Q4 2023 Vermilion Energy Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Vermilion Energy Q4 conference call. At this time, all lines are in the listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Vermilion Energy Q4 conference call. At this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session, but any time during this call. We require immediate assistance. Please press star.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, March 7, 2024. I would now like to turn the conference over to Mr. Dion Hatcher. Thank you.

Oh for the operator this call is being recorded on Thursday March seven 2024, I would now like to turn the conference over to Mr. D. On hatchery. Thank you. Please go ahead.

Anthony Hatcher: Thank you. Morning, ladies and gentlemen, thank you for joining us. I'm Dion Hatcher, President and CEO of Vermilion Energy. With me today are Lars Glemser, Vice President and CFO, Darcy Kerwin, Vice President International and HSE, Brandon McQuaid, Vice President North America, Jenson Tan, Vice President Business Development, and Kyle Preston, Vice President of Investor Relations. We'll be referencing a PowerPoint presentation to discuss our 2023 Q4 and year end results. The presentation can be found on our website under Invest with us and events and presentations.

Thank you.

Ladies and gentlemen, thank you for joining us on Hatcher, President and CEO really energy.

With me today are Larry cluster, Vice President and CFO Darcy carbon Vice President International HFC, Brendan Mcquade, Vice President North America, Jessica Tan Vice President business development Co President Vice President of Investor Relations will be referencing a powerpoint presentation to discuss our 2023 Q4 and year end results.

<unk> presentation can be found on our website under invest with us and events and presentations.

Anthony Hatcher: Please refer to our advisory on forward-looking statements at the end of this presentation. It describes forward-looking information, non-GAAP measures, and oil and gas terms used today and outlines risk factors and assumptions relevant to this discussion. Production during the fourth quarter averaged 87,597 views per day, which was at the midpoint of our Q4 guidance range of 86,000 to 89,000. This represents a 6% increase over the prior quarter, prominently driven by the WANDU platform in Australia and Corp Gasfield in Ireland, which were online for the full quarter following maintenance downtime in the prior quarter. Bondu and Korb are high-margin assets, and both continue to perform quite well in Q1.

Please refer to our advisory on forward looking statements at the end of the presentation describes forward looking information non-GAAP measures and oil and gas terms year to date and it lines risk factors and assumptions relevant to this discussion.

Production during the fourth quarter averaged 87597 used per day, which was at the midpoint of our Q4 guidance range of 86 to 89000.

This represents a 6% increase over the prior quarter, probably driven by the wandoo platform in Australia.

Gastro in Ireland, which are online for the full quarter, all that maintenance downtime in.

In the prior quarter.

Onto a core of our high margin assets and both continued to perform quite well in Q1.

Anthony Hatcher: We generated $372 million of fund flow and $225 million of free cash flow in Q4, which represents a 38% and 59% increase over the prior quarter, respectively. With this amount of free cash flow, we were able to reduce net debt by $164 million and return $45 million to shareholders during the quarter, comprised of $16 million in dividends and $29 million in share repurchases. Thank you. Thank you. Thank you.

We generated $372 million of funds flow and $225 million of free cash flow in Q4, which represented 38 and 59% increase over the prior quarter respectively.

With this amount of free cash flow, we were able to reduce net debt by $164 million and returned $45 million to shareholders during the quarter.

Rice of $16 million of dividends and $29 million in share buybacks.

Yeah.

Anthony Hatcher: Looking at the full year results on slide three, we achieved the midpoint of our annual production guidance of $84,000. We achieved this despite wild car related downtime in Western Canada and unplanned maintenance downtime in Australia. Our ability to meet annual production guidance despite these issues illustrates the strategic advantage of operating a diverse portfolio, as we're able to reallocate capital to offset production impacts in Canada and Australia. We generated over $1.1 billion of funds low in 2023; this represents the second strongest year ever for the company. Capital expenditures of $590 million were in line with guidance and resulted in free cash flow of $550 million.

Looking at the full year results on slide three we achieved the midpoint of our annual production guidance of 84000.

We achieved that despite wildfire related downtime in western Canada, and unplanned maintenance downtime in Australia.

To meet annual production guidance. Despite these issues illustrates the strategic advantage operating in diverse portfolio as we're able to reallocate capital offset the production impacts in Canada and Australia.

