Q4 2022 Magnolia Oil & Gas Corp Earnings Call
[music].
Good morning, and welcome to the Magnolia oil and gas fourth quarter and full year 2022 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Please note this event is being recorded.
I'd now like to turn the conference over to Jim Johnson. Please go ahead.
Thank you Gary Good morning, everyone welcome to Magnolia oil and gas is fourth quarter earnings conference call participating on the call today are Chris Stavros, <unk>, President and Chief Executive Officer, and Brian <unk>, Senior Vice President and Chief Financial Officer.
As a reminder, today's conference call contains certain projections and other forward looking statements within the meaning of the federal Securities laws.
These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements.
Additional information on risk factors that could cause results to differ is available on the company's annual report on Form 10-K filed with the SEC.
The full safe Harbor can be found on slide two of the conference call slide presentation with the supplemental data on our website.
You can download <unk> fourth quarter 2022 earnings press release as well as the conference call slides from the investors section of the company's website at Www Dot Magnolia oil gas stock comp.
I'll now turn the call over to Mr. Chris Stavros.
Thanks, Jim and good morning, everyone. Thanks for joining us today I'll provide some comments on our results and accomplishments during 2022.
Our outlook for 2023, and how we plan to allocate our free cash flow during the year, Brian will then review our fourth quarter and full year 2022 results and provide some additional guidance before we take your questions.
As we enter our six years as a public company core principles of Magnolia its business model established at the beginning are expected to continue.
I have said previously that my plan is not to make significant changes.
Personal and our Magnolia throughout the halls here in the office and out in the field every one of our employees is the Magnolia shareholder and it's aligned with our investors we run Magnolia if our shareholders. My objective will always be to do what is the best interest of our investors.
We plan to maintain our discipline around capital spending while keeping low levels of debt and we expect to continue our track record of achieving moderate annual production growth, while generating significant amounts of free cash flow strong operating margins.
22 was a record year for Magnolia you don't want to recognize the team's strong contributions, which help support bank Allianz exceptional financial and operational results.
We achieved the goals that further solidified the strength of <unk> business model and strategy, while also marketing some important milestones.
Record production in 2022, combined with higher product prices and our team's continued focus on managing costs. All contributed to expand our full year pre tax operating margins to 63% to record net income for the company.
Last year, we successfully executed our development program at Giddings and the positive performance of the SaaS and it is reflected in our financial results.
<unk> now represents more than half of that overall production net proved reserves and it's a significant contributor to our strong financial performance. Our Giddings development was responsible for driving overall production company production growth of more than 14% during 2022, while spending only 34% of our total EBITDAX.
D&C and associated facilities capital.
We generated a record $823 million of free cash flow last year returned to 54% of this amount to our shareholders in the form of share repurchases and our regular base dividend, which is paid for.
We repurchased more than 15 million Magnolia shares during 2022, reducing our diluted share count by 8% compared to 2021 levels.
Our ability to deliver moderate annual production growth.
Production volumes at.
Reducing our outstanding share, it's still greater dividend per share payout capacity overtime and as demonstrated by the recent announcement of a 15% increase to our quarterly base dividend.
The increase to our dividend reflects our strong operating and financial performance achieved during 2022 and demonstrates our ongoing confidence in the outlook of the business.
Inclusive of the cash returned to shareholders after spending approximately $90 million on some small bolt on oil and gas property acquisitions during the year, our cash balance nearly doubled during 2022, ending the year at $675 million.
While Magnolia is unhedged business captured the benefit of much higher product prices last year. This year's plan, we will focus on improving our execution and generating further operating and cost efficiencies in order to partially offset the impact of higher oilfield service cost.
Operationally, we expect our 2023 planned to be quite similar to last year.
We expect to continue to operate a two rig drilling program, which we estimate should generate full year production growth of approximately 10% of production.
As expected to steadily decline throughout the year and starting in the first quarter.
As I noted earlier, we will stay disciplined around our D&C capital and limit our spending approximately 55% of EBITDAX, which would provide us with significant free cash flow.
