Q1 2022 Matador Resources Co Earnings Call

Yeah.

Good morning, ladies and gentlemen, welcome to the first quarter 2020 to Matador Resources Company earnings Conference call.

My name is Shannon and I'll be serving as the operator for today.

At this time, all participants are in listen mode.

Facilitate a question and answer session at the end of the Companys remarks.

As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's web site through may 31st 2002 as discussed in the company's earnings press release issued yesterday.

I'll now turn the call over to Mr. Mac Schmitz, Vice President Investor Relations Matador. Mr. Smith, you May proceed.

Thank you Shannon.

Morning, everyone and thank you for joining us for Matadors first quarter 2022 earnings conference call. Some.

Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador resources in measuring the company's financial performance.

Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release.

As a reminder, certain statements included in this mornings presentation, maybe forward looking and reflect the company's current expectations or forecasts of future events based on information that is now available.

Actual results and future events could differ materially from those anticipated in such statements additional information concerning factors that could cause actual results to differ materially is contained in the companys earnings release and its most recent annual report on Form 10-K .

In addition to our earnings press release, I would like to remind everyone that you can find a slide presentation in connection with the first quarter of 2022 earnings release under the Investor Relations tab on our website.

Finally, I would like to introduce the management team joining me. This morning, they are Joe Foran, founder Chairman and CEO , Billy Goodwin President operations.

Van Singleton, President land acquisitions divestitures and planning.

Craig Adams Executive Vice President co Chief operating officer, and Chief of staff.

Gregg Krug executive Vice President marketing and midstream strategy.

Michael Frenzel Executive Vice President and Treasurer.

Tom Elsner Executive Vice President Reservoir Engineering, and senior asset manager Rodney.

<unk> Executive Vice President and Chief Accounting Officer.

Glenn Stetson executive Vice President of production.

Brian Willey President of San Mateo Midstream and Chris Calvert Senior Vice President operations. Other members of the senior staff are also present and available to answer your questions and with that I would now like to turn the call over to Mr. Joe Foran, our founder Chairman and CEO Joe.

Thank you Mac and good morning to everyone and thank you for participating in today's earnings call. We very much appreciate your time and interest in Matador.

To begin this conference.

And like.

Point out three things first is that we are celebrating sits.

Since February .

Art.

10 years of being a public company.

So this is the 10 year anniversary of our first earnings call.

I hope, we do better than we did that.

Okay.

Second.

Uh huh.

I like to point out that we've retired one third of our aggregate debt.

And we are now producing 100000 barrels of oil or gas equivalent.

And number three that this growth that we've had.

Typically this year has not come from spending that much more on cap ex but from better than expected.

Growth from our various drilling programs.

Okay.

Hey, Ann.

And capital efficiency.

And with that.

Turning to your questions.

And Oh.

Mac once you laid off.

Thanks, Shannon if you would turn it over to questions that would be great.

Thank you.

You will need to press star one on your telephone.

So it's part of your question press the pound key.

Ladies and gentlemen, due to time constraints, we ask that you. Please limit yourself to one question and one follow up again, we ask that you. Please limit yourself to one question and a follow up until all have had a chance to ask a question.

After which we will welcome additional questions from you.

First question is from Scott Hanold of RBC capital markets.

Your line is now open.

Thanks, Al and congratulations the 10 year anniversary of being public.

My first question Yeah.

For my first question I was hoping we could talk a little bit about in place and obviously it's a.

Big conversation in the industry with you on both the Opex as well as the Capex side, but it looks like you all it at this point have been managing it so far pretty well if you could give us some sense of like what what things you've been doing and where you think that you know might progress through the course of this year, especially if you look at the back half.

Half of the year and into 2023 wins.

Think that most of the industry is a little bit more open to service price.

Price inflation.

Hey, Scott This is Tom Elsner, yes, thanks for the question.

We are seeing a little inflation, but it's still early in the year. So it's just it's just hard to say exactly where where things are going to be but we're really proud.

