Q3 2022 Frontera Energy Corp Earnings Call
Okay.
Good morning, everyone. My name is Michelle and I'll be your conference facilitator today.
Welcome to Frontera Energy's third quarter, 2022, operating and financial results Conference call.
All lines are currently on mute to prevent any background noise.
I would like to remind you that this conference call is being recorded today and is also available through audio webcast on the company's website.
Following the speakers remarks, there will be time for questions.
Analysts and investors are reminded that any additional questions can be directed to the company at IR.
From Terra energy Dot.
Hey.
This call contains.
Contains forward looking information within the meaning of applicable Canadian securities laws relating to activities events or developments. The company believes or expect will or may occur in the future.
Forward looking information reflects the current expectations assumptions and beliefs of the company based on information currently available to it.
Although the company believes the assumptions are reasonable forward looking information is not a guarantee of future performance.
Forward looking information is subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward looking information.
The company's MD&A for the quarter ended September 32022, and the Companys annual information form dated March 2nd 2022, and other documents it files from time to time with the securities regulatory authorities.
The risks uncertainties material assumptions and other factors that could influence actual results.
Any forward looking information speaks only as of the date on which it was made and the company disclaims any intent or obligation to update any forward looking information, except as required by law.
I would now like to turn the call over to Mr. Gabrielle to Alba Chairman of the board of Frontera Energy Mr De Alba. Please go ahead Sir.
Welcome to <unk> third quarter 2022.
Two earnings call.
Joining me on today's call are Linda.
Fernando.
<unk> Chief Executive Officer, Andrew <unk>.
The Chief Financial Officer.
Also available to us at this juncture.
Nicole we had.
Okay.
The field development, Mr weight management than exploration.
100, <unk> General counsel.
Hello VP operations.
The company's euro marketing or do you see some business sustainability.
Thank you for joining us.
Third quarter results underscore the company's continued focus on cash generation operational excellence and unlocking value for shareholders.
Year to date.
Anthony continues to deliver its guidance.
41200 barrels per day in production.
Representing about 10% year over year growth.
Generating close to $500 million in EBITDA.
Showing a strong focus on cost control.
<unk> quarter over quarter production cost reductions by nine 5%.
Additionally, the company continues to deliver on our shareholder value initiatives.
Till the end of the third quarter.
Company has invested over 100 million.
$87 million in share buybacks.
SAP <unk> and NCB programs, where the company acquired and retired over $8 5 million shares.
The company also purchased Ifc's interest you know deal representing an important milestone for the company as we work to unlock the value of our infrastructure assets.
The acquisition increases.
From Paris direct interesting bill deal pipeline to 35% incentives from various midstream cash flow and create a self sustaining and growing midstream business.
As a result of our continued focus on performance and value during the quarter S&P global ratings upgraded its outlook from stable to positive.
The company's B, plus issuer credit issue level ratings.
I would now like to take a moment to discuss a potential transformational opportunity in the current time block offshore Guyana.
Due to unforeseen challenges to the exploration activities of a third party operator, the release of the Noble Corp discover drilling unit to <unk> has been delayed.
This deterioration is beyond the reasonable control of the joint venture.
<unk> communicated the revised spud window.
One well to the government Doug again.
Correct. It to now be between December 2022, and late January 2023 subject to rig release by the third party operator.
Finally preparations are complete in advance of its Paul I think the way one well on the current than block and follows the discovery of light oil and condensate at <unk> earlier this year.
We are excited about our <unk> opportunity committed and ready to move forward with the drilling of the way one well.
I'll now turn the call over to Orlando Cabrera. Please.
Our CEO and our CFO <unk>, who will share their views on our third quarter results Orlando.
Thank you go to Ed and good morning, everyone and thank you for taking the time to join US This morning.
I would like to begin my remarks, this morning by by taking a moment to acknowledge <unk>.
A tremendous milestone that the men and women upfront data achieved in the third quarter.