We generated over $1 1 billion of funds flow at 23. This represents the second strongest year ever for the company.

Capital expenditures of $590 million was in line with guidance and results in a free cash flow of $550 million. This free cash flow was used to fund the.

Anthony Hatcher: This free cash flow was used to fund closing costs associated with a core acquisition and asset retirement obligations while also allowing us to reduce net debt by $266 million and return $160 million to shareholders, which represents about 30% of our free cash flow. We exit the year with net debt under $1.1 billion, which is the lowest level in a decade and represents 0.9 times our annual fund flow. This is a key milestone for the company as it aligns with our internal leverage target of one times net debt to fund flow or less and positions us for increasing shareholder returns. Moving on to the operational updates for the quarter. Production from our North American operations averaged 54,216 BUs per day in Q4, a decrease of 4% from the previous quarter due to natural declines.

At closing costs associated with the <unk> acquisition ask.

Retirement obligations.

So, allowing us to reduce net debt by $266 million and return $160 million to shareholders, which represents 30% of our free cash flow, we exited the year with net debt under $1 1 billion, which is the lowest level in a decade and represents nine times our annual funds.

It's the key milestone for the company as it aligns with our internal leverage target of one times net debt to funds flow or less and positions us for increasing shareholder returns.

Moving on to the operational updates for the quarter production from our North American operations averaged 54216 bps per day in Q4, a decrease of 4% from the previous quarter due to natural declines and the deep basin, we drilled and completed five wells brought on production four manville liquids rich.

Anthony Hatcher: In the deep basin, we drilled and completed five wells and brought on production four man-built, liquids-rich gas wells. At MICA, we drilled the initial four Montigny wells on our BC lands as part of our winter drilling program in advance of the expected completion and start-up of our A-33 BC battery in mid-2024. Slide five includes a map of our Monty position.

Gas falls it might get we drilled the initial four montney wells on RPC lands as part of our winter drilling program in advance of the expected completion and startup of our eight to 33 P. C battery in mid 'twenty four.

Slide five includes a map of our montney position.

Anthony Hatcher: As you can see, our land is in the oil window, and the results of our first two BC wells validate our geological assessment and development plans. On slide six, you can see that 16 of 28 wells continue to produce at very strong rates, 800 B.U.E.s per well after 11 months on production. These two wells went on production March 23 and produced nearly 700,000 B.U.E.s combined to the end of February, including over 215,000 barrels of liquids, which is mainly oil. Given the relatively shallow decline profile, we also believe this presents an opportunity for downspacing, which could add further drilling locations and is something we will be testing this year. The 11 wells we plan to drill this year will be on or offsetting the 16 of 28 pads.

As you can see our land is in the oil window and the results of our first two B C wells validate our geological assessment and development plans.

On slide six you can see the 16 to 20 wells continue to produce at very strong reach 800, Boe's a day per well after 11 months on production.

These two wells were brought on production in March 23, and produce nearly 700000 boe's combined to the end of February including over 250 to 215000 barrels of liquids, which is mainly oil.

Given the relatively shallow decline profile. We also believe this presents an opportunity for downspacing, which could add further drilling locations in the something we were testing this year.

The 11 wells, we plan to drill this year will be on or offsetting the 16 to 28 pad we have drilled six wells on the first pad commenced frac operations on this pad in late February.

Anthony Hatcher: We have drilled six wells on the first pad and will commence frac operations on this pad in late February. We expect these wells to be ready for production and tie-in in Q2, in time for the mid-year startup of the AIDA-33 battery. We're also currently drilling the second pad, which we expect to finish in mid Q2 and should complete fracking operations on that second pad. Transcribed by https://otter.ai, Slide 7 shows a picture of the new 16,000 VBD battery being constructed on our Micah-Montaney lands. Construction is progressing as planned and remains on schedule for mid-year startup.

These wells will be ready for production that tie in in Q2 in time for the midyear startup of the $8 to 33 battery.

We're also currently drilling our second pad, which we expect to finish in mid Q2 as you complete cracking operations on that second pad in Q3.

Slide seven shows a picture of a new 16000, bpd battery being constructed or Micah Montney lands construction is progressing as planned it remains on schedule for midyear startup.