Out of all of our operations teams and I'm going to hand, it off to the 1 billion, Chris talk about some of the some of the detailed work theyre doing on on completions and drilling and production, but you know.

Certainly we think we can mitigate some of these cost increases later on in the year.

Chris Hi, Scott This is Chris Calvert SVP of operations I think obviously, it's a great question you know operationally when we think about about service cost inflation as you know I think the main the main ticket items are the cost of steel the cost of fuel and the cost of sand.

Specifically speaking to the cost of steel operationally you know we are looking every day to to push reducing or eliminating a casing string we talked a lot about state law in a long time ago.

And we're looking to do that as we go back to Rustler breaks as we grow up into into Lea County on the fuel side, obviously, the less amount of fuel that you use less exposed yard or the increase in fuel price what.

What we're doing is dual fuel, we're bringing in either field gas.

Our San Mateo partner, we're using field gas, what we're doing at <unk> and so that's another thing that we're doing to kind of reduce exposure to diesel and.

And the last thing I think is just spending less time on wells you have de rate components and rental components that add to the cost of the well and what we can do there is just eliminate time on well and so we've had record wells with our Max Com room, but I think we're up to a 162 records with Max Com and we're just spending less time on wells, what we've learned down at Stateline, we've gone up to Rustler breaks and we've.

We've really just kind of set records and spend less time drilling those wells Scott.

L. A is present and have you all been processed and they're sitting in other departments.

Sure.

This is really good one.

President.

Matador and.

We've been working with our vendors longtime vendors like D&O pop co and they handle all of our casing tubular goods and they keep the supplied and stay out in front of everything and we've talked with them and we're covered for the rest of the year. We've we also work with Patterson drill them they've drilled almost.

Every world Youll ever drilled I think in first and second Matador. So that's been good and good relationship and they work force and worked with us to.

To ensure that we can get rigs in high technology equipment on those rigs and.

So we can get after and drill wells faster and faster and along with our other.

Long term vendors are halliburton and universal they both helped us out like Chris was talking about with.

Sure, we've got plenty of sand and they stay out in front of that.

Have agreements in place. So we don't have any issues. There. So all of those things together you know that helps us drill better wells faster and like Chris also mentioned the <unk> Com and you don't shout out to those guys and keep it assumes zone.

90% to 100% of the time that creates better wells and more.

Cash flow for the company more reserves and I don't know.

It wants to say anything about match com there.

Yes, Ned Frost senior Vice President of Geoscience.

<unk> Com group has really done a good job and Scott I know you're familiar with them, but that's at.

Geoscientists and drilling engineers working around the clock together and our control room.

They've done a great job of staying in zone, and Israeli sad that the implications of staying in zone really lead to better well productivity better efficiency drilling those wells faster every every hour you save Terry in terms of days that you save and that really impacts to the bottom line in the very favorable.

But that <unk> done a great job for for really helping Matador.

The growth that we're seeing right now.

And then like.

I'd like to follow up some that Nate This is Joe again.

About the Max Com group that was 162 records that we tally on some checking we thought that added up to approximately 23 million in savings.

And yet.

And we have improved our time in the reservoir.

Zones to 95% or more which again.

Leads to better than expected results.

So by this Scott that where we're trying to emphasize that a lot of the things that Billy and his group there did are sustainable.

Because they're time savings and productivity increases and innovation. So we're you know of course ware.

We're trying to address.

The effects that there'll be inflationary pressure, but our guys are also finding ways to mitigate it and improved well results without spending more money.

This is Billy Goodwin again, I'd also like to throw in the.

With my ex Com working with the drilling program.

We've also started seeing more and more 100 foot in our drilling and where we used to be trying to drill the whole lateral with one assembly now we're drilling curves and laterals and have seen you know this and each hold size or 663 quarter inch hole size, eight and three quarter, eight and a half minutes holes.

<unk> all of them doing equally well and getting up over 13000 foot.

One BHA so.

That's great vendors out there improving technology, and making the motors and bits butter. So we can do the drill the curve and lateral with the same BHA. So.

