Q3 2022 PDC Energy Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Good day and thank you for standing by welcome to the PDC Energy third quarter 2022 conference call. At this time all participants are in a listen only mode. After the speaker's 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 today's conference is being recorded I would now like to hand, the conference over to Erin Bandit Board. Please go ahead.
Thank you and good morning, everyone on today's call, we will our president and CEO, Bart Brookman Executive Vice President Lance Lauck, Chief Financial Officer, Scott Meyers Senior Vice President of operations, Dave Lillo yesterday afternoon, we issued our press release and posted a presentation that accompanies our remarks today. We also filed our Form 10-Q.
The press release and presentation are available on our Investor Relations page of our website at Www Dot P. D C E Dot com.
Today's call, we will reference about forward looking statements and non U S. GAAP financial measures the appropriate disclosures and reconciliations can be found on slide two and the appendix of that presentation with that I'll turn the call over to our CEO Bart brookman.
Thank you, Eric and Hello, everyone solid quarter for the company as our results reflect the first full quarter.
Contributions from the great Western acquisition.
I'd like to extend a sincere thanks to all employees, who work so diligently on the successful and timely integration of this highly accretive merger.
Sure.
As we go through our comments today the company is incredibly well positioned for ongoing operational financial and ESG success.
Years to come.
Let me pivot to some quarterly highlights free cash flow for the company $440 million or 25% annualized free cash flow yield capital expenditures of $260 million.
Production.
In line with our expectations of 250000 Boe per day.
Shareholder return for the quarter up $295 million, including our base dividend and the repurchase of approximately $4 2 million shares of PTC stock.
This represents four 5% of shares outstanding.
Purchased in the third quarter.
The leverage ratio for the company decreased 2.5.
We reduced total debt another $300 million.
All of this while operational and G&A cost for the company beat our expectations.
Scott will provide a lot more detail around these numbers in a moment.
Along with these operational and financial highlights our ESG program is making great strides we are on target to reduce our greenhouse gas emissions by 15%.
Methane emissions by 30%.
For the period of 2021 2022, and we continue to expand our community outreach efforts, including our month long employee volunteer campaign.
September event succeeded in donating over 5700 volunteer hours across over 40 charities my sincere thanks to all of the PDC employees for their tremendous effort.
Let me share my thoughts on how the year is wrapping up production early fourth quarter looks encouraging.
We anticipate over one $5 billion free cash flow full year 2022 shareholder returns for the year should be approximately $1 billion with share repurchases over 10% of the outstanding shares of PDC.
G&A for the company fully reflecting the synergies of the great Western merger should be in the $1 55 to $1 65 per Boe range.
And enduring story of financial success, including the company's incredibly strong balance sheet.
And all of this while our operating teams continue delivering on some of the top projects in the country projects clearly mapped by our multiyear permit and DUC inventory in the state of Colorado.
As I mentioned earlier.
Greenhouse gas emissions and methane emission reduction goals are meeting or exceeding targets.
Ongoing drilling location optimization continues to enhance our capital efficiency.
Two five and three mile laterals are becoming more common and our well design and the company's completion pace is actually setting records.
But the real fix a success story here is how we are achieving these operational improvements with safety front and center always our top priority.
All in all the company is poised to deliver a solid fourth quarter and an extremely promising outlook for 2023.
With that I'm going to turn the call over to Dave <unk> for an update on our operations.
Thanks Bart.
Jumping in on slide six total production for the quarter came in at 23 million Boe.
Our approximately 250000 Boe per day.
And oil production was seven 4 million barrels or approximately 81000 barrels per day.
On the investment and cost side of the equation we.
We invested approximately $260 million during the quarter, which was right in line with our second half guidance.
Our team maintained great focus on managing costs in a tight market.
Our LOE for the quarter was $3 <unk> per Boe.
And all in G&A expense totaled $1 75 per BOE inclusive of approximately 22 <unk> per Boe and cost associated with the great Western acquisition.
As Bart highlighted earlier in the call.
The team has fully integrated the great western assets from a drilling.