We estimate the current year's capital expenditures to be approximately $500 million.
Yours heaviest capital outlays occurring in the earlier part of 2023.
Our supply chain and operations team did a superb job of strengthening the valued partnerships with our key vendors as well as managing through the inflationary environment of rising oilfield service costs that occurred throughout 2022.
These efforts have helped to mitigate some of the increased cost and with recent signs, indicating that some of the service cost inflation, starting to flatten or even declined modestly in certain products and services.
We plan to continue to allocate a sizable portion of our free cash flow toward enhancing the value of the existing business and improving our per share metrics. This includes our ongoing share repurchase program or we expect to repurchase at least 1% of our outstanding shares each quarter.
We also expect to pursue small accretive bolt on oil and gas property acquisition acquisitions in and around our current operating areas.
These acquisition opportunities would have characteristics comparable to our existing assets and match some of the skills and learnings from our experience in giddings.
As an example in late 2022, and we were able to acquire some acreage minerals and additional working interest in giddings and primarily outside of our core development area is.
Further builds on our strong position in the play and is in line with our strategy of incrementally improving our opportunity set as well as our drilling economics.
Allocating our free cash flow through these actions intended to enhance the underlying value of the business expand our dividend per share payout capacity and strengthen our investment proposition of providing 10% average annual dividend growth overtime.
Now I'll turn the call to Brian who will review, our fourth quarter and full year financial results.
Thanks, Chris and good morning, everyone I'll review, some items from our fourth quarter and full year results and refer to the presentation slides found on our website also provide some additional guidance for the first quarter of 2023 and remainder of the year before turning it over for questions beginning.
Beginning with slide three I know you continue to execute on our business model as demonstrated by our fourth quarter and full year 2022 financial and operating results. We established records for many of our key operating and financial metrics during the year, including production free cash flow net income and most notably operating income margins of 63%.
During the year. The overall results for 2022 were supported by very strong product price realizations, our efforts around cost containment and supply chain management and stronger overall production.
During the fourth quarter, we generated total net income of 255 million, which included a noncash tax benefit to earnings of $66 million excluding.
Excluding this noncash tax item, we generated total adjusted net income for the quarter of 189 million or <unk> 88 per diluted share.
Our adjusted EBITDAX for the quarter was 268 million and for the year was $1 3 billion.
Total capital associated with drilling completions and associated facilities for the fourth quarter was 150 to 140 million or 52% of our EBITDAX.
D&C capital for the year was $460 million or just 34% of our EBITDAX fourth quarter production volumes grew 6% year on year to $73 8000 barrels of oil equivalent per day.
For the year company production volumes grew 14% to $75 4000 barrels of oil equivalent per day as.
As Chris noted earlier, we repurchased 15 5 million shares starting 2022, reducing our diluted share count by 8% year over year.
Looking at the 2022 cash flow waterfall chart on slide four we started the year with $367 million of cash cash flow from operations before changes in working capital was $1 5 billion with working capital changes, partially offset by other items benefiting cash by 54 million.
Our D&C capital incurred including land acquisitions was $465 million and spent $90 million on several small bolt on oil and gas property acquisitions.
During the year, we allocated $352 million towards share repurchases and paid dividends of $90 million. We ended 2022 was $675 million of cash in our balance sheet, an increase of more than 300 billion during the year and after returning approximately 54% of our free cash flow to shareholders in the form of share repurchases and dividends.
Looking at Slide five this chart illustrates the progress of the reduction in our total outstanding shares since we began our repurchase program in the second half of 2019.
Since that time, we have reduced our total diluted share count by 50 to 52 3 million shares or approximately 20%, but I know he is weighted average fully diluted share count declined by $2 4 billion share sequentially, averaging $215 4 million during the fourth quarter. We currently have eight 9 million shares remaining.
At our current repurchase authorization, which is specifically directed toward repurchasing class a shares in the open market.
