Q3 2023 SilverBow Resources Inc Earnings Call
Thank you for standing by at this time I would like to welcome everyone to the silver boat resources third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time.
Simply press Star followed by the number one once again star one on your telephone keypad and if you'd like to withdraw your question just press star one again. Thank you.
And at this time I would like to turn the call over to Jeff Maggots, Vice President of Finance and Investor Relations. Please go ahead.
Thank you Greg and good morning, everyone. Thank you very much for joining us for our third quarter 2023 conference call with me on the call today are Sean Woolverton, our CEO, Steve Adam our CFO and Chris <unk> our CFO.
Yesterday afternoon, we posted a new corporate presentation to our website and will occasionally refer to it during this call. We encourage listeners to download the latest materials. Please note that we may make references to certain non-GAAP financial measures, which are reconciled to their closest GAAP measure in the earnings press release.
Our discussion today may include forward looking statements, which are subject to risks and uncertainties many of which are beyond our control. These risks and uncertainties are described more fully in our documents on file with the SEC, which are also available on our website.
That I will now turn the call over to Sean.
Yeah.
Third quarter results highlight the success of silver both growth strategy.
Production increased approximately 20% compared to a year ago and exceeded the high end of guidance.
Our oil focused development program has resulted in a year over year increase of 80% in oil and a 25% increase in NGL production.
Driven by the increase in our liquids production adjusted EBITDA of $141 million was the highest quarterly EBITDA in <unk> history.
At the same time, we generated 18 million of free cash flow and reduce debt by $78 million during the quarter.
Finally, our operational performance year to date is allowing us to further increase our full year free cash flow guidance to a range of $20 million to $40 million, while at the same time, maintaining our full year capex guidance.
Our results in <unk> provide us with an attractive outlook.
Guidance for our base assets, excluding any contribution from the Chesapeake acquisition implies a 10% increase in fourth quarter oil production.
And we anticipate significant free cash generation through year end.
With prices now above $3 and with key and.
In with takeaway constraints from web county, being alleviated we.
We are once again investing capital in our gas assets.
We are currently flowing back a recently completed four well duct pad in Webb County and.
And we recently moved one of our two drilling rigs to this gas area.
Our fourth quarter investment will set up well for uplift to our gas production in early 'twenty four.
Yes.
Overall, our strong operating platform position silver both to continue to grow through multiple avenues.
We have champion the need for validation within the Eagle Ford and recent M&A announcements around the industry have supported this thesis.
In August we announced an agreement to acquire certain oil and gas assets in South, Texas from Chesapeake for $700 million.
This marks our eighth and largest acquisition over the last two years.
The Chesapeake transaction checks all the boxes, we look for.
In an accretive acquisition.
First it enhances scale within our core focus area in the Western Eagle Ford.
And upon close Silver Bowl will become the largest pure play public Eagle Ford operator by production.
The growth from these assets position silver bow to exceed a 25% annual growth target in the coming years.
Yes.
Second we are acquiring the assets at a discounted PDP valuation, while adding roughly 300 high confidence locations at essentially no cost.
This maintains our decade, plus inventory life and as locations that will immediately compete for capital in 2024.
Third the production base further expands our commodity exposure with a mix of assets.
That are spread evenly across oil gas and Ngls.
Finally, we are financing the transaction accretively through an upsize to our revolver and second lien notes.
As well as our September equity offering.
Which will add to our cash funding sources.
We see a clear path towards Delevering below one times by year end 2024.
Yeah.
To wrap up my prepared remarks, silver bow continues to execute on its differentiated growth strategy, while generating significant cash flow.
Our liquids production growth this year combined with plans to ramp gas production into next year position silver bow as a leading Gulf coast operating platform with the ability to further consolidate and benefit from the pending LNG expansion projects.
Our team has an established track record of delivering on our key objectives through commodity cycles and I'm very excited about both the near and long term prospects for the company.
With that said I will hand, the call over to Steve.
Thank you Sean in the third quarter, we drilled 10 net wells completed nine net wells and brought nine net wells online.
D&C activity was focused on our eastern extension and central oil areas.
The team continues to execute on our 23 development.
And our operational efficiency gains are are driving improvements in downtime footage per day and overall well costs.
