Q1 2022 Berry Corporation (Bry) Earnings Call
Good day, and thank you for standing by welcome to the Berry corporations first quarter 2022 earnings call. At this time, all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone.
Please be advised that this conference is being recorded.
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I would now like to hand, the conference over to Speaker today, Mr. Todd Crabtree ins.
Investor Relations. Please go ahead Sir.
Thank you <unk> and welcome to everyone and thank you for joining us for Berry's first quarter 2022 earnings teleconference earlier today Berry issued an earnings release, highlighting first quarter results.
This morning, we'll be trimmed Smith board chair and CEO , Fernando Oahu, Chief operating officer, and Executive Vice President and Cary Baetz, Chief Financial Officer, and Executive Vice President before we begin I want to call your attention to the Safe Harbor language found in our earnings release the release in today's discussion contains certain projections and other forward looking statements within the.
Meaning of federal Securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements.
These include risks and other factors outlined in our filings with the SEC our website B R Y Dot Com has a link to the earnings release and our most recent investor presentation.
Any information, including forward looking statements made on this call or contained in the earnings release and that presentation reflect our analysis as of the date made we have no plans or duty to update them, except as required by law. Please refer to the tables in our earnings release and on our website for a reconciliation between all adjusted measures mentioned in today's call and the relay.
GAAP measures, we will file our 10-Q later today, we will also post the replay link of this call and the transcript on our website I will now turn the call over to trimmed Smith.
Welcome everyone and thank you for joining us. This morning, we are pleased with our performance in the first quarter of 2022, and we're well positioned for a good year as our results. Once again demonstrated we are a cash generating machine with our new shareholder return model in place and current oil in stock prices.
We are excited to report that we are on track to deliver top tier returns just as we promised.
When we announced our new shareholder return model with our new variable dividend that started with the first quarter 2022 results plus our regular fixed dividend. We are delivering record returns totaling 19 cents per share or three times prior quarter returns.
<unk> is one of the highest returns of capital amongst our peers.
For 2022, we anticipate we will deliver a cash returns equaling, 120% to 150% of the approximately $100 million of dividends. We have returned to our shareholders since our IPO in July of 2018.
This translates to approximately $1 60 to $1 90 per share and a return in the mid to high teens.
Our new return model is predictable transparent and simple just like our business model is allocated 60% of our discretionary free cash flow primarily in the form of cash variable dividends. The remaining 40% is described as for discretionary capital to be used opportunistically, including in the form of share.
For repurchases.
Last week, the board increased the share repurchase authorization to $150 million in aggregate.
Furthermore, we are executing the operation side of our business with excellence.
We're hitting our production targets, which as a reminder is to maintain production flat year on year I'll explain how we do this.
Foundation of our business model as our base production, which is the production that comes from our existing producing wells and on average accounts for 90% of our total production year in and year out before we ever have to drill a new well.
It is predictable and does not require new permits.
This is why our business can be model like a manufacturing or industrial business.
We plan to fill the 10% gap to keep our production flat from year to year by drilling new wells for 6% of that production gap and completing workovers in the existing wells for the remaining 4%.
Other words, 90% of our cash flows comes from production out of existing producing wells.
Fernando will share more details about our production activities, including the better than expected performance that we're seeing out of our Utah assets.
We are steadily reducing we have steadily reduced our carbon footprint and we are continuing to do so as a reminder, through the end of 2021 and in early 2022.
We reduced our carbon footprint by 13%, which is more than 205000 metric tons and reduced our operating cost by $14 million, mainly due to our focus on operational efficiencies and A&D activity as well as ESG initiatives.
We are continuing to.
On energy operating costs gas costs continue to rise due to various market factors to address this situation. We recently improved our 2022 gas purchase hedging positions and as we have mentioned previously our access to the Kern River gas line from the Rockies to California increased on.
<unk> this past Sunday to provide up to 80% of our daily gas needs further enhancing our ability to obtain gas from markets that have historically been cheaper and more reliable than California.
Additionally, our oil production accounted for 91% of our current total production.
Our oil production is well hedged, giving us visibility of our levered free cash flow over the next two plus years.
Sanjay well services, our recent acquisition that provides standard well services to the industry in California, and accelerates the reduction of fugitive emissions by plugging idle in orphan wells has been fully integrated into the company.
It is on track to plug approximately 2003rd party idle wells in California in 2022.