Schedules in operation methodologies, and I am very proud of the work the team has done to fully integrate this asset as planned with an aggressive timeline.
In the Wattenberg field, we invested approximately $230 million to run three drilling rigs and one completion crew.
For the majority of the quarter.
We spud 47 wells and turned in line 41 wells.
Towards the end of September we brought in a second completion crew as planned.
We'll operate into the second quarter of 2023.
For the court quarter production in the Wattenberg averaged 219000 Boe per day.
Of which approximately 32% was oil.
LOE in the basin came in at $2.46 per Boe, highlighting the low cost nature of our operations.
In Delaware, we invested approximately $30 million.
And maintained one full time drilling rig activity level study and three wells.
We turned one well in line during the quarter as we finished completions activities for the year at the end of the second quarter.
Production for the Delaware Basin averaged 31000 Boe per day.
Of which approximately 39% was oil.
Although in the basin came in at $6 92.
<unk> per Boe.
And is reflective of the increased workover activity during the quarter.
Sure.
Moving to slide seven I wanted to take a little more time diving into our Wattenberg field operations and highlight some of the exciting announcements we are working on as we continually improve operations in the field.
As of last year.
Your then 10 three mile long reach laterals were completed in the Niobrara and Codell formations in the DJ Basin.
Our work on the Wayne pad is a tremendous accomplishment.
And is important stepping forward for the industry and our operations with respect to efficiencies in the basin.
Those three mile laterals are not appropriate for all acreage, we are trending toward longer reach up operations where possible.
As a result of the longer laterals and improved efficiencies, we completed approximately 15% more stages in the third quarter compared to the previous quarter.
And we said two Liberty Energy records with 808 stages completed in the month.
And 129.
Continuous hours of pumping.
On the Tan three mile laterals.
On the wind pad I am encouraged by the preliminary results, we have seen so far and look forward to updating the market on our production results on further cost.
I want to highlight the 36, well pad in our newly acquired range area that we began completing during the third quarter.
This is the first great western pad that PVC turned in line.
With a mix of one and a half and two and a half mile laterals, we will develop approximately four square miles from a single pad.
Large number of wells per pad, where our acreage supports can reduce surface footprint and impact our communities while driving efficiencies.
Our team at PDC is in the forefront of these modern development trends.
On slide eight we highlight our long term visibility of our development of our core Wattenberg field.
With more than 2000 wells in our current core inventory.
Our assets generate robust economics that will support the company's cash flows for years to come.
At the current strip price all of our areas deliver a 100% internal rate of returns and payback on the average and approximately 14 months at current pricing.
This short payback period adds to the durability of cash flows in a volatile commodity environment.
To put it in perspective at today's prices.
Welles, we turn on in line this quarter could be adding to our base cash flow available for shareholder returns as soon as 2023.
I also want to give a quick update on our vanilla cap and our current inventory of permitted projects.
On October 2nd a 60 day public comment period concluded.
We are encouraged.
By the feedback and support we are receiving we are receiving hosting our community outreach events and look forward to the December 7th hearing date.
We're also encouraged by our process of securing additional permits in Colorado.
Can see from the representative turned in line inventory on this slide there is good long term visibility into our economic development of our assets for years to comp.
Between the Ducks approved permits and permits and progress we are poised to materially materially derisked more than half of our identified core locations and also note that the majority of the Unpermitted locations today are in concentrated rural.
<unk> Prairie area of our Weld County, where we have good confidence and permitting process. When it comes time to begin permitting activity there.
On slide nine we highlight some of the progress of our Delaware Basin and stack pay an oily production mix.
As we discussed in DJ our Delaware team is focusing on unlocking value through execution and innovation as well.
We currently are drilling three of our first three mile lateral tests in block four we have seen great success in our two and a half mile laterals and are excited about the potential capital efficiency gains by moving to three mile laterals.
The team is also testing a batch drilling process on these wells, where we drilled a surface of each of the three wells before moving to the drilling of the intermediate sections.
And then finally drilling each of the lateral sections. We anticipate this process may result, in reducing drilling days and ultimately cost.
