Q4 2023 Intrepid Potash Inc Earnings Call
Operator: The Ultimate Parody Site! Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash Incorporated 4th Quarter 2023 Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad.
Thank you for standing by this is the conference operator, welcome to the Intrepid potash incorporated fourth quarter 'twenty to 'twenty three results conference call. As a reminder, all participants are in a listen only mode.
<unk> is being recorded after the presentation, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing the star and zero I would now like to turn the conference over to Evan.
Operator: Should you need assistance during the conference call, you may signal an operator by pressing the star and 0. I would now like to turn the conference over to Evan Mapes, Investor Relations. Please go ahead. Thank you, Krista. Good morning, everyone.
<unk> Investor Relations. Please go ahead.
Thank you Chris Good morning, everyone. Thanks for joining us to discuss <unk> fourth quarter 2023 results.
Evan Mapes: Thanks for joining us to discuss and review Intrepid's fourth quarter 2023 results. With me today is Intrepid's co-founder, executive chairman, and CEO, Bob Dornavas, and CFO Matt Preston. Also available to answer questions during the Q&A session are our Vice President of Sales and Marketing, Zachry Adams, and our Vice President of Operations, John Galeski. Please be advised that our remarks today include forward-looking statements as defined by U.S. securities law. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be mutually different from those currently anticipated, are based upon information available to us today, and we assume no obligation to update them. These risks and uncertainties are described in our periodic reports filed with the SEC, which are incorporated herein as the SACC.
With me today is <unk> co founder executive Chairman and CEO, Bob <unk> and CFO, Matt Preston.
Also available to answer questions. During the Q&A session, the vice President of sales and marketing exactly Adams Senior Vice President of operations John Garcia.
Please be advised that our remarks today include forward looking statements as defined by U S Securities laws.
These forward looking statements are subject to risks and uncertainties that could cause actual results to materially different from those currently anticipated.
Based upon information available to us today, and we assume no obligation to update them.
These risks and uncertainties are described in our periodic reports filed with SEC, which are incorporated herein by reference.
Evan Mapes: During today's call, we referred to certain non-GAAP financial and operational measures. Reconciliation, the most direct and comparable gap measure, is included in yesterday's press release. Our SEC filings and press releases are available on our website at IntrepidPotash.com. I'll now turn the call over to Bob. Thank you, Evan. Good morning, everyone.
During today's call, we refer to certain non-GAAP financial and operational measures reconciliations to the most directly comparable GAAP measures are included in yesterday's press release.
Our SEC filings and press releases or they are on our website at intrepid potash dotcom.
I'll now turn the call over to Bob Thank.
Thank you Ivan good morning, everyone. We appreciate your interest in Intrepid and attendance for our fourth quarter earnings call.
Robert P. Jornayvaz: We appreciate your interest in Intrepid and your attendance on our fourth quarter earnings call. I'll be structuring my remarks today, beginning with a high-level overview of the quarter, our market outlook, and production updates, and then diving into more details of the recent XTO deal and takeaways for Intrepid's XTO. In the fourth quarter, our adjusted EBITDA totaled $7.1 million, bringing our 2023 figure to $41.6 million. Significantly higher production costs from our lower production, as well as moderating Potash Prime, drove down the decline in profitability.
I'll be structuring them my remarks today, beginning with a high level overview of the quarter, our market outlook and production updates and then dive into more details of the recent <unk> deal and takeaways for Intrepid equity.
In the fourth quarter, our adjusted EBITDA totaled $7 $1 million, bringing our 2023 figure to $41 $6 million.
Significantly higher production costs from our lower production as well as moderating potash prices drove down the decline in profitability this year.
Robert P. Jornayvaz: While our results continue to be negatively impacted by our current production profile, primarily due to the failure of our HVIP30A well in the fourth quarter of 2022, fortunately, the replacement well has been fully permitted and is being constructed as we speak. This individual well failure created a major impact on our unit economics.
While our results continue to be negatively impacted by our current production profile.
Primarily due to the failure of our HP IP 30, a well in the fourth quarter of 2022.
Fortunately the replacement well has been fully permitted and is being constructed as we speak.
It's individual well failure created a major impact to our unit economics, so correcting our mistake as well as our overall potash production trend remains the number one strategic priority for intrepid.
Robert P. Jornayvaz: So correcting our mistake, as well as our overall potash production trend, remains the number one strategic priority for Intrepid. Before getting into the highlights, also included in our fourth-quarter results were approximately $43 million of non-cash impairment charges, which were primarily directed at our East Langmanite mine in the Trio Sec. During the fourth quarter, we saw continued strong demand for our fertilizer products. And for 2023, our Potash and Trio sales volumes were both up 16% compared to the prior year. Market potash pricing has also recently stabilized at levels that are about 35% higher than the previous cycle, and we expect our sales to remain steady ahead of spring application. Longer term, we will remain constructive on the outlook for agriculture and fertilizer markets, even with pricing for key crops recently coming down over the past few months, as we discussed in our earnings call in August, following the last period of moderating U.S. farmer incomes off peak years, which we saw Annual U.S. potash demand still averaged roughly a 5% growth rate through 2017.
Before getting into the highlights also included in our fourth quarter results were approximately $43 million of noncash impairment charges, which were primarily directed at our east Langbeinite mine in the triage segment.
During the fourth quarter, we saw continued strong demand for our fertilizer products and for 2023, our potash and trio sales volumes were both up 16% compared to the prior year.
Market potash pricing has also recently stabilized at levels that are about 35% higher than the previous cycle and we expect our sales to remain steady had a strong spring application.
Longer term, we remain constructive on the outlook for agriculture, and fertilizer markets, even with pricing for key crops recently coming down over the past few months.
As we discussed in our earnings call in August.
Following the last period of moderating U S farmer incomes of peak years, which we saw back in 2012 and the period thereafter.
Annual U S potash demand still average roughly 5% growth rate through 2017.
Robert P. Jornayvaz: And given the significant profits generated by U.S. farmers over the past three years, they're currently in a very solid financial position. Putting this together, we expect the trend of yield maximization to continue with the upcoming spring application, which of course is positive for fertilizer demand. Moving on to our products production, the number one strategic priority at every level within the company has been to correct our declining production trend. To that extent,
And given the significant profits generated by U S farmers over the past three years, they're currently in a very solid financial position.
Putting this together we expect the trend of yield maximization to continue past the upcoming spring application season, which of course is positive for fertilizer demand.