On the drilling side, we continued to see ongoing cost deflation.
Housing prices are down approximately 25% to 30% year to date and rig rates have dropped by roughly 20%.
As for year to date drilling efficiencies cost per foot are down, 13% or $22 per foot compared to 22.
On the completion side year to date pumping efficiencies are averaging 20% higher compared to 22 and in the third quarter, we achieved the highest quarterly pumping efficiency so far for 'twenty three.
These gains have been driven by reductions in equipment downtime and other nonproductive events.
As a result, we're completing approximately 10% more stages per day on a same store basis, and completing 10% more lateral feet per day as compared to 22.
In aggregate, our total D&C costs in 'twenty three have been delivered 2% below AFC.
We estimate that realize D&C savings or roughly 10% to 15% today with leading edge market rates continuing to indicate further reductions through year end.
Sure.
Specific to oil, which has been the focus of our development program. This year strong well performance continues to drive oil production to new highs.
Third quarter oil production increased 24% compared to last quarter, and 80% compared to a year ago.
Much of our oil development has focused on properties, we acquired over the last two years and well performance on these assets is exceeding expectations.
Furthermore, ongoing Austin chalk delineation across our oily acreage adds to inventory upside and possible co development opportunities with the Eagle Ford formation.
And our Webb County gas area, we were able to sell into some interruptible capacity during the third quarter.
We believe past capacity constraints are currently being alleviated and expect new pipeline capacity to come online in November.
The multiyear takeaway agreements we secured earlier this year a setup for continued development in this core area.
We remain bullish on longer term natural gas prices in LNG demand growth.
As such we view, our Webb County gas area as the cornerstone and continue to expand our inventory through Austin chalk delineation and organic leasing.
We have now assembled nearly 20000 net acres with 200 identified drilling locations and one of the most profitable natural gas plays in the nation.
Turning to results and outlook, our third quarter production of 357 M. M. C. F E per day was above the high end of guidance and represents a 19% increase in production year over year.
For the fourth quarter, we are guiding to production of 364, MMC FTE per day at the midpoint, a 2% increase quarter over quarter.
We tightened our full year 'twenty three production guidance to a range of 336 to 342 <unk> per day, which implies overall production growth of 20%, 26% and oil production growth of 94% year over year.
All forward looking estimates exclude any contribution from Chesapeake assets.
Specific to our capital budget, our previously lowered guidance of $400 million to $425 million remains unchanged given the efficiencies realized today, we will be able to accelerate the completion timing of several pads. We had scheduled for early 'twenty four and therefore able to.
Absorb that D&C spend in 'twenty three.
As discussed on prior calls, we allocated 100% of our D&C capital to oil development through the third quarter.
Currently we have moved one of the two rigs back to our Webb County gas area, where we are further testing the Austin chalk formation.
We expect our two rig program to remain split between oil and gas drilling through year end.
As always we remain flexible on our capital allocation as we optimize our drill schedule and completion activity accordingly.
With that I'll turn it over to Chris.
Thanks, Steve.
In my comments this morning, I will highlight our third quarter financial results.
As well as our price realizations hedging program operating cost and capital structure.
And we'll then also provide a brief update on our announced Chesapeake transaction and our pro forma capital structure.
Third quarter oil and gas sales were $174 million, excluding derivatives with oil representing 26% of production and 65% of sales.
Of note oil represented just 30% of third quarter sales one year ago.
During the quarter, our realized oil price was 97% of Nymex <unk>, our realized gas price was 90% of Nymex Henry hub.
And our realized NGL price was 26% of Nymex <unk>.
Year to date, our realized gas price has been impacted by widening basis differentials and is lower than our historical range compared to Henry hub.
More recently, we have observed differentials that are closer to historical averages as the regional market has become more balanced.
Risk management is a key aspect of our business and we are proactive in adding basis to further supplement our hedging strategy for 2023 and 2024, we have secured gas basis hedges on 150, and 180 Mcf per day, respectively to mitigate further risk.
Our realized hedging gain on contracts for the quarter was approximately $18 million.
Based on our hedge book as of October 27% for the remainder of 2023, we have approximately 200 Mcf per day of natural gas hedged 11, 100 barrels per day of oil hedged 3750 barrels per day of Ngls hedged.