Turning to slide six and as Chris discussed earlier, we recently announced a 15% increase in our quarterly dividend to <unk> 11, five cents per share, which is payable on march 1st and providing an annualized dividend payout rate of 46 per share.
The increase in our dividend is supported by the 24% year over year increase in our production per share that we achieved during 2022, our plan for annualized dividend growth of at least 10% as part of minorities investment proposition and supported by our overall strategy of achieving moderate annual production growth and reducing our.
Outstanding shares by at least 1% per quarter, we plan to examine our dividend payout rate at least Andy with Eddie annually and.
And after assessing our full year results recast in at $55 oil price environment.
Magnolia has the benefit of a very strong balance sheet and we ended the quarter with a net cash position of $275 million.
Our $400 million of gross debt is reflected in our senior notes, which do not mature until 2026.
Including our fourth quarter, ending cash balance of $675 million and our undrawn $450 million revolving credit facility. Our total liquidity is more than $1 1 billion, our condensed balance sheet and liquidity as of December 31 are shown on slides seven and eight.
Turning to slide nine and looking at our per unit cash cost and operating income margins. Our total adjusted cash operating costs, including G&A was $12 15 per Boe in the fourth quarter of 2022.
That's an increase of 83 per Boe compared to year ago levels. The year over year increase was primarily primarily due to higher production taxes due to higher product prices and higher low as a result of increased oilfield service costs and higher workover related activity, including.
Including our DD&A rate of about $9 40 per Boe.
Our operating income margin for the fourth quarter was $29 16 per Boe or 57% of our total revenue.
I know you had a very successful organic drilling program during last year. Our 2022 proved reserves increased 16% to 157 million barrels of oil equivalent and we replaced 179% of our 2022 production.
They know your books only one year of proved undeveloped reserves and as a result, 80% of our 2022 proved reserves were developed.
Proved undeveloped reserve represent but we plan to convert to proved developed during 2023.
Turning to guidance for the first quarter and for the remainder of 2023.
We are currently operating two drilling rigs and plan to continue this level of activity through the end of the year, one rig will continue to drill multi well development pads in our giddings asset.
Second rig will drill a mix of wells in both karnes and giddings areas, including some appraisal wells in Giddings, we continue to improve our operating efficiencies in the giddings field and are seeing signs that cost inflation is flattening for some of our drilling and completion materials compared to last year's steep increases we.
We estimate our D&C capital to be between 490 $520 million for the full year 2023, which includes some non operated capital that is expected to be similar to 2022 levels at.
At this level of spending and activity, we expect to deliver full year production growth of approximately 10% with most of the growth expected to come from our development program mechanics.
For the full year 2023, we expect our effective tax rate to be approximately 21% with most of this being defer our cash tax rate is expected to be 6% to 9%.
For 2023.
Looking at the first quarter of 'twenty three we expect total production volumes to be to be between 80% and 82000 Boe per day, and our D&C capital is estimated to be in the range of 140 and $150 million, we expect our first quarter capital expenditures to be at the highest quarterly level for the year with modest reductions in spending.
In subsequent quarters.
Our price differentials are anticipated to be a $3 per barrel discount to NIH.
Our fully diluted share count for the first quarter is estimated to be approximately 214 million shares which is 6% below year ago levels.
We're now ready to take your questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Leo Mariani with Ross M. P. M. Please go ahead.
Okay.
Hi, I was hoping you could talk a little bit more about some of the acquisitions in the fourth quarter, you said that it sounds like the preponderance of this stuff was with outside the core.
<unk> I guess that certainly implies some confidence in the appraisal program.
So maybe you could just talk a bit more about how the appraisal program went in in 2022 and are you seeing more of these <unk>.
Say a year ago.
Sure Good morning, Leo Thanks for the question.
We did have a pretty active appraisal program last year.
Things went fairly well, we expect that to continue somewhat into this year too.
Remember there is.
Sort of a large.
Swath of acreage in Giddings that we are we have our hands on more than 600000 gross acres. So there's a lot to go through.