Plugging wells reduces actual and potential methane emissions as well as other potential health and environmental hazards occur.
According to the United Nations Environment programme, and the climate and clean Air Coalition methane is a powerful greenhouse gas and over a 20 year period. It is 80 times more potent at warming than carbon dioxide.
It also reports that methane has accounted for about 30% of global warming since preindustrial times and is proliferating faster than at any other time since record keeping began in the 19 eighties.
With CJ well services, we have the capability to address this urgent environmental issue today with technology that exists today.
I will come back to highlight other ESG activities and initiatives as well as give an update on legislative activities in my concluding remarks, now I will turn it over to Fernando who will highlight the operational results of the quarter.
Thank you I want to begin my comments by reaffirming our commitment to the safety of our employees and contractors protection of the environment and regulatory compliance.
One we continued to achieve solid safety results, including not having lost time incidents. Since 2019. This is best in class performance.
In terms of operational performance in Q1, you can refer to the earnings release and 10-Q for details I do want to highlight a few key achievements from Q1.
I was trying to mention on average our base production accounts for approximately 90% of our total production. This year. Our goal is to keep production flat by filling this gap with Workover, a new drilling activity.
Q1, net of divestment and acquisition activity, our quarterly production was slightly higher than our production plants.
Q1, we operated on average with one to have rigs drilling a total of 26 wells 22 wells in California, and four wells in Utah.
California, we continued with our successful development campaign.
Drilling horizontal wells in the midway Sunset field in vertical wells in our Hill property.
In addition to drilling new wells, we accelerated workover activities, both in California, and Utah, completing 76 jobs with a rate of return greater than 100% for the program.
As mentioned in the past where productivity is our most efficient use of capital.
And Antelope Creek, our Q1 bolt on acquisition in Utah, we doubled production into two months at <unk> has been operating this property.
There is another example of outstanding work from our Uinta Basin team.
We have significant upside potential for additional workovers operations improvements on your drilling inventory, which is what an ideal bolt on acquisition should look like.
In Q1, non energy Opex remained essentially flat compared to last year effectively mitigating market pressures.
We continue to focus on operational efficiencies and unlike other oil and gas producing regions in the country are inflationary pressures are going as we planned in California.
We are a purchaser of fuel gas and the market dictates prices higher than expected gas prices increased our energy opex in Q1.
This is mainly driven by current geopolitical pressures.
As you May remember our energy Opex includes fuel gas purchases, which are partially offset by electricity sales from our cogeneration plants in California.
We recently added new gas hedges, which effectively protects two thirds of our gas demand at $4 Btu.
And as Tim mentioned as of May 1st we have additional physical line capacity in the Kern River line, which covers up to 80% of our total demand.
Both of these initiatives will help us mitigate the volatility in gas markets.
Also increasing oil prices outpaced the cost of energy, resulting in an overall increase in our operating margin for Q1.
To summarize Q1 net of divestments and acquisitions. Our production went according to plan, we have done an excellent job in accelerating and executing a workover campaign, which has delivered great results.
Our capital expenditures and production guidance are within plan now I'll turn it over to Kerry.
So I'll keep my comments brief as trim and Fernando have covered most of the important items. My first comment is that we expect our second quarter variable dividend to be much greater than the first quarter as the first quarter is seasonally our largest working capital consuming quarter.
In Q1, working capital use was higher than we anticipated due to the rise in oil prices in the second half of the quarter, which caused a temporary increase in our quarter ending accounts receivable balance.
We have added a slide to our IR deck slide 12, where you can see the historical historical quarterly changes in working capital again, we are well positioned to have a strong payout under our shareholder return model for 2022 and over the next few years.
Turning to oil hedges, we are limited on our hedge volume by our credit agreement for 2020 to roughly 60% of our planned production swapped at about $77 a barrel. Brent. This provides certainty around our free cash flow and leaves upside for significant portion of our production as we.
<unk> continued strong pricing throughout the rest of the year and beyond.
Before turning it back to trim I wanted to highlight that the board did approve an increase to $150 million of share repurchases in aggregate.
We recently amended our credit agreement to allow us greater flexibility around share repurchases speaking of the credit agreement, we don't see in our we don't see a change in our elected commitment of 200 million, although the borrowing base supports a higher amount. There is no reason to pay for liquidity, we don't need.
In closing, we arent a resource play due to our attractive low decline curves and low capital intensity needs our development and production business provides investors with strong predictability and visibility into our cash flows.