Moving onto our potash production.
The number one strategic priority at every level within the company has been to correct our declining production trend too.
To that extent I am excited to share that our recent production execution has put us on the path for a meaningful increase in production starting in the second half of the year.
Robert P. Jornayvaz: I'm excited to share that our recent production execution has put us on the path for a meaningful increase in production, starting in the second half of the year. We included comprehensive project updates in yesterday's earnings release. But for a quick summary on the key takeaways, we forecast that our total potash production will be up at least 10 to 15 percent in 2024 compared to 2023 with an additional 15 to 20 percent increase expected the following year, higher upside looking long term. In mid-December, we announced the third amendment to our Cooperative Development Agreement with XTO.
We've included comprehensive project updates and yesterday yesterday's earnings release, but for a quick summary on the key takeaway or.
<unk> forecast that our total potash production will be up at least 10% to 15% in 2024 compared to 2023 with an additional 15% to 20% increase expected the following year.
And higher upside looking long term.
In mid December we announced the third amendment to a cooperative development agreement with <unk>.
Robert P. Jornayvaz: For some background, XTO is one of ExxonMobil's subsidiaries that has a very large acreage position in the Delaware Basin, and more specifically within the designated potash area, or DPA. For many years, we've been successful in co-developing our respective interests within the DPA, and this amendment helps ensure that this continues while also formalizing several items. For Intrepid, what this amendment stipulates is that, in exchange for us agreeing to support and not oppose XTO's development and operation of their oil and gas interests within the DPA, Intrepid receives certain payments from XTO.
For some background XT I was one of Exxonmobil subsidiaries that has a very large acreage position in the Delaware basin and more specifically within the designated potash area or DPA.
For many years, we've been successful in co developing our respective interest within the DPA and this amendment helps ensure that this continues while also formalizing several items for.
For Intrepid, what this amendment stipulates that in exchange for us agreeing to support and not a pause <unk> development and operation of their oil and gas interest within the DPA Intrepid received certain payments for next year.
Robert P. Jornayvaz: The date we received the initial $50 million was $50 million more, guaranteed by the seventh year anniversary of the amendment, but possibly received sooner if XTO receives approval for a new or expanded drilling island within the specific area. Intrepid could also receive up to an additional $100 million, with the amount of that payment and timing being dependent on certain drilling activities by XTO. We feel we are now more properly aligned with XGO and the co-development in the area. We can't emphasize enough the importance of this transaction, with the cash infusion significantly bolstering our liquidity position and helping de-risk our output. Your current balance sheet cash is close to fully funding our 2024 capital program, providing a solid cash runway until we see the positive impacts to our unit economics associated with the higher potash production expected later this year. Overall, we think Intrepid is extremely well positioned. But when looking at where the equity is trading, we're close to being priced for worst-case scenarios, which is certainly not the case.
To date, we have received the initial $50 million with $50 million more guaranteed by the seven by the seventh year anniversary of the amendment.
But possibly received sooner if <unk> receives approval for a new or expanded drilling island within the specific area.
Intrepid could also receive.
So an additional $100 million.
With the amount of that payment and timing being dependent on certain drilling activities by X tier.
We feel we are now more properly aligned with <unk> and the co development in the area.
Can't emphasize enough the importance of this transaction with the cash infusion significantly bolstered bolstering our liquidity position and helping derisk our outlook.
Our current balance sheet cash is close to fully funding our 2024 capital program, providing a solid cash runway until we see the positive impacts to our unit economics associated with the higher potash production expected later this year.
Overall, we think intrepid is extremely well positioned but when looking at where the equity is trading we're close to being priced for worst case scenarios, which is certainly not the case and I want to clarify.
Robert P. Jornayvaz: And I want to clarify several key points. Potash production will be inflecting higher following the summer evaporation season. So we're only a few quarters away from seeing those results. We also want to be clear that as we progress through the commodity cycle, we'll be focusing on measures that protect our balance sheet and enhance our margins and cash flow. And accordingly, we'll be evaluating our options for TRIA. Our primary business of selling a product that supports crops is forecast to see steady growth, and we're seeing price support for Baja. We have long-lived reserves and resources that can support many decades of production, which significantly helps reduce our terminal value, and non-potash growth projects already underway, namely San and Liv, offer attractive returns and up. For these projects, Intrepid won't be committing significant upfront capital and owning all of the risk.
Key points.
For potash production will be inflicting higher followed this summer of summer's evaporation season. So we're only a few quarters away from seeing those results. We also want to be clear that as we progressed through the commodity cycle, we'll be focusing on measures that protect our balance sheet and enhance our margins and cash flow and accord.
We will be evaluating our options for Korea.
Our primary business of selling a product that supports crops is forecast to see steady growth and we're seeing price support for potash we.
We have long lived reserves and resources that can support many decades of production.
Which significantly helps reduce our terminal value risk the.
The non potash growth projects already underway.
Namely sand in lithium offer attractive returns and upside.
Or these projects intrepid won't be committing significant upfront capital and owning all of the risk. So we are currently negotiating with various parties in pursuit of a JV partnership structure for each of those commodities.
Robert P. Jornayvaz: So we are currently negotiating with various parties in pursuit of a JV partnership structure for each of those commodities. We have a very strong balance. No Long-Term Debt, a cash position of $35 million, and a $150 million revolver with maturity of August of 2027. Moreover, we'll have another $50 million guaranteed from our XTO deal, and the possibility of an additional $100 million in payments from XTO over time. And this is the most important point.
We have a very strong balance sheet, no long term debt, our cash position of $35 million and $150 million.
Our revolver with a maturity of August 2027. Moreover.
Moreover, we will have another $50 million guaranteed from our <unk> deal the possibility of an additional $100 million of payments for Mexico overtime.
And this is the most important point.
Robert P. Jornayvaz: No one has a more important stake or a greater stake in wanting to see Intrepid succeed and have this translate to the price of our common stock than myself as the largest shareholder. I firmly believe that for the items we can control, our outlook is the best we've had in many years, and I'm excited about the direction we're going. I'll now turn the call over to Matt. Please go ahead. Thanks, Bob. In the fourth quarter, Intrepid generated Adjusted EBITDA of $7.1 million and had an Adjusted Net Loss of 5.2%.
No one has a more important stake or greater stake in wanting to see intrepid succeed and have this translate to the price of our common stock and myself as the largest shareholder.
