Q4 2023 Parex Resources Inc Earnings Call
Operator: Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Parex Resources 2023 Annual Results Conference Call. All lines have been placed on mute to prevent any background noise.
Okay.
Good morning, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the Parex resources 2023 annual results 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.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star followed by the number one on your telephone keypad. And if you would like to withdraw that question, press star one again. Thank you. I would now like to turn the conference over to Mike Kruchten, Senior Vice President, Capital Markets and Corporate Planning. Mike, you may begin your presentation. Good morning, everyone, and welcome to Parex's fourth quarter 2023 conference call and webcast. My name is Mike Kruchten, and on the call with me today are our President and Chief Executive Officer, Imad Mohsen, our Chief Financial Officer, Sanjay Bishnoi, and our Chief Operating Officer, Eric Furlan. Please note that at any time, telephone participants on the call can press star 1 to submit a question.
Would like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you would like to withdraw that question Press Star. One again. Thank you I would now like to turn the conference over to Mike Christian <unk> Senior Vice President capital markets and corporate planning, Mike You May begin your conference.
Good morning, everyone and welcome to partners fourth quarter 2023 conference call and webcast. My name is Mike <unk> and on the call with me today are our President and Chief Executive Officer, and Matt Wilson, Our Chief Financial Officer, Sanjay destroyed and our Chief operating Officer, Eric Furlan.
Please note that anytime telephone participants on the call compressed star one submitted questions. As a reminder, this conference call includes forward looking statements as well as non-GAAP and other financial measures with the associated risks outlined in our news release, and MD&A, which can be found on our website or at SEDAR com.
Michael Kruchten: As a reminder, this conference call includes forward-looking statements, as well as non-GAAP and other financial measures, with the associated risks outlined in their news release and MD&A, which can be found on our website or at CDARplus.ca. Note that all amounts discussed today are in U.S. dollars, unless otherwise stated. I'll now turn the call over to Imad. Please go ahead.
Note that all amounts discussed today are in U S dollars unless otherwise stated I'll now turn the call over to Matt. Please go ahead.
Imad Mohsen: Thank you, Mike, and good morning, everyone. Before I turn it over to Eric to discuss our recent operational and reserve results and to Sanjay to provide the financial overview, I'd like to share some high-level commentary on our 2023 performance. And now we are well positioned for the future. I will conclude the call with some remarks on Parex's output.
Thank you, Mike and good morning, everyone.
Before I turn it over to Eric to discuss our risk recent operational and reserves results.
Sanjay to provide the financial overview I would like to share some high level commentary on our 2023 performance.
Now we are well positioned for the future.
I will conclude the call with some remarks on taxes okay.
Imad Mohsen: In 2023, our assets performed well and generated record full-year and fourth-quarter average production, while delivering excellent safety performance throughout the year. Including share buybacks, production per share was up 12% when compared to the previous year. And over the last three years, we have been growing production per share at roughly 15% a year. And over the same period, our average return of capital employed was over 30%. For 2023, our PDP reserve replacement ratio was 100%.
In 2023, our assets performed well and generated record when here Adam fourth quarter average production.
While delivering excellent safety performance throughout the year.
Including share buybacks production per share was up 12% when compared to the previous year.
And over the last three years, we have been growing production per share roughly 15% a year.
And over the same period, our average return on capital.
Employ to us over 30%.
For 2020 three our BD peers, those replacement ratio of 100% and RPT P Reserve life Index remained approximately.
Imad Mohsen: And our PDP reserves life index remains approximately four years, roughly consistent with where it was over the last five years. As a conventional producer, where shorter reserve life indexes are more common compared to unconventional producers, our assets extend beyond the reserves book and include a 5.4 million net acre land position that we have acquired over the last three years. Our ongoing efforts in permitting, seismic analysis, and comprehensive block modeling are yielding positive results. We have doubled our portfolio in terms of prospective targets and have graded our future opportunity pipeline. For 2024, our long-term planning incorporates lessons learned from 2023. Our guidance is robust and incorporates layers of contingency to navigate potential volatility.
Four years, roughly consistent with where it was.
Over the last five years.
As a conventional producer we're shorter reserve life index is are more common.