And we've been doing that gradually.
This is really led to us identifying several new and frankly promising areas in giddings.
We plan to continue with some of that appraisal work in and around our acreage over time.
Clearly to improve our understanding Frank frankly, some of that appraisal work and activity that provided us with a lot more confidence and which led to one of our larger recent acreage acquisitions. So yeah, we'll continue to be doing more of that.
It may lead to some <unk>.
Shale acreage acquisitions over time.
It may.
Two other learnings that could sort of.
Steer us in a little bit about.
On adjacent direction, maybe as the best way to say it but I think it will supplement it's going to continue to supplement.
Some of what we do around.
Propping up.
Our extending.
And sustaining giddings, even further and utilizing some of the learnings that we have.
We've had over the last several years. So it continues to go well.
Well, we'll see what sort of.
Actual amount of money amount of money, we allocate to this it will depend but I think it's frankly on the on the mineral side.
Yes.
You know where you're going to drill.
That's obviously up.
Each help there and we have a good feeling around that so appraisal helps and that's a boost to our economics.
Better than sitting on the money.
Three 4%, even though thats not so bad these days, but it's better than that clearly.
Okay very thorough answer I appreciate that could you provide a little bit more details around the performance of the eight well Giddings pad and then you guys said it was sort of better than expected can we get maybe a little more color around that was that all in the core in there or are there any other plans maybe for large pads of that nature here in 'twenty three.
Yeah.
Yeah. You know this is we've tried to be as upfront about it as possible back early in the year. When we frankly experienced a couple of things that.
Offset the expectations around our volumes for the fourth quarter, which were weather related items and.
And certainly the large eight well pad that.
It was delayed a little bit and I mean, a little bit.
You're talking about number of days that you can count on one hand.
But when you are banking on one eight well pad for the bulk of by and large large proportion or most of your activity in a particular period and especially late in that period.
Things slipped a little a little bit and namely because you hadn't done it before not because of any other particular reason it stands out and that was really the issue. So we had greater reliance on this one pad and that really made the difference. The pad has been online now since December and is actually performing.
Other than our expectation so no issues around that.
Will we be doing any more eight well pads here anytime soon or.
We're not planning on it and I was joking the other day and I said, if we hadn't changed saw it had an eight well pad, we just cut in half, maybe but I I just I don't think so.
This is sort of a more unique circumstance nothing nothing beyond that.
Okay. Thanks, guys.
The next question is from Jeff J with Daniel Energy Partners. Please go ahead.
Good morning, guys.
Good morning, Jeff Hi, Jeff.
So just simply for me looking at Q4, D&C Annualizing that it looks like a 10% reduction in your guide for 2023, just wondering if you kind of.
What's the sort of components of that are and really trying to get to sort of see where you see sort of the greatest I guess.
Either either sort of flattening or actual deflation in your service costs, what are you seeing pricing.
Where is it getting looser.
Yeah, what you are seeing for fourth quarter and Youll see it in the first quarter as well, which we talked about it and we talked about just in terms of the guidance.
The the capital that we're forecasting or viewing right now is going to be more heavily weighted in the back end of last year and the front end of this year and that's really just the the plan of our scheduling and so it's it's really somewhat front end loaded this year and that youll see that develop and evolve and some of the vault.
<unk> and production in the first half of the year. So youll see some some growth clearly stem from that and then the capital will start to decline.
As we move into two Q3 Q4, Q, so it'll it'll come down a bit so annualizing either frankly, either one of those numbers is probably not not the best way to sort of view. The overall outcome for 2023 as far as you know where the cost inflation is is showing up or maybe not showing up we're seeing some.
Some.
Planning out.
Seeing some.
Decline, maybe a softening softening is probably a better way to put it flattening in steel maybe some some oh.
CTG items clearly fuel.
Maybe drilling fluids.
That's sort of what Youre, saying I think.
Rigs are still well supported.
But you know.
Frankly.
Given where we've come in terms of product prices here in the last three to six months.