Gives us the confidence to plan for and deliver significant cash returns and to provide additional value to shareholders, including through share repurchases.
Back to you Trevor Thanks Terry.
Good quarter and are well positioned for the rest of the year.
Now I wanted to touch briefly on a few of our environmental social and governance initiatives or ESG.
First one of our strategic focuses for our well plugging business is to work with the state to plug orphaned wells in highly populated often distressed neighborhoods such as in parts of Los Angeles County.
Many of these wells were drilled years ago, some even decades.
<unk> services is highly skilled in dealing with these old and often complex wells.
This is a critical component in achieving the state's goal to safely reduce emissions near at risk populations.
In addition, as carbon capture and sequestration projects.
So yes, it will be imperative to ensure that all historic wells in the carbon dioxide.
Our appropriately shut in and plugged to ensure the reservoirs completely sealed.
The technical competence.
Plus these very sensitive wells will be in high demand <unk>.
<unk> well services working with Cal Jim other state government agencies and other operators is uniquely positioned to do this work.
In conjunction with our environmental efforts, we continue to monitor the developments at the state level.
Ccs opportunities on the Legislative front, California seems poised to take action this year to embrace Ccs as unnecessary tactic to transition to a lower carbon economy.
There are a handful of measures that have been introduced and currently making their way through the legislative process the deal with Ccs, including three bills to lay the foundation and framework to make season.
In California, one bill address addresses the pore space ownership issue necessary to achieve widespread deployment of Ccs a second bill streamlines the permitting process for these projects and the third bill directs agencies to adopt regulations and safety guidelines for C O two pipelines.
We continue to be very committed to being part of the energy.
We are working with the state to make sure. We can continue to provide California's was safely produced affordable equitable and reliable energy now ill open it up for questions.
At this time I would like to take any questions you might have for S. C. D. As a reminder, if you would like to ask a question over the phone simply press star one on your telephone keypad.
Again that would be star one on your telephone keypad.
Our first question comes from the line of Leo Mariani with Keybanc. Your line is now open.
Hey, guys I wanted to see if you can provide a little bit more detail on the regulatory side really just curious if you all have been getting kind of regular way oil drilling permits from the state over the last couple of months and I guess, if so do you do you have what you need for the 22 program. At this point are you still a little short.
Leo This is trim I'll handle this one.
The question is that the.
But we are getting permits that are handled under sequel already.
The issue is Cal Gem is now the lead seek what agencies cyclo stands for California, Environmental quality Act, which is a requirement in all activities not just oil and gas in California.
While current county goes through it's legal.
Issues.
We expect by the end of May be the second or third quarter of this year Kern County will become the lead agency. So the answer is yes. We are getting permits we will be currently have permits to take us through the end of June .
And we expect to get another.
Group of permits here shortly that will take us well into the year, but we don't have permits in hand, yet as we normally don't.
Okay, well I just want to make that clear at this time, we don't have all the permits in hand for the entire year's activity.
But we're moving forward.
And working with the agencies is necessary to get those permits.
Okay, but it has there been I guess movement in the last couple of months, where they have been issuing them.
Yes, that's what I was just trying to say, yes, we have been getting permits.
Okay.
And then I guess any kind of specific update on any of the C. O. Two sequestration pilots you've talked about obviously you went through the legislation certainly sounds like a positive that's moving through.
The legislature, there, but anything kind of specific to bury that youre working on.
As we mentioned in the previous call the fourth quarter call, we have an a.
An LOI with a company that is investigating taking our CEO to our largest generators of emissions our co gens and taking the cotwo emissions from those co gens into a project they have going on in another basin.
That is moving forward and then we regularly touch base with CRC Elk Hills is a very good place to store steel too.
And we will be a participant as a source of cotwo for them as they progress. So those are the two activities for Berry at the moment.
Okay.
And then just maybe you could touch base on the oilfield service business here.
This right it looks like you all did just over $3 million.
Are there in the first quarter I think you all had talked about annual guidance of 27 million on EBITDA. This year. So it sounds like maybe it's off to a bit of a slow start can you maybe just give us a little bit of color in terms of how you're feeling about hitting that guide and explain a little bit on the the recent shortfall.
So this is carey.
Good to talk to you.
The guide is that we still feel very comfortable in the guide first quarter is kind of the slowest quarter for Sanjay revenue wise was very was very strong.
