Q2 2022 Antero Resources Corp Earnings Call
Okay.
Greetings and welcome to the Antero resources, two Q2022 earnings conference call.
At this time all participants are in a listen only mode.
Brief question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Brendon Kruger Vice President of Finance you may begin.
Thank you operator.
Thank you for joining us for Antero <unk> second quarter 2022, Investor Conference call, we'll spend a few minutes going through the financial and operating highlights and then we'll open it up for Q&A.
I would also like to direct you to the homepage of our website at Www Dot Antero resource resources Dot Com, where we have provided a separate earnings call presentation that will be reviewed during today's call.
Before we start our comments I would like to first remind you that during this call Antero management will make forward looking statements such statements are based on our current judgments judgments regarding factors that will impact the future performance of Antero and.
And are subject to a number of risks and uncertainties many of which are beyond <unk> control.
Actual outcomes and results could materially differ from what is expressed implied or forecast in such statements.
Today's call May also contain certain non-GAAP financial measures.
Please refer to our earnings press release for important important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures.
Joining me on the call today are already chairman CEO and President Michael Kennedy CFO , Justin Fowler Senior Vice President of gas marketing and transportation and David <unk> Senior Vice President of liquids marketing and transportation I will now turn the call over to Paul.
Thanks Brendan.
The second quarter was an exceptional quarter for antero, both operationally and financially.
We delivered quarterly company records for adjusted EBITDAX and free cash flow.
We reduced debt by nearly $400 million, while also accelerating capital returns to our shareholders.
Behind these excellent results is consistently strong well performance.
I'd like to begin the call by highlighting some outstanding well results from recent pads that we place to sales during this year.
The plots on slide number three show the accumulated cumulative equivalent production over the first 100 to 180 days of the well.
As you can see the pads, we have recently placed to sales have outperformed the average production from our average 2018 through averaged 2021 wells.
One of our pad located in the Ohio Utica is comprised of six wells with an average lateral length of over 15000 feet.
And they averaged out a per well basis 29 million cubic feet equivalent per day for the first 60 days of production, including a company record 17, 250 barrels a day of liquids per well.
Just to emphasize that the magnitude of this pad production. This totals 175 million a day and over 10000 barrels of liquids for the total pad.
This is 20, 28% higher than the 2020 average and 25% higher than the 2021 average enel.
Another pad located in the Marcellus also comprised of six wells with an average lateral length of 14500 feet averaged over 32 million cubic feet equivalent.
Per day per well in the first 60 days, including <unk> hundred 30 barrels of liquids per well.
This pad totals over 100, and 180 million cubic feet, a day and 9000 barrels of liquids.
This is 36% and 33% higher than the 2020 in 2021 average averages respectively.
Most notably both these pads are projected to have payout periods of less than five months from the date that they were turned to sales.
One of the factors driving this impressive performance as the strong liquids volume.
Turning to slide number four I'd like to point out the progression of our average wells cumulative C III plus NGL and oil production for the first 150 to 180 days.
By year since 2008 or 2018.
The average per well liquids production of our 2022 wells for the first hundred days represents a 23% increase from the previous year and a 109% increase from 2018.
The performance of the recent wells and the continued improvement year over year is a testament to the quality and depth of our liquids rich core position.
On the development of this inventory.
These pads are located in the liquids rich fairway of Tyler and Wetzel counties, where our five year development plan is focused.
Turning to slide five titled Marcellus peer well performance comparison.
Let's take a look at how our wells stack up against some of our close peers on an equivalent production basis based on a recent and various report that has just recently been published.
The plot on the page compares antero as average cumulative production per well since 2020 to that of our southwest Marcellus peers.
As illustrated on the Bache Antero as average cumulative equivalent production per well is 22% greater than the peer average since 2020.
This is another testament to the quality and depth of our core liquids rich position.
Further while some peers may be experiencing inventory exhaustion, we have tremendous confidence in our five year plan and beyond as we have been drilling some of the best Wells in company history.
Now to expand on the discussion of inventory, let's turn to slide number six titled organic land acquisition.
Across the oil and gas industry, we have seen an increase in both public and private corporate acquisitions over the last couple of years.
During this time, we've continued to maintain our focus on our core acreage footprint with a particular emphasis on spending capital on organic lease acquisitions.