I am proud to report that through September 30, the company deliver a total recordable recordable injury rate of 1.01, which is the best safety performance in the company's history, and a credit to everyone upfront data.
This result is due to hard work dedication shown by everyone across the organization and is a reflection of our organizational priorities and commitment to safety.
But on better deliver solid operational and financial results during the third quarter.
The company generated EBITDA of $173 2 million and almost 500 million of EBITDA year to date through the end of the third quarter.
But on data also produced 41033.
Per day in the third quarter.
<unk> 41238 Boe per day year to date through the end of the third quarter.
We remain on track to deliver our 2022 production guidance of 41 to 43000 Boe per day as production ramps up in the fourth quarter of the year.
Importantly, we are delivering our production and EBITDA targets so far this year.
While controlling our operating costs.
By industry wide inflationary pressures.
And we anticipate achieving our production and transportation cost guidance for the year.
The company currently has three five.
<unk> on three Workover rigs active drilling.
Drilling and work over operations in Colombia.
In the third quarter the company through 16, developing wells and completed 18 workovers on well services.
Through the third quarter. The company has real 50, developing wells and completed 78, Workovers and well services in Colombia.
At <unk>, we delivered record quarterly average production of 5000 5070 Boe's per day and October average production of 5220 Boe per day.
At <unk>, one we had encouraging results at <unk>, two well, which supports our plans for enhanced oil recovery starting in the four o'clock.
<unk> our current gross production is 2600 barrels per day.
At <unk> block preliminary logging at <unk> at the <unk> exploration well indicate hydrocarbons.
I would like to take a moment to highlight our ESG progress.
In addition to our best ever safety performance I mentioned earlier, but.
But on data has also neutralized 52% of its 2022 Colombian emissions through the purchase of carbon credits on cost protected.
458 hectares of important biodiesel biodiverse ecosystems.
The company is focused on bringing diversity inclusion and gender equality gaps and these advanced advancing training of community women women in its oil and gas technical program.
Can I say control data.
To date from data has invested $2 $3 million and 105 social projects.
Benefiting benefiting more than 21000 people in Colombia, Ecuador and Peru.
The company purchased $32 3 million from local suppliers and we'll accomplish its goal of chasing $41 million locally in 2022.
I would now like to turn the call over to renewables prompted us.
Chief Financial Officer.
Thank you very much Orlando and good morning, everybody I'd like to take a moment to highlight a few key financial aspect of our third quarter results.
First as you heard operating EBITDA with $173 2 million in the third quarter compared with $197 million in the prior quarter.
The decrease in operating EBITDA quarter over quarter was primarily a result of a decrease in the benchmark oil price compared to the previous quarter Harsha.
Partially offset by lower differential where royalty inventory drawdown, which resulted in one more quarter sold during the third quarter.
Second cash provided by operating activities was $128 million in the third quarter.
Which compares.
$246.
$6 million in the prior quarter.
The decrease in cash provided by operating activities was primarily related to.
The variance in working capital, resulting from the timing of cargo sales and payments received.
A decrease in the benchmark oil price compared to the previous quarter, both partially offset by inventory volume filled during the quarter.
Third we continue to maintain a strong total cash position of $309 1 million at the end of Q3. This compares to $253 1 million at the end of the second quarter.
During the quarter the company invested $61 1 million exploration production and development facilities in Colombia and Ecuador.
Return $57 9 million in capital to shareholders through it.
<unk> and CIB share repurchases.
$21 $2 million as part of the acquisition of the 40% direct interest in.
Until.
Spent $11 8 million in Vienna in support of pretty well.
Greenway, while drilling activities and $9 3 million in debt service obligations leases and foreign exchange impact to cash and cash equivalents.
Fourth at our Sherman commented, we remain focused and committed to generate shareholder value.
On the share buyback front the company completed its 65.
Million Canadian dollars essentially for a bit through the fantastic.