Anthony Hatcher: Once operational, this battery will more than double our Montenegrin infrastructure capacity to approximately 20,000 BBs today and allows us to move forward with the growth phase of our mica acid production. Production from our international operations averaged 33,381 views per day in Q4, an increase of 29% over the previous quarter, mainly due to the full quarter of production from Australia and Ireland operations, following maintenance downtime in the prior quarter, as well as increased production in the Netherlands, We continue to advance our deep gas exploration plans in Germany. We will commence drilling our first deep gas exploration well at the end of November and expect to reach total depth in the upcoming weeks.

Once operational this battery more than double our montney infrastructure capacity to approximately 20000 Boe's a day allows us to move forward with the growth phase of our Micah asset.

Production from our international operations averaged 33380 <unk> per day in Q4, an increase of 29% over the previous quarter, mainly due to a full quarter of production from Australia and Heartland operations following maintenance downtime in the prior quarter as well as increased production in the Netherlands.

Due to new production from our <unk> drilling program, we brought online in the quarter.

Okay.

We continue to advance our deep gas exploration plans in Germany, we commenced drilling of our first deep gas exploration well at the end of November. They expect you reached total depth in the upcoming weeks. These wells over 5000 meters deep and typically take a 100 plus days to drill we will then move the rig to our next location for the second well of our program will be drilled.

Anthony Hatcher: We are excited about the exploration plans in Germany as we see this as a natural extension of the successful drilling campaigns we have executed over the past two decades in the Netherlands. We have approximately 700,000 net acres of undeveloped land in Germany, located approximately 300 kilometres east of our producing fields in northern The Netherlands. The exploration targets of Germany are on trend to our Netherlands, please, where we have drilled 29 gas wells over the past two decades with an average success rate over 70%. The German exploration targets are deeper and higher risk, but they have a much larger resource potential than the Netherlands.

During Q2, we are excited about the exploration plans in Germany as we see this as a natural extension of the successful drilling campaigns, we have executed over the past two decades in the Netherlands.

We have approximately 700000 net acres of undeveloped land in Germany, located approximately 300 kilometers east of our producing fields in northern Netherlands. Thanks.

The exploration targets in Germany, or a trend toward Netherlands plays where we have drilled 29 gas wells over the past two decades with an average success rate over 70%.

Germany exploration targets are deeper and higher risk, but have a much larger resource potential in the Netherlands, I believe or land base can support at multi year drilling campaign, providing vermillion years of organic production growth of high valued European gas.

Anthony Hatcher: We believe our land base can support a multi-year drilling campaign, providing Vermilion with years of organic production growth of high-valued European gas, www.vermilion.com In Croatia, installation of the gas plant on the SA-10 block is progressing as planned. It remains on schedule for start-up. The mid- 15 million day gas plant will facilitate production from the SA-10 block. We have gas behind pipe from previous discoveries.

In Croatia installation of the gas plant on the SA 10 block is progressing as planned.

<unk> is on schedule for startup mid year $15 billion gas plant will facilitate production from the SA 10 block we have gas behind pipe from previous discoveries subsequent year end, we commenced drilling our first exploration well on the seven block and reached total measured depth of 2000, and 371 meters discovered hydrocarbons multiple assaults.

Anthony Hatcher: Subsequently, at year end, we commence drilling on the first exploration well on the SA-7 block and reach a total measured depth of 2371 meters, rediscovered hydrocarbons in multiple zones, currently evaluating the results, and plan to test the well during the second quarter by commencing drilling operations on the second of four wells planned on the SA-7 block. In addition, we recently signed a firm rate agreement with the ENA Group to jointly develop the SA7 block. ENA is the second, sorry, largest integrated oil and gas company in Croatia.

We're currently evaluating the results.

And to test the world here in the second quarter by commencing drilling operations on the second of four wells planned on the SA seven block.

In addition, we recently signed a primary agreement with the Eni group jointly developed yes seven block.

Is there a second sorry.

It's the largest integrated oil and gas company creature brink's local expertise and access to existing infrastructure that will play a critical role developed asset.

Anthony Hatcher: It brings local expertise and access to existing infrastructure that will play a critical role in developing gas. We're excited about the future European gas potential in Germany and Croatia. I look forward to providing an update as the year progresses. We included our updated reserve evaluation with our Q4 release. Our 23 PDP reserves decreased by 8% from the prior year to 173 million POEs.

We are excited with the future European gas potential in Germany, and I look forward to providing updates at the year progresses.