Additionally, in our 2022 up space production results have outperformed 2021 down spaced tests by approximately.
175 times during the first 150 days.
I will point out that nearly half of the 2022 and all of the 2023 turn in lines utilize the up spaced design.
During the quarter the team utilized three workover rigs during the quarter to catch up on our backlogs of maintenance projects that built up in the second quarter.
I'm happy to report that the Delaware team has successfully worked through the backlog of projects and we have returned to our steady state activity level with a single Workover rig working today.
With respect to activity levels going forward into 2023, we're planning to continue.
Operating one full time drilling rig and a partial completion crew, which will materially be similar to our 2022 activity level.
With that I will turn the call over to Scott Meyers.
Thank you, Dave as Bart and Dave highlighted the third quarter has been operationally solid and in line with expectations, we laid out with our second half guidance. This execution has translated into a tremendous financial quarter for PDC highlighted by our robust free cash flow and shareholder return pro.
Grams before.
Before jumping into some results for the quarter I wanted to take a moment to reaffirm our guidance. We expect total production for the fourth quarter to again be in the range of $2 245 to 255000 Boe per day and.
And oil to be in the range of 80 to 84000 barrels per day.
For the full year 'twenty, two we reaffirm our production guidance range of 230.
To 240000 Boe per day.
Of which approximately 73 to 77000 barrels is expected to be crude oil.
Our planned 22 capital investment in crude oil and natural gas properties are expected to be approximately 1.0 75 billion, which is at the high end of our previously reported full year guidance range. This is a result of the continued operational efficiencies.
The ultimately increases the number of stages.
And spuds that Dave highlighted as well as the continued cost pressures.
Moving to slide 11, we received a pre hedged realized price of approximately $52 per Boe.
While operating expenses again came in under $9 per Boe.
Our G&A came in as expected at $1 75 per BOE inclusive of the 22 <unk>.
BOE costs associated with the great Western acquisition.
This allowed us to generate approximately $700 million of adjusted cash flow from operations and after taking into account $260 million of Capex, we generated more than $440 million and free cash flow.
Highest level of quarterly free cash flow and PVC history.
This equates to an annualized free cash flow yield of more than 25% among the highest in the industry.
Moving to slide 12, I'd like to highlight a few details on our shareholder return program.
In the third quarter alone, we returned approximately $295 million through share buybacks and quarterly dividends.
We remain committed to returning 60 plus percent of our annual post dividend free cash flow to shareholders via systematic share repurchases and a special dividend if needed.
For the first nine months of the year, we have generated nearly $1 2 billion of free cash flow.
That we've paid out $90 million in the form of regular dividends.
And bought back 560 million shares.
$560 million worth of shares for the full year, we are on track to generate $1 5 billion in free cash flow.
After paying $125 million for the base dividend and accounting for 60% shareholder return target.
Anticipate at least $825 million to be available for share repurchases and a special dividend.
As we continue to use the share repurchases that are primary tool and our shareholder return program today as we spend more on the share repurchases are anticipated year end special dividend May decrease however, the total returns are still hold.
We're on track to return approximately $1 billion through our base dividends share repurchases and a potential year end special dividend.
On slide 13, we illustrate our progress on the share buybacks.
In the third quarter alone, we spent $260 million to repurchase four 2 million shares or approximately four 5% of the outstanding shares through.
Through the first nine months of the year, we've invested $560 million to repurchase eight 5 million shares. We ended the quarter with approximately 93 million shares outstanding which is less than our share count prior to issuing the 4 million shares in the second quarter for the great Western transaction.
Again look for the fourth quarter to be another strong share buyback quarter for PDC.
Finally on slide 14, I want to draw your attention to the quality of our balance sheet.
During the quarter, we reduced our debt by approximately $300 million exiting the quarter with approximately $1 4 billion in long term debt and a leverage ratio of five times, which is where we estimated our leverage ratio was going to be at year end.
In October as part of the credit facility Semiannual Redetermination, our borrowing base was increased to $3 5 billion from $3 billion as a result of the reserves from the acquisition of the great Western.