Using the midpoint of our production guidance, we are 92% hedged on gas and 66% hedged on oil for the remainder of this year.
For 2024, we have approximately 211 Mcf per day of natural gas hedged 11, 800 barrels per day of oil hedged at 5400 barrels per day of NGL test.
The hedge the math are inclusive of both swaps and collars at.
A detailed summary of our derivatives contracts is contained in our presentation and our 10-Q filing which we expect to file later today.
Our third quarter costs were within or favorable to our third quarter guidance ranges across all categories.
Lease operating expenses were <unk> 71 per Mcf.
Transportation and processing costs were <unk> 42 per Mcf.
Production taxes were 6% of oil and gas sales.
Cash G&A, which exclude stock based compensation was $3 million for the quarter.
For the full year 2023, we are guiding for cash G&A of $17 $7 million at the midpoint, which implies cash G&A on an mcf basis to continue to trend below 22 levels.
We consider our lean cost structure to be a differentiator when compared to our peers.
<unk> reported a net loss of $5 million for the third quarter, excluding unrealized losses on commodity derivatives net of the tax impact.
<unk> reported adjusted net income of $56 million or approximately $2 42 per diluted share for the third quarter.
As reconciled in our earnings materials, we recorded free cash flow of $18 million for the quarter for the full year.
We are increasing our free cash flow guidance to a range of $20 million to $40 million.
Turning to our balance sheet total debt was $648 million. This is a decrease of $78 million from the prior quarter as we generated free cash flow and completed an equity raise in the quarter.
Offset by a $50 million deposit for the Chesapeake transaction.
As of September 30, we had $279 million of liquidity.
Our LTM adjusted EBITDA for Covenant purpose was $485 million and our quarter end leverage ratio.
Was one three times consistent with our strategy.
At the end of the third quarter, we were in full compliance with our financial covenants and had sufficient headroom.
As John previously mentioned Silver BOE announced the acquisition of certain oil and gas assets in South, Texas from Chesapeake for a purchase price of $700 million.
Chesapeake May also receive up to $50 million in contingent cash consideration based on future WTS prices.
In conjunction.
Function with the closing of the transaction, which is expected to be in the fourth quarter silver biomass secured a borrowing base upsized commitment of $425 million, which will increase our borrowing base from $775 million to $1 2 billion.
Also upon close we will upsize, our second lien notes by $350 million, which will increase our total facility size to $500 million in.
And extend the maturity date by two years to December 2028.
In addition to customary purchase price adjustments to $50 million deposit further reduces the cash payment at close.
As a closing condition silver bow is required to have 75% of oil and gas PDP volumes hedged for the first 24 months following closing and.
And 60% of volumes hedged for months 25 through 36 following closing.
We have been proactively adding hedges to meet these requirements over the last several months at or above our underwriting.
Lastly in September we completed a $148 million $148 million follow on equity offering consisting of 4 million shares approximately 70% for $2 8 million shares were primary shares issued by silver Bay.
Net of the secondary shares issued the underwriting spread and offering fees. The net cash proceeds received by silver boat was approximately $97 million. These proceeds were used to reduce credit facility borrowings ahead of closing the Chesapeake transaction.
And with that I will turn it over to Sean to wrap up our prepared remarks.
Thanks, Chris.
Silver boat continues to execute on its strategy and is positioned for significant value creation.
The transformational growth we have achieved over the last two years has been underpinned by a low cost and highly efficient operating platform that is able to expand through accretive acquisitions.
We expect M&A to remain eccentric theme across the sector in the near term.
As always our strategy emphasizes operational flexibility and real time capital allocation to our highest returns on investment.
The ability to pivot between oil and gas development has been and will continue to be a competitive advantage for us.
I want to thank our stakeholders for their continued support.
We look forward to closing the Chesapeake transaction in the fourth quarter and providing further updates on our next call.
And with that I will turn the call back to the operator for questions.
Thank you so much and at this time I would like to remind everyone in order to ask a question again press star one on your Touchtone keypad Keypads excuse me and we will pause just a moment to compile the Q&A roster.
