Q3 2023 SM Energy Co Earnings Call

Speaker 1: with forward-looking statements. I direct you to slide two of the accompanying slide deck, page six of the accompanying earnings release, and the risk factors section of our most recently filed 10K, which describe risks associated with forward-looking statements that could cause actual results to differ.

I direct you to slide two of the accompanying slide deck page six of the accompanying earnings release and the risk factors section of our most recently filed 10-K, which describe risks associated with forward looking statements that could cause actual results to differ.

Speaker 1: We will also discuss non-GAAP measures and metrics, definitions and reconciliations of non-GAAP measures and metrics to the most directly comparable GAAP measures, and discussion of forward-looking non-GAAP measures can be found in the back of the slide deck and earnings release. Today's prepared remarks will be given by our President and CEO Herb Vogel and our CFO Wade Purcell. I will now turn the call over to Herb.

We will also discuss non-GAAP measures and metrics definitions and reconciliations of non-GAAP measures and metrics to the most directly comparable GAAP measures and discussion of forward looking non-GAAP measures can be found in the back of the slide deck and earnings release, today's prepared remarks will be given by our president and CEO Herb Vogel and all.

Our CFO Wade Pursell I will now turn the call over to Herb.

Speaker 2: Thank you, Jennifer. Good afternoon, and thank you for your interest in FM energy. I will start on slide 4.

Thank you Jennifer and good afternoon, and thank you for your interest in SM energy.

On slide four.

Speaker 2: We are very pleased today to discuss our third quarter and year-to-date results. You'll see that we continue to deliver on our core strategic objectives for 2023, demonstrate the quality of our assets, and position our company for an even stronger 2024.

We are very pleased today to discuss our third quarter and year to date results Youll see that we continue to deliver on our core strategic objectives for 2023 demonstrate the quality of our assets and position our company for an even stronger 2024.

Speaker 2: I'll start by reviewing our progress against the objectives we set forth early in the year.

I'll start by reviewing our progress against the objectives, we set forth early in the year.

Speaker 2: First, deliver an increased return of capital to our shareholders.

First deliver an increased return of capital to our shareholders.

Speaker 2: In the third quarter, return of capital amounted to $114 million, which is up 31% from the previous quarter.

In the third quarter return of capital amounted to $114 million, which is up 31% from the previous quarter.

Speaker 2: In addition to the dividend, we repurchased and retired 2.35 million shares of stock.

In addition to the dividend, we repurchased and retired 235 million shares of stock from.

Speaker 2: From inception of the Return of Capital program in September 2022, we have now repurchased 7.7 million shares, or around 6% of the shares that were outstanding as of September 2022.

From inception of the return of capital program in September 2022, we have now repurchased seven 7 million shares or around 6% of the shares that were outstanding as of September 2022.

Speaker 2: Looking ahead, I'm very pleased to announce that 20% increase in our fixed dividend policy.

Looking ahead I am very pleased to announce a 20% increase in our fixed dividend policy.

Speaker 2: As we emphasized when we initiated the return of capital program, we seek to offer a sustainable dividend through the cycles in our industry. This increase is a testament to the confidence we have in our assets, capabilities, performance, and outcomes.

As we emphasized when we initiated the return of capital program, we seek to offer a sustainable dividend through the cycles in our industry.

This increase is a testament to the confidence we have in our assets capabilities performance and outlook.

Speaker 2: turning now to slide five. The second objective is to focus on operational execution.

Turning now to slide five.

The second objective is to focus on operational execution.

Speaker 2: This quarter, we enjoy continued strong well performance in both the Midland Basin and South Texas.

This quarter, we enjoyed continued strong well performance in both the Midland Basin and South Texas.

Speaker 2: This was complemented by faster drilling and the accelerated completion of three wells in South Texas.

This was complemented by faster drilling and the accelerated completion of three wells in South Texas.

Speaker 2: Also this quarter, our land team executed an asset exchange at our SweedieTec location.

Also this quarter, our land team executed an asset exchange at our Sweetie Peck location.

Speaker 2: This increased our working interest from around 42% to nearly 100% in nine 15,000-foot lateral, drilled but uncompleted wells, which we expect to be strong performers when they are turned in line early in 2024.

This increased our working interest from around 42% to nearly 100% in 915000 foot lateral drilled but uncompleted wells, which we expect to be strong performers. When they are turned in line early in 2024.