We included our updated reserve evaluation with our Q4 release 23, PDP reserves decreased by 8% for the prior year to $170 million $173 million, while our total proved plus probable reserves decreased by 18% from the prior year to $430 million decrease as <unk>.

Anthony Hatcher: For the year, our total proof plus probable reserves decreased by 18% from the prior year to 430 million, decreases primarily due to dispositions, production, and technical revisions, including technical revisions resulting from capital allocation decisions. Unknown Executive, Travis Wood, Jenson Tan, Anthony Hatcher, Bryce Kremnica, Lars Glemser, Approximately 40% of the 2P technical revisions relate to the capital allocation decisions, and therefore some of these reserves could be recognized at a future date, if they align with our capital allocation parameters at that time. In addition, we expect to recognize additional reserves over time from our MICA, Monteney, and Germany exploration programs as we develop Our Monteney asset is in the early stages of development and is conservatively booked today. A potential multi-year German exploration program is largely unbooked at this time.

Finally, due to dispositions production and technical revisions, including technical revisions, resulting from capital allocation decision. It reflects the divestment of noncore assets in Saskatchewan other noncore assets in the U S. And also incorporates updated capital allocation decisions as a result of our asset high grading.

A couple of years, given the greater focus on or Mike Montney development in Germany exploration program, we have removed or divested reserves associated with the undeveloped locations that are not.

Ill prioritize for investment on our current plans assets most impacted by these capital allocation revisions.

<unk> and our U S and Saskatchewan and operating regions.

40% to be technical revisions relate to the capital allocation decisions and therefore some of these reserves could be recognized at a future date.

They align with our capital allocation parameters at that time.

In addition, we expect to recognize additional reserves over time from my Mic Montney and Germany exploration program as we develop these assets our montney asset is in the early stages of development and is considerably book today quite a potential multiyear chairman exploration program is largely on booked at this time.

Lars William Glemser: The PDP and 2P Reserve Light Index as of December 31st, 2023 is 5.6 and 14 years, respectively, both of which are in line with our long-term average and reflect the conventional composition of our asset base. I will now pass this over to Lars to discuss our financial outlook and updated return of capital target. Thank you, Dion.

PDP two P Reserve life Index as of December 31, 2023 is five six and 14 years, respectively. Both of which are in line with our long term average and reflect the conventional composition of our asset base.

Now I'll pass it over to Lars to discuss our financial outlook and updated return of capital targets.

Thank you Dion, we released our 2020 for budget in early December and the execution of our capital program to date is progressing as planned.

Lars William Glemser: We released our 2024 budget in early December, and the execution of our capital program to date is progressing as planned. Our 2024 full-year guidance remains unchanged. And we are also providing Q1 production guidance of 83 to 85,000 BOE a day. As a result of progress made on debt reduction, we are pleased to announce an acceleration of our return of capital. As you recall, we previously planned to increase our return on capital target to 50% of excess free cash flows starting April 1st, but we will now apply that 50% target against full-year excess FCF. To date this year, we have purchased 1.4 million shares, and we plan to increase the pace of buybacks going forward to align with this increased ROC target. We continue to believe share buybacks represent a very compelling return of capital option, which will result in the majority of our return of capital for this year.

Our 2020 for full year guidance remains unchanged and we are also providing Q1 production guidance up 83% to 85000 BOE a day.

As a result of progress made on debt reduction we are pleased to announce an acceleration of our return of capital.

As you recall, we previously planned to increase our return of capital target to 50% of excess free cash flow was starting April one.

But we will now apply that 50% target against full year excess Fcs.

To date. This year, we have purchased one 4 million shares and we plan to increase the pace of buybacks going forward to align with this increased <unk> target.

We continue to believe share buybacks represent a very compelling return of capital option, which will result in the majority of our return of capital for this year going towards share buybacks.

We have updated our internal forecast with the latest strip pricing and our forecasting annual <unk> of approximately 125 billion with resulting free cash flow of approximately $650 million.

Under current strip pricing and applying our new <unk> allocation target, we would expect to return approximately $250 million to shareholders through our base dividend and share buybacks, representing approximately 10% of our market cap.

While continuing to reduce debt, which is also an indirect form of returning capital to shareholders.

We believe this is an appropriate allocation of capital is further debt reduction will make us an even stronger and more resilient company.