I firmly believe that for the items, we can control our outlook is the best we've had in many years and I am excited and the direction, we're going I will now turn the call over to Matt. Please go ahead.
Thanks, Bob.
In the fourth quarter Intrepid generated adjusted EBITDA of $7 $1 million and had an adjusted net loss of $5 2 million, although our sales volumes and demand for our key products have remained steady moderating potash pricing and higher unit costs associated with the lower production levels continue to be headwinds for our financial results.
Matthew D. Preston: Although our sales volumes and demand for our key products have remained steady, moderating potash pricing and higher unit costs associated with the lower production levels continue to be headwinds for our financial results. As Bob noted, returning our potash production to prior peak historical levels remains the most effective way of improving our margins, with the first key inflection expected later this year. The improvement in our unit economics will be gradual but should start to be evident in the second half of 2024 and keep improving from there with the higher levels of potash production. For segment highlights, in potash, our Q4 and 2023 sales volumes totaled 45 and 258,000 tons, respectively, with the fourth quarter volume down 10% compared to last year, while the full year sales volumes increased 16%.
As Bob noted returning our potash production to prior peak historical levels remains the most effective way of improving our margins with the first key inflection expected later this year the.
The improvement in our unit economics will be gradual but should start to be evident in the second half of 2024 and keep improving from there with the higher levels of potash production.
For segment highlights in potash, our Q4, and 2023 sales volumes totaled 45, and 258000 tons, respectively with the fourth quarter volume down 10% compared to last year, while the full year sales volumes increased 16% sale.
Matthew D. Preston: Sales volumes into agricultural markets comprise about 74% of our overall potash sales, while sales into feed markets made up approximately 23% of our tons sold in 2023. Despite lower overall production levels, we've been successful in continuing to grow sales and to feed markets to ensure we take advantage of the premium price. In the fourth quarter, our potash production totaled 79,000 tons, which brings our 2023 calendar year production to 224,000 tons. Reduced brine grades at HB in Wendover were the primary drivers of the lower than expected production.
Sales volumes into agriculture markets comprise about 74% of our overall potash sales while sales into feed markets made up approximately 23% of our tons sold in 2023.
<unk> lower overall production levels, we've been successful in continuing to grow sales into feed markets to ensure we take advantage of the premium pricing.
In the fourth quarter, our potash production totaled 79000 tons, which brings our 2023 calendar year production to 224000 tonnes reduce Brian grades at HB in Wendover were the primary drivers of the lower than expected production, but since commissioning the <unk> shaft project in October we've been filling our pons at HB with.
Matthew D. Preston: But since commissioning the Eddie Schaaf project in October, we've been filling our ponds at HB with some of the highest-grade brine in Intrepid's history, which will translate to a production benefit we should see beginning with the fall 2024 harvest. As for the first quarter potash outlook, we expect our sales volumes to be in the range of 65,000 to 75,000 tons at an average net realized sales price of $3.85 to $3.95 per ton. In trio, our Q4 and 2023 sales volumes total 49 and 228,000 tons, respectively, which compares to 28 and 197,000 tons in the same prior year period. In the fourth quarter, we produced 57,000 tons of TRIO, which was up about 5,000 tons both sequentially and year over year.
Some of the highest grade Brian at Intrepid history, which will translate to a production benefit we should see beginning with the fall 2020 for harvest.
As for the first quarter potash outlook, we expect our sales volumes to be in the range of $65 to 75000 tons at an average net realized sales price in the range of 385 million to $3 95 per ton.
And trio, our Q4, and 2023 sales volumes totaled $49 and 228000 tons, respectively, which compares to 28 and 197000 tons in the same prior year periods in the fourth quarter. We produced 57000 tons of trio, which was up about 5000 tons, both sequentially and year over year.
Matthew D. Preston: As for the first quarter trio outlook, we expect our sales volumes to be in the range of 80,000 to 90,000 tons at an average net realized sales price of $290 to $300 per ton. In Oatle Field Solutions, our fourth quarter sales saw an approximately $2 million sequential increase, which was largely attributable to a roughly $3 million increase in our water sales from a large frack job on our south range.
As for the first quarter trio outlook, we expect our sales volumes to be in the range of $80 to 90000 tonnes at an average net realized sales price of $2 90 to $300 per ton.
Oil field solutions, our fourth quarter sales saw an approximately $2 million sequential increase which was largely attributable to a roughly $3 million increase in our water sales from our large frac job on our South ranch, our fourth quarter gross margin was double the prior year figure in our Bryan business is becoming a steady contributor with room for more.
Matthew D. Preston: Our fourth-quarter gross margin was double the prior-year figure, and our brine business is becoming a steady contributor with room for more organic growth, although we are still subject to quarterly fluctuations based on the timing of larger frac jobs like we saw in the fourth quarter. Finally, given our improved financial position and recent period of high investments, I'll end my remarks clarifying our capital allocation priorities as we look ahead. First and foremost, we are focused on successfully finishing the remaining potash revitalization effort. This is far and away the most important initiative Intrepid can undertake, and for 2024, we expect our capital expenditures to be between $40 and $50 million, which is down about 30% compared to 2023 at the midpoint.
Organic growth, although we are still subject to quarterly fluctuations based on the timing of larger frac jobs like we saw in the fourth quarter.
Finally, given our improved financial position and recent period of high investments I'll end my remarks, clarifying our capital allocation priorities as we look ahead.
First and foremost we are focused on successfully finishing the remaining potash revitalization efforts. This is far and away. The most important initiative intrepid can undertake and for 2024, we expect our capital expenditures to be between $40 and $50 million, which is down about 30% compared to 2023 at the midpoint.
Our next priority is maintaining a solid financial position with a strong balance sheet through the cycle.
Third we will continue to develop the sand and lithium projects already underway, but for these projects will be very thoughtful moving forward to ensure we limit intrepid capital commitments reduce potential operational risks and make sure. Our operations teams remain focused on the successful completion of our key potash projects operator, we're now ready for the <unk>.
Operator: Our next priority is maintaining a solid financial position with a strong balance sheet through the cycle. Third, we'll continue to develop the sand and lithium projects already underway, but for these projects, we'll be very thoughtful moving forward to ensure we limit intrepid capital commitments, reduce potential operational risks, and make sure our operations teams remain focused on the successful completion of our key potash projects. Operator, we're now ready for the Q&A portion of the call. Thank you. If you would like to ask a question... Please press star then 1 on your touch-tone phone.