As opposed to larger transactions that can dilute your equity create a large overhang on your stock or lever up your balance sheet, we preferred to pick up smaller more tailed acreage packages within our core liquids rich position in West, Virginia, where we continue to see <unk>.
Very strong well results.
As an example during the quarter, we spent $49 million on land a portion of which was used to add 25 additional drilling locations at less than $1 million per location.
Since 2000 2019, we have added approximately 100 drilling locations in the liquids rich window of Tyler and Wetzel counties, which equates to a year and a half of drilling inventory at an average of 65 wells per year under our maintenance capital plan.
We believe this approach is much more cost effective relative to many of the recent larger M&A transactions that averaged one 5% to $3 million per location.
What makes this even more attractive these locations are in our core areas, where we are currently focused providing further liquids rich development runway and improving our overall operating efficiencies.
Now, let me turn to commodities and our hedging strategy.
We continue to see a supportive macro outlook for all of our products, whether it be natural gas Ngls are oil.
We have a strong balance sheet that gets stronger by the day and we're confident in our drilling inventory and our ability to deliver our results.
This leads us to our current view that we are not planning to add hedges on any of our products for the foreseeable future.
Now to expand on the current gas fundamentals and how they directly benefit antero.
Going to turn the call over to our senior Vice President of gas marketing and transportation.
Justin Fowler.
Thanks, Paul.
Despite some intra quarter volatility driven primarily by the Freeport LNG facility outage in Texas now.
Natural gas prices are higher today than at the time of our last conference call.
A combination of strong industrial demand.
LNG exports that are 20% above last year, even with the Freeport outage and record power generation demand continue to push natural gas prices higher.
In addition, the supply response continues to Underwhelm due to pipeline constraints in the major gas producing basins.
Along with labor and equipment tightness that makes it difficult to grow U S natural gas production.
Now, let's turn to slide number seven titled Antero peer leading exposure to premium markets.
This slide highlights the <unk> unique ability to benefit from rising Nymex prices and the premium hubs accessed by the Antero firm transportation portfolio.
Antero owns two three Bcf a day of firm transportation to the U S Gulf Coast, LNG fairway and to the mid Atlantic Cove point, LNG terminal, which represents approximately 75% of antero as total natural gas production.
Driven by the LNG export build out in recent years basis differentials at these premium.
<unk> have improved dramatically.
On the Tennessee gas 500 wide, where antero owns 570 Mcf a day of firm transport the fourth quarter 2022 forecast implies the basis will improve by 24 to a 17% premium to Nymex.
Since the end of 2020.
On the Anr pipeline, where antero shipped 600, Mcf a day of south bound to the U S Gulf Coast.
Basis improved by 10.
To a 7% premium to Nymex.
This increase in positive basis differentials directly led to the increase in our natural gas price realization guidance.
To a premium premium of Nymex, plus 30 to 40 <unk> and.
2022.
Conversely, you can see the local negative pricing differential, but many of our Appalachian peers saw their gas into has deteriorated by 41.
To $1 10 below Nymex.
As additional LNG trains and terminals are completed.
We expect that the pricing hubs, where we sell the majority of our gas to see larger and larger basis premiums to Nymex.
With the expected increase in LNG exports, both on an absolute and relative percentage of overall U S. Supply. We believe these premium hubs will see price increases more dramatically than Nymex.
As they are linked directly to international prices.
This environment will provide further support to antero strategic position today accessing LNG markets.
Next let's turn to slide eight titled Historically high power burn demand.
We continue to see very strong U S demand across industrial power generation and LNG exports.
Looking specifically at power generation relative to the five year average demand is up more than four bcf in the past three months.
So far in July demand is up 9% from a year ago and 11% from the five year average.
Low coal supplies, leading to the inability for switching combined with the summer heat is expected to keep natural gas demand high despite rising natural gas prices.
Recently, a 50 Bcf power burn was recorded on July 21 2022.
This strong demand growth combined with numerous supply constraints supports our positive outlook for natural gas prices going forward.
With that I will turn it over to Mike.
Thanks, Justin this is Dave here.
Paul adjusted already discussed our positive outlook for natural gas. So I'll keep my remarks brief this morning, but will be available for questions. Following our prepared remarks.
Turning to slide number nine titled Propane market fundamentals highlights the supportive environment for propane prices today.