So hats off to all of those guys as well.

That's great to hear that there's some durability and what we've been seeing so far.

And then as my follow up in.

Joe maybe this one's for you, but you know obviously, even since when you know you just reported fourth quarter earnings.

The quantum of potential free cash flow for you all who continues to increase on the back of your operations and frankly, a big part of that is also commodity prices have risen and you know the way we see it right. Now you may have maybe another $1 billion plus of free cash flow, even after paying down revolver.

Balancing the remainder part of the year and so as you start looking at that and thinking about 2023 can you just give us a sense of like how do you look at utilizing that free cash flow and just give us a sense of like where the priorities are and what are the likely.

But that are.

Uh huh.

Well, Scott that's a big question.

And we are studying it from all different angles.

Yes.

The team is really working together and where we're getting ideas from all the different teams.

And all of the different departments on what how we could best puts this to us, but I'd say the conceptual as it.

<unk> plan is to continue to reduce debt.

We think our business has changed to where it's advantageous to work down your debt.

You know as much is reasonable.

Reasonably possible without disrupting your operations growth.

So the first priority is just reducing continued to reduce debt. We think that's a good path.

Going forward <unk>.

If these have practice this line itself we.

Will you.

You know.

Reduced continued to reduce debt not only this year, but into 2023. The second thing. He is he may not as you know we're all large shareholders everybody. In this room is a shareholder of Matador, we like <unk>.

And we're we're you know we're happy to try to raise their ideas, but we wanted to do it in a prudent fashion and it's a little early to make a prediction of how much.

If anything we're going to raise dividends this year, but if prices sustain themselves anywhere near this area a wave.

Certainly plan to have over the years to have a steady and consistent dividend policy that rises it and add Tim.

It improves our returns to shareholders.

And that's where most of that direction.

He is where we're not.

We're gonna be careful.

Maintaining the same disciplined approach to where we spend money and our drilling programs and where we might spend it.

Barring additional acreage.

And we.

We know this is a great opportunity we want to make the most of it but we want to do it in a very disciplined fashion fashion.

That's attractive to our shareholders and strengthens the company financially sell.

With those parameters.

We're looking at a number of items.

And.

And there are good ideas coming about.

Yeah.

We we think it's a great opportunity and we it gives us great options and we don't want to be hasty in going into any one of those options, but be sure. We thought everything out so we can.

<unk> continued to add to the value of Matador and make it.

More valuable to our shareholders and make sure that we share.

Uh huh.

Some of the.

The gains in cash flow, we're getting with them.

And and to keep up the good relationship we have with airbags.

Yes.

Do you think about the fixed dividend, then and you know the return to shareholders in that matter.

You all have some kind of context on.

Where you like to see that is there like a particular yield do you think that's appropriate for a company of your size and growth potential or is it a percentage of passenger or is that still some of the decisions youre trying to figure out right now.

Well, Scott I would say both as it is that are.

We believe in the fixed Dev did we believe in the steady growth of the fixed dividend.

But you don't want to walk something back once you've raised it.

So yes, we are steady there.

And and meeting with shareholders.

And discuss it as a board how much and when.

Erase the day of the deal.

And.

And what circumstances, we're going to be looking at I may need you could declare piece could be declared overnight.

In Ukraine, and Russia, and you'd have a different set of circumstances. So it's a little early to say.

Exactly.

What we're gonna do but I think in general terms as I tried to stress.

We plan to consistently raise the dividend.

As cash flow permits and we plan to pay down the debt as is prudent.

And here to.

To stay as much as we can based on cash flow and as you saw this year, we were able to not only have the drilling programs, but to make a few acquisitions and we weren't doing it by borrowing money, but living within our cash flow.

Alright, I appreciate that thanks, Joe and team.

Our next question is from Neal Dingmann with Securities. Your line is now open.

Good morning, all thanks for the details gentlemen, my first question, maybe for Bill or Tom on the op side I want to maybe tackle Scott's question, a little bit different way I'm looking at slide five when you guys.