As we continue to see opportunities to reduce our overall indebtedness in 2023, we maintained our elected commitment at one 5 billion.
To summarize our call before we move to Q&A.
We are very we are at a very exciting time in Pdc's evolution as we continue to build a company of scale, we have long term visibility and developing our world class assets.
A low cost structure and a healthy balance sheet that all supports our model of delivering sustainable free cash flow and material shareholder returns for years to come.
I will now turn the call over to the operator for Q&A.
Certainly as a reminder.
You will need to press star one on your telephone please standby, while we compile the Q&A roster.
Our first question will come from Al <unk>.
K P H L.
Oliver.
Good morning, everyone. Congrats on a solid quarter and thanks for taking my questions.
On the shareholder returns front, good to see the buyback pace coming along better than expected guessing its probably as simple as saying shares is undervalued, which we would agree with but helping you all might be able to provide a bit more color as to if there were any main drivers behind accelerated pace seen moving through the year versus initial expectations.
Yes.
Again, we're looking at an annual program when we look and we're projecting our free cash flow and hitting that 60 plus percent target clearly after the second quarter earnings and the little bit of softness we were pretty aggressive in the share buyback and now as we get closer to year end I would expect to see something similar because.
The.
The 60 plus percent is our goal and we're going to achieve that and if we don't do it through share repurchases.
We were then added to the special dividend and to your point right now we really see the company is still shares is undervalued and a great value to buyback.
Awesome and for a second question just wanted to focus on the range area in the Wattenberg any key observations to kind of highlight with respect to the gas pad just kind of given it's the first one that you all have turned in line and also maybe the size of the patent just kind of given how big the size of the pad as well.
Thanks.
Yes, I can.
Give a little more color on that we've we've completed the first eight wells, we've got them online and they're looking astronomically.
The up to our expectations at this point we will.
Move back ended the pad to Frac. The additional 24 wells here coming up on the schedule probably in December .
When we had the rain dance pad, we had some issues with having to move back into to do some gas lift operations with this pad, we will install a gas lift.
Mediately upon clean out and tubing the wells up so really encouraged about this pad so far and look forward to.
Turning all the wells online at this point.
Thanks for the color.
One moment.
Okay.
Sure.
Our next question will come from Bertrand Dawn of tourists your line's open Bertrand.
Morning.
Don't want to belabor the point, but just going right back to the shareholder returns I just wanted to maybe last quarter.
I would've thought that hitting the $320 million or so remaining for the buyback target would be a stretch, but it sounds like the pace has kind of picked up and you're more comfortable with that higher level.
I guess my question is is the special dividend starting to become a more integral part of the program or do you still see it purely is just kind of the catch up mechanism to use at the end of the year.
Yes.
As always really been meant to be the I would say the top off feature.
Are the rounding we really looked for at this point in our company the share buyback to be the main engine for delivering our returns.
And so I would say that and then during the third quarter with the activity. We had we felt very comfortable.
There was no material movement in our in our price as a result of our program. So we're really comfortable being able to purchase that many shares again a day so.
I would say that's kind of when you look when we look at it and if you just go back remember the first quarter. There was some time that we couldnt purchase because we are going through the great Western acquisition. So it was kind of always lean toward towards the second half plan because of that.
But again, just look for the fourth quarter to be another strong share buyback quarter for us.
That sounds good I only ask because some of it another E&P has slowly transitioned from a special becoming a regular special about that was just pointed out.
Maybe moving over to the Guedalla cap.
The multi day process I guess, it's just a little new to me.
Is it purely due to the extent the size of the capped or is there something else you're expecting that might stretch out the process.
I've listened to a couple of he then it seems like at one point that the director will kind of call a vote, even if everything is not agreed upon but.
I was just trying to understand it could it go past two day that to date the cap or is there a reason that it might take to date besides the size.
Okay.
So our vanilla cap.
We have this the hearing scheduled for December 7th.
The cap consists of 450 wells its 22 locations.