Compared to our conventional producers or extend beyond the reserve and include five or <unk> 4 million net acre land position that you have acquired over the last three years three years.
Our ongoing efforts in permitting seismic analysis and comprehensive block modeling are yielding positive results. We have doubled our portfolio in terms of prospective targets and have high graded our future opportunity pipeline.
For 2024 hour long term planning incorporates lessons learned from 'twenty to 'twenty three our guidance is robust corporate players of contingency to navigate potential volatility the midpoint production guidance. We have said is a key.
Eric Furlan: The midpoint production guidance we have set is achievable and has sufficient remaining contingency despite the shutdown we faced in the past month. Today I am Confident with our base production, where we are seeing the initial benefits from our water flood investments in Soka, at Cabastero, and Block 34. I'm optimistic about our near-term growth at Arauca and excited about leveraging the upside of our large land base throughout through exploration and exploitation in Colombia, a country where we have a proven competitive advantage. With that, I'll invite Eric to discuss our operational and reserve results. Thanks, Imad.
Favorable fishing.
Fishing remaining contingency despite.
The shop, and we face the basketball.
Today I am.
Confident our base production.
Our base production, where we are seeing the initial benefits from our waterflood investments in Socal I'd give us their touch four im optimistic about our near term growth at our Orca and excited about leveraging the upside of our large land base.
Exploration and exploitation in Colombia, the country, where we have a proven competitive advantage with that I will invite Eric to cover our operational and reserve results.
Thanks, So Matt regarding our 2022 reserves report, it's fair to say that it was below Madison expectations.
Eric Furlan: Regarding our 2023 reserves report, it's fair to say that it was below management expectations. However, three items that provide us with some positive outlook for the future of the 1P, and 2P reserves are: We will have better visibility of the extent of our Iraqi aid once we're finished testing the remaining zones, which is happening as we speak. And once we complete appraisal drilling, for 2024, our exploration plan includes targeting three high-impact Big E exploration wells, as well as roughly five near field exploration targets that have a higher chance of success relative to the high risk, high reward Big E program. And as Matt alluded to, we've been upgrading our portfolio, and we see significant runway in Columbia. In the fourth quarter, production averaged 57,329 BOE per day, up 6% compared to the previous year.
Adam just to provide us with some positive outlook for the future of the <unk> reserves are.
We will have a better visibility to the extent of our orca eight once we're finished testing the remaining zones, which is happening as we speak and once we complete appraisal drilling.
Our 2024, our exploration planning to spud three high impact exploration wells as well as roughly five near field exploration targets that have a higher chance of success relative to the high risk reward program.
Program and as Matt alluded to we've been high grading our portfolio, we see significant runway in Colombia.
In fourth quarter production averaged 57329 Boe per day up 6% compared to the previous year as that Matt had mentioned this is a quarterly record for parts I'm pleased to say that we are back at full operations at both the railcar conscious with <unk> already ramped up to approximately 75%.
Eric Furlan: As Imad mentioned, this has been a quarterly record for Parex. I'm pleased to say that we are back to full operations at both Arauc and Capachos, with Capachos already ramped up to approximately 75% of where it was before shutting down. I want to thank our team for working with the Colombian government and our community stakeholders to quickly come together and reach a mutually beneficial solution. At Cabo Stero, we are seeing success with our water flood injection efforts.
Or where it was before shutting want to thank our team for working with the Colombian government and our community stakeholders to quickly come together and reach a mutually beneficial solution.
Our copper still we are seeing success from our waterflood injection efforts. Our production is ahead of our budget. We're also excited about our polymer flooding pilot that we started the end of last year. The polymer injection has gone smoothly and we have started a comprehensive monitoring program.
Sanjay Bishnoi: Our production is ahead of our budget. We're also excited about our polymer flooding pilot that we started at the end of last year. Polymer injection has gone smoothly, and we have started a comprehensive monitoring program. We look forward to getting a full picture of the effectiveness of the technology over the next six months or so and are planning to provide an update in the second half of 2024. We're optimistic about what we're seeing so far from enhanced oil recovery or EOR efforts and what it could mean for future increases in recovery time. With that, I'd invite Sanjay to please go ahead.