Speaker 2: Looking ahead, these wells are expected to contribute to our estimated mid-single digit oil growth next year.

Looking ahead. These wells are expected to contribute to our estimated mid single digit oil growth next year.

Speaker 2: Our third objective is to replace and build inventory during 2023.

Our third objective is to replace and build inventory during 2023.

Speaker 2: Year to date, we have increased our Midland Basin footprint by just over 29,000 acres, or about 35%. We contracted a fourth rig for the Midland Basin that commenced drilling on a Howard County pad in early October . We intend to move it to our new acreage position in North Martin and South Boston counties in December , once permits and other logistics are in place.

Year to date, we have increased our Midland basin footprint by just over 29000 acres or about 35%.

We contracted a fourth rig for the Midland Basin that commenced drilling on our Howard County pad in early October we intend to move into our new acreage position in northern Martin and South Boston counties in December once permits and other logistics are in place.

Speaker 2: Looking ahead, this rig is currently contracted for six months, and we are excited to initiate drilling in the new area, which we expect to contribute to both our high-quality inventory and 2024 oil production growth.

Looking ahead. This rig is currently contracted for six months and we're excited to initiate drilling in the new area, which we expect to contribute to both our high quality inventory and 2020 for oil production growth.

Speaker 2: In short, we have exceeded expectations on all fronts this year. As we wrap up the last two months of 2023, we expect to remain well positioned for a positive trajectory in 2024.

In short we have exceeded expectations on all fronts. This year as we wrap up the last two months of 2023, we expect to remain well positioned for a positive trajectory in 2024.

Speaker 2: I'll now turn it over to Wade to speak to some of the specifics behind these results and what to expect in the fourth quarter.

I'll now turn it over to Wade to speak to some of the specifics behind these results and what to expect in the fourth quarter weighted.

Speaker 2: Thanks, Herb. Good afternoon, everyone. Before I get into the details of the quarter, I'd like to step back, put some numbers behind the strategic objectives that Herb just walked through. Turning to slide six.

Thanks, Sarah good afternoon, everyone.

Before I get into the details of the quarter I'd like to step back put some numbers behind the strategic objectives that herb just walked through turning to slide six our.

Speaker 2: Our sustainable and repeatable long-term business model is generating substantial free cash flow, a 7% yield to current market cap over the last 12 months. In turn, we allocate that free cash flow with disciplined objectives to generate long-term value. We seek to one, maintain low leverage, two, maintain and build our high-quality inventory base, and three, return a predictable yield with upside opportunity to our stockholders.

Our sustainable and repeatable long term business model is generating substantial free cash flow, a 7% yield to current market cap over the last 12 months.

In turn we allocate that free cash flow with disciplined objectives to generate long term value.

We seek to one maintain low leverage to maintain and build our high quality inventory base and three return to predictable yield with upside opportunity to our stockholders.

Speaker 2: Drilling down on capital allocation on the top half of the slide at January 1st, 2022, as soon started the year with $333 million in cash, and since then, generated $1.2 billion of adjusted free cash flow. This has been allocated using round numbers as follows. Approximately 50 to 55% to debt reduction, reducing our debt to adjusted EBIT acts from 1.5 times to currently 0.7 times.

Drilling down on capital allocation on the top half of the slide at January one 2020 to assume started the year with $333 million in cash and since the end generated $1 $2 billion of adjusted free cash flow. This has been allocated using round numbers as follows approximately 50% to 55% to debt.

Reduction, reducing our net debt to adjusted EBITDAX from one five times to currently seven times, 10% to acquisition slash inventory and 30% as return of capital to stockholders with the cash balance increased to around $400 million.

Speaker 2: 10% to acquisition slash inventory, and 30% as return of capital to stockholders.

Speaker 3: with the cash balance increased to around $400 million.

Then looking at the bottom half of this slide we show these metrics for 2023 year to date, we entered 2023 was $445 million in cash and had essentially met our leverage target.

Speaker 3: Then looking at the bottom half of the slide, we show these metrics for 2023 year to date. We entered 2023 with $445 million in cash and had essentially met our leverage target.

Speaker 3: This year to date, we've generated $353 million of adjusted free cash flow.

This year to date, we've generated $353 million of adjusted free cash flow.

Speaker 3: With low-leveraging place, we've been able to lean in further on the return of capital to our stockholders while still maintaining inventory. Year-to-date capital allocation has been approximately 65% stockholders and 30% to acquisitions and increased acreage.