Okay. It looks like our first call questioner is Tim residents from Keybanc capital markets. Tim go ahead.
Hey, good morning, everybody and thank you for taking my question.
I guess first just wanted to check.
Hey, get the Chesapeake acquisition, the timing is sliding a bit here.
Sure.
Just to ask the Big question is there any any concerns that this deal doesn't close.
Yes, I'll start there and then related to that.
Are you having if that's not the case are there discussions underway on gas takeaway terms with Williams and given the unique structure that Chesapeake had thanks.
Hey, good morning, gentlemen, and thanks for the question in terms of your first question, we continue to work closely with Chesapeake and.
When we first announced the transaction felt like and disclosed to.
So the market that we would.
Closed the transaction in the fourth quarter. So we remain on track to do that.
And are confident that the deal gets closed here in the near future.
In terms of.
Activity.
On the asset I will tell you that.
Working closely.
With Chesapeake team as well with our within our company our teams to be ready to take control of the asset. So we're confident that we'll be able to integrate.
The acquisition very successfully just like we've done with previous deals.
And then lastly in terms of trying to optimize the asset going forward you raised the question around pipeline agreements that the asset has I think as we dig in and really start to.
Really put our focus on the asset.
And grow volumes, there may be opportunities to revisit COO.
Contracts that improve the efficiency of the asset so.
Definitely something that's on our radar and.
We'll see if there's opportunities to address something there in the future.
Okay, we'll stay tuned on that.
And then those.
Interesting Sean your closing comments you talked about M&A.
As a central theme for the sector if I could.
Redirect that to you.
Is M&A.
Still like how high your radar screen is that as you get to the.
Finish line with Chesapeake and then given that you put a one times leverage target at the end of year end 2024.
We think about future M&A and you've been active.
How fungible is that target if you find the right deal.
I'm trying to understand that as you balance deleveraging versus growth.
Yes, yes.
Obviously, we've been very successful on doing transactions.
Thank you.
You are very efficient at.
At integrating them into the business once we identify them and close them, but we will continue to use our COO.
Criteria that we have all along right first it has to be.
Makes a lot of industrial sense.
In or around our existing asset base brings inventory in that competes for capital and to your point. Most most importantly, it's an increase of transaction.
<unk>.
All the share metrics as well as it doesn't put any stress on the balance sheet. So we'll continue to look for all those for now our focus is on getting the Chesapeake transaction closed and integrated but our BD team is always looking at other opportunities and we'll be very thoughtful on any other future transactions that we do.
Okay. Thank you and our next question comes from Charles Meade with Johnson Rice Charles go ahead.
Good morning, Sean and Steve and the rest of the silver proteins.
Sure.
I recognize you don't you guys you don't have the Chesapeake assets, yet, but I really appreciate that you share with us on on slide 15.
The well results that I guess Chesapeake to share with you and so I wonder if you could talk about or about.
How are how how these wells can we came in with your.
What you expected or what you underwrote on the acquisition and maybe in particular, it looks like that up that faith Sandy pad looks the most attractive to me not just because of the overall Boe rate, but also the 70% oil cut and does it look that way to you.
Yes kind of big picture.
When we announced the deal we discussed that.
The asset was going to see a ramping up production.
<unk> an industry Q as many new wells were brought online.
Chesapeake recently, Li announced in their call that the asset was doing 32, or <unk> 32000 BOE a day.
<unk> for the third quarter and that was right in line with what we felt like it was going to do so overall the asset is.
Performing.
Up to what we had underwrote wrote the deal for for the third quarter now specific to the wells.
We've been continuing to monitor.
Their performance the performance of the new Wells brought online would tell you is that overall the program is performing at what we expected it to.
Few wells performing above type curve, a few wells below but right in line overall in.
In terms of your call out of the faith property.
<unk> wells being all Eagle Ford Wells.
A really good area.
And performed slightly above where we thought so encouraging to continue to see strong Eagle Ford wells in that part of the property.
Got it and then my second question is really about.
Trying to get up a sense of the <unk> standalone.
Going into <unk> 24, and I recognize you guys haven't you haven't given 2004 guidance and that will come but but I'm wondering if you can just help me kind of put some of the pieces on the table because it looks to me.