We look forward to getting a full picture of the effectiveness of the technology over the next six months or so and are planning to provide an update in the second half of 2024.
We're optimistic about what we're seeing so far from enhanced oil recovery or you our efforts and what it could mean for future increases in recovery factor.
With that I'd invite Sanjay to please go ahead.
Sanjay Bishnoi: Thanks, Eric. I'm encouraged by our progress, which spans our social and access teams to our operational and technical teams, and I look forward to helping execute the business plan in 2024. Let's now look at the financial picture of our business. Funds flow provided by Operations for the Quarter was $193 million, supported by strong commodity pricing, growing production, and current taxes that were better than expected, offset by higher production costs. The better than expected result in current tax is primarily driven by the surtax calculation for 2023, ending up at 10 percent versus our prior expectation of 15 percent. This was due to the levels at which Brent prices ended in 2023, and with 2023 being the first year of the surtax, there was clarity provided by the government on the calculation of the surtax itself. In addition, a court ruling in Columbia reinforced the deductibility of royalties from taxable income. Our production costs were higher mainly because of higher energy costs, workovers, and the Colombian peso appreciation against the U.S. dollar. Higher energy costs are primarily a result of drier conditions in Columbia, where a significant portion of power is derived from hydroelectric power.
Thanks, Eric.
I'm encouraged by our progress, which spans our social and access teams to our operational and technical teams and I look forward to helping execute the business plan in 2024.
Now look at the financial picture of our business funds.
<unk> flow provided by operations for the quarter was $193 million supported by strong commodity pricing growing production and current taxes that were better than expected offset by higher production costs.
The better than expected results in current tax is primarily driven by the surtax calculation for 2023, ending up at 10% versus our prior expectation of 15%.
This was due to the levels at which Brent prices ended in 2023, and with 2023 being the first year of the Surtax. There was clarity provided by the government on the calculation of the surtax itself.
In addition, a court ruling in Colombia reinforced the deductibility of royalties from taxable income.
Our production costs were higher mainly because of higher energy costs, Workovers and the Colombian peso appreciation against the U S dollar.
Energy costs are primarily a result of dryer conditions in Colombia, where a significant portion of power is derived from hydroelectric sources.
Sanjay Bishnoi: We ended the quarter with a working capital surplus of $79 million. The sale of a large export cargo in the fourth quarter and the timing difference between collecting cash on that cargo versus closing the quarter resulted in a $90 million draw on our credit facility that has been partially repaid. We are currently in a positive net debt position, cash less the credit facility. But depending on commodity prices, we forecast that we will keep a small draw on the credit facility to manage capital requirements at different times during 2024. In the long term, we do not see Parex in a net debt position, and one item worth highlighting outside of production that can support working capital will be the deployment of $30 to $50 million of long-lead material and equipment inventory off of the balance sheet this year. Our 2024 plan that was released last month is governed by our long-term capital allocation framework, which, consistent with prior years, has us returning approximately 33% of funds flow to the shareholder while we reinvest the remaining back into the business. In 2023, we met our goal of returning 33 percent of funds flow, returning $224 million through dividends and share repurchase.
We ended the quarter with a working capital surplus of $79 million the sale of a large export cargo in the fourth quarter and the timing difference between collecting cash on that cargo versus closing the quarter resulted in a $90 million draw on our credit facility that has been partially repaid.
We are currently in a positive net debt position cash cash less the credit facility.
But depending on commodity prices, we forecast that we will keep a small draw on the credit facility to manage capital requirements at different times during 2024.
Long term, we do not see <unk> and a net debt position and one one item worth highlighting outside of production that can support working capital will be the deployment of 30% to $50 million of long lead material and equipment inventory off the balance sheet. This year.
Our 2024 plan that was released last month is governed by our long term capital allocation framework, which consistent with prior years has us returning approximately 33% of funds flow to the shareholder while we reinvest the remaining back into the business.
Our 2023.
In 2023, we met our goal of returning 33% of funds flow returning $224 million through dividends and share repurchases.
It is worth restating here that the business interruption that we recently experienced in the northern U on us.