With low leverage in place we've been able to lean in further on the return of capital to our stockholders, while still maintaining inventory year to date capital allocation has been approximately 65% to stockholders and 30% to acquisitions and increased acreage.

Speaker 3: Looking ahead, I think you can assume that we will continue to maintain a thoughtful balance for long-term sustainability.

Looking ahead I think you can assume that we will continue to maintain a thoughtful balance for long term sustainability.

Speaker 3: Turning to slide seven and a quick look at the balance sheet, which remains very healthy. Net debt to adjusted evid acts point seven times. liquidity of $1.65 billion, including zero drawn on the revolver with commitments of $1.25 billion. Maturity staggered rateably from 2025 through 2028, offering significant flexibility. As I've mentioned, we are earning over 5% on invested cash. So no rush in taking down the 2025.

Turning to slide seven and a quick look at the balance sheet, which remains very healthy.

Net debt to adjusted EBITDAX, seven times liquidity of $165 billion <unk>.

Including zero drawn on the revolver with commitments of $1 $25 billion.

Maturity staggered ratably from 2025 through 2028 offering significant flexibility.

As I've mentioned, we are earning over 5% on invested cash so no rush and taking down the 2025.

So, let's turn to slide eight now and look at the details from the excellent third quarter results.

Speaker 3: So let's turn to slide eight now and look at the details from the excellent third quarter results.

Speaker 3: Production at 14.1 million B.O.E. or 153.7,000 B.O.E. per day with oil production at 44% or 67,000 barrels per day. Slightly exceeded our guidance. The beat was driven from South Texas where faster drilling and completion accelerated three wells that contributed to the quarter.

Production of $14 1 million Boe or 153, 7000 Boe per day with oil production at 44% or 67000 barrels per day slightly exceeded our guidance. The beat was driven from south, Texas, where faster drilling and completion accelerated three wells that contributed to the quarter.

Speaker 3: Strong oil production combined with higher sequential commodity prices supported gap net income of $1.88 per diluted share, adjusted EBIT acts of $476 million, cash flow from operations adjusted for working capital changes of $436 million, and adjusted free cash flow of $208 million.

Strong oil production combined with higher sequential commodity prices supported GAAP net income of $1 88 per diluted share adjusted EBITDAX of $476 million cash flow from operations adjusted for working capital changes of $436 million.

And adjusted free cash flow of $208 million.

Speaker 3: All of these bottom line results were up significantly sequentially, and I believe all beat consensus expectations.

All of these bottom line results were up significantly sequentially and I believe all beat consensus expectations.

Speaker 3: The financial statements are generally straightforward, although I will point out that we have earned a significant tax credit for the research and development efforts behind our optimized well performance. As we pointed out over the years, we have pioneered technology and innovation in the Permian Basin and continue research and innovation in South Texas Austin Chuck.

Financial statements are generally straightforward.

Although I will point out that we have earned a significant tax credit for research and development efforts behind our optimize well performance as we pointed out over the years, we have pioneered technology and innovation in the Permian Basin, and continued research and innovation and South Texas Austin Chalk.

Speaker 3: These efforts support a research and development tax credit.

These efforts support our research and development tax credit.

Speaker 3: In addition to the current year benefit for periods prior to 2023, we have recognized a $77 million benefit, which will be carried forward to future years, reducing cash taxes in those years. For your modeling purpose, this is expected to reduce our cash taxes in coming years by up to 75% until the carry forward is completely used, a significant future cash tax benefit.

In addition to the current year benefit for periods. Prior to 2023, we've recognized a $77 million benefit which will be carried forward to future years, reducing cash taxes in those years for your modeling purposes. This is expected to reduce our cash taxes in coming years by up to seven.

5% until the carryforward is completely used a significant future cash tax benefit.

Speaker 3: For purposes of adjusted net income, the one-time prior period carry forward was removed.

For purposes of adjusted net income to one time prior period carryforward was removed.

Speaker 3: Capital expenditures adjusted for change in our rules for $228 million. This came in below guidance, but it simply due to timing. So the difference gets pushed into the fourth quarter, which is a good segue to guidance on slides nine and 10.

Capital expenditures adjusted for change in accruals were $228 million. This came in below guidance, but it's simply due to timing. So the difference gets pushed into the fourth quarter, which is a good segue to guidance on slides nine and 10.