That particularly with you guys accelerating that four wall gas pad and also the three the three well all the pad into <unk>. It looks to me like you're setting up for actually a big a big step up in organic growth.
In one Q24, so I guess, maybe the context, Steve you mentioned that you brought nine wells online.
In <unk>.
You said nine wells to sales in Q3 can you tell us what you think that number will be for Q4 and do you does it also look to you like youre going to have a big step up organically for <unk> 24.
Yes. Thank you Charles for the question, Yes, we're looking for for Q4 were looking for.
One of the four well pads oil pads that we're currently completing right now to come online.
And then additive to that we're looking to at our discretion to accelerate maybe another three well pad and other oil well pad over in the eastern extension to come online along with if we have some optionality for some additional gas in Webb County.
So that's kind of how it sets up right now today forward through to the end of the year.
And then with that.
We're looking at Q Q3.
In terms of our oil production per day.
We are looking at about <unk>.
I'd say better than.
Like we were guiding to before we're looking at a better than 15000 per day.
And.
At about.
Probably better than.
Better than 16, 5% or so roughly in that range for the fourth quarter.
Yeah, Charles So the way it is lining up right is we expect we will see strong oil growth like we mentioned in the call about 10% growth.
Q2, <unk> on oil.
And anticipate with the acceleration of that three well oil pad that we'll have strong exit rates.
And then the gas starts to kick in and so we'll have continued growth on an equivalent basis.
From fourth quarter to first quarter with much of the growth in the first quarter being driven by the high gas rate wells that are coming on so yes, I think on the base assets continued strong organic growth.
Really driving the growth on oil through end of year, and then starting to see the ramp of gas into the first quarter.
Okay, great. Thank you and our next call.
<unk> is going to be John Donovan Schafer from Northland capital markets Donovan. Please go ahead.
Hey, guys congratulations on the quarter and thanks for taking the questions.
I want to start kind of.
Dovetailing with the questions.
Prior questions of course, you don't have 2020 for guidance and Thats not something.
We're really here to talk about in any sort of formal or efficient way to that.
But what I want to.
What I'm trying to think about things are framed things as well.
When you when you announced the Chesapeake transaction.
And middle of August based on the slide deck you shared at the time it looks like you must have gone through a pretty thorough.
Internal set of projections around everything.
Given you showed.
Your path to getting down to onex leverage ratio and 24.
You kind of put out some numbers in the relative percent increase that you would get in 2000 and for free cash flow per share and some other things like that so so my question is between you know in the last sort of two five months between putting that deck together are growing through that exercise.
And where you stand today.
Your own kind of internal sense for 'twenty four.
Is that Directionally is it fair to say that that's directionally.
Improved.
With the <unk>.
With the.
Capital budget, you've been able to pull forward some of that into this quarter and get some wells done more quickly like it seems like there is.
The takeaway capacity improving it seems like there have been more positive developments.
So would you expect things to come out.
More favorably today, if you reran that exercise for.
For the whole company.
And comparing the before and after the acquisition.
Yes, I would tell you that the base assets for silver bow.
Are performing well.
Tim in slightly ahead for third quarter kind of in line.
For <unk> guide and full year. So the base assets are performing well, probably a little less capex.
With the cost reductions that Steve outlined.
And then.
I mentioned earlier, the Chesapeake assets are kind of performing in line with what we can see on a read through.
The information, we're receiving from a production standpoint, so I think what we disclosed at the time.
Of the transaction kind of laying out that over the next 12 months, we see EBITDA and that $825 to $925 million range.
And production in the mid 99.
<unk> 93 to 95000 BOE a day those numbers, we still think are.
Kind of where we're at.
<unk>.
No.
Think that we'll be able to deliver those once we take control of the asset and get into next year.
Okay and then.
As a follow up just.
Since you are not including the Chesapeake acquisition.
And the PDP production that would come with that in the Q4 guidance.
And then but you also do still expected to close in the fourth quarter.
I guess it feels like this is kind of almost automatically follows biologic, but I'm just trying to be thorough double check things here.
I mean, it's in your view it sort of safe to say the actual Q4 results should come in above guidance.
And maybe.
Two it sits above guidance.
More so above or only slightly above kind of depending on.