And especially around natural gas I I would think that there is a bit of a disconnect.
Alright.
Costs for some services and materials.
Relative to where we are in the cycle as you know as well as I do this as sort of a lag events and.
Yeah.
Folks are going to try to take it out of our hides as best they can and then they'll do that a bit and then things will soften up I think.
Yes, that's super helpful. And then thinking about the current pricing environment, and obviously, a little soft will that have any impact on your ability to kind of get some of the bolt on deals you guys may be looking at an hour if you're interested in going forward.
Alright.
Nothing that I can say frankly.
Alright, well thanks for that guys I appreciate it.
Sure Jason.
The next question is from Nicholas Pope with Seaport Research. Please go ahead.
Good morning, guys.
Hey, Nick.
I was hoping you guys could talk a little bit.
About the karnes asset.
It's obviously a little further along in development, maybe maybe if you could provide a little context on kind of inventory there and then how youre thinking about kind of what you have available to offer on the operated side versus the non operated side on the card side of things.
Yes, sure I mean look at the pace that we're going and.
Like we said, we're utilizing one sort of devoted rig in giddings and and the second rig floats around giddings.
And a little bit of Karnes and.
So I mean.
From a proportionately on that basis.
There's more for us to do.
It's a simple.
Sort of decision on our part frankly around some of the returns and some of the.
Ultimate performance that we're seeing out of the Giddings wells are there.
That is clearly led us are steered us more to allocating capital a little bit away from cards as a pause as opposed to sort of just.
Yeah, if we wanted to drill a little bit more on cards as we could but you know it's it tends to be a little bit.
A lot of flush Ips and sharp production.
Initially and then it declined more rapidly typically then and.
Giddings so.
Typically youre, just seeing longer productivity and some more efficiency out of out of the Giddings program and that's that's really why we're doing it.
Got it that's helpful. And then just as a follow up on on the cost discussion I'm kind of curious how how do you all think about.
The I guess the timing of.
Kind of rig contracts and some of these consumables that you mentioned kind of moderate a little bit and costs like what is the timing how long out do you.
Do you kind of set up some of those contracts and some of that planning.
Yeah, without I mean without getting into too many specifics I mean, you're you're looking at you know.
Chunky periods of time of three to six months, let's call it.
So.
You know theres not theres not much more that we can do in this environment around that.
So I think it.
It's it's just.
Fine for the service providers, that's okay with us.
<unk>.
What we plan to do as always and we've done this as part of our.
I'm just trying to be efficient.
And supply chain, and making sure we don't run into any problems or issues as far as getting getting things.
We talk to the vendors and we keep in touch with them.
All the time, where we're very much in their face as far as scheduling.
Planning.
Working working with them, we provide them with schedules that they also their confidence knowing that we're going to be there.
Next week next month three months from now we're not going to sort of pull the rug out from under them and so that's it.
Very useful and developing a relationship.
It really cuts both ways.
Got it that's that's helpful. That's all I got I appreciate the time, thanks, Chris sure.
The next question is from Tim <unk> with Keybanc. Please go ahead.
Hey, good morning, guys. Thanks for taking my question I.
I want to start on the repurchase front, you've been very steady on that.
Brian had mentioned $8 9 million shares last authorization.
Authorizations, So Kristina if you could put your your direct your hat on.
Should we just assume that that would.
Probably be kind of extended or increased the authorization program since you could run through that.
<unk> or <unk> this year.
Yeah, you know as Brian said earlier.
You know the the.
Share repurchase authorization, that's approved by the board it really is related only to the date.
<unk> class a shares that trade on the market.
<unk> private equity owner owns some.
Small amount of a shares and some larger amount of class b shares and so the share repurchase program. The $8 9 million shares of the authorization is not related to the piece.
Putting my director hat on I mean look you know.
Yeah.
But it's not my from my point of view. This is not an issue we wanted to authorize or try to get the board to authorize additional shares for purchase will go to the board and that they'll they'll do that I fully anticipate that I don't see why they would I mean this has been part of the.