And a portion of the call.
Thank you.
If you would like to ask a question.
Please press Star then one on your Touchtone phone.
Pause for a moment to compile the Q&A roster.
Your first question comes from the line of Joel Jackson from BMO Capital markets. Please go ahead.
Hi, good morning, everyone.
Thanks for the color a couple of questions I'll ask them one by one maybe on costs.
Operator: Pause for a moment to compile the Q&A roster. Your first question comes from Joel Jackson from BMO Capital Markets. Please go ahead. Hi, good morning, everyone.
You gave some good volume.
<unk> is expecting for potash this year and next year and talk about cost starting to improve in the second half of the year can you give us a bit of color on the magnitude of cost reductions you might see unit cost second half of the year potash into 25% to hit your production numbers and then maybe you can give a bit of color on how your CTO costs.
Joel Jackson: Thanks for the color. A couple questions. I'll ask them one by one, maybe on cloth. You gave some good volume increases expected for potash this year and next year and talked about costs starting to improve in the second half of the year. Can you give us a bit of color on the magnitude of the cost reductions? You might see unit costs in the second half of the year for potash go into 25, if you hit your production numbers, and then maybe you can give a bit of color on how you see trio costs, projected trio costs this year and next. Matt, do you want to take that?
Keep trajectory share cost this year or next.
Matt you want to take time, yeah happy to.
Given where our production is today Joel we're in that 10% to 15% increase in production, we expect to see the same decrease in our unit economics on potash down 10% to 15%.
It really start to come into effect kind of late Q3, and really into Q4 results as those tons go into inventory or we start to sell down that inventory from the fall harvest beginning in the fourth quarter of 'twenty four for trio.
Matthew D. Preston: Yeah, happy to. You know, given where our production is today, Joel, we're in that 10 to 15 percent increase in production. We expect to see the same decrease in our unit economics on potash, you know, 10 to 15 percent. And that'll really start to come into effect kind of late Q3 and really into Q4 results as those tons go into inventory. We start to sell down that inventory from the fall harvest beginning in the fourth quarter of.
Right now our outlook is pretty consistent production cost per ton not a lot changing there on our production profile and while we certainly look to limit cash investments capital investments and kind of cut.
Cut back wherever we can I would say the outlook is pretty steady there with 23.
Okay.
And then.
It looked like.
Matthew D. Preston: You know, for TRIO, you know, right now our outlook is pretty consistent production cost per ton, not a lot changing there on our production profile. And while we certainly look to limit cash investments, capital investments, and kind of, You know, cut back wherever we can, I'd say the outlook is pretty steady there with 20.
On your freight costs were a lot lower in the fourth quarter is that something we should expect going through for the next bunch of quarters, how much you've locked in.
No our freight fluctuate depending on just location of sales mix between truck and rail freight really for US is mostly a pass through costs. So.
When we give our net realized status, while we focus on that average net realized sales price factor.
Matthew D. Preston: Okay, and then, um, your freight costs were a lot lower in the fourth quarter. Is that something we should expect going through for the next bunch of quarters, how much you have locked in? Now, our freight fluctuates depending on just the location of sales mixed between truck and rail. You know, freight is really just a pass-through cost for us. So, when we give our net realized, that's why we focus on that average net realized sales price factor when we give that forward guidance. And so, we'll see normal fluctuations based on where we're selling. But, you know, there's no reason to think we won't just go back to sort of, you know, long-term trends and averages.
When we give that forward guidance and so we will see normal fluctuations based on where we are selling but.
No reason to think we won't just go back to sort of long term trends and averages.
And finally, the first $60 million payment.
I think in the press release that came in December but I think you actually got in Q1 as I look at some of your other color and then on the <unk>.
50 million, what is kind of I know what you said is within seven years, but what is kind of a best case scenario you envision forgetting the second $50 million, what does that look like.
Exxon is our X T. O is currently applying for drill islands, which is.
A small geographic area within the non potash area that the BLM has to approve and so.
Robert P. Jornayvaz: And finally, the first $50 million payment, I think in the press release that came in December, but I think you actually got it in Q1, if I look at some of your other colors. And then the second $50 million, what is the, I know you said it's within seven years, but what is the best case scenario you envision for getting the second $50 million? What does that look like?
I don't know if youre following <unk> I can't speak as to Exxon in their merger with pioneer, but they've made it very clear that the Permian basin overall, both the Delaware and the Midland Basin are critical areas for them in terms of areas of focus so it's much more a question for Exxon as to the tie.
<unk> of their development plan, but given.
Robert P. Jornayvaz: Well, Exxon is our XTO is currently applying for Drill Island, which is a small geographic area within the known potash area that the BLM has to approve. So I don't know if you're following XTO. I can't speak as to Exxon and their merger with Pioneer, but they've made it very clear that the Permian Basin overall, both the Delaware and the Millen Basin, are critical areas for them in terms of areas of focus. So it's much more a question for Exxon as to the timing of their development plan, but given their public statements and their significant merger with Pioneer and their commitment to the Delaware Basin. The sooner that they go to work and receive permits, the sooner we get paid. So I think Given Exxon's commitment to the Delaware Basin, there's an opportunity for that payment to happen significantly sooner, but that's not under our control. Thank you very much.
Our reading of their public statements and there are significant merger with pioneer and their commitment to the Delaware basin.
The sooner that they go to work and received permits the sooner.
We get paid so.
I think I think.
Given <unk> commitment to the Delaware Basin.
There is there is an opportunity for that payment to happen significantly sooner, but thats not under our control.
Thank you very much.
Your next question comes from the line of Joshua Spector from UBS. Please go ahead.
Hi, Good morning. This is Lucas Beaumont answer Josh I, just wanted to clarify the volume guidance first of all I'm not sure. If I wrote this down back to France. It sounded like you guys said, 65% copper potash and 80 to 90. The trail was that the other way round.
Okay.
No that's correct.
Potash is 65 to 75.
That's right.
Alright, Okay. So I guess, then just could you kind of talk to us as to why that's kind of you're expecting that to be down on a year on year in the first quarter.
Joshua David Spector: Your next question comes from the line of Joshua Spector from UBS. Please go ahead. Good morning, this is Lucas Beaumont. I'm on behalf of Josh.
The dynamics with <unk> there.
Yes, it's just a function of tons in inventory.