It was within the contingency parameters that have been incorporated into our outlook and that these interruptions have not materially changed our outlook for the year.
Sanjay Bishnoi: It is worth restating here that the business interruption that we recently experienced in the Northern Llanos was within the contingency parameters that have been incorporated into our Outlook, and that these interruptions have not materially changed our Outlook for the year. We continue to build on our return of capital track record, which is one of the best in the E&P space. Cumulatively, over the past five years, we have returned over 1.5 billion Canadian dollars through dividends and share buybacks, which is about two-thirds of our current market capitalization today. With our track record firmly established, I look forward to being a part of the team that is focused on capitalizing on the opportunity set that we see in Columbia. With that, I would now like to turn the call back to Imad for some final remarks. Please go ahead, Imad.
We continue to build on our return of capital track record, which is one of the best in the E&P space cumulatively over the past five years, we have returned over $1 5 billion Canadian dollars through dividends and share buybacks, which is about two thirds of our current market capitalization today.
With our track record firmly established I look forward to being a part of the team that is focused on capitalizing on the opportunity set that we see in Colombia with that I would now like to turn the call back to you Mark for some final remarks. Please go ahead Marc.
Thank you Sanjay.
Our expectations for 2024 hour hotline.
Confident that we have taken the right steps to be well positioned to outperform.
Resolving the recent situation in London Alamos was imperative for US it is important to note.
Imad Mohsen: Thank you, Sanjay. Our expectations for 2024 are high, and we are confident that we have taken the right steps to be well positioned to outperform. Resolving the recent situation with modern illnesses was imperative for us.
But we came to a framework with the community that should provide long term stability.
The company's ability to collaborate with the governments and communities effectively is instrumental and driving long term operational momentum for us.
Especially in this new area, where we anticipate the strong capital efficiency.
Imad Mohsen: It is important to note that we came to a framework with the community that should provide long-term stability. The company's ability to collaborate with the government and communities effectively is instrumental in driving long-term operational momentum for us, especially in this new area where we anticipate strong capital efficiency based on the results so far from Morocco 8.
Based on the results so far from our okay.
I'm excited about what's to come in.
Relates to the portfolio.
Okay demonstrates our execution ability on high impact exploration, which is one of the key reasons why investors should be attracted to parks.
Regarding our foothills ammonia was a perpetual.
We are making meaningful progress in this area with significant potential that could enhance our growth profile.
Within the footprint of the Mou.
Imad Mohsen: I'm excited about what's to come. And as it relates to the portfolio, Arauke demonstrates our execution ability on high-impact Big E exploration, which is one of the key reasons why investors should be attracted to Parex. Regarding our foothills, I want to use Equipetrol.
Already underway on several fronts.
Regulatory matters related to.
So infrastructure access and this is part of the around exploration block once due in January.
Our team remains focused on achieving year over year production increases.
And having capital efficiency.
And delivering exploration success.
Imad Mohsen: We are making meaningful progress in this area with significant potential that could enhance our growth profile. Within the FOTAS MOU, progress is already underway on several fronts, such as regulatory matters related to infrastructure access and the location of the Arantis Exploration Well at Block 1-2 in January. Our team remains focused on achieving year-over-year production increases.
In my mind, we are taking the right steps to execute these which in turn should result in strong free cash flow growth reserve increases in shareholder value.
Joanne I extend my gratitude to our dedicated staff for their hard work.
I also express appreciation to our shareholders.
The sport despite recent volatility.
Our team and strategy are on the right trajectory.
Imad Mohsen: Enhancing capital efficiency and delivering exploration success. In my mind, we are taking the right steps to execute these, which in turn should result in strong free cash flow growth, reserve increases, and shareholder value. To end, I extend my gratitude to our dedicated staff for their hard work. I also express appreciation to our shareholders for their support, guidance, and volatility. Our team and strategy are on the right trajectory.
This concludes our formal remarks, I would now like to turn the call back to the operator to start the Q&A session for the investment community.
Thank you.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Your first question comes from the line of Alejandro Demichelis from Jefferies. Please go ahead.
Okay.
Yes. Good morning. Thank you very much for taking my question couple of questions. If I may.