Propane inventories are 4% below the year ago level and 13% below the five year average at the same time, we are beginning to see propane exports accelerate driven primarily by China reopening its economy in recent weeks, we have seen PTH plant utilization in China increased nearly 80% from the low level.
As of the second quarter that averaged under 70%.
As China Reopens further this utilization rate as expected declined to the upper 80% range.
This higher utilization rate combined with an estimated 500000 barrels per day of new <unk> capacity coming online in China and over 100000 barrels per day of new capacity in Europe , and North America over the next 18 months is expected to lead to a tightening propane market as we under winter with over.
50% of our NGL volumes being exported antero is well positioned to benefit from increasing NGL demand.
With that I will turn it over to Mike Thanks, Dave.
Imperatives in the strongest financial position in company history.
During the second quarter, we generated over $650 million in free cash flow, which was used to reduce debt by nearly $400 million in the purchased $250 million of stock.
I'll start on slide number 10, titled strong and sustainable balance sheet.
During the quarter, we paid down our credit facility by $317 million and were able to repurchase $64 million of our higher cost 2026, and 2029 senior notes in the open market.
During the second quarter of 2022, we also purchased six 7 million shares at an average weighted price of $36 66 per share for $247 million.
For the first six months of 2020 to Antero purchased 11 million shares at a weighted average price of $32 44 per share for $358 million.
More than 15% discount to today's share price.
With the credit facility being paid off in July and based on our current commodity prices, we are targeting greater than 50% of free cash flow to be used for the share repurchase program in the second half of 2022.
For the full year 2022, we now expect to be at or above the high end of our initial target of returning 25% to 50% of annual free cash flow to our shareholders.
When the initial $1 billion share repurchase plan is fully utilized.
Likely announced an additional buyback program by year end.
The next slide highlights our free cash flow targets.
And Taro is 2022 development plan is expected to generate over $2 5 billion of free cash flow.
We're also expecting higher free cash flow in 2023, despite the backward dated strip prices as our hedges roll off.
This brings our current five year cumulative free cash flow target to over $10 billion.
This substantial free cash flow will enable us to continue returning capital to our shareholders. While also continuing to pay down debt.
Slide number 12, titled five year, corporate free cash flow yield highlights the attractiveness of repurchasing our shares at today's valuation.
Over the past 18 months, we have cut our debt in half, while our five year corporate free cash flow yield increased from 38% to 80 plus percent.
The key takeaway here is that despite the stock price more than doubling since the fourth quarter of 2021 and debt being reduced by over $500 million.
Our five year free cash flow yield is higher today.
Our stock is cheaper today than it was six months ago and that is why we will continue to focus on share buybacks as the primary method for returning capital to shareholders.
Turning to slide number 13, and the continued emphasis on our ESG initiatives.
Proud to report that the rise that energy recently released its annual ESG scorecard and Antero was ranked number one for the environment.
Antero was recognized for having industry, leading emissions performance and zero routine flaring.
Our ranking also benefited from our 2025 net zero commitment and water management strategy.
While we are happy that our team's efforts were recognized in this scorecard, we look forward to keeping this momentum going with the publication of our 2021 ESG report later this quarter.
To summarize on slide number 14, titled Antero investment highlights.
Antero is well positioned to execute shale three point al.
Antero has the strongest balance sheet in Appalachia with $1 $6 billion of debt and six times leverage.
We have significant scale as the fifth largest natural gas producer and second largest NGL producer in the U S.
Providing product diversity at attractive prices and unmatched drilling inventory.
<unk> more than a decade of premium core liquids rich locations.
Our limited hedge position industry, leading firm transport portfolio provide direct exposure to rising natural gas and liquids prices driven by rising global demand.
Lastly, with the lowest leverage and highest free cash flow yield of our peer group and a trading multiple well below four times.
We believe antero is uniquely positioned to continue to deliver attractive multiple expansion and value to our shareholders.
With that I will now turn the call over to the operator for questions.
Thank you.
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Our first question today comes from Arun <unk> of Jpmorgan. Please proceed with your question.
Yes. My first question is perhaps for Mike Mike You mentioned, you continue to see buybacks as a good use are an attractive use of free cash flow.
I know you did.
Pay down some debt in <unk>.
But I guess the first question would be just the potential trajectory of buybacks in the second half.