Pretty nicely shelf too.

2022 milestones and timelines that you show for the World.

So again, it really talks about the inflation, but I guess my question around that it doesn't appear like you guys are having any.

Delays or anything on that nature.

Regarding any of the services out there does that is that fair to say, maybe if you could just talk about that timeline, a little bit and based on what maybe the tightened with the services.

Are there any challenges it doesn't tell you were seeing any any any delays in the such but I just wanted to double check that.

Sure Hey, Neil this is Tom.

Our timeline for the year.

Still feel really good about our our plan in the major milestones that we've got set up for the year.

We have a busy second quarter with with Rustler breaks, bringing on line 11 wells and.

We're gonna be back in Antelope Ridge, bringing on 16 wells later in the later in the year in Q3, and then we will we have a big tranche of Ranger wells coming up.

Q4 things.

Things are looking good.

As Phil mentioned here in a minute.

Teams are all working together, we're doing a great job transferring knowledge between between these different asset groups like some of the warnings we've had at stateline, reducing casing strains and learning how to install some better.

Production lift systems, and worried about better targets with that with Nazi group and so we were firing on all cylinders and things are going things are going well, we just want to remain cautious caution for the year.

Aneel disability and.

Back up with Tom Sawyer on there I mean everyone's excited here, we're all working together.

You know the lag.

Slammed in geology fond in you know, we're a plus rocawear and you know both of them.

Our land positions in.

More opportunities for two mile and looking at three mile Wells, and we're drilling faster and getting better and you know all of them or all of our vendors are decided you know Luke new ideas, new technology and you.

Some of that extra money you know we're spending there's a there's a good return to us in helping us to drill wells faster and mitigate the costs. So it's.

It's all good.

No thats, what it sounds like I don't see any delays and then maybe just one follow up on midstream maybe for Gregg I know part of your priorities you talked about or if you could talk about San Mateo I know on your priorities you all talked about adding maybe some of the new <unk> customers in.

Earning in hitting some of those performance incentives could you just talk about it you have certainly seen some real nice upside on San Mateo. If you could just talk about that a bit more.

Hey, Neil this is Brian .

San Mateo and happy to answer that question. It's a good question. So thanks for asking it.

As it relates to third party as you know we continue to see opportunities. It's a it's a great market out there right now and we see opportunities with new customers that are potential and as well as existing customers and we look at those opportunities with existing customers as something that is really a testament to the great work of the business development team.

The operations team here in the office and then also out in the field you know they do a great job coordinating their efforts out there and so it's good to get this repeat business and how those opportunities in particular, you mentioned the Max comedy them earlier on the San Mateo side. We also have a commodity control room, where we're able to actually monitor many of the systems that we have in and the pressures in and makes.

There are no issues occur.

And where this logos.

Just had one of our third party customers say that was the best controller and they've ever worked with some really good feedback and good working together with them on the incentive side you know we I think it was you.

Announced in the press release, we Matador received $23 million of incentive last quarter.

We expect to continue to receive incentives as we operate in the San Mateo areas, and so and there's $50 million left on the San Mateo one incentives will expect to get first quarter next year and then the remainder of San Mateo to incentives that we continue to work towards an end that is one of our priorities.

Neil rate detail yeah.

Dale why we're in this area.

Other things it really places me about the midstream business is the amount of repeat business that we've gotten from customers that customers are clients have.

Have signed a deal we'll we'll gather collect their gas water or all and then they re up for additional.

Commitments to sell to us and so we're real pleased with the work that Matt.

That's faster than <unk> and the James in the operating side has tried to make sure that.

They are giving them really good service and we think that's beginning to make a difference is.

As you get additional.

When you get a customer to re up again or to add to it you feel like you've climbed a mountain and that's one of the check marks that we've.

Rogers that we've really tried to look at Brian . Thank.