Investment proposition for Magnolia from the beginning.
As I said and I really tried it.
Double down on this or we're trying to create this.
Dividend per share payout capacity enhancement and so by I continually repurchasing our shares that we think are at a at a good value.
We just enhanced that capability over time.
Okay. Thanks, I just wanted to make sure that.
That would be part of it the medium long term plan it sounds like it is.
Okay.
Okay, great Great and then.
On the acquisitions front big number and <unk> $78 million. So two questions related to that first.
Their production that came with those acquisitions and then secondly, as you look forward kind of what.
You're sitting on a lot of cash here.
How big could that be Opportunistically would you go two or three or 400 million for the right opportunities. This year, just trying to understand kind of what.
No.
You know what your appetite is or how big you go on.
That's right yes.
Yeah sure I mean.
$78 million in the quarter, the $90 million per year.
Frankly, I don't view that as a large.
Number it's just larger than maybe some things that we've done fairly recently.
And so anything anything of any size is probably the standout.
We did all of this and we sort of walk you through and we ended with.
700 million or thereabouts of cash and so.
Having a little bit more cash right now probably not such a terrible thing.
Specialty given some of the uncertainty around the economy at least we're getting a little bit more interest.
Setting almost all the cash interest expense.
<unk> said that we're not you know bank of America.
The goal of the money is to find a better use for it generates stronger returns and helps the business over time.
So we'll continue to execute on our on the model with a moderate growth that we talk about and frankly, we've overshot that.
And we'll continue to repurchase shares and continue to pay a safe and growing dividend.
As you know we have this sizable private equity owner.
Continue to accommodate.
Their sales process over time, I can't say I can I can say, yes, but I can't say when that will happen, but we'll be very supported through our own purchases around that to help them.
The M&A.
Yeah.
As I said this included a mix of acreage and working interest in minerals could we go larger.
If we found the right opportunity.
Yes, sure we could do that.
We don't need the business doesn't need a lot of money.
To sort of continue to run well and do what we need to do execution wise, we found that out the hard way Darrin COVID-19, but where we really didn't burn much cash at all and so.
If we only spend 55% of our gross cash flow you sort of generate free cash flow year on year out so we're pretty pretty focused around that and compensated around that.
So if we find the right deal.
Find the right opportunity that improves the business and enhances the sustainability of the business provides us more running room, yeah, you know, but we're not I won't I.
I would tell you we're not looking to do a deal where we would require any additional outside financing so.
It's sort of limited to our our capabilities around what we have on hand in terms of cash and also round our skill set.
Okay, Thanks for that detail and just.
To close the loop can you disclose any production that came with the acquisitions in the fourth quarter right now.
Was very small I mean, it's not a consequential amount immaterial amount of production volumes.
Okay, alright, thanks, so much.
Again, if you have a question. Please press Star then one.
The next question is from Noel Parks with TUI. Please go ahead.
Hi, good morning.
Good morning.
So just a couple of things.
You talked about.
Expect to see some efficiencies this year that could help offset some of the service cost inflation and I Wonder if you could just talk a little bit about it.
Most operations are working on different efficiency projects.
Know how all the time I was just wondering are there any particular resource shifts I mean more staff are shifting staff around various functions to tackle any particular types of projects in the field that you haven't before.
No I wouldn't I wouldn't say, we're shifting any staff or.
Generating new staff to work on this and especially.
I would tell you with Giddings remember I said, we're wearing entering our sixth year as a public company now and so.
If you skip skip over the Covid gap.
We really just got at this maybe in 'twenty late 2020, more so 2021 and so.
Sure in the earlier middle innings of what is the evolution of trying to get at Giddings and understand it better.
And so theres more to I think be squeezed out of it.
So the usual operational efficiencies that most top two or speak to in terms of improving our drilling feet per day and.
We are reducing our drilling days and frac stages per day, improving we recently set a new record on a pad in terms of.
The completion time so.
Theres still some of that to be done.
And captured this year and so I think we'll see some benefit of that.