Jessica for cancellation, approximately five $4 million of its common shares or approximately five 8% of the total number of issued and outstanding common shares as of August eight.
The X Ray data.
At a price of $12 Canadian per common share.
Additionally, due to the company's current normal course issuer bid it in CIB, which commenced on March 17th and will end on March 16, 2023, the company has repurchased in excess of three <unk>.
One 8 million shares for cancellation for approximately $32 5 million as of November one.
Year to date at <unk>.
At the end of the third quarter. The company has repurchased approximately $8 6 million shares and returned $83 6 million to shareholders through its <unk> and.
And in CIB.
With respect to our midstream assets during the quarter, we completed the acquisition of the 40% remaining interest in Bill Austen Helena pipeline investment limited, we did not already own.
The increases from the <unk> investment.
Interest in the pipeline to 35%.
This is an important milestone for our midstream business strengthening midstream cash flow generation capacity, and creating a self sustaining and growing business.
Pro forma for the acquisition.
This has generated approximately $50 million in cash flow over the last 12 months direct from both dividend payments related to the <unk> pipeline and the ongoing port operation.
Our results show that.
The strength of our platform our focus on maintaining a strong and healthy balance sheet and underscore our commitment to driving shareholder value.
I would now like to take a moment to discuss the proposed.
Columbian government tax reform.
On November one the government presented by tax reform proposal to Congress.
This proposed tax reform has two main impact on taxes related to the oil and gas industry.
First the government purposes.
5% to 15% tax surcharge on the industry when oil prices.
Are in excess of 30, 60% the average over the last 10 years.
Second the tax reform would codify, making royalties non deductible for tax purposes.
Under the revised proposal. However, the government has now removed the proposed tax on exports when oil prices rise about $48 per barrel at the threshold.
The first and second data warehousing Congress the week of October 4th two more debate will occur within the next few weeks.
We won't have a full picture of the potential impact on frontier until the tax reform law is enacted.
<unk> through its involvement and leadership in various industry associations, including the ACP continues to actively engage senior members of the finance Ministry virus Congress people in our industry partners to sharpen through some views about the proposed tax reform and lobby for changes.
I would now like to turn the call back to Orlando.
Thank you. Thank you.
Looking looking ahead to the fourth quarter, we anticipate increased production.
Additional water disposal capacity keefer.
A new battery for capacity came online in October .
Increased pumping capacity at the CMA, which is a water treatment facility, which begins in November .
As development drilling growth record production at CP six.
As liquids recovery increases at being one.
We expect to continue generating strong free cash flow from our oil weighted production and efficient operations.
We will advance our significant development on high impact exploration growth prospects in Colombia, Ecuador, and we done.
And we will maintain a strong balance sheet healthy leverage levels and will continue to return value to shareholders through our HIV.
Finally, we intend to host an open house for analysts investors and shareholders and bondholders on November 15th of this year from 930, a M to five P. M. Colombian time here at our office in Bogota.
Members of <unk> executive team will provide.
The presentations and answer questions from Frontera strategy on key initiatives operations and production.
Columbia on a quality exploration development of reserves transportation and marketing midstream business Gaiam exploration sustainability efforts on finance initiatives.
The open house will be webcast for those who cannot attend in person I look forward to seeing <unk> as many of you in Bogota as we can.
With that I would like to conclude by saying, Thank you to <unk> and therefore the comments. Thank you everyone everyone for attending our call I will now turn the call back to our operator.
We will open the call up for questions.
Thank you Sir.
Ladies and gentlemen, we will now begin the question and answer session.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
If your question has been answered and you would like to withdraw please press star followed by the number too.
If you are using a speaker phone please lift the handset before pressing any keys.
One moment. Please for your first question.
Your first question will come from Nathaniel August of mangrove. Please go ahead.
Hi, Thanks for taking my question.
I had two questions on.
The first of which is.
I had a deadline coming up in November .
Okay.
I guess can you speak up because we can barely hear you. There is a program that youre connected vehicle sure is this a little better for you.