Operator: This concludes our formal remarks. I would now like to turn the call back to the operator to start the Q&A session for the investment community. Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Alejandro De Michelis from Jeffreys. Please go ahead.
First one could you please give us a bit more detail on what these frame agreement with the community entail.
That's dependent on some kind of delivery from the government or is that something that <unk>.
Todd in the hands of Forex.
And then the second question is maybe you can give us your view on how you are seeing.
Alejandro Anibal Demichelis: Thank you very much for taking my question. I have a couple of questions, if I may. First one, could you please give us a bit more detail on what this framework agreement with the communities entails and whether that's dependent on some kind of delivery from the government or is that something that is entirely in the hands of Parex? And then the second question is, maybe you can give us your view on how you're seeing your operating costs developing through the rest of 2024, given the volatility of electricity prices. Thank you. I'll direct the first question on the communities to Imad, and then Eric can talk about the operating system. So, thanks, Alejandro. The community framework has two components, indeed.
Our operating costs developing through the through the rest of 2024, given the volatility.
Yeah.
Thank you. The first question on the community to Ahmad and then Eric can talk about the operating cost.
So thanks for the answer.
The community framework has two components. Indeed, one component has to do with.
Long term government promises to the community.
And the requirements for infrastructure spend the government indicated that they would wish to do their part.
Third we also have a very clear set of demand.
And synergies with the community in the long term that we agreed to I would say the biggest element. There was has to do with connecting the expanding a little bit the local gas infrastructure in the area.
Imad Mohsen: One component has to do with long-term government promises to the community and requirements for infrastructure spending. The government indicated that they would will do their part. That being said, we also have a very clear set of demands and synergies with the community in the long term that we agreed to. I would say the biggest element there has to do with expanding the local gas infrastructure in the area for distribution to people living there and our supply to that network. And from these kinds of agreements, other than the fact that people commit to doing work together and extend it over a long period of time, by creating that interdependency, say that the gas comes from our field that feeds people's cooking stoves, etc., makes it much more profitable for everybody that we keep producing.
For distributions to people living there an hour.
Fly to that network and forming these kinds of agreements other than the fact that people commit to do work together and extends over a long period of time.
By creating that interdependent C C. The gas comes from our field salespeople.
Cooking stoves et cetera. It makes it much more profitable for everybody is that we keep producing.
So we see it as an investment in our future as well.
The next question.
Regarding operating costs.
We've already discussed the three main components side of it.
The Colombian peso power more cohorts that really drove the three things.
As far as what we see going forward. So power is still at a slightly elevated level, but it is not hitting the peaks that we saw last year.
Eric Furlan: So we see it as an investment in our future as well. Do you want to answer Eric's next question? Regarding operating costs, as we've already discussed, there are three main components there. There is the Colombian peso, power, and workovers that really drive those three things.
Obviously, that's because of the dry season and electric power generation. So we're seeing some stabilization there at a lower level than we had last year. The other thing that we can control as workovers.
Eric Furlan: As far as what we see going forward, power is still at a slightly elevated level but is not hitting the peaks that we saw last year. You know, obviously that's because of the drier season and hydroelectric power generation. So we're seeing some stabilization there at a lower level than we had last year. The other thing that we can control is workovers. We've had a big effort in stabilizing our power system in southern Casanare. Disruptions in the power system cause wells to go down, and that increases workovers. And we've had to compensate for some of the longer-term social shutdowns. I'm pleased to say that we brought Capachos back online and will not require any OPEC funds for workovers.
We've had a big effort in stabilizing our power system and the southern cautionary disruptions in power system caused wells to go down that that increases Workovers and we've had and also compensating for some of the longer term social shot shutdowns I'm pleased to say that we brought capacity was back online and will not require any op.
Funds for Workovers, all the wells came back online after that short shot and so we think we can really impact that workover number by keeping things stable and had a really good year. So far the CRP is a bit out of our control and we see power elevated but down from last year.
Okay. That's great. Thank you.
Your next question comes from the line of Conrad birthday, Nicky from Peters <unk> Company. Please go ahead.
Eric Furlan: All the wells came back online after that short shut-in, so we think we can really impact that workover number by keeping things stable. And we've had a really good year so far. The COP is a bit out of our control, and we see power elevated, but down from last year.