Speaker 3: Full year production guidance is narrowed at the high end of the previous guidance range to 55.1 to 55.4 million B.O.E. or 151 to 152,000 B.O.E. per day at 42 to 43 percent oil.

Full year production guidance is narrowed at the high end of the previous guidance range to 55, 1% to $55 4 million Boe or 151 to 152000 Boe per day at 42% to 43% oil implied fourth quarter production and is $13 seven.

Speaker 3: Implied fourth quarter production then is 13.7 to 14.0 million BOE or 149 to 152,000 BOE per day at approximately 42% oil.

To 14.0 million Boe.

Or 149% to 152000 Boe per day at approximately 42% oil the.

Speaker 3: The increased working interest in the nine duck wells gained in the sweetie peck asset exchange will come online early in 2024, benefiting first quarter 24 of production volume.

The increased working interest in the nine DUC wells gained in our Sweetie Peck asset exchange will come online early in 2024, benefiting first quarter 'twenty four production volumes.

Capital guidance is unchanged other than to add the cost associated with the increased working interest in the nine DUC wells from the Sweetie Peck asset exchange the full year guidance is now $1 1 billion.

Speaker 3: Capital guidance has unchanged other than to add the cost associated with the increased working interest in the nine duck wells from the Swedish pegasset exchange. The full year guidance is now $1.1 billion. This puts the fourth quarter at $290 to $305 million and is expected to include drilling 30 net wells, 17 in Midland and 13 in South Texas and completing 11 net wells in Midland. Illinois, we got it.

This puts the fourth quarter at $290 to $305 million and is expected.

To include drilling 30, net wells 17 in Midland and 13 in South, Texas, and completing 11 net wells in Midland.

LOE guidance for the full year is reduced we picked up a workover rig and expect the fourth quarter to range around $5 55 to $5 65 per Boe.

Speaker 3: We picked up a work over rig and expect the fourth quarter to range around $5.55 to $5.65 per VLE. And the full year to come in between $5.20 to $5.25 per VLE.

And the full year to come in between $5 20 to $5 25 per Boe.

Speaker 3: Transportation expires. It's coming in around $2.25 in the fourth quarter, keeping full year guidance around $2.50 per BOE. So in summary, great quarter, great execution by the team, solid cash flow generation resulting in significant return of capital to stockholders.

Transportation expense should come in around $2 25 in the fourth quarter, keeping full year guidance around $2 50 per Boe.

So in summary, great quarter, great execution by the team.

Solid cash flow generation, resulting in significant return of capital to stockholders.

Speaker 3: I'll now turn it back to Herb to walk you through a few highlights from the field. Herb?

I'll now turn it back to Herb to walk you through a few highlights from the field.

Thank you Wade.

Speaker 2: Thank you, Wade. At SM, we differentiate ourselves with a high quality of our asset base and the high caliber of our geophirons team targeting the best reservoir intervals, our engineering team using cutting edge simulation and data-driven analytics to optimize completion designs. And that is followed by flawless execution from our operations team.

At SM, we differentiate ourselves with a high quality of our asset base and the high caliber of our geoscience team targeting the best reservoir intervals.

Our engineering team using cutting edge simulation and data driven analytics to optimize completion designs.

And that is followed by flawless execution from our operations team.

Speaker 2: The following slides present third-party data from JP Morgan, Ann Vriss, Roy Stad, and TD Cowan, who all agree with us that our optimization efforts over the years continue to deliver improved performance.

Following slides present third party data from J P Morgan and Bruce <unk>, and TV Cowen who all agree with us that our optimization efforts over the years continue to deliver improved performance.

Skipping to slide 13, and Midland Basin, well performance relative to peers.

Speaker 2: Skipping the 513 and Midland Vason well performance relative to peers.

Speaker 2: On the left, Gabe Dowd at TD Cowen looks at oil production per foot over the past three years from SM compared to 20 other Midland peers, a full set of peers, and pointed out in his words, SM is numero uno.

On the left Gabe Daoud at TD Cowen looks at oil production per foot over the past three years from SM compared to 20 other Midland peers, a full set of peers and pointed out in his words SM as Boomer Ono.

Speaker 2: On the right side, we see inverse data that shows EURs by operator in the midland basin and compares SM to 12 peers. Again, SM is the leader.

On the right side, we see and risk data that shows <unk> by operator in the Midland Basin and compares to <unk> 12 peers again SM as the leader.

Speaker 2: This didn't just happen. Our investment in people and cutting edge data and technologies ultimately leads to the differential bottom line performance that is demonstrated here.