And our model, we have about $1 6 billion of free cash flow in the second half.
And given how you don't have a lot more debt to pay down were wondering if there is potential to completely exhaust.
The $1 billion buyback and perhaps.
Potentially reload if the strip holds.
Yeah. Good question, we do plan to continue to pay down debt Arun.
In the third quarter right now, we're targeting that $70 million that we had on the credit facility and plus as we've mentioned in the past we are contemplating a $2 million to $300 million tender for those bonds outstanding and we don't have anything that's currently callable, but.
Hopeful to get some in that way so assuming we're at the mid point of that so call it $250 million plus $70 million on the credit facility, we do plan on paying down approximately $320 million of debt in.
In Q3.
You look at our current free cash flow for that quarter.
Based on today's prices at $700 million, plus so that would result in.
Call It a high three hundreds of.
On share buybacks, just based on today's current commodity prices for the quarter.
And then heading into Q4.
That would leave the majority for sure.
Further share buybacks, although we probably would still try to repurchase some bonds in the open market. So we are forecasting the exhaust that billion dollars.
Authorization from the board sometime in Q4 and would most likely reload at that.
Great Thanks for that.
Color.
I had a follow up and I wanted to go through the well productivity slide that you released.
Ask you about slide four.
I wanted to see if you could maybe talk about what's driving that is the data.
<unk> linked adjusted but just give us a sense of.
Whats driving that is it completion design just wanted to get more thoughts on that.
I think we're going to trend up in Tyler and Wetzel County, more and more and it represents greater proportion of each of these years plan and thats getting higher btu levels to $12, 75% to 3500 Btu. So we're seeing higher btu.
On average per well and we're actually seeing a big increase in gross wellhead gas from those wells. When we were just assuming that it would be similar gross wellhead gas. So I believe it's similar completions.
Just better rock.
Okay, great. Thanks, a lot.
Yes.
The next question is from Neal Dingmann Truest. Please proceed with your question.
Good morning, all.
First question just on LNG I'm, just wondering specifically.
Paul for you or Mike do you, all anticipate being able to complete or a range further deals and contracts to boost what I think you already have a sizable <unk>.
Existing contracts to the Gulf I'm. Just wondering are you seeing anything is it too early to tell or is that a focus on trying to add some more of those contracts down to the Gulf and contracts some things down there.
Hi, Neal it's Paul here.
Well, we've been a leader in tying up firm transportation to two quality areas. As you are aware so both cove point on mid.
Mid Atlantic and then LNG facilities down in the Gulf.
Their projects and expansions that are put out there.
We follow them, we may be interested spending on where it takes us and at what tariff of course, so we keep our eye on it but feel pretty good right now with the portfolio that we have transportation portfolio taken as to quality markets. So very little of our gas is left behind in Appalachia and some won't.
But.
Remains to be seen whether whether we sign on for anything more.
Got it great and then.
Paul just a follow up on I guess would be on M&A, specifically you might look at and continue to talk about in stress. The buybacks does that still look like a better value cheaper value then it sounds like to me there are some deals out there even in Appalachian.
Obviously, you guys have done some things.
One are there some things still available out there and so that always is buying your stock back still us a better return in your opinion.
Yes, we like buying our stock back and we like organic leasing.
Taking leases in other people's minerals or buying minerals ourselves I think both of those are our better bargains for us and so even though yes. There is M&A out there whether its in other basins and of course, we follow all of that whether it's haynesville or other things that come up for sale, but we really do plan.
In our backyard, we know well and.
Really understand the land quite well see more opportunity in <unk>.
Organic leasing and just adding to our inventory or adding to our NRI on the wells that we do do drill.
And really don't plan on doing anything else in other basins for.
For a long time.
So I was hoping to hear thanks, guys great strategy.
Thanks.
The next question is from E monitor jewelry of Goldman Sachs. Please proceed with your question.
Hi, good morning, and thank you for taking my questions.
My first question was on the 23 plants.
To see the strong reserve any initial.
On on spending and production growth for next year and also can you remind us when you when we should expect.
But what <unk> can mean to back to the company.
Yes, good point on the override that's something definitely to look forward to in 2003 that they stopped participating wells anything. After March 31, 2023. So are our NRI will increase by approximately 4% for wells after that so that's definitely something we're looking forward to 2023.