Hi, everyone. Thanks for taking my question I just had a question around the ramp up a part shows.
It's four days after the blockades finished production is already is back to 75%.
Conrad Michal Bereznicki: That's great. Thank you. Your next question comes from the line of Conrad Bereznicki from Peters & Company. Please go ahead. Hi, everyone.
Are you doing differently this time to get that ramp up to be a lot quicker.
Then also when do you fully expect to be back to that 5000 barrels a day.
Hey, good morning, Conrad I'll pass that again here.
Eric Furlan: I just had a question around the table to get that. Unknown Attendee, Luke Davis, Roman Lores, Sanjay Bishnoi, Kevin Fisk, Parex Resources, Good morning, Conrad. I'll pass that again to Eric. Good morning, Conrad.
Good morning Conrad.
So it was a bit short of shut in we had a when we shut the field down we had the opportunity to shut it down in a way to minimize.
Eric Furlan: You know, so it was a bit short of shut-in. We had a when we shut the field down, we had the opportunity to shut it down in a way to minimize, you know, surge impacts and all the pumps. So, the field was shut down quickly, but in an efficient manner, then we brought everything back online, and everything did come back online, which is nice to see. We're actually at about 80% of pre-shutdown, and we expect now, as the wells clean up, to get back to full capacity of Capachos in the next seven to 10 days, I would expect. Just one more quick question, you're testing the Arauca... My, Conrad, when it comes to EROCA 8, you know, we're finalizing the final stages of the last test. They'll happen over the next couple of weeks, and it really depends on what zone we decide to produce at and the timing, but we expect EROCA 8 to start producing roughly between mid-March to mid-April, while we'll have that fully online.
Serge impacts on all the pumps.
So the field was shut down quickly.
No.
<unk> manner than we bought everything back online and everything did come back online, which is nice to see we're actually at about 80%.
Our pre shutdown and we expect now.
As the wells clean up to get back to full capacity in the next seven to 10 days I would expect.
Got it no. Thanks for that just one more quick question you are testing their rock or eight well right now in the Guadalupe when should we expect results on that test is that coming in the next couple of months is that something with Q1 win when should we look for timing on that on those results.
Our Colorado when it comes to the road to eight.
We're.
Finalizing the final stages of the loss test that will happen over the next couple of weeks and it really depends on what is the only decided to produce that.
Timing, but we expect roughly eight roughly to start producing between mid March through mid April we'll have not fully online.
Eric Furlan: And then we're also proceeding with drilling the additional delineation wells in that area. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Phil Flonick from 8 Capital. Please go ahead. Yeah, thanks. Good morning.
And then we're also proceeding with drilling the additional delineation wells in that area.
Okay.
Got it no that's very helpful. I have no further questions.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad. Your next question comes from the line of Phil slow net from eight capital. Please go ahead.
Yes, thanks, good morning.
Phil Flonick: Just further on to Rauka 8, just kind of thinking more, you know, as you continue to test that and drill additional wells around that, could there be any kind of a major report? Because you already did book some reserves at Rauka 8. Sure. Thanks, Bill. Good morning.
Just just further onto a railcar.
Just kind of thinking more.
As we continue to assess that and drill.
All wells around that.
Could there be any kind of a major report that to you already did book some reserves at the <unk> eight.
Sure Thanks, Bill and good morning.
Eric Furlan: Eric. Sure, I mean, the key part, as we've mentioned with Erolka and the Erolka-8 discovery, is the fact that we've got one well, and really to understand the mapping and size and materiality, you need several delineation wells. And the first one of those will be spied upon immediately after the completion of the Erolka-8 test. So is a mid-year report a possibility? It sure is, depending on the timing and the results and the materiality of what we're seeing.
Eric.
Sure I mean.
The key part as we've mentioned.
And they are all key discoveries back when we've got one well and really trying to understand the mapping of the size of materiality you need several delineation wells and.
First one of those will be spud immediately after that.
<unk> of the Iraq.
Eight testing.
Is a mid year report, possibly insurance, depending on the timing of the results and the materiality of of what we're seeing but it's certainly something that we've got our eyes on.