This didn't just happen our investment in people and cutting edge data and technologies ultimately leads to the differential bottomline performance that is demonstrated here.

Turning now to slide 14 and capital efficiency.

Speaker 2: Turning now to 514 and capital efficiency. On the left, we again see endless data. This time looking at capital efficiency or capital cost per barrel of EUR, by operator in the Midland Basin. Here, SM is among the top four leaders.

On the left we again see envious data this time looking at capital efficiency or capital cost per barrel of EUR by operator in the Midland Basin here SM is among the top four leaders.

Speaker 2: On the right side, we present RICE-TAD data for efficiency and profit pumps.

On the right side, we present <unk> data for efficiency and proppant pumping.

Speaker 2: SM ranks number two among 27 Permian peers for Prop and Pump per day.

<unk> ranks number two among 27 Permian peers for proppant pump per day.

Speaker 2: Behind the data, comparing SM to the top listed peer, SM laterals are about 5% longer, and SM pumps on average 15 to 20% more profit per foot. Again, our application of data and technology leads to these demonstrated peer leading efficiency.

Behind the data comparing SM to the top listed peer SM laterals are about 5% longer than SM pumps on average, 15% to 20% more proppant per foot.

Again, our application of data and technology leads to these demonstrated peer leading efficiencies.

Speaker 2: Turning to 515, here we show a graph from a JP Morgan report that incorporates endless data. JP Morgan points out in their report that SMS shown solid trends in both our Midland and South Texas program.

Turning to slide 15 here, we show a graph from a J P. Morgan's report that incorporates and risk data jpmorgan points out in their report that SM has shown solid trends in both our Midland in South Texas programs.

Speaker 2: In this figure, we focus on JP Morgan's presentation of SM's well performance in the Midland bass.

And this figure we focus on J P. Morgan's presentation of SMS well performance in the Midland Basin.

Speaker 2: This shows cumulative performance on a BUE basis by year in an effort to detect programs that may be high-grading zones drilled or otherwise detect declining asset quality.

This shows cumulative performance on a Boe basis by year in an effort to detect programs that may be high grading zones drilled or otherwise detect declining asset quality.

Speaker 2: This is not the case with SM as we have been co-developing multiple zones over the entire time period, not just high grading to the best single zones. And we develop a customized spacing for each drilling spacing unit and each interval. Our production forecast has been quite accurate and results will vary predictably based on the actual mix of zones drilled and the location of the pads being developed.

This is not the case with SM as we have been co developing multiple zones over the entire time period, not just high grading to the best single zones, and we develop a customized spacing per each drilling spacing unit and each interval.

Our production forecast had been quite accurate and results will very predictably based on the actual mix of zones drilled and the location of the pads being developed.

Skipping to slide 17, and our Midland Basin program. The chart on the left is produced by our team we update this each quarter to demonstrate the outperformance of our Howard County wells compared to 17 peers.

Speaker 2: Giving to 517 at our Midland Basin program. The chart on the left is produced by our team. We update this each quarter to demonstrate the outperformance of our Howard County Wells compared to 17 peers.

Speaker 2: The lower black line represents the average cumulative oil performance of the 17 pure operators in Howard County during the period. And the upper blue line is the average of SM well.

The lower Black line represents the average cumulative oil performance of the 17 peer operators in Howard County during the period and the upper Blue line is the average of SM wells.

Speaker 2: The SM average outperforms appears, assuming normalized lateral lengths, producing 34% more oil as updated through the first 25 months on production.

The SM average outperformance appears assuming normalized lateral lengths producing 34% more oil as updated through the first 25 months on production.

Speaker 2: And on the right side, organically building inventory and economic value, we show our progress in applying our Midland Operations model to our most recent acquisition.

And on the right side organically building inventory and economic value, we show our progress in applying our Midland operations model to our most recent acquisitions.

Speaker 2: At the 20,000 NET acre North Martin and South Austin counties acquisition, which we call a Klondike, implementation of the SM Operations Model has already included environmental efforts such as flare assurance and flare reduction.

At the 20000 net acre North Martin in South Austin Counties acquisition, which we call Klondike implementation of the SM operations model has already included environmental efforts, such as flare assurance and flare reduction.

Speaker 2: field-wide, LDR survey and spill risk mitigation. Community outreach including donations to the local school and fire department.

Our field wide Eldar survey and spill risk mitigation.