Matthew D. Preston: I just want to clarify the volume guides first of all; I'm not sure if I write this down back to front, but it sounds like you guys said 65 to 75 for Potash and 80 to 90 for Trio. Was that the other way around? Well, that's correct. Potash is $65 to $75. That's right. Okay, so I guess then could you kind of talk to us as to why that's kind of, you're expecting that to be down kind of year on year in the first quarter? Just the dynamics from 4Q to 1Q there? Yeah, it's just a function of tons in inventory and our 2023 production. Obviously, being down, we took advantage of high prices by selling as much as we could in 2023.
Tori and our 2023 production, obviously being down when we took advantage of high pricing and selling as much as we could in 2023.
Yes.
Be clear.
The well failure that happened in the fourth quarter of 2022.
It resulted in lost production somewhere between 60 and 100000 tonnes at the HB facility.
So that that one well failure.
Had a very significant impact on our overall production failure.
Failure, and Thats why I called it out in the early part of my remarks.
Great. Thanks.
And let me just add a lot.
Sorry go ahead.
Okay.
Yes.
Go ahead.
Sorry, you go ahead, and I think you had something to add play the play centers I was just going to say the reason we called it out in the initial part of our remarks.
Robert P. Jornayvaz: Yeah, to be clear, the well failure that happened in the fourth quarter of 2022 resulted in lost production somewhere between 60 and 100,000 tons at the HB facility. So that one well failure had a very significant impact on our overall production, and that's why I called it out in the early part of my, Great, thanks, and I mean you gave a lot. Sorry, go ahead. I was just going to say. Go ahead. Sorry, you go ahead, Matt.
We own the fact that that that that well.
Phil.
And with the replacement well is actually being constructed as we speak but it had a major impact to our production profile and correcting that that mistake.
We will have an immediate impact once it's down completed and commissioned which is <unk>.
Expected to occur in the next 60 to 90 days.
Matthew D. Preston: I was just going to say the reason we called it out in the initial part of our remarks is we own the fact that that well failed, and the replacement well is actually being constructed as we speak, but it had a major impact on our production profile. And correcting that mistake will have an immediate impact once it's down, completed, and commissioned, which is expected to occur in the next 60 to 90 days. Great, thanks.
Alright, Thanks, and I guess, just then you gave a lot of good color on sort of where the projects are in the.
Press release.
Seven you had got it came.
It all sounds kind of coming up here in March in the second quarter in the third quarter.
So I mean could you just kind of help us understand how you feel about your confidence in sort of hitting the timing there and around the completion Dyson I mean is there any risks or.
Lucas Charles Beaumont: So, I mean, and I guess, Justin, you gave a lot of good color on sort of where the projects are kind of in the press release. So, I mean, you have kind of key milestones kind of coming up sort of here in March, in the second quarter and the third quarter. So, I mean, could you just kind of help us understand how you feel about your confidence in sort of hitting the timing there and around the completion dates? And is it, I mean, are there any risks, or how does that kind of stand currently?
That has that kind of stand currently.
Well, we in order to mitigate the risk of the re drilling of that well we completely changed the drilling design, we brought on a whole new team to drill the second well.
Unfortunately, the permitting.
Look.
An unusual amount of time it took us almost a year to re permit that replacement.
And so the good news is.
It's fully permitted it's actually theres a rig on site.
Drilling the conductor pipe as we speak and so we hope to have that well down and completed by the end of the month and hopefully commissioned by the end of April.
Robert P. Jornayvaz: Well, in order to mitigate the risks of the redrilling of that well, we completely changed the drilling design. We brought on a whole new team to drill the second well. Unfortunately, the permitting took an unusual amount of time; it took us almost a year to re-permit that replacement well. So the good news is that it's fully permitted.
And given that Thats in our largest best Brian pool within the entire company structure.
Being able to put that high grade brine into our ponds at Carlsbad will have a material impact.
As we begin the harvest of those bonds.
Robert P. Jornayvaz: It's actually, there's a rig on site, drilling the conductor pipe as we speak. And so we hope to have that well down and completed by the end of the month, and hopefully, commissioned by the end of April. And given that that's in our largest, best brine pool within the entire company structure, being able to put that high-grade brine into our ponds at Carlsbad will have a material impact as we begin the harvest of those. And I guess, I mean, if all of this goes to plan, you've set a flag that you're expecting a material uplift in production volumes in the second half. Can you kind of help sort of frame that course relative to the 190,000 tons in the second half of last year? Is it, you know, 10,000 tons this year, 20,000 tons? Second half.
And I guess, so I mean, if all of you guys. The plan I mean, you said apply that youre expecting a material uplift in the production volumes in the second half can you kind of help sort of frame that for us relative to the cut.
<unk> hundred 90000 tons in the second half of last year.
Is it 10000 tons this year 20000 tonnes second.
Second half.
Well in terms of trying to break it down by quarters.
Is the hard part given the seasonality in the evaporation cycle.
But I want to be clear that we.
We lost somewhere between 75, and 100000 tons from that one big Brian pool that we are unable to access still there and so those tons will be going into our ponds.
And we will begin to harvest. So I know you are trying to build a quarterly model.
Robert P. Jornayvaz: Well, trying to break it down by quarters is the hard part given the seasonality and the evaporation cycle. But I want to be clear that we lost somewhere between 75,000 and 100,000 tons from that one big brine pool that we were unable to access. It's still there. And so those tons will be going into our pond, and we'll begin to harvest those. So I know you're trying to build a quarterly model, but it basically starts a pinwheel effect, if you will, because we have multiple, as we've tried to outline in our IR dash.
But.
It basically starts a pinwheel effect, if you will because we have multiple as we've tried to outline in our IR decks.
We've got multiple abandoned mines that we have now flooded.
And this has given us abandoned mines time to the Brian grades to re saturate and build up so that we're now going to be producing for several years a much higher Brian Greg as we just explained from our HB.
From the Eddie shaft project, which has been putting in some of the highest Brian grade in our history into our ponds. So if you could take five minutes and look at our IR deck and familiarize yourself with with the H B.
Robert P. Jornayvaz: We've got multiple abandoned mines that we have now flooded, and this has given those abandoned mines time for the brine grades to resaturate and build up so that we're now going to be producing for several years a much higher brine grade, as we just explained from our HB, from the Eddie Shaft Project, which has been putting in some of the highest brine grades in our history into our ponds. So if you could take five minutes and look at our IR deck,
<unk> system I think it will become more evident to you.
Okay.