Eric Furlan: But it's certainly something that we've got our eyes on to proceed with. Okay, thanks. Just a follow-up, just like kind of on the lower risk side of things, you know, what could we look forward to that could, you know, help to offset the reserve revisions that you were impacted by with the 2023 report? As far as, you know, the reserve divisions, you know, what are we looking at as far as reserves are concerned down the road? You know, the first thing I would highlight is the Southern Kastaneri.
To proceed with.
Okay. Thank you.
A follow up just like Tom just on the lower risk side of things.
What can we look forward to that could help to offset.
The reserve revisions that you are impacted by 2023 report.
As far as the reserve sufficiency.
Are we looking at as far as reserves down the road.
First thing I would highlight is the southern cost scenario.
Eric Furlan: I know there are some revisions there this year that, in the scheme of things, were really just minor adjustments up and down, as we've seen for a lot of years in Southern Kastaneri, but the performance there is working out quite well. Our Cabristero block, which is a bit ahead of Block 34 as far as EOR deployment is concerned, is performing very well. You know, we're happy we're above budget there. We're about to set new records for production on the block. And really, we haven't added any wells there for quite a few months. So we are seeing some good stabilization, and some good EOR performance. So that whole what the Southern Kastaneri decline trends look like going forward. Small changes in performance from water floods have a big long term reserve impact. So that's what we're looking at there. As far as, you know, the next one that comes to mind, obviously, is delineation around Rauka 8, an exciting discovery. And one well does not make a reserve booking. You need something to map.
I know there was some revisions or this year that in the scheme of things.
Really just minor adjustments up and down as we've seen in a lot of years in southern cost scenario, but the performance. There is working out quite well our camera sterile block that that's a bit ahead of block 34 as far as EUR deployment is performing very well.
We're happy we're above budget there are both set new records for production from the block and really we haven't added any wells there for for quite a few months. So we are seeing some stabilization. Some good EUR performance so that that whole what is the southern cautionary decline trends looked like go forward small changes in performance from waterflood.
Big long term reserves impacts so that's.
What we're looking at there as far as the next one that comes to mind, obviously is delineation around railcar eight exciting discovery and one well does not make a reserves Vulcan you need something to map. So so that snacks and then we've got a mix of big and small either biggie I don't have to say much about that if they're successful they have a very material impact.
On the company and a small he is really meant to to add in some some low risk prolific wells were very quick payouts.
Eric Furlan: So that's next. And then we've got a mix of Big E and Small E. The Big E, I don't have to say much about that. If they're successful, they have a very material impact on the company. And the Small E is really meant to add in some low-risk prolific wells with very quick payouts. You know, most of these are targeting the one to three million barrel range. They're not huge reserves each, but they're quick to drill, very quick to get online, add to production, and, more importantly, add significant cash flow and quick bailouts. So those are all parts.
Most of these are targeting on the 1% to 3 million barrel range theyre not in a huge reserves each but equipped to drill very quick to get online ads production and more importantly add significant cash flow and quick balance.
Those are the those are all parts and then longer term, we've got a big runway of opportunities that we're trying to accelerate.
As we mentioned our opportunity basis has doubled significantly on the <unk> opportunities for longer term. That's what we're looking at also to grow the reserve book and grow the size of the company.
Okay. Thank you.
And we have no further questions in our queue at this time I will now.
Turn the call back over to Mike for closing remarks.
Eric Furlan: And then, longer term, we've got a big runway of opportunities that we're trying to accelerate. As we mentioned, our opportunity basis has doubled significantly on our Big E and Little E opportunities for the longer term. That's what we're looking at also to grow the reserves book and grow the size.
Thank you very much for joining us today, please feel free to contact me directly if you have any additional questions and have a great day.
This concludes today's conference call. Thank you for your participation and you may now disconnect.
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Michael Kruchten: Okay, thank you. We have no further questions in our queue at this time. I will now call back over to Mike for closing remarks. Thank you very much for joining us today. Please feel free to contact me directly if you have any additional questions and have a great day. This concludes today's conference call. Thank you for your participation, and you may now disconnect.
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