Thank you Joe one other thing on that point is we also are three type system, which I think is a really unique out there in the Delaware right now and so we've had customers that have been on one of the commodities, whether it be water oil or gas and performed well and because of that we've had opportunities to be able to service them on different commodities and so I think that's a real good advantage for us as well with these repeat customers is having the different.

Quantity sort of all three and we're able to take care of everything that our customers need and another follow up point did you. When you were talking about the commodity control room that goes 24 seven.

And.

So you watch it not so you can give a quicker response and that's been well received as well as the measurement room to be sure that the quantities are being paid right.

Yes.

Thanks, Joe and guys for the details.

Okay.

Thank you as a reminder to ask a question time. Please press Star then one on you touched on the telephone.

Our next question is from Zacks.

With Jpmorgan your line is now open.

Hey, guys. Thanks for taking my question.

Following up on an earlier question on capital allocation.

As you think about reducing that further what do you believe the pud.

The level of debt to have at the company because with the free cash flow youre going to generate at strip. This year, you could push that to very low levels.

Yeah, exactly that's a very good question.

We're not really ready to head to present, a plan to you or to the market or to our shareholders.

Exactly what is the right amount of debt because it always depends on the circumstances and I'm not trying to Dodge your question by saying it depends on circumstances, but you could have a very different economy here in six months.

There's a wide array of opinions on that same thing on the international situation.

But.

Paying down debt will be our default area, if we're not sure.

Don't feel strongly on putting it.

Or else it will be used to pay down debt, because we will still have the options.

What is exactly the number.

Can't tell you.

At this time, we're reviewing a number of different scenarios and.

The board plants take you that this.

This summer and early fall and we will have a.

We'll have it have more detailed plans.

Those times as we say.

How long the situation.

Yes.

But we do want to get that to a level, where we think we'll be in good shape always if and when the commodity prices turn the other way.

So you know this is a great opportunity to take advantage of that we think we have reached a new inflection point with our size we.

Been traded up there when we were in the higher Fifty's approaching $7 billion and so we just don't have to take the chances that we once did when we were.

Under a billion and half.

And that we think that gives us an operational advantage and we want to be known as a.

We think the.

The stronger financial shape should make us more attractive to the generalists coming back into the market.

And that when you pay down debt the advantage it has Albert just buying back stock.

Is when you buy back stock whoever sales either stocks generally exits your company as a shareholder it goes onto another deal, but when you pay down debt that helps all shareholders.

Particularly your long term shareholders and strengthens the company and increases the opportunities that you have it just.

That's good for everyone and that's why it's our default.

We'll look at other uses in money, but and certainly.

At the time, we are reducing debt to be sure. We're allocating some for the shareholders and the growth of the return to the shareholders. So we want to grow that return to the shareholders and we want to reduce debt and we think we can do both at the same time and still maintain our active drilling program with these <unk>.

Good locations that the teams.

We have put together and presented to.

The board and the senior staff. So you know that's a really exciting period.

No.

For us and we see this as a time to make the most of these opportunities.

It helped pushes to the next steps for Matador.

Matadors.

Growth and value plan.

Got it thanks for that color I guess, just following up there you also mentioned earlier, you mentioned, reducing debt and raising the dividend is what you would do with free cash flow are you considering anything else.

You know potential special dividends or variable dividends.

Zhang those of course are in the conversation.

Uh huh.

And.

We're not saying we're going to do it I mean right now we probably lay lane in the direction of.

First taking care of existing shareholders.

Through increasing David in allocating for increasing that fix the other Dan and taken care of that but.

Special dividends, you know variable dividends are in the conversation and we're studying other companies who are doing that to just say how well it works for them.

And you know, we don't mind fallen and the practices of other companies that they seem to be working better than what we're doing. So we're you know we have a saying around here, we always reserve the right to get smarter.

And at this time, the focus is on fixed and dividends and repaying debt, but were certainly if that seems to be working for other companies will be quick to adopt it.

Thank you and maybe just one quick follow up.

Youll pay but a little bit in cash taxes. This quarter can you talk about how that should trend through the rest of the year.

Yeah.