And the reason we put a tentative date for the next day is as we as we go through each individual.
Site.
We're not sure how long the explanation and.
How far how long the cap.
Hearing will take so that's why we put that for a tentative second day as well we are hoping with all the involvement that we've had with the local municipalities with the GCC.
But we're going to be able to conduct that in one day and get that approved with high confidence at this point.
That's great and then and this is just a housekeeping question I don't think anyone else can ask it but that the 5%.
<unk> over <unk> growth kind of hop in and out of the press releases I see where you guys were at.
With that and whether that applies still applies to oil and gas.
Gas volumes are oil and total BOE volume and then maybe if there's some sort of.
On Wattenberg, Delaware and that's all I got thank you.
Yes, I mean, we're still going through finalizing our budgeting process as we go through the next several weeks into our board meeting in December .
So it's still a little premature, but again I think when we when we think about when we put out our second half guide we were very cognizant to make sure that the market understood that our 23 expectations, we're not really being altered so thats, where it came out with the.
5% because originally our growth is expected to be the zero to five and we don't see our 23 material planned materially changing so if you look at our guidance I'd still say, it's closer to that that 5% range right now for <unk>.
For the guidance that we have for the second half of the year, but we're still finalizing some of the plans in a few of the things in 'twenty three that make it even more challenging for some of these big pads that Dave alluded to when you are turning on 24 36 wells at a time it can make your production a little bit lumpier, So let us finalize our schedule and we'll give you some more outlet.
And as far as the.
Oil mix, we're still going to be in that 32% ish kind of company again from quarter to quarter. It could go down 1% or up 1% really win Delaware activities kicking in.
So we will be giving you more flavor on that upcoming in some of our other calls. We're just we just got finished the budgeting process first but I still expect to be more towards that 5% on the second half guidance, then zero or five that we would have said earlier in the year and Scott.
Delaware and DJ we do have growth plans in both basins right now, yes, we don't yes, yes, we do.
Modest appreciate the color.
Thanks, guys.
Okay.
One moment.
Okay.
Yes.
And our next question comes from <unk> <unk> of Goldman Sachs. Your line is now.
Thank you.
Hi, Thank you and good morning.
My first question I wanted to get your thoughts on the inflation expectations next year.
Can you help us think also conclude the benefit on capex as a shift towards this longer lag credits and pick up at.
Dave you want to start with yes, I think so so as we guided to in the last call our guidance was.
1025 to 1070 $5 million and I think we're still in that range right now probably on the high side of the range in 'twenty two.
<unk>.
We're about halfway through our bidding process right now and it looks like we're looking at probably another 5% increase into next year, it's the fuel and the profit in the steel and the chemical costs really to pass through that we're going to see that so as we continue to finalize our bidding process.
Our budget will be able to talk.
A little more on what 2023 looks like at that point.
And I would just remember two other key things when youre thinking about the Capex for 'twenty. Three number one is you have to add that $150 million to $200 million.
Because of the great Western acquisition, we only had it for eight months. This year. So I would take that 175, let's add 200 million to that as your starting point and then as Dave saying.
The 5% additional cost is kind of where we're from now when you're really comparing to the full year, it's probably going to be more than 10, 12% year over year, because some of the obviously dollars. We spent earlier in the year, we're a lot less than what we're spending currently in the fourth quarter. So hopefully that will provide a little bit more color.
As we're going through this so I'd say annualized for the activity with the great Western expect about 10%, 12% over year over year, including the whole spend and the growth in spend that happened during the year and you'll get close to a preliminary target for now and clearly more detailed to come in a few months.
That's great color. Thank you.
And then I guess my second question can you give us an update on the second bone Spring Test result, and then any initial thoughts as to how it impacts have delivered inventory.
Yes, so I can expand a little bit on that this was really an effort in the Delaware two to expand our inventory and it was excellent.
Exploratory Greenwich second bone Springs, which is a sand we saw.
Several operators one to the north.
Getting really good results from this from this zone and there was permitting going onto the east.
We drilled the well in January .
This year in practice and April geological model a good.