There was a couple of inflationary pressures that they got hit with one was adjusting all filled level wages up by $2. So that was a little higher than it was expected and then also fuel got them a little bit as well. So are they comfortable with the revenue revenue is actually moving better than we thought.
Finding the personnel still is a challenge out there.
The other day that we heard is.
Del Taco now in California page $21 an hour.
For new employees, so think about that in the talk we got to move. So you do have to make sure that dropping at very good competitive wage in order to get out there and work and that Jack is doing a great job with that and we still feel comfortable with the guide.
Okay. Thanks, guys.
Thanks, Leo Thanks Leah.
Thank you. Our next question is from the line of Charles Med D. G.
Johnson Rice your line is open.
Good morning, Charlie.
Fernando.
I want to go back to the the CJ will plugging so so I get that.
I think it's it.
Right point that you're going to have to plug in more wells to make these fields really.
Good place for Ccs I guess my question is.
Has the character or the size of this opportunity.
Changed versus you know last year when you when you bought this business. It seems like it's gotten better and if that is the case is this something we should be thinking about FERC.
As early as 23 or is this more kind of a back end of the decade kind of thing where it's at.
It's gotten bigger and better.
Well, there's two components to two to your question.
So let me explain first off the state has the liability for thousands tens of thousands of orphaned wells.
Many of those wells there are several markets here many of those wells occur in highly populated areas.
And C. J is uniquely positioned to take care of those wells the other.
Going to develop over time.
As the plugging around wells that are in the C. O two sequestration realm and that should happen several projects and probably will be a growing business. Okay. It's right now it's not a big piece as you observe but that will be growing over time and there'll be several aspects of it.
Charles and this is just me talking which is one is preparation of those reservoirs for sequestration.
Okay wells old wells will need to be.
Plugged and then as the reservoirs become utilized for sequestration.
Additional wells will be needed to be flowed the.
The other component that has changed which is also positive is the state is becoming more proactive in offering tenders for big packages of wells to be plug.
We didn't talk much about that today and I'm, hoping we'll talk more about it.
Future quarters as we win some of these tenders, which are currently in progress.
The state is.
At tendering and understanding the complexities with.
Plugging a number of orphan wells in a certain area.
That is a change that has evolved over the last three to six months in my in my experience. So.
Doing business when we bought.
Plugging business was about 20% of their entire business.
That may continue to grow.
And we continue to position so we're delighted with the way it looks for the plugging business in that acquisition does that help.
Yes.
That helps a lot. It that's that's great insight into not just not just your thinking, but but how the markets evolve and that's exactly what I'm looking for trend.
And then if I could have a follow up for you and.
I apologize ahead of time, but this is a little down in the weeds, but I think it's an important thing to us.
To pull up and it's about really your variable dividend and so one of the ways that debt.
Very different is that you guys are calculating.
Different from other companies to put these variable dividend frameworks in place because you guys are doing it.
Post working capital adjustment, which makes sense that that's really where youre, where that's closer to real free cash flow, but it's not something that other people in this space are doing so to drill in on the point that you made earlier about your working capital.
No expansion are draining <unk> I get the part about your receivables going up as the oil price goes up but but what other things happened in <unk> that makes that a that make that a kind of a working capital draw.
Yeah, so the debt.
Good question Charles.
And we were doing fine until March yet, but for good reason prices went up and our IR went up about $25 million in March which is one of the biggest drivers but.
There's two other things that happen once or twice a year. So in the first quarter and in the third quarter, we pay our annual interest expense, our semiannual interest expense on the bonds. So that's a little bit of a working capital use but the other big item that in Q1 that doesn't stand in any other quarter is or what we call <unk>.
Our core Max lease which is R.
Annual royalty payment to Exxon.
For formats, which on average is to get into it and it gets into about a 15 million dollar number give or take a little bit on annual basis and then the last item that we do also in Q1 will be it's not as big a number but you also pay your annual bonuses in Q1, so those are kind of the debt.
Three biggest outliers versus the other three quarters, you've got interest.
Royalty payments and bonuses.
Got it.
As those as those kind of roll off or don't repeat into Q that working capital adjustment not only will we will go to zero, but that can flip the other way.
Yes, that's right absent absent a continuum.
At the end of that quarter on oil prices and again, it's a seven day lag from the end of the quarter to when we get paid so you know we get a little frustrated at times that there's give and take with that as well, but those are the three big item in the first quarter and Thats. The reason when you look at the other three quarters in the.