Whether it closes sooner or later.
And I'm asking partly just because.
Optically it would look like.
Your Q4 guidance is below <unk>.
Consensus, but my sense here is that that's probably because of the difference here im guessing analysts or may be factoring in those additional assets I just want to make sure I'm thinking about all of this correctly.
No no great question and you're spot on with the observation.
Thank is we've given a guide of sometime in the fourth quarter analyst have done the best with the information we provided today.
Model when that might occur.
<unk>.
Somewhere probably several of them, probably projecting mid quarter call or a mid quarter close.
With others may be projecting a December close so.
The guide that we put out yesterday was for Standalone Silver Bowl only.
Once we do close the deal.
And give an update to the market on the <unk> estimate and guide you'll see I think a true up.
A lot of the projections that are out there.
So yes, just to be clear right now we're out in market with just silver both standalone numbers.
Many of the analysts covering the company.
Combination of silver bow, Standalone, plus a part partial quarter Chesapeake contribution.
But yet.
Like I said once we do close we will plan to give an updated guide.
For the adjustment for the.
Chesapeake assets.
Coming into the Silverado numbers.
Okay. Thank you and our next question comes from Noel Parks with Tuohy Brothers No go ahead.
Hi, good morning.
Sure.
One thing that you talked a little bit about in the.
The prepared remarks and I also saw in the release you were talking about.
Austin Chalk co development I think in the central oil area and I recall more past discussion about the Austin chalk, particularly in Webb County so.
So what's the current thinking about.
The chalk and the Eagle Ford in the oily areas now.
Yes.
Our team over the last several years has really dug in on the Austin chalk started.
And their work in Webb County, and we shared a lot of that information and it's.
Okay.
And a lot of our materials, but.
Coming into this year, we had identified a couple of areas.
That had chalk potential.
Primarily in our central oil area, but also in our eastern extension area.
So we've.
In combination with drilling Eagle Ford have slotted in some chalk tests at.
At the same time and so I think it's on slide 15 of our presentation, we outline.
In that central oil area, a number of pads, where we drilled the chalk wells on.
We've brought on.
Yes.
Three chalk wells in that area, thus far and all are meeting or slightly above our expectations. So pretty excited about that.
In the eastern extension area, we brought on three chalk wells to date.
And those wells are kind of early on in their performance. So we're still assessing those results, but I think it just points to that hey, they're stacked pay opportunity within the basin.
We have a large footprint with post the Chesapeake close of nearly a quarter million acres in what's great about it is we will continue to scour not just the Eagle Ford, but also other zones across that acreage block.
Great. Thanks.
Well with the Eagle Ford of course, like with a development process, you're always learning and gathering data.
And.
The Austin Chalk has had so many different lives across so many different.
Pacings over the years so.
Is is there anything in particular incrementally back.
Your experience in Webb County, and sort of brought to the table that.
That clarified that.
Did have some decent potential in parts of central.
Central oil and eastern extension.
Could you ever.
Can you give a shot at sort of what that might mean in terms of.
Yes.
How many locations you might have incrementally or just a portion of the portion of the overall acreage where.
The chalk might work.
He can talk about what what characteristics make it look better in some places than others that would be great.
Yeah, Yeah really the fundamental change right from historical chalk development.
It's up in Giddings and through like the Karnes Austin chalk trend.
So quite a bit of activity.
Through 717, 18 19 timeframe.
What emerged with the Webb County, chalk was development not necessarily chasing fractured chalk but more.
Prosody, driven chalk and so when we really started to.
Understand that better and web we took that mindset and thought elsewhere, obviously, we identified in conjunction with the.
Sam play in northern Webb, the potential that it had and that's why we we were patient and pursued the Chesapeake transaction, because we are really excited about the chalk there.
But then took that same model elsewhere.
And it's starting to replicate itself the chalk doesn't have good property you're in doesn't have enough thickness across the good portions of the basin, but we've found pockets where it does.
So that's kind of the difference in the models from historical to what we're pursuing I would say is is less of a fracture play in more of a prosody thickness driven play.
So a little bit of conventional.
Reservoir development using horizontal drilling in.
Fracturing to unlock the resource.
In terms of quantifying the inventory obviously wet.