Although we ran into really some complex faulting as we're drilling.
We went ahead and completed the well head of the abnormally high <unk> levels and and high water volumes.
After trying to mitigate for short term.
Decided that this well was not going to be commercial.
It didn't really condemn the zone the teams going back and taking what we learned from this and see if we could apply it to.
Other areas. So that's kind of where we're at at this point Dave.
Dave as far as our inventory in the basin.
Impacts we did not have that second bone inventory. So this is truly a single test exploration.
In an effort to add inventory, but it did not reduce our our opportunities right.
That's great and I guess.
If I can do a quick follow up on that.
Given the results as you think through your inventory in the Delaware.
Approaching a data looking at some bolt on opportunities, which can further increase the inventory in that region.
And are you doing for the test as it but as it pertains to testing the second bone spring and Wolfcamp season next year.
Yes. Good question. This is Lance let me give you just a couple of updates on how we're thinking about our inventory in Delaware.
First and foremost, yes, we do look at sort of what we call blocking and tackling with offset operators and how can we for example, take a one mile section and combined with our mile and lets go drill a two mile together and gain efficiency from that so that's ongoing and there's been also an example of where our party had to lease that.
Coming up on exploration and we were able to based on our development plan get over and drill that so that added incrementally to us as well I think as you think about our inventory keep in mind the inventory we have.
Currently talked about comes from last year, when the prices were a lot lower for commodities et cetera, So from where we sit today there should be an increase just due to commodity price.
Sort of a starter, but then theres a couple of other intervals that we're looking to test in 2023.
That other operators offsetting this have already drilled and producing and so we're going to be in a position to continue to monitor the offset activity and schedule. A couple of test ourselves that we will believe we believe will be inventory added.
For us in 2023, so a lot of different things that we're doing a lot of good work in and just really thankful for the for the Delaware team in and the work that they've done to continue to build and grow our inventory there.
Thank you.
One moment.
And our next question will come from Tim <unk> of Keybanc capital markets. Your line is open.
Hey, good morning, everybody. Thanks for taking my question.
I wanted to circle back on the repurchase program, you've mentioned <unk> should be a strong buyback quarter.
We noticed shares are up pretty sharply quarter to date almost 30% here.
I know you think theyre undervalued, but all else equal.
A little less undervalued given the rally so I'm just kind of curious on.
Yeah.
Informing intensity as capital returns that you see fit.
Through this quarter and into 2023, if shares continue to perform well the buybacks more liquidity based or is it really opportunistic I think you did a good job in the third quarter, but just kind of curious how you're seeing going forward.
Yes.
I'd love to get to that.
A point, where we back off a little bit because our share price performance has continued to perform and but I don't think we are to that point, yet I mean, we still have some.
Headlines out there with Cornell cap getting approved that we think is going to be a catalyst for us are getting any shares we can before that we think will be a positive.
Okay.
Quarter after quarter delivering the free cash flow that we think we can do I still look at the share repurchases with our multiples where they are is still a great way to use our capital return program.
So I would say look for us to continue into 'twenty three if we start seeing that theres. Another form that starts really distinguishing itself, we will always be.
And we would consider other ideas, but right now we're just big believers in the share buyback and look for that to continue and we hope to share price performance continues as well part of that should be driven by the sheer fact that we have brought down bought shares and theres less shares outstanding.
Bart said.
Earlier, we could be less than 90 million shares or around 90 million shares by the end of the year with our buyback program. So look for us to still lean in on that right now, but we will still consider other things in the future.
Okay. Okay, Okay, and then on the subject of Gonnella cap.
<unk> got a pretty quick approval from their box out of their cap and it was a lengthy process. They did preliminary exciting like you all did.
Once you get past Gonnella, if you if that gets approved as you expect.
What if any permitting needs do you have going forward.
Pretty much done.
With our always be kind of smaller.
Kind of tag on permits you need to get approved.
So when you think about the vanilla cap.
There is going to have to be individual GDP is for each of the locations.
The team has really those prepared we have the alternative location analysis, we have the cumulative impacts ready to go.