Station Youll see that relatively flat if you if you've looked at prices prices impact a little bit on the AUR, but doesn't that theyre fairly flat.
Got it. Thank you. Thank you for the slide you're prepared on that end and for indulging that question Gary.
No problem. Thanks Charles.
Thank you.
Our next question is from the line of Steve Busch Everglades Resources. Your line is now open.
Good morning, Steve. Thank you for taking my call.
I'm, just kind of new to the stock. So I'm just trying to wrap my head around the oil.
Oil and gas derivatives number.
Why isn't revenues and that's a pretty big number if you could just kind of.
Fill me in a little bit.
Yes, I think I think from an overall point of view. The recent Gen. There is still we actually get the realized price for our commodities Joe.
It is adjusted so everybody sees the actual price that we receive on the products that are sold.
Okay. So like this was $161 million derivative loss for the quarter is that just purchasing forward contracts or is that actual mark to market is it a cash that is a market that has a mark to market for the hedge book for that quarter during that okay. So it's not cash that's what I thought okay.
Yes.
Rice's, yes, if prices stay flat from that from here on you won't see that mark to market. It's when you have big wide changes that you see that Steve and as you know the first quarter, we saw a substantial run up in oil prices and that's where you get that that big number jumps out I understand okay and so just.
Kind of an odd question are we having any trouble with water droughts or needs for any kind of that.
Water issues in California.
Steve This is Trevor.
We do not have a problem sourcing water most of the water we use in our operations, we actually produce and recycle.
Okay.
With water is disposing of water that we don't end up using that we have produced.
And we have various disposal methods, including the best one is disposal wells.
Right, Okay alright.
Alright, I think you guys are doing a great job.
Steve.
<unk> hold ons you still there yes go ahead.
Okay, you opened up the water thing so let me, we do and we are working very well.
We have one field in particular on the east side of the San Juan team that has very.
Pure water.
We produce and we are very close and we're in negotiations on.
Selling that water too.
Two one of the water districts that provides water to the farming industry in California.
So I'm, hoping we'll talk about that but your point is.
Hope with the drought conditions in that way.
Alright, Okay I appreciate it thank you.
Thanks, David asked me welcome to the stock Yep. Thank you.
Thank you. Our next question is from the line of Nicholas Pope with Seaport Research. Please go ahead.
Good morning, everyone.
Good morning.
I just hope it.
Can you talk a little bit about.
The operating costs kind of where it's running.
I mean, obviously energy.
Excuse me is that.
It's.
Run up on.
On the energy component of the operating expense, but just looking at the non op or the non energy operating expense.
And kind of where that's running relative to.
The full year guide I see very active quarter for for Workovers.
And I was kind of curious how that kind of.
With situated relative to kind of where the plan was and where operating costs.
Kind of trending over the course of the year relative to that kind of very active first quarter for for for Workovers.
Yeah, Hi, Nick this is Fernando in terms of non energy Opex as you know thats basically our standard salary.
Just historically, we've been able to reduce our non energy opex by about $2 a Boe since 2019.
And this has proven to be very sustainable in 2021 and into 2022 as seen by the results that we have.
Obviously, we've been able to realize significant improvements in operational efficiencies in all aspects of the operation and these efficiencies.
Into 2022.
Now we budget at a slight increase in <unk>.
Non energy Opex.
Due to inflation.
Now we are working within that number so our actual.
Q1.
Dollar per <unk> number is actually below what we planned for.
Don't expect energy opex to be in.
Issue beyond what we planned for so we're staying within that to about 5% increase compared to last year.
Yeah. Nick this is Terry I'll jump in I think overall non energy Opex, we're still comfortable with the range I think we.
We are the energy Opex side of things is where we're focusing on again getting about two thirds of our our daily demand are used at $4 I think helps us get that back down getting access to the current line as of last Sunday the full access.
That's going to give us some ability to move some lesser expensive.
Rockies gas Navy door areas as well that I think non energy opex good energy opex on the higher side, but at right now we're still comfortable overall with our guidance.
Got it and then non energy Opex I think it was $6 25 to two.
Seven 750 or something like that at that rate on a unit basis.
No I think it's.
Our energy, Yes energy energy, yes, but we'll be on.
And I think we need to get through the second quarter before we break refresh on the energy side of things, but I think non energy Opex, we're still comfortable within guidance.
Got it.
Thank you.
And.