It will be a similar capital program this year and that will be maintenance capital.
It will be flat to that second half.
2022 kind of production levels in that three three to three four range.
Gotcha.
Any initial color on the spending side.
I think given the inflation what I've been looking for.
On a D&C spend next year is it up 10% or is it.
Remains to be seen that 7%, though we raised for this year captures the completion contracts that we entered into that go through the end of 2023. So there won't be any more inflation around that there may be a little bit on the drilling rig side and it's to be determined on the other components.
Really dependent on commodity prices and diesel and fuel and hopefully those are high next year that will obviously translate into substantial free cash flow for us. So.
To be determined yet, but probably up a little bit from 2022.
Got you that's helpful.
And then I appreciate all the Mac grill macro carload.
I wanted to perspective on propane prices, which have come off a bit.
As we head into the propane winter heating season.
<unk> set up which is very similar to last year.
The only thing that they might still be rescued demand here.
Yes. Thanks for the question <unk> and let me turn it over to Dave King long ago, you heard from earlier in the call that he's our VP of.
Liquids marketing and so I'll throw it to you Dave that's a great question.
Starting from the supply side one.
We saw a lot of incremental LPG come on over the last year as OPEC was winding down.
Holland Terry cuts so.
That dynamic.
It looks stable.
Going forward.
<unk> has been a fair amount of U S. LPG production growth this year, but.
Also.
At a very moderate pace of that expected going forward.
A tremendous amount of demand expectations coming we saw here in the second quarter. If you look at mobility and use.
Daily flights in China is an indicator that the lockdowns that they went through here on the second quarter were.
Nearly identical in terms of the number of flights.
Reductions on a daily basis as what we saw from the Wuhan Lockdowns are back in 2020, so they have not yet recovered to the levels that they were.
Really a 2021.
Leading into these latest measures that they've taken.
We've got about 270000 barrels a day of.
<unk> capacity is coming online here just in the second half of 2022 in China 170000 on <unk>.
'twenty three and then projects.
Canada Poland.
Belgium, and the U S. All over the next year and a half so.
Things set up very well and the other piece I would remind everybody is last year, we had a very mild winter here in the U S and so that.
It remains to be seen as to what type of.
Restaurant demand, we will have at this winter, but certainly the potential there I think the markets.
Not paying as close of attention to it this year as it did last year I think there's a lot of distracting factors, maybe paying more attention to gas here in the immediate term, which has certainly been.
FINRA rising.
Strongly through the year so.
We're optimistic.
And we're going to see propane.
Rice's rally into the out of the winter season.
Alright, Thats really helpful. Thank you.
Thank you.
The next question is from <unk> Chandra Benchmark Company. Please proceed with your question.
Yes. Thanks.
On the QL capital.
Drilling partnership.
Is there any change to that in that.
23 program.
What we saw what we will see what the override reverting.
That.
<unk> is a separate transaction that will continue into 'twenty three 'twenty four it ends at the end of.
<unk> 24, it is an annual election, whether from Antero.
Slowly by Antero, whether they participate in the 15% to 20% level. This year and 'twenty two we elected 15%, obviously, where commodity prices are that would tell you that we would elect for them to participate at the same level at 15% in 'twenty three 'twenty four.
<unk>.
After 24.
Okay got it.
And I guess seeing the Utica update.
Today I presume thats.
West, Virginia, not a point pleasant.
Unit.
No.
No <unk> is actually Ohio, Utica point pleasant, but it's over in.
Noble County.
So in south central of the Utica fairway.
So we still have inventory that is quality and so this was an example of it.
Drilled a few pads over there in this last year and through the first half of 2022.
With good results and so we are just citing an example of one of our new pads, where we focus more on the.
Liquid side liquids with.
A substantial amount of gas with it so.
It's not to say that we're going to shift a major priority of our budget over to the Utica, we still have good inventory and good infrastructure over there including.
Our processing and fractionation capacity. So can go over there and when we want to really 90, 95% of our budget will be directed towards Marcellus in the liquids rich fairway, mostly in <unk>.
Tyler and Wetzel counties.
Got it so.
This liquid.
As shown on the slides.
Can you just kind of remind us what your I guess liquids handling capacity is currently.
<unk> fully utilized or not it might be.
And I assume the shell cracker.
Room, there too, but how dependent.