Yes, much better okay.
So I had some questions on the first of which is that I thought you had a deadline coming up in November regarding either spud, the well or drilling the well and now it sounds like youre going to Miss that deadline.
Is it your understanding that.
You have some sort of waiver in your contract with the government. Because this is out of your control or if you don't have a waiver has the government responded to your notification I'd like to just understand.
The situation there and what risks you have around retention of your.
Your acreage.
Okay. Thank you. Thank you Antonio for the question.
Let me let me, let me begin by saying that the that the JV.
Mays committed to drilling the <unk> well.
And we have been ready.
Spot for four months now that's that's defers the stratosphere.
Now due to these.
Unexpected challenges.
In the in the exploration activities of a third party operator.
The release of their REIT of the novel core discover drilling unit.
Two CTX has been has been delayed.
The situation as you can as you can see is beyond the reasonable control of the of the JV J.
The JV.
We have communicated has communicated that revised export window no.
The wave one well to the government.
The spot is now expected asset Guardian said it.
It is now expected now to be between December of this year in late January .
Of next year.
We have been I mean, we have been equal.
Equal and occasionally permanent communication with good communications I would say with the government.
I'll have provided all supporting documents to them.
And the feedback that we have received is that they agreed in principle that this is situational knees is beyond is beyond our control.
We again.
We are totally committed to.
So thrilled this one well.
Okay. That's helpful.
My two follow ups here are.
First.
To the extent that the.
Things were to take a turn for the worse.
And.
And the government were to decide.
They're not okay.
With the delays that have happened.
What sort of liabilities would you still have to noble.
With regards to the rig.
And then the second follow up is what sort of.
Official modifications or you're going to need from the from the government before you are willing to actually sort of spend the drilling capex to go forward with with the way one well.
Well, let me let me let me put it this way.
We I mean, we are absolutely thankful for the support.
The operational of the government.
To accommodate these.
Unexpected, but not so uncommon third party delays remember we had some delays in <unk> well.
Which is which are beyond our control. So we will look forward to building. This success from from our light oil and condensate discovery at power.
We remain committed to to thrill to drill this well.
Can you. Please just elaborate a little bit on what sort of financial.
Obligations, you would have to noble in the event that for one reason or another.
Youre not able to drill the well or you would be drilling the well and not retaining the acreage.
That scenario is highly unlikely and I think there is what we're trying to communicate and I'm sorry, if it not being transparent enough is we do not see or foresee any issue related to a license and we are moving forward with the drilling.
Your comments related to the financial obligations easily.
The noble Don apart.
So again getting reiterating what but Orlando.
We're committed to the well, we look forward to drilling that well and continuing success that we're already putting galena and the content block.
And we just.
Just just to remember.
In January of this year.
We exercise <unk> exercise the option to contract this quarter to drill the way one well.
Since that time.
The JV has has contracted all services all necessary services materials.
All vessels.
Anticipation of commencing the way one drilling operations in August .
Including including the permits environmental permits.
From the from the EPA.
No which.
Which was granted in August of this this year. So we have been ready the government knows this we are.
Being provided all supporting documentation.
I E. We don't really see.
A risk of not of not doing it this way.
Well.
And whats, let's go back to the prior question, which is just I know you've.
<unk> told the government.
This delay is happening and I understand that it's out of your control, but what kind of.
Sort of official agreements do you now require from the government before you're going to take the risk of actually going forward in spending the capital and drilling the well.
Well we are.
It <unk> scheduled with them.
Alright, Okay. Thank you for taking my question today. Thank.
Thank you Doug and thank you for another question.
Your next question comes from Oriana cobalt of balance capital. Please go ahead.
Hi, good morning, as you've heard anecdotes with patterns. Thanks for taking my questions I had two of them. If they could go one by one that would be great.
First with regard to the increasing data of ODM and if you could.
Share more updates information regarding this transaction in particular is there any meaningful that <unk> cash.