Just working on the operational plans for each.
Facility right now.
So we're really confident we're going to be able to get approval for our initial citing and then whatever we're going to have to do after that the team is ready to go.
We feel like we are way ahead of that process. In addition to that we several we have several other <unk> there still.
Out there that we're working on we actually submitted a Whitney 16, well pad in August .
It's in our Q now at the oil and gas commission going through the completeness determination and we have two other ones the triplet in the Bubba which or another.
<unk> 46, well package, an 18, well package, where we're going to submit in the next couple of weeks. So we feel like we're in really really good shape.
Permitting.
To support our activity levels in the future.
Sure.
Okay. Thanks, and just to clarify is 2023 fully permitted and these are longer term. Some of these in the program for next year.
Yes, we have our permits in hand takes our turn in lines into 'twenty four.
Completions, so when we're looking at the cap, we're not even going to start drilling these wells until mid 'twenty. Four so yes, we have great line of sight here for our turn in line schedule for the next several years, Tim with the cap.
Approval, we will have our turn in line schedule, beating the ducks plus permits in hand through.
Through 2028.
Okay, yes, so that in the deck.
Great I appreciate all the color thanks, everybody.
One moment.
Okay.
And our next question will come from Charles Meade of Johnson Rice <unk> Company. Your line is open.
Good morning, everyone. This is actually Austin filling in for Charles.
Hi, Allison.
First question the bumping as that PTC experienced in <unk> with respect to the rain dance pad seems to be behind you.
Going forward should we assume that this is no longer an issue.
Absolutely.
You acquired that rain dance from great Western when they.
Went back in and cleaned out the wells they installed tubing, but they didn't install the gas lift.
Demand rolls in the well and Thats why we had to go back to that pad to get the gas lift mandel installed at the time, we did that.
That is behind US in October we were able to move back in we completed our operations and on the on the last 10 wells there.
The team did a tremendous job renovating seim ops, we brought two rigs and at the time and it took about a week of well work activity.
<unk> forward.
We will do it the way that PDC brands their operations when we do our clean outs on these longer laterals. We go ahead and install gaslog manuals at that time. So we're hoping this isn't going to be a systemic problem.
I appreciate the color and as a follow up I guess more about how you prioritize your free cash flow.
PBC is 2023 targets to return over $1 billion to shareholders via the buyback and base dividend as well as a target to reduce debt by 1 billion by year end 'twenty three.
I guess if oil prices.
I guess dip below $80, what would be prioritized debt reduction or the buybacks.
Yes, just before I answer that let me just clarify our shareholder returns. This year is going to be about $1 billion and we have been we have a long term debt goal to get our debt down to about $800 million. So right now we're sitting.
With the one point.
$4 billion of debt. So when we look at this I mean, our framework is our framework. It's the returned 60% of our post dividend annual free cash flow to shareholders. So that other 40% ish. That's left is to manage our working capital needs to pay down our debt and again, we don't want.
To be a debt free company. We believe that is an important part of your capital profile. When you look at it as a cost effective for them to use. So I think we will start paying down that debt will continue paying down that debt in 'twenty three based on commodity price environment, we might get to the 800, we might only get two 1 billion, which then we'd get to the <unk>.
Rest of it in 24, so we're very comfortable where the balance sheet sits today, but we will continue to work on it is as we try to make the company stronger and stronger does that answer your question.
It does thank you very much that's all from me.
Thank you.
And Im showing no further questions at this time I would now like to turn the conference back to Bart for closing remarks.
Yeah. Thank you Latanya and thank you everyone for joining.
Terrific quarter for us.
Great job on the operations.
The rebound that we're experiencing and more to come as we go through the fourth quarter. So look forward to talking to you in a few months. Thanks.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.
Okay.
The conference will begin shortly.
As Johan during Q&A, you can dial one one.
[music].
Okay.
Yes.
[music].
Sure.
[music].
Okay.
[music].
The conference will begin shortly to raise your hand during Q&A you can dial one one.
[music].
Okay.
[music].