Zach E that we play a strike game around here and if it comes.

Where we owe taxes of course, we're going to pay our taxes and.

We're gonna be.

Compliant with that and we consider that a high class problem I mean.

Yeah and yeah.

We were pleasantly surprised in a strange way that we were in a tax position.

Because earlier.

In the year, we thought we'd be go through 2022 without needing to pay taxes.

But he came upon US we were more profitable than Italy, then had originally conservatively forecast then.

And so coming into taxes.

Has.

You know, it's a high class problem now it's important to remember that while it shows 15 million that's not cash out the door 15 million. That's if things go this way that would be the proportionate share.

One quarter of what we might expect to pay if oil remains at $100. A barrel. So that number is going to change either up or down depending how the rest of the year goes but I'd like to turn to Rob Rob What what would you add to that yeah. This is rob.

Mac like our Chief Accounting Officer, I think you said it well Joe you know I think that that is just the proportionate share in the in the amount of cash that actually went out the door with us is something much lower than that you know there are a lot of variables when you're looking at deductions and and the like.

Like Joe said, we play a straight game, we're going to take all the deductions that were allowed to take in and continue to monitor the situation here throughout the year, yeah, but we're not going to do any exotic.

Plans are execution.

Try to avoid dividends, it's better to I mean to avoid taxes, we're gonna it's better just to pay the taxes and go on and do what you're supposed to do I would like to ask Oh, Michael just to comment on the on the debt and the dividend plants and that.

They were considering other things, but that's your yes.

This is Michael Frenzel, Executive Vice President and Treasurer, and one thing I wanted to add Joe We've said it consistently before but I think a potential use of free cash as we have used our cash in the past I think we'll look at trying.

Trying to find some accretive bolt on opportunities just like the one that we talked about are the ones that we talked about last quarter up in up in Lea County, where we were able to put a rig to work and from your nice note that you are that you put out on the uncle chest, well I think it's pretty obvious why we ought to be excited about that area and getting to work there.

Tom or could certainly comment on why we're excited about that area, but I think that's a that's something as we have done throughout our history that we would we'd consider as a potential good use of cash yeah and disk backup what Michael said when our.

Geoscience and the other teams come up with new ideas to try this one or that sound that may open up areas just like they did on medical chest well you know, we're gonna give that serious consideration didn't have it in the conversation too so.

One always reserve that right to get smarter and.

Again, you know we are shareholders. So it spending our own money and we're gonna be careful with that and take advantage of this I think unusual time in our business and indicated cash policy.

Joe and team thanks for the answers.

So I say and call any time, you all want further updates at say that to you and to nail and discard and others that look where.

We are open and you know ready to visit with you all eight time.

Do you have a carry all state would want to know more about what we're planning to do.

Our next is from Michael Gallo with Stifel. Your line is now open.

Hi, good morning, guys.

Most of my questions been asked but just wanted to follow up on.

Michael You mentioned all the chest wells it looked like very strong performance out of those wells just curious view.

Did anything differently with the completion design there or is it just the result of a.

Very good geology, and any opportunities to Oh, I know you've got a couple more wells you're drilling in that area, but.

Two as you mentioned acquire.

Acquire additional properties there.

Or.

Move.

To accelerate in that area.

Hey, Mike This is Tom I'll say, yes, as Michael alluded. We certainly certainly are very proud of our of our uncle Chess World and we think that that those types of wells show chalk why we're excited to be putting a rig to work in the Ranger area and why we continue to look at opportunities up there.

Certainly the very very high oil cut is something that really stands out but also the very low water cuts are certainly something that we think are are important to us we're always.

We're always looking at ways to get better though.

We're always looking at ways to complete the wells with.

Good stimulation jobs with with good profit and get good fluid and you know obviously, we work very closely with our with the geology team to put our Wellbore is in the best possible rock and my hat is off to the net and the geoscience team into Max Com for constantly looking at ways to to make the most of.

The other opportunity we have in front of us.

We are certainly running our sixth rig up in that area and it will be.