Associated with the asset and you estimated.
EBITDA for this transaction.
So the the acquisition of the <unk> pipeline does not increase our EBITDA you got to remember that we have a minority interest of 35%, but where you will see that it.
Sure.
Companies that we've invested in now.
Now what we're doing is consolidated in the dividend. So now the dividend that I think the last 12 months with roughly 35% to $40 million now this dividend whole to us.
As it relates to the <unk> company itself.
Look we are now the owners of a 35% interest there is no at the <unk> level, we do not publish our finished because we don't consolidate but we're not at Liberty actually sharing that you can find more information on the oil pipeline in Ecopetrol financial statements.
But let me I got to make sure that I answered your question.
<unk>.
Yes.
EBITDA no impact increasing caseloads relate to dividends.
Infection, we talked about the total purchase price so we did.
Clothes, we made a.
<unk>.
A few payment on the closing date and immediately following and the remaining amount roughly.
I think it's about $50 million to $60 million will be paid through 2023 to satisfy obligations under that agreement.
Okay understood.
Just following up.
Estimate multiple for this transaction you are not in a position to share that carried it.
A multiple for the transaction.
Yeah exactly for the UK.
So you can do the math.
The dividends associated for four.
For audio.
They all have been historically between $35 $40 million a year recently.
Remember that <unk> in the past that our project finance and I believe that after that matured that thats actually what increased the amount of dividends being paid.
And we acquired a we held this investment through a company called pipeline investment limited, which we call pill, we actually need to change the name by the way that we co company got a horrible I mean, clearly it hit us a little bit of accompanying humor here.
But the we bought 40%. So now you can take 40% that the dividend plus the transaction value consideration and you can get to that multiple.
Alright.
Yeah, Thanks for clarifying.
My second.
Question, we got expectation will continue strong.
Free cash flow generation will be seen I'm, sorry, I'll get back to you.
Could you could you back away from the Mic.
We're getting a little muffled I want to make sure that I understand your question.
Yeah of course, sorry is that better now.
Yes.
Perfect. So just thinking of your excess free cash flow generation and your expectations to continue generating data.
Do you see bond repurchase as an attractive alternative at current levels.
Aside from buybacks.
Look as I said in the in the in the prior call, we look at value and strategically where we invest our capital I think that the levels that we're seeing in the market. Certainly this is something that we're going to give a lot more thought because it at this point it starts making sense for us to start analyzing those potential purchases.
Nothing nothing to announce at this point in time, but certainly yes.
Asset.
We constantly are looking into it we're going to school.
<unk> value for our stakeholders shareholders.
Okay. That's helpful.
Thanks again.
Your next question comes from Cristina <unk> of HSBC. Please go ahead.
Okay. Thank you.
Now the new tax laws are still in flux, but.
If you could give us just more color on what is already now propose.
How does that impact your cash.
Cash tax paid I think getting rid of the export.
Taxes was a huge benefit for you.
My calculation is that help reduce what you were going to pay by almost half.
If you can kind of help us walk us through how we can think of.
The actual tax.
John .
I think would start in 'twenty 'twenty four or would it start 2023. Thank you.
Yes.
Let me just I mean, I think I mean.
Would just reiterate what <unk> already said in his remarks.
I mean first of all the debate continues I mean, we have still two debates are hit in the planner is independently at Congress.
These permanently changing so it's difficult to to.
DCP, what is going to be the final outcome, but but but basically they continue they keep the non deductibility of royalties that is number one and number two they change what they had originally proposed.
As an export tax.
To supercharge on the industry, which.
Which is basically from 5% to 15%.
When the average oil price is between 30 and 60.
The average of the last 10.
So you saw.
A complicated formula but that is what the hospitals.
As I said they changed the initial proposal to have the tax on exports.
When the oil prices rise above the $48.
So the original proposal. So these I mean, these changing and we have been.
Actively working with we have different trade associations, where we are part of ACP, which is the oil and gas reconciliation.