The shell cracker.
It's not dependent on the shell cracker, we have to be.
<unk> today are processing in the Marcellus, it's relatively full gave a little bit of capacity, but.
<unk>.
That processes.
Relatively full Utica, we do have some we have about 600 million a day, where we're utilizing maybe half of it right now 600 million a day of rich gas processing capacity and so.
You have the capability of open capacity there that we can go through.
And then the.
Liquids the Y grade will flow up to help Gail and get fractionated there there's capacity there with MPLX. So we have the ability to do it everything is in line, we don't have <unk>.
And that idled capacity.
<unk>, four and kind of a basket case with Marcellus mixed in so have open capacity there to do what we want there don't have to add any commitments. So it's just up to us as to when we want to feather in a rich rich Utica pad or not as we go on.
Got it.
Thanks, so much guys.
Okay.
The next question is from Kevin Mccurdy Pickering. Please proceed with your question.
Hey, good morning, guys.
Free cash flow outlook for the back half of this year.
My question is given the delay of the shell Cracker are there any key milestones that are holding up that start.
Yesterday.
Maybe I want to clarify in our earnings release, you may have implied.
Some kind of a delay but really it was just an updating of our guidance. When we first put that in place, we made and announced to the market. A second half 2022 starts. So I think we kind of paradigm.
<unk> on the front side of that.
<unk> all seen in their earnings call.
Call slides this morning.
Therefore at completion of construction on that Cracker. So it's really just in the commissioning phase and how long that takes and what volume they call on from each producer on any given day will vary.
Until it reaches commercial operation and what we've seen with other facilities in the industry.
<unk> base can take anywhere from a handful of months too.
First case with some other found.
Equipment challenges or errors, it's taken over a year right now we don't expect anything like that.
With the with shell asset, but really just us updating kind of a stale sale forecast there.
Around when we would start recovering significantly more ethane are related to that and we have other.
Ethane customers that were ramping up volume with here in 2022 as well as in 2023 that all all play a role in that.
Forecast as well.
Great that's nice to hear and my next question is under what conditions do not Max out the buyback authorization this year.
It would just be dependent on commodities.
We're already at our debt goals truly trying to be opportunistic around that as well.
So around the free cash flow generation.
It's really the a $320 million of debt and then the remainder is really share buyback. So it just has to be commodity prices come off where we have less than $1 billion of free cash flow in the second half of 'twenty two.
Thanks for taking my questions.
Sure Yeah. Thanks, Kevin.
The next question is from David <unk> of Cowen. Please proceed with your question.
Thanks for your time this morning guys.
Two quick ones for you.
Yes.
Just one as you envision reloading our buyback program should we always think about antero communicating sort of a one year targeted buyback or.
Is there sort of a specific time reference when you think about it.
Heating and authorization.
No there is generally no time around.
To be determined.
This one I think just happened to be.
One where we're able to complete it within a year. So we really don't have a formula or methodology predetermined. We just look at the markets in whatever seems reasonable at the time is what we do.
Discuss with the board to get authorization for.
Yes.
And then just on some of the land and mineral acquisitions.
When these scenarios happen as it typically a reactive process or is this productivity on the part of they are just trying to acquire minerals now.
We're wherever their core areas are.
It's proactive.
Yes.
We do get some inbounds, but mostly it's us touching base with so we go through courthouse records and figure out who owns what.
Who do approach and all of that sign on our map. So it's generated by antero by our land Department.
We all follow it pretty closely and decide what we want to do and what's a good value and what's not.
Okay.
And then my last one is just on the propane macro I think you referenced some of the PTH plants in China operating at 70% of capacity during the Covid initiated lockdowns in the second quarter and you've seen them rebound recently to 80%.
Do you have a sense of what propane inventory levels were at these plants do you think that this is going to be kind of like a delayed response or do they do to working down inventory levels that might have been loaded or do you think that inventory levels were already kind of manage down in first and second quarters.
Yeah, I'll take that one it was and that there is a number of factors so everything from port congestion and challenges on the downstream resin side.
However, operating the refineries in the utilization rates.
Those around their export quotas.
But we've seen them step back into the market at a pretty significant way here.
Just in the last number of weeks, we've seen that utilization rate creep up we've we've seen very little change to the PVH.
Newbuild completion dates I think one may have slipped two months was all.