We'll be active in there for many years to come.

Yes.

That's all I had.

Thank you ladies and gentlemen, this ends the Q&A portion of this morning's conference call I'd like to turn the call over to management for any closing remarks.

Right.

Two other points I'd, just like to end this way I didn't get a question on it but.

Oh, we have two other assets, sometimes don't get necessarily a lot of mentioned in the the first one is just the value of the midstream are not only from.

The capacity you have taken away from our deal, but enabling us to predict the time, when we would complete those and how that affects cash flow and and second for the environmental purposes are that it has of that reducing and not like Glen just to say a few.

Words on.

The improvement and perhaps cliff on on the environmental area, how much we're recycling and how much we cut down on admissions.

We had the on on the emission side.

We are definitely very focused on doing everything we can on the production and completion side to reduce our footprint.

We released our first sustainability report at the end of last year and in that we showed a 19% reduction in greenhouse gas emissions from 19 to 20, we're focused on an year over year improvement to that and look forward to.

Shelly.

As Shelly or Pal has a kind of spearheaded that project in and she's working on our 2021 report now.

On the production side.

The biggest focus we have is getting our liquids.

On pipe today, we have 98% of our gross operated water on pipe and over 80% of our oil on pipe as well that that also helps in terms of flow assurance and talking about some of the impacts that are made.

The impact that some of the labor shortages have in the base and we can mitigate that with with the not not having to use trucks.

The increase use of vapor recovery units helps.

Helps both on the production side and reducing the amount of.

Gas that we flare and certainly in an environment, where natural gas is trading at these levels.

It's very advantageous.

Another thing that we're doing and it helped on the lease operating expense side as long as well as helps on the emission side is is where we don't have where.

Where we are using onsite electrical generation converting those wells to grid power and so it's a it's kind of a win win situation, there, where we reduce both emissions and lease operating expenses.

On the flaring side.

We are currently.

When you look at gross operated production versus.

Gross operated.

Volumes flared were right around 1% now.

We have seen year over year improvements from that from 2019 to 2020 and further again in 2021.

And that again, we'll publish later in the year.

Sure.

And also want to kind of give a plug for San Mateo and that.

Having that.

Part of what has contributed to the reduction in flaring is the fact that we work very closely with our midstream partners are specifically, San Mateo and that and.

We they they are there from day, one when we go to turn on our wells.

And then also the.

The amount of firm transport that they have and the operations of the plant and the communication that we have between teams really is very helpful. In terms of making sure that we always have a home for our gas.

Thanks, Glenn this is cliff Humphreys SVP of completions and I just wanted to comment to add to Joe's note on the increased recycled water usage.

Since 2015, the completions group, it's really out there trying to exercise every avenue to use more recycled produced water in our Fracs and I think our partnership with San Mateo just allows us to do that that much more as the infrastructure expands and new Mexico. For example, this quarter. We used at just under 5 million barrels of recycled produced water in our completions.

Which is the most we've ever done in any quarter. So we can we see that continuing to increase in and it's great cost savings as well as a greater ESG effort and it results from the the good partnership we have with San Mateo.

And so that obviously the midstream is increasingly important to us and then the second asset is our.

Remaining gas assets in northwest Louisiana.

You know we've been drilling non op wells with various operators. Most recently with Chesapeake brought on a well a 25 million a day, which we had a quarter.

So still a lot of haynesville to be drilled over there, but second when we made the deal with Chesapeake we reserved all of the uphold watch which included the Cotton Valley. We believe theres. Some over 200 Bcf billion cubic feet of reserves there, they're all held by production there just away.

A consistent gas price that she knew would stay and knew we could easily set up a drilling program there, but right now it's H B P. It's not going anywhere is a valuable gas bank from future activity sometime so I just want to mention those assets look behind it.

And again invite everyone come see us we'll be happy to meet with you we'll be happy to.

Answer to your questions and appreciate all your.

Support and participation with us.

Ladies and gentlemen, thank you for your participation today. This concludes today's program.

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