Natural gas is so we have been really active in the last weeks two to position the.
Playing the position on the industry and the impact that these may have on the on the country as a whole not only on the industry. So.
So we haven't I mean, we haven't provided any any guidance.
And yet on the on the potential impact to throughput on data, but we are per month to be monitoring. The situation. I was wondering if you want to watch anything on that.
So to your second point about the impacts of the impact on our books will be 2023, whenever the actual new textile and gets enacted.
But as you if youre not familiar with Columbia.
Tax lower premiums are effectively that are due in 2020 corporate tax year 2023, and that we're doing in April that said Theres also withholding payments that we make throughout the year.
So the on the timing wise the bulk of it should be in 2024, there are withholding taxes after the taxes themselves.
I think thats why youre seeing the reform now it's actually much more straightforward.
The investment community somewhat calculate.
Most of the changes now there was an elimination of the export tax. So now what you have is like Orlando mentioned is this surcharge.
<unk> is the search is going to be five is it going to be 15, depending on oil prices is there are probably going to get it just those surcharges.
So there is still room for debate and we're hoping that by the Investor Open House, we will have a lot of these questions answered and we can engage in a dialogue once we have better information because we do still believe it's a little premature to jump to any conclusions based on the level of dialogue that we've been receiving hopefully that helps to clarify some of those points.
Okay, well just follow up later when we have more clarification. Thank you.
Yes.
Your next question comes from Roman Rossi of Canaccord Genuity. Please go ahead.
Good morning, and thank you for taking my questions I have a couple of them. So I will not spend sequentially.
The first one going back.
Well, yes.
We expect any additional capex before the absolute smoothing of the world.
Can you repeat the question Robyn.
I mean.
Okay.
December or January .
Any additional topics.
Or do you actually smoothing because height so.
<unk>.
Capex was 82 work commitments around that so.
Again, we are I can't expect anymore capex before the actual excluding.
I think we haven't I mean, we haven't.
And I'll turn it into a market on that I think is.
Premature to.
We will anticipate any additional capex, but certainly what we have that.
Maybe what I would say, let's divide the question into two as it relates to the way well itself. We have it we don't expect any additional charges there could be some minor charges as it relates to some of the equipment. That's already at the ready like like Orlando mentioned, we have been ready to drill this well per month, but as it relates to drilling the well we didn't expect.
Anything different from the forecast that we shared.
Okay perfect.
And regarding the.
When the Englishman.
The government could potentially charge any fines or are you starting to get any penalty there.
So.
You know the government the government of Guyana provide.
Provided on September <unk>.
September provides CTX.
Surrender.
Rendered beat to formalize a they're relinquishing of the damage that Avalon.
So subsequent to that.
The joint venture scientists will render.
Of the Damietta or do they met our license.
On.
And so I think which is important for gaiam now towards the Guyana Gordon man, we discuss it with them is that.
They're relinquishing of this block.
We will benefit any.
Any additional exploration activities on their order company, because we have been talking about the nuomi will be drawn so.
So today is as of today the depot surrender easing in.
The process of being finalized.
Okay perfect.
And why not usual.
Do you have any feel differently.
Thank you.
I know that you extended the loan.
In shrink agreement, but wanted to get more clarity on when you would expect.
Watching it close.
No I think I mean, I would say that I mean, very very briefly that once all conditions precedent have been satisfied.
We will close the deal.
And then on.
Tara will will hold 68% of the of the participating interest in the quarantine block on <unk>.
The remaining 32%.
Perfect and the last question was regarding.
The operational issues at Ekati and.
Look so just wanted to get more color on what.
What were the operational issues at <unk>.
This will require a default capex that we sold.
What type of what blocks the b pieces.
Okay.
Yes, we yes.
As we said we had some operational issues we are in the process.
In them.
Potentially could be could be an additional target we haven't even gone through that yet, but we are in the process of fixing that.
The good thing is that the signs are there our producible.