Great.
And.
Yeah.
I noticed it looked like there was a sequential decline in cash G&A between first quarter and I think from a horse.
Third quarter to fourth quarter.
Not complaining always good to see.
Listen on costs I'm, just wondering was there anything particular, one time involved in in that.
Make a difference.
Yes.
Cash G&A is pretty pretty small number for us.
So.
As always <unk>.
And Lee can be some one off items that.
Pop up period to period it could be.
It could be an insurance item that comes up payment or it could be.
Bonuses for the executives or whatnot.
It is I mean, it's it's hard to sort of predict evenly.
Or or with a lot of precision quarter to quarter. So.
I wouldn't make anything of it there's nothing that jumps out in my mind, I mean, theres some things even associated with some.
Enter enter the share sales some costs associated with that so a very small items generally.
Gotcha, and then just wondering one thing about reserves.
Did you see any.
Any type curves improve.
Improvements are upward revisions in reserves this year.
The engineers, we did we did and.
Youll be able to see that more specifically once we once we put out the 10-K, which will be here soon very shortly so we did we did.
I'll speak to directly there in terms of some.
Performance positive performance revisions.
Yeah.
Terrific that's all for me.
Thanks.
The next question is from Neal Dingmann with Truest. Please go ahead.
Morning, Chris.
So they go as you know the answer this for you or Brian , but just could you just talk about just on capital allocation.
When you guys think about buybacks versus debt these days.
Anything to cause you to change that plan.
Yeah, you know I mean, the the share repurchases I.
I mean, we talk about doing this 1% at least regularly every quarter and theres nothing changing around that but if you look at the last two years, we've probably done double that rate.
And thats largely been to help out.
And our best as they've sold down so we've purchased a lot of shares from that.
As that peels off or.
Starts to go away here.
You could see what.
Committing to the 1%.
But you could see some of that excess cash that's been allocated to share repurchases move.
Move a little bit more towards dividends.
It's sort of my thought.
On the dividend again I've said this repeatedly.
You want to prudently grow into it you don't want to rush too.
Grow out of it and so you just want to be steady and maintain the safety and security that dividend.
Uh huh.
I wouldn't see us sort of.
Leaning in on some sort of variable dividend process, we just want to grow that dividend steadily and thats, what good dividend growth companies actually do.
I was wondering if you didn't bring up that your wife like dividends like your great leader wants what said, but.
Secondly, as I always consult with her before.
[laughter] in it and that.
Would that cause I, just had a follow up on that where shoe the shoes.
The immense amount of cash you. All have is is that out there just in case you know the wood, the inner best or or could you talk about the cash you have on the books very significant.
Yeah. It is I mean, we'll see how things go within our vast and we'll see how things go with.
Some M&A opportunities or bolt ons that we can.
Look at.
I don't I don't have anything in mines.
Right now and so like I said, it's okay to have a little bit extra money and this in this sloppy environment.
Obviously, not a great data report results here with the C or read out there today.
Where the day ends but.
It's always not a it's not a bad thing to have a little bit more cash on hand, given some of the general macro uncertainty and.
Variability volatility of the market. These days, so feel very safe secure but again the point is that.
It just is not doing a lot for us just to sit there and look at it may make you feel better or somewhat feel better, but you'd actually want to want to put it to work to improve the business.
Great point, and then one last one if I could just on the development program Obertan Gideon's will that remain largely on that 70000 or will there'll be are you able are you, adding more acreage to that piece.
Well, we did we that's what we did in the fourth quarter and so.
Where we can maybe through some appraisal work or activities around that or just things that may come up in terms of bolt ons, we will look at expanding that footprint within giddings, not just on our existing acreage but over time.
It will some of the things that we already have may be filled in.
That allow us to be active outside of that core development area.
Core development area is great, but you know.
Just sort of want to continue on that path of looking at other options.
Great point, thanks, guys great quarter.
Alright. Thanks, Neil This concludes our question and answer session and the conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.
Okay.
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