And then maybe just lastly, similar following on from sort of the question in terms of the.
And also the incremental set of $50 million.
Robert P. Jornayvaz: Familiarize yourself with the HBs, and pond system; I think it will become more evident. Cool, thanks. And then maybe just lastly, sort of related, following on from sort of the question in terms of the hurdles with the incremental sort of $50 million payment, I mean, it sounds like you have a reasonable degree of confidence that that one will sort of proceed. Could you talk a bit more about sort of what the contingent sort of hurdles are on the further $100 million that would need to kind of happen over time? Well, there are really no hurdles.
I mean, it sounds like.
You have a reasonable degree of confidence that that one will sort of per se.
Could you talk a bit more about sort of what the continued sort of hurdles are on let's say the 100 million that would need to kind of happen all the time.
Well, there's really no hurdles.
Once they once they get their next drilling island approved then there really arent any hurdles. It's described as contingent payments as they drill off those drilling islands and so it all starts happening very quickly once they get that first drill island approved.
Robert P. Jornayvaz: Once they get their next Drilling Island approved, then there really aren't any hurdles. It's described as contingent payments as they drill off those drilling islands. So it all starts happening very quickly once they get that first drill island approved, and we are now very much aligned in terms of them receiving that drill island. And I would just take you back to looking at Exxon's comments and look to Axon for guidance as to their importance and the significance of the Delaware Basin, and in terms of where Exxon believes they're going with their production. So that's more of an Exxon question.
And we are now very much aligned in terms of.
Them, receiving that drill island and I would just take you back to looking at Exxon's comments and look to axon for guidance as to their importance in the significance of the Delaware basin in terms of where axon believes they're going with their production. So that's more of an excellent question.
Yes, I mean, I guess, you said that the first one is linked to them just doing one drilling on <unk>.
Robert P. Jornayvaz: Yes, I mean, I guess you said that the first one's linked to them doing one drilling island. So, are the incremental ones linked to multiple drilling islands? Or, I mean, what? Well, we simply need them to get their first.
The incremental ones linked to multiple drilling islands or.
Well we.
It's actually made them to get there first.
We simply need to get their first one approved to kickoff the entire process.
Robert P. Jornayvaz: We simply need to get their first one approved to kick off the entire process. Okay, thanks. I have some more questions, but I'll go back into the queue. If you would like to ask a question, please press star 1. Your next question comes from the line of Jason Ursaner from Barbershoot Holdings. Please go ahead.
Okay. Thanks, I'll have some more questions, but I'll get back in the queue.
If you would like to ask a question. Please press Star One. Your next question comes from the line of Jason <unk> from <unk> Holdings. Please head.
Jason M. Ursaner: Hi, thanks for taking the questions. And first, I just want to congratulate you on the XDO deal and for getting the final sand permit. Finally, I know that's been a long time coming, and I appreciate all the details on the CapEx projects in terms of how they're progressing and just your commentary at the end. I appreciate you adding that. Just first on the balance sheet. Is there anything notable about the timing in terms of either working capital that you've laid out ahead of the spring season or CapEx that's maybe been front loaded in 2024? Or is that a pretty clean number?
Hi, Thanks for taking the questions first just wanted to congratulate you on the <unk> deal and for getting the.
The final San permits highway I know thats been a long time coming and then appreciate all the details on the Capex projects in terms of how they're progressing and just your commentary at the end Bob appreciate Youre, adding flat.
Just first one on the balance sheet is there anything notable about the timing in terms of either working capital that you've laid out ahead of the spring season or Capex, that's maybe been frontloaded in 2024 or is that.
Is that a pretty clean number.
Thank you.
Matthew D. Preston: Yeah, Jason, when it comes to capital, I mean, I think certainly some of it's going to be weighted more towards the first half as a lot of those projects are, you know, started in 2023. And they'll be wrapping up in kind of the first half of 24, the HP pipeline, we've already covered IP 30 B, we replace it well, which is happening right now, and the Wendover primary pond, which began in 23 as well. And so, you know, from the growth side, certainly that'll be weighted more towards the first half of the year, and the sustaining capital piece, which is the balance of that 40 to 50 million, you'll spread pretty evenly throughout. Okay.
Yeah, Jason when it comes to capital I mean, I think certainly some of it is going to be weighted more towards the first half is a lot of those projects are started in 2023 and there will be wrapping up until the first half of 'twenty for the HB pipeline, we've already covered IP 30 be replace it well, which is happening right now and in the Wendover primary pond.
<unk> began in 2003 as well and so from the growth side, certainly that'll be weighted more towards the first half of the year and sustaining capital piece, which is the balance of that 40% to $50 million spread pretty evenly throughout the year.
Okay and for the sand project apologize if you've talked about this before but can you maybe either speak to or remind me about the regional economics of the project because I guess my understanding is the cost of sand to whoever is using it probably has a lot to do with whoever the next closest op.
Robert P. Jornayvaz: And for the SAN project, I apologize if you've talked about this before, but can you maybe either speak to or remind me about the regional economics of the project? Because I guess my understanding is that the cost of SAN to whoever's using it probably has a lot to do with who the next closest option would be. So when this project can now get up and running, what is the kind of the regional or competitive view of what's in the area besides you guys? It will be the closest, and it will be the first and only sand mine in southeast New Mexico. So from a logistical standpoint, which operators pay for sand? Sometimes they pay for it FLB at the mine, and they pay their own transportation costs, or they buy it on a delivered basis.
<unk> would be so when.
This project now can get up and running what is kind of either regional or competitive.
Whats in the area. Besides you guys.
It will be the closest it will be the first and only sand mine in southeast New Mexico, So from a logistical standpoint of which.
Operators pay for sand.
Sometimes they pay for it <unk> at the mine and they pay their own transportation costs or they buy it on a delivered basis.
Logistically, we will now be the only mine in south in the Delaware Basin on the new Mexico side, and we will be the closest to the wells being permitted and drilled so.
Robert P. Jornayvaz: Logistically, we will now be the only mine in the Delaware Basin on the New Mexico side, and we will be the closest to the wells being permitted and drilled. So we will have a significant logistical advantage from a transportation standpoint to the wells being, you know, to the hundreds, if not thousands, of wells that are currently permanent and scheduled to be drilled. Okay, that's pretty clear. And looking for a partner, is it someone that would have, I guess, prior experience operating, or running a sand mine that you kind of would look to bring that on? Or is it more just the financial aspect of, you know, maybe getting money up front instead of having to kind of do it all yourself?