Looking back on our Scf allocation over the past three years, we will have reduced debt by over one 2 billion by the end of 2024 over the time period shown here.

This is value that accrues directly to our equity shareholders at the same time, we have increased our return of capital to shareholders each year over this timeframe.

We believe at 50% return of capital target is appropriate for our business as it will allow us to provide ratable.

Annual dividend increases and buyback shares while also creating excess capacity on our balance sheet to be opportunistic.

With that I will pass it back to Dr.

Thanks, Larry.

Discipline focused on strengthening the balance sheet and high grading asset base.

Along with diligent capital allocation has made vermilion are much stronger and much more resilient company. We ended 2003 with a strong balance sheet and our continued our operational momentum from the fourth quarter into 2024.

Our 24 capital program is well underway and we're very pleased with how things are progressing on our three growth initiatives.

Canada, Germany and Croatia.

The development of our gas prospects in Germany, Croatia will increase our exposure to premium price European gas, but.

Expansion of our Montney infrastructure in Canada will set the stage for long term development and growth of this asset.

We're excited with Vermilions outlook I believe if we havent robust portfolio capable of generating strong compound returns to our shareholders through a combination of modest annual production growth.

Zillionths been growing base dividend and share buybacks, while that concludes my prepared remarks with that we'd like to open it up for questions.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your telephone keypad should you wish to cancel your request. Please press star followed made it too.

Thank you speaker phone.

Handset before pressing any Keith one moment. Please for your first question and once again that is star one to ask a question.

Your first question comes from the line of Greg Pardy from RBC capital markets. Please go ahead.

Yes, thanks, good morning, and thanks Dion worse.

Run down.

Couple of questions for you, but maybe the first one is just on the.

The net.

Sure.

I think the loss rate.

Hello.

I have Mr. Greg.

Two question one again.

Thank you Anne.

Your line is now open.

Can you guys hear me.

You bet you, we got you know, okay, alright listen listen.

Lastly on thanks, very much for that for the rundown.

Couple of questions first one maybe just on.

Net debt thresholds in terms of opening up.

Return of capital, So I know a $1 billion, which.

Was the first trigger have you thought about what net debt floor you'd like to achieve.

On the business and then what the implications might be is it possible that you could see yourselves into a 100% payout that would be question, one and then I've got a follow up.

Okay, well, thanks, Craig I'll pass over to Lars to discuss our debt levels and return of capital Yes, no. Thanks for the question Greg.

We're quite excited to get to this point here, where we will be targeting that 50% for 2020 for I would say at this point, we're comfortable not putting out guidance in terms of the next net debt level that would trigger a higher return to capital.

I think what youre going to see here in 2024 is that 50% target still allows us to return potentially up to 10% of our market cap through the dividend, but primarily through the share buyback.

The way, we think about absolute debt levels is that $500 million $2 billion range, we're quite comfortable in as you get closer to the $500 million level that represents the amount of debt that we have termed out to 2030 and so we started to approach that that may be a catalyst to rethink the 50%.

<unk> at this point, but I think we're very comfortable with the 50% now.

Okay. Okay, that's great that makes a lot of sense.

Any.

Basic question, how fast are you with the.

With the reserve revisions and then maybe just related to that.

Given the shift in capital allocation that you are looking at two areas like the U S or even portions of your ops in Saskatchewan.

Become noncore or could those areas become noncore I'm, just curious as to maybe what the what the medium to longer term planning might be with those areas.

Yes, I can take this one great thanks for that.

Over the last couple of years, we put a lot of focus on debt reduction.

Asset high grading with corvid, Mike in particular, and actually selling some assets in the U S. Saar in the U S and Saskatchewan most recently.

And what we're excited about is we're able to advance these growth opportunities in Germany, Croatia, and as well, Mike It where we see a lot of running room. So.

At this point, we're happy with our portfolio as we look out to the running room, even able to deploy capital in those key growth areas.

As to the actual reserves themselves as noted 40% of that is capital allocation as we've worked through our permanent process, our budgeting process and know our reserves process and in Saskatchewan, we still have a rig going there.

Got a lot of inventory still in the book that we quite like and the inventory that moved out of reserves has the potential to come back should we find ourself.

Changing our capital allocation in the future. So we like the option like the exposure to oil in Saskatchewan.