I was hoping you could expand a little bit.
On on kind of the two capture pilot that you were talking about on the co Gen facilities.
It sounds like Thats like a small scale project is this something that like realistically.
You could see.
To capture from.
Your electric generation facility.
Facilities I mean is that is that a realistic at this point in their life to see or to capture or is this more of kind of a.
Test case to see if it's if it could be viable I mean are these facilities is actually capable of capturing C O two.
Actually the capturing of C. O. Two is not the issue the issue is getting the permits by the.
The group, we have the LOI with Wil.
We will be taking that.
The technology exists to capture the Cotwo. So we are able to do that.
There are various methods that cost different things and so we'd all run the economics as well, but thats been around for a long time and we can we can do that the issue with those projects is that is taking them from the when they've been captured to the location, they're going to be injected into.
The subsurface.
One of the pieces of legislation that I mentioned in the call.
The C O two pipelines.
That is a much.
That's an area that's never been addressed slated Lee or regulatory wise in in California, So that's where the risk associated with if you think about it for us the cotwo emitters are going to be our steam generators and our co gens.
In California, the biggest C O two generators are going to be industry.
Some but not as much cement factories utilities things like that.
And that's where the capture of larger volumes is going to occur.
We will contribute as a source of Sidoti.
But for Berry.
As our.
Our.
Invest as our PSG deck.
Supports we produce about one 4 million.
<unk>.
114 was 1 million metric tons.
A year, okay. So we actually don't produce that much but as a company. We are measured by how much we reduce and thats why reducing.
Far in the first quarter, we completed the reduction of 205000 metric tons, which is a big deal for us. So no. It's more than just the pilot testing things. This is.
It would be very beneficial to berry.
And it's doing it.
And is the idea that the cotwo attending to capture I mean does it is it purely for sequestration or is there.
I would assume it would have to be a more peer source of C O two for Houston.
C O two floods is it pure sequestrating that we're talking about.
Yes, it is pure sequestration right.
Gary Berry has no plans to do a cotwo flood to generate additional hydrocarbon production.
Got it if that's what you mean by <unk>, yes, yes.
Exactly thank you know.
This is pure sequestration.
I appreciate the time guys.
Thank you. Our next question is from the line of Joseph <unk> with Wells Fargo. Your line is open.
Thank you thanks for taking my questions.
I was just wondering if you guys could maybe dive into kind of that 40% side of a discretionary capital and just kind of how youre thinking about it at these levels with the.
The increase of the share repurchase plan and kind of a $100 oil how are you balancing kind of the repurchases versus organic inventory growth and some of the other options embedded in there.
I would say, it's a calculus model.
I think yes.
I'd in California will be limited by our.
Permitting and the ability to get the permitting to be able to grow. So I think we're comfortable with our our current guidance based upon.
Permitting is and where we're at from permitting as Fernando pointed out we've had some very.
Very good success ended Antelope Creek bolt ons.
Two to increase there, but it won't be substantial enough to really take over that 40% we are.
Some additional bolt ons.
That would take part of that as well, but I think also we're keenly focused on total shareholder return.
The right opportunity comes around to be able to repurchase some shares I think we will take advantage of that as well. So I would say it's fluid it's not it's not tightly defined.
But again the right bolt ons will come out of that and then I think the rest of it will be focused much more on the share repurchase side as well.
Okay. Thank you that helps and then maybe just a quick follow up on Charles' question about the variable dividend obviously, the working capital was kind of a headwind to this quarter I guess moving forward. If there was a working capital change that went in the other direction.
The variable dividend to be kind of based on the inflow coming in or would you have kind of maybe pocket that change for the for future quarters, when it reverses and use it to kind of even things out a little more.
No I think it's from our point of view is to keep the math simple keep keep them, let the math just work like.
Some quarters will be a little higher.
Allow us, but overall I think we're still comfortable as <unk> pointed out that dollars 60 to $1 90 range for that for that dividend return and so I think with that being said it blends out over time.
Gotcha Alright.
For me the long term and the long term investors will continue to reap the benefits of the cyclicality of the working capital again, we don't see as much cyclicality in Q2, three and four it's really the first quarter and you kind of.
The next three quarters should be fairly steady at historical working capital stays in place.
Please.
Got you makes sense.
Thank you very much.
You bet. Thanks.
I think that thank you.
Karen I'll.
We really want to thank everybody today for the time.
Good second quarter. Thank you.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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