So we will have a significant logistical advantage from a transportation standpoint.
To the wells being to.
The one hundreds if not thousands of wells.
They're currently permanent scheduled to be drilled.
Okay, that's pretty clear.
The.
Looking for a partner a strategic is it someone that would have I guess prior experience with operating running a sand mine that you would look to bring that on or is it more just the financial aspect of it.
Getting money upfront instead about the kind of do it all yourself.
I would say both components are very very important the good news is we've got a lot of interest.
Robert P. Jornayvaz: I would say both components are very, very important. The good news is we've got a lot of interest. And so I'll just leave it at that, that we're currently negotiating and feel like we have several directions that we could go in the nature of a park. And then just, you talked a lot about HB in some of the last questions, but on Wendover specifically, the primary pond, 7, which I guess will now be a second primary pond, is that one more additive, or is that kind of replacing declining rates at, I guess I would say its number one purpose is replacement.
And so.
I will just leave it at that that we're currently negotiating and feel like we have several.
Directions that we could go in the nature of the park.
Okay.
And then just you talked a lot of HB and some of the last questions, but Andover specifically.
The primary PON, seven, which I guess will now be a second primary ponds.
Is that.
Is that one more additive or does that kind of replacing declining rates that I guess, what would have been the old primary path.
I would say its number one purpose is replacement.
Robert P. Jornayvaz: We'll still be storing brine in primary pond six that will then flow into primary pond seven, and we will eventually start a multi-year construction on Pond 8, which we will, just so we don't allocate a bunch of capital; we're gonna look forward because Wendover has tremendous opportunity. Assuming we structure a lithium joint venture, the capital will be available to greatly enhance the facilities out there with a partner that will not only increase potash production but increase magnesium, salt, and hopefully lithium production as well. Okay, and on the lithium, the kind of numbers later, the 2000 tons, is that kind of, dependent on POM 7 being built? Is that contingent on POM 8 being built?
We will still be storing Brian and primary pump six that will then flow into primary bond seven and we will eventually start a multiyear construction on pond eight which we will just so we don't allocate a bunch of capital we're going to look forward because wind over has has tremendous opportunity.
Assuming we structure a lithium joint venture.
The capital will be available to <unk>.
Greatly enhance the facilities out there with a partner that will not only increase potash production, but increased magnesium salt and hopefully lithium production as well.
Okay and on the lithium.
Kind of number is late 2000 tons.
Is that kind of.
Tien tsin on Palm seven being built is that contingent upon <unk> being built is that kind of where you are today with the Mag chloride is the byproduct or just I guess.
Robert P. Jornayvaz: Is that kind of where you are today with mag chloride as the byproduct or just, I guess, where is that? The 2000 really is a base number that is just literally sitting in ditch five or pond, collection pond five. So we know that consistently, over the last many, many years, if not decades, That's where we achieve the highest concentrations of lithium. So it's been measured over several years. We know we have an additional.
Where is that number.
The 2000 really has a base number that is just literally sitting in ditch five or pond collection pond, five and so we know that we consistently over the last many many years if not decades.
That's where we achieved the highest concentrations of lithium and so its been measured over several years.
We know we have an additional.
Yeah.
Robert P. Jornayvaz: 4,000 to 5,000 tons that flow through the system, and we're working with some very sophisticated partners that have ideas where we can place collection points to collect those additional tons. Combining with the right strategic partner that understands our seasonality, understands DLE technology, and as well as finance are our primary goals. The great news is that any dollar we spend to enhance lithium production will directly result in greater potash. So it is a true win-win, in terms of who and how we structure the project. Okay, perfect. And I'll hop back in the queue if I have any other questions. But thank you again for taking my questions. I appreciate all the calls. Thank you, Jason.
4% to 5000 tons that flow through the system and we're working with some very sophisticated partners that have ideas, how we where we can place collection points to collect those additional tonnes. So.
Combining with the right strategic partner that understands our seasonality.
I understand the <unk> technology.
And as well financed.
Our primary goals.
The Great news is is that any dollar we spend to enhance lithium production will directly result in greater potash production.
So it is a true win win in terms of who and how we structure. This.
Okay.
Perfect.
And I'll hop back in the queue, if I have any other questions.
Again for taking my questions I appreciate all the color.
Thank you Jason.
Jason M. Ursaner: Your next question comes from the line of Josh Spector from UBS. Please go ahead. Thanks Hyatt, Lucas here again. So just on the TRIO side, you've got a pretty large step up there in the volumes for the first quarter. I mean, could you just kind of talk about how you're thinking about the rest of the year for us, please? Yeah, thanks for the question. You know, certainly here in North America, I think, as others have echoed, we're seeing a spring season that's trending ahead of normal, just due to mild weather conditions.
Your next question comes from the line of Josh Spector from UBS. Please go ahead.
Thanks, Tod again, so just on the trio side, so you've got a pretty large step up there and the volumes for the first quarter. I mean could you just kind of talk about how you're thinking about the rest of the year. Please.
Okay.
Okay.
Yes.
Thanks for the question.
Certainly here in North America, I think as others have that code, where CMS spring season that is trending ahead of normal just due to mild weather conditions and.
Zachry Adams: And we certainly see that in our trio segment. So we would certainly expect our Q1 to, you know, reflect that, and it does so far. But, you know, trio is a little bit different than some other nutrients in that.
And we certainly see that in our trio segment. So.
We certainly expect our Q1.
Reflect that does so far but.
It was little bit different than some other nutrients and that.
Zachry Adams: The demand piece on that has a little bit of a longer tail through the first half, so we would expect to still see steady volumes through the second quarter in the early summer as that product's used on a variety of different crops and not only for pre-plant applications, but also for side dress applications. And sorry, so when you say 70 there, that's implying it could stay up at this kind of 90,000 time level. I mean, that'd put you at kind of 180 in the first half, which would be... 50% higher than last year in the last quarter.
The demand piece on that has a little bit of a longer tail through the first half. So we would expect to still see steady volumes.
Our second quarter and the early summer is that products used.
On a variety of different crops and not only for pre plant applications, but also for side dress applications as well.
And sorry, so when you say 70 there.
Thats imply it could stay up at this kind of 90000 ton level.
I mean that would put you kind of a 180 in the first half which would be.
50% higher than last year last quarter, you said.