But.
Now there is nothing.
And then I expecting a significant overhang that could delay I would say 2021 was interesting to us with.
We kind of entered the September with power rationing in things around the spike in LNG prices that we.
Move into Beijing Olympic related emissions controls and then.
Expect it to be.
Ramping up from there right into what became the significant COVID-19 lockdown so.
I would say it kind of a tumultuous nine nine or 12 months and.
And the world's largest <unk>.
Pay market for the industry, but seeing.
Seeing seeing the tailwind.
Therefore for the for us and others.
As we're coming out of this latest round of Lockdowns.
Yes.
Thanks for the responses guys.
Thanks, Dave.
The next question is from Tim Lugo of Mizuho. Please proceed with your question.
Yes. Thanks for the time I guess this is kind of linked back to propane.
The World is clearly starving for energy molecule I'm wondering if you guys have.
Any incremental conversations with potential international buyers.
All screen.
Energy and thermal security.
I'd say, we're having conversations every day with buyers who want to buy our LPG or ethane for domestic or even export views. So.
The marketing team it looks kind of.
Similar to what we've been seeing for quite some time now.
Meritor asset with a great program for us.
We've enjoyed strong demand.
Out of that facility really the entire time, we've been shipping on it so.
I'd say nothing that I would report different from what's just been very consistent.
Risks in our commodities.
Yes.
Not only a desire on the NGL side, but on the natural gas side.
Adjusted can attest to we get.
That's all the time, whether we can double up on our cargoes, whether we can spend more money.
Different international countries and so there is an appetite strong appetite out there.
Yes, that's correct.
Talking to multiple buyers.
Various.
LNG facilities in the U S Gulf Coast.
Directly linked with the Antero firm transportation portfolio.
The Calcasieu pass facility.
For venture Global and then our Tennessee gas 500 al deliveries should also match up nicely with.
The platinum an LNG facility.
So.
I'll take increases at those second wave projects.
Continuing to have discussions with multiple potential international buyers.
Got it good to hear and I guess my follow up is kind of tied to that.
The bump in gas price realizations.
Linked to the Gulf Coast demand I was wondering if you had any thoughts to share conceptually.
The market for the gas and the Gulf Coast could evolve.
Demand kind of comes more and more weighted to the export centers there. Thanks.
Sure. So you know as we mentioned in the.
Earnings transcript.
We have been witnessing basis appreciation in several locations.
Being a 500 L.
Location that we.
We used to trade minus six first Nymex, we've seen it trade as high as plus 25, plus 40 recently.
So we feel that we are starting to see that Gulf basis evolve into a premium market and we just continue.
Okay.
To see basis improvement and physical gas demand across that Louisiana, and Mississippi region for molecule. So our outlook is as we go into the winter we could continue to see.
The basis rise at those Gulf locations as the international prices.
In Europe and Asia also climb.
Great. Thanks, guys.
Thanks, Tim.
We have a follow up question from a shoebox genre of the benchmark company. Please proceed with your question.
Yes, hi, guys.
So a question first.
Alright.
Are you seeing yet.
A premium market there develop on your on your pipeline.
Lines.
Maybe Tennessee gas.
And then second as you know.
On the LPG side.
Initiatives, you might take for sort of better butane price capture.
I'll take the first part we have yet to see the RFP pricing, but we are working on a couple of initiatives internally.
So stay tuned on that one that could result in premium pricing and then I'll turn it over to butane question to Dave.
Yeah, we're not looking ourselves with any type of butane upgrade projects like you've seen some other folks invested in the Gulf coast.
I would say the biggest thing we do on a routine basis is really.
Are you, saying that we produce gets fractionated and purity ISO and purity normal and so whether you have seen the wide ISO butane spreads to normal. This summer we've enjoyed all of that and so that's probably the main thing that we do for.
If you take price enhancement and then also just around how we.
Flex what we shift during the summer and winter on the Mariner east pipeline to try and optimize the value for both propane and butane.
Seasonality the basis that we see seasonality with those new products to try and find the optimum.
Our recipe for what we set out that line.
Okay. Thanks, guys very helpful.
Thanks <unk>.
There are no further questions at this time I'd like to turn the floor back over to Brendan Krueger for closing comments.
Yes. Thank you for joining us on today's conference call. Please reach out with any further questions. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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