U S. What excites us about the U S is that oil stack theres for all these zones.

We continue to look at all four zones in particular denial, where theres been a lot of industry activity and it's material.

This year, we did hit the pause button on drilling in the U S who can really work through those four zones, where we see competitor activity in all four zones to determined.

How best to develop that asset so at this point no changes to our portfolio with respect to the U S. In Saskatchewan and we've made these technical revisions partially due to capital location and then partially due to performance and you're right.

The performance issues were in the U S in Saskatchewan, where we've made those changes.

Okay. Thanks.

Great. Thank you very much.

Okay. Thanks for that Greg.

Okay.

Thank you once again should you wish to ask a question. Please press Star then the number one on your telephone keypad and your next question comes from the line of JV slid from National Bank Financial. Please go ahead.

Yes, thanks for taking the question.

One question, but it's the same question for both Germany and Croatia.

Don in your opening remarks, you talked about kind of 70% risk profile as you look at drilling exploration wells.

As you think about the size of the prize in the.

Packed from wells, how should we think about that potential production impact on success.

Whats the can you remind us on the cost to drill and tie in these big wells.

And then are there any.

Kind of analog wells in proximity that you guys are using to kind of derisk that whether it's.

Tests from.

Yourselves or other operators in the area.

Okay. Thanks, Travis so definitely we can get excited to talk with Germany upside potential when we look at that land base and the teams working at four.

Five six years, we see a tcf of gas on our land base. We've got 700000 net undeveloped acres, we've got <unk> seismic across that land base.

And we've got two decades of drilling similar formations, just 300 kilometers away in the Netherlands.

So we like we like the size of the prize. We also like the jurisdiction in which Germany is working with us to develop these wells as well as still are very much needed gas to replace about a third of their.

Energy, which comes from coal and lignite.

As to the targets themselves what we see are targets that are in that <unk>.

30 to 40 bps.

Typically and costs that are in similar $35 million to $40 million wells to drill and so if you zoom out how I think about it it's a bucket mcf.

We can drill these wells and get exposure for bucket Mcf and then sell that gas still at five to six times equal at 10 to 12 Bucks in Germany, we like that trade off on a risk reward of course, the dry hole cost if youre not successful are much lower than the total 35 to 40 million to drill so what.

We see right now.

And we see two wells per year, we see a multi year program on that with success, we can more than double the German production.

And we're quite excited to get these first couple of wells drilled and to be able to come back to provide an update later this year.

There is an element of exploration here, we want to make sure that when we talk about that with our success rate in <unk>.

Netherlands, it's been about 70% and we think that's a reasonable number to use for a drill program.

<unk> analog wells, we're drilling in pools, where were offsetting wells within those pools that have done 30 40 bps.

So we're surrounded by producing wells are producing.

Plays that are very similar and add wells and the structure and so that gives us more confidence to be able to put these this capital work and assessed that upside. So we're excited but we do recognize that it is.

We're going to have to look at this as a program versus individual wells and we look forward to providing more updates in the next couple of months here.

Okay and would that be similar commentary as you think about derisking and exploring Croatia.

Chris Yes, Okay shifting to cross shop Krish, it's interesting we've got two blocks. So SA 10.

Is the area, where we've drilled and tested and we've got gas behind pipe and with the gas plant that see the pictures.

Unit has built.

Just finalize the pipeline tie ins.

Spi pipe and this will be basically dry gas.

We'll produce into that unit.

That's the SA 10 block the SA seven block is an area, where we're surrounded by.

Known producing fields oil and gas and we did the partnership with <unk>, who.

<unk> has a lot of that infrastructure and offsetting production.

We're in the first of four wells that we've drilled there first of all it looks encouraging we've seen hydrocarbons multiple zones will drill the next three wells and then progress after that.

Precise of the price, it's really early days and NSC seven so I would say too early to comment, but we can come back once we get these four wells in the ground.

It'll be a couple of thousand BS a day of high netback gas that will produce through that compressor.

Okay I appreciate all that color in detail I will turn it back.

Thanks Travis.

Thank you there are no further question at this time Mr. Hatch. Please proceed.

Well again, we want to thank you for participating in our year end results conference call enjoy the rest of your day.

Thank you, ladies and gentlemen that does conclude our conference for today. Thank you all purposes participating you may all disconnect.

Okay.

[music].