We plan to produce it.
Okay awesome. Thank you very much for taking my questions.
Joining the total bank.
Your next question comes from Eduardo Nieto of J P. Morgan. Please go ahead.
Yes. Good morning, Thanks for taking my question I have two actually so.
So first of all would you be able to give us more detail on the foreign exchange loss that you had on the quarter and specifically if you think that theres going to be an impact going forward.
We can expect.
The second question.
Right.
The foreign exchange loss, yes, nothing week to be the book a lot about why don't we just take this one offline because this is a non cash loss and its related to our.
Yes.
Our our positions for example.
Loan credit and things like that's where we can touch base, we can fluctuate and give you an answer offline if you don't mind.
Sounds good. Thank you. The second one is a follow up on a previous question on the tax reform.
I appreciate that it's hard at this point to calculate any impact it changing but I'm curious on what the dynamic is with.
With the government at this point I know you've been working with the ACP with other players are they still being constructive or they're listening to you are these changes that they're proposing in line with what you are proposing or at this point are you just waiting for whatever they come up with and what they think is going to be passed.
Alright.
As I said I mean, we have been really honestly very very active in the conversations.
Third the final organizations.
We have I mean, we are permanently.
Making I mean trying to reduce the potential impact this may have on the industry.
I mean, the good thing that they have seen.
In the last say weeks, which I haven't seen in the last years in Colombia is that.
The people who have <unk>.
Spreads themselves.
In favor of the industry in favor of the of the importance of the industry.
So I think we have made a difference in the in the debate on again, let's see let's see what happens in the next in the next two rebates that we still have.
To get the deal approved.
Okay. Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star one at this time.
Your next question will come from <unk> Fernandez of balanced capital. Please go ahead.
Hi, good morning, everybody. Thanks for the color on the materials completed always.
Want to go back.
Again, a little bit to what.
Pointing out on the ODM transaction.
If we're not mistaken.
Right.
$47 million.
Right.
14%.
One 414% additional stake in OBL.
In the absence of material cash balances and debt.
That translates into three.
$340 million about uhm pipes, or the full equity stake and actually a full enterprise value.
<unk>.
Also the latest filing of ODM.
And it is roughly $210 million to $120 million.
So with that values OBL.
One five EBITDA.
Enterprise value EBITDA.
Sub teams.
A great deal.
But at the same time.
So we think there is something perhaps wrong, we'd be outbid.
Being so cheap or maybe something particularly about the transaction that makes it so cheap.
I don't know if you have anything to comment at that time.
Look we love the OBL assets, we've been part of it from Noah.
And I'll, let Keith.
We expect we expect production to continue to grow through that.
Pipeline, particularly motivated by the addition of kind of a fluid into the <unk> pipeline.
This is an asset that we know well and we're excited about the purchase.
Okay, Great. So maybe you would think that the.
Inexpensive valuation has to do with being a minority blocking and other indirect holding or any other factor to consider.
And looking at <unk> again, it's tough for me to put myself in somebody else's position as to what their interest and motivations are but what I can say is we continue to look strategically at where to invest our shareholders' capital and stakeholders capital and when approach by this opportunity and the investment that we already had we decided to undertake it in and again we're very.
Excited about the prospects for Olivier, but most importantly, the excited about what this means in the transformational capacity all of this together with our midstream business I think as I said it might you might remark. If you combine the port operations together with the audio dividends, we're talking about our midstream business than Ohio $50 million of cash flow generation.
Call it dividend plus <unk> EBITDA so they.
Something for you guys to take a look at and by the way I'm looking forward to your note on this one.
No definitely it looks like.
At first sight.
That was precisely my question. So thank you very much.
Thank you.
Ladies and gentlemen hosted speakers at this time there are no further questions from the phone lines. So this will conclude your conference call for this morning.
We would like to thank everybody for participating today and you may now disconnect your lines.
Yeah.
Yes.
Yes.
Yes.
Okay.