Webb County is where we have a lot of it.
We have a couple of hundred probably 100.
2500 may probably 125 gas chalk locations off top of my head.
Our footprint there is smaller than our web county, so it's not going to be those extent, but we're going to it's going to be additive to our inventory for sure.
Okay. Thank you and our next caller comes from Jeff Robertson with water Tower research one more time, if you'd like to ask a question. It is star one on your Touchtone keypad and Jeff with that go ahead.
Thank you good morning.
A question on the Chesapeake assets with the new wells that you highlighted that are being brought on can you talk about the natural decline on that asset base. When you fold it into silver Bowl and how that impacts the overall corporate natural decline rate.
Yes he is.
Sure.
The Eagle Ford Chesapeake had developed at <unk>.
Asset base going back as far as what the OE.
Eight nine timeframe so.
Overall, it has a lower that asset basis has a lower decline rate than silver both standalone.
So we're expecting that it will flat.
Flatten or decline.
Sure.
The base decline on our combined asset.
Here moving forward.
So brought it down probably a couple a couple of percent.
<unk> high <unk> low <unk> on a standalone basis down.
No.
The Chesapeake assets, we're probably in the mid twenties little bit higher than that so.
Dropping at a combined probably have one or 2%.
And then if you.
Think about co developing the chalk and the Eagle Ford and some of your areas does that have any issues with respect to infrastructure.
That needs to be addressed.
No actually it's a.
Benefit.
Especially.
Our web county area, both on the silver bow existing assets and then on the Chesapeake assets as we're able to leverage.
Existing Eagle Ford infrastructure.
And put the chalk into it so.
Most of those assets.
<unk> put in place to capture peak Eagle Ford development.
And have declined off a little bit San said Eagle Ford has so bringing on the chalk.
Actually taken advantages of existing infrastructure.
Thanks for taking my questions I appreciate it.
Okay. We have another question from Noel Parks with Tuohy Brothers No go ahead.
Hi.
Wanted to get your thoughts on one other topic so.
Gassy E&ps a number of them were the earliest ones to report.
As we listen to those companies talk about their outlook.
Alright, okay.
On LNG capacity coming online starting next year and what that does to the overall demand picture and hopefully get it to.
Commodity prices I was just wondering can you just talk a bit about.
Your general thoughts on.
Gassy Eagle Ford's role in LNG, and I guess I'm wondering in particular.
Web County area, whether you're maybe seeing new players coming in kicking the tires because.
Of course, everyone Appalachia looms large the haynesville looms large I was just wondering about.
Maybe what we should be looking for.
Neither.
New capital coming in for development or maybe even.
Purchasing or consolidation in the area.
Yes, yes, I think that.
As you look at the amount of LNG build out for <unk>.
Over the next several years you start to kind of look at the.
The imbalance of the demand of that LNG build out versus the supply and where is it going to come from.
The acknowledgement that.
Getting more out of the Appalachia is somewhat challenged as from from pipelines.
Getting being able to get to the Gulf Coast, Obviously, <unk> got strong growth in the Haynesville, but theres still a gap to fill that LNG build out. So yes, we're seeing that the Eagle Ford in just the strong performance of web County over the last few years us plus others see.
That.
Yes.
Probably one of the first places to look at to help fill.
Forthcoming LNG demand. So yes, I think its existing players plus new entrants that are looking to find gas to to fill some of the the LNG expansion that they're contracting into so sets us up well that we're long term players in the area understand the resin.
<unk> well.
Have a lot of great existing relationships and infrastructure. There. So we're excited about the opportunity exposes us to.
Much stronger gas prices in the coming years.
Great. Thanks, a lot yeah.
Yes, I appreciate it.
Okay. Thank you all for your questions and with that I will turn the call back over to CEO, Sean Woolverton for closing remarks.
Okay I appreciate that Greg.
We will wrap up I'll say I look forward to giving an update hopefully here in the near future on the close of Chesapeake and giving everyone. An early preliminary view look into our plans for 2024.
And with that we'll conclude our call. Thank you.
Thanks, John and ladies and gentlemen that does conclude today's call as he mentioned thank you all for joining and you may now disconnect have a great day everyone.
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