The outreach, including donations to the local school and fire Department.

Speaker 2: Production optimization of existing wells and facilities as well as SCADA and automation installation for improved surveillance of production prep.

Reduction optimization of existing wells and facilities as well as skater and automation installation for improved surveillance of production parameters.

Speaker 2: We are excited that we will be ready to spot our first well on this new acreage in December .

We are excited that we will be ready to spud, our first well on this new acreage in December.

Speaker 2: As we mentioned last quarter, we intend to target the Dean and Middle Spray very hand in.

As we mentioned last quarter, we intend to target that Dean and middle Sprayberry sand intervals, we estimate that new wells were breakeven on average less than $50 per barrel of oil assuming $2 50.

Speaker 2: We estimate that new wells will break even on average at less than $50 per barrel oil, assuming $2.50 per MCF gas and a 10% discount.

Per mcf gas and a 10% discount rate.

Speaker 2: As we detect, as I mentioned earlier, we completed an asset exchange with an offset operator which enabled us to increase our working interest from around 42% to almost 100% in nine new 15,000-foot lateral wells.

At Sweetie Peck as I mentioned earlier, we completed an asset exchange with an offset operator, which enabled us to increase our working interest from around 42% to almost 100% in nine new 15000 foot lateral wells.

Speaker 2: These wells are expected to be online in the first quarter, setting us up for stronger oil production early in the year.

These wells are expected to be online in the first quarter setting us up for stronger oil production early in the year.

Speaker 2: Turning now to South Texas in slide 18. In 2023 to date, we have brought on 30 wells that have reached peak IP30 rates. These wells have averaged over 1900 BOE per day peak IP30 with an average of 43% oil and 72% liquids.

Turning now to South Texas on Slide 18.

2023 to date, we have brought on 30 wells that have reached peak IP 30 rates. These wells have averaged over 900 Boe per day peak IP 30, with an average of 43% oil and 72% liquids. This.

Speaker 2: This includes wells across our acreage position in both liquid rich gas and high oil content areas as you can see by the location of the blue star.

This includes wells across our acreage position in both liquids rich gas and high oil content areas as you can see by the location of the Blue stars.

Speaker 2: Overall, SM has completed 98 wells in the Austin Chalk that have reached IP 30 as of October , 2020.

Overall SM has completed 98 wells in the Austin chalk that have reached the IP 30 as of October 2023.

And turning to slide 19, we are very excited to have our new operation surveillance room fully up and running in the third quarter.

Speaker 2: And turning to slide 19, we are very excited to have our new operations surveillance room fully up and running in the third quarter. This centralized facility is a result of collaboration among several SM teams. Production operations, our Permian instrumentation, electrical automation and communications team, advanced analytics and emerging technologies, IT, Operation Technology Facilities and Office Management.

This centralized facility as a result of collaboration amongst several SM team's production operations, our Permian instrumentation, electrical automation and communications team advance analytics and emerging technologies.

Operations technology facilities and office management.

Speaker 2: It empowers our operation team with leading technologies that serve to improve operating efficiencies, reduce operating costs, and ensure improved environmental storage.

It empowers our operations team with leading technologies that serve to improve operating efficiencies and reduce operating costs and ensure improved environmental stewardship.

Speaker 2: The technology's employed enable monitoring and communicating with field personnel as well as midstream companies and generating automated responses thereby cutting reaction time.

The technology is employed enable monitoring and communicating with field personnel as well as midstream companies and generating automated responses, thereby cutting reaction times for.

Speaker 2: For example, the monitoring and automated response capabilities enabled early detection and resolution of potential compressor downtime events prior to shutdown.

For example, the monitoring and automated response capabilities enabled early detection and resolution of potential compressor downtime events prior to shutdown.

Speaker 2: So I'll wrap up by reiterating our theme. SM Energy presents a sustainable and repeatable business model that is characterized by cutting edge technology, outstanding operations, a strong balance sheet, growing return of capital stockholders, now with an increased and durable, fixed dividend and strategic inventory growth.

So I'll wrap up by reiterating our theme SM energy presents a sustainable and repeatable business model that is characterized by cutting edge technology outstanding operations, a strong balance sheet growing return of capital stockholders now with an increase in durable fixed dividend and strategic inventory growth.

Speaker 2: Thank you for your interest in SM Energy and I look forward to our Q&A call tomorrow.

Thank you for your interest in SM energy and I look forward to our Q&A call Tomorrow.