Lucas Charles Beaumont: Is that correct? No, I mean, Q1 will certainly be our largest sales quarter for Trio, as Zach said. I mean, we've got an early spring season, and we're seeing strong demand there. But, you know, like all of our sales seasonality and trends, we'll certainly see it, you know, sort of tail off here and towards the back half of Q2. So by no means is it gonna be a consistent Q1 and Q2 volume. We've always... Are you guys? I'd say it's very consistent with priority.
Is that correct no Q1 will certainly be our largest sales quarter for trio as <unk> said I mean, we got an early spring season, and we're seeing strong demand there but.
Like all of our sales seasonality in trends and we will certainly see.
Sort of tail off here towards the back half of Q2.
So by no means is it going to be a consistent Q1 and Q2 volume.
Great job.
We've always.
Alright, guys.
Hi, this is very consistent with prior years.
Matthew D. Preston: Great, thanks. And just following on from Joel's question earlier on the cost, so you're sort of talking about the tongue costs, I think, on the TRIO side, so you had the step up there and sort of the aggregate cost level as well. So were you assuming that the aggregate costs were going to kind of be flat year-on-year as well, roughly? Is that how you think about it?
Great. Thanks, and just following on from <unk> question earlier on the cost savings that we're talking about to turn costs I think.
In the tree I saw you had to step out there and sort of the aggregate cost level as well.
Several you assuming that the aggregate costs, we've got to kind of be.
Flat year on year as well roughly.
<unk>.
Is that how do you think that that was yep, that's correct correct yes.
Matthew D. Preston: Yeah, that was, yep, that's correct. Correct. Yeah.
Lucas Charles Beaumont: And then just on the CapEx side, just following up on that one. So you mentioned most of the growth in CapEx is going to sort of start to wind down later this year, and you highlighted that it's kind of falling to sort of $20 to $25 million. I mean, obviously, you're going to have these ongoing kinds of well-growth CapEx, I guess, as you go right into next year too. So I guess how much of what's happening this year is left in terms of spend that will carry into 2025? And how do you kind of see a normal level of growth?
And then just on the Capex side.
Just following up on that one.
You mentioned most of the growth Capex is going to kind of start to wind down.
From lighter this year.
And you highlighted that is kind of falling to say, 20% to $25 million.
Obviously, youre going to have things like ongoing kind of well growth Capex I guess is your car rod into next year too.
Yes.
How much of what's happening this year is like left.
The standard will carry into 2025.
How do you kind of seem like a normal level of.
Matthew D. Preston: Grog's CapEx, in that sense. Yeah, I mean, as far as the big push on revitalization, obviously, the last two years have been significant increases in cap back in that 65-70 million range, 22-23, down a bit in 24. So certainly nothing at those levels, you know; we'll continue to evaluate opportunities in front of us when it comes to, you know, expanding into, you know, Bed 9 and Moab, if we'd like to, and certainly other areas, but, you know, no, significant forward projections now for 25 as we just continue to work to complete the projects that are currently underway, make sure those are successful and get up and running, and then we'll Thanks.
Growth capex in that sense.
Yes, I mean as far as I know, there's a big push on revitalization. Obviously the last two years have been significant capex in that $65 $70 million range 'twenty, two 'twenty three down a bit in 'twenty four so certainly nothing that those levels will continue to evaluate opportunities in front of us when it comes to expanding into bed nine an moe.
Sure.
We'd like to and certainly other areas, but no significant forward projections now for 25 as we just continue to work to complete the projects that are currently underway.
Make sure those are successful and get up and running and then we will evaluate our production profile at that point and see what makes sense in future years.
Lucas Charles Beaumont: And then just lastly, on the potential kind of lithium project, I was just wondering if you could kind of give us your latest thoughts on how the project economics of that would sort of work if you had either sort of the royalty or the JV agreement? Is it, you know, you're going to kind of capture like a percentage of sort of revenue there or something? I mean, with where prices are at the moment, like the 2000 tons a year would be worth kind of 30 to 45 million a year in sales, which then, you know, obviously, the production costs and everything, and you have to split with the JV partner. How would you think about walking through that?
Thanks, and then just lastly on the.
On the potential kind of lithium project I was wondering if you can kind of give us your latest thoughts on how you think the project economics of that would set of work if you have any of those.
The royalty or the JV agreement.
No.
Youre going to kind of capture like a percentage or a set of revenue there or something.
With where prices are at the moment likely 2000 tons a year of the west.
$30 million to $45 million a year in sales, which then.
There's a bit of production costs and everything and you have to split with the JV partner, how would you kind of think about walking for sure that.
Robert P. Jornayvaz: We look at it as a pretty significant upfront payment. To use an oil and gas analogy, since we own the mineral outright, we don't lease the mineral; we own the lithium in fee. So we have the opportunity to structure it like you would a South Texas ranch in the Eagleford play, where as a mineral owner, you would take a significant upfront payment. They would be responsible for the majority, or if not all, of the capital costs.
We look at it as pretty significant upfront payment.
We.
To use that oil and gas analogy, we view our since we own the mineral outright we don't lease the mineral we own the lithium in fee and so we have the opportunity to.
A structure like you would.
South Texas Ranch in the Eagle Ford play, where as a mineral owner you would take a significant upfront payment they would be responsible for the majority if not all of the capital cost.
Robert P. Jornayvaz: And then you would collect a significant royalty, so we would not be expending any capital. It would give us the opportunity to expand, create more berms, more ponds, which, as I said in my remarks, every dollar that you spend to improve lithium production actually results in additional potash mag chloride and salt production as well. So the multiple effects of a dollar being spent out there really have an impact on Intrepid, and that's why we're so focused on our Utah facilities, especially our Windover facility right now, because we own the lithium in fee. Great. Thanks very much.
And then you would collect a significant royalty off of that.
And so we would not be extending any capital.
It would give us the opportunity to expand create more berms more ponds, which as I said in my remarks every dollar that you spend two improved lithium production actually results in additional potash mag chloride salt production as well.
The multiple effect of <unk> of $1 being spent out there.
It really has an impact on intrepid and that's why we're so focused on our Utah, especially our window of our facility right now because we own the lithium and fee.
Great. Thanks very much.
Jason M. Ursaner: If you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Jason Ursaner from Bumbershoot Holdings. Please go ahead.
If you would like to ask a question. Please press star one on your telephone Keypad. Your next question comes from the line of Jason <unk> from Bumbershoot Holdings. Please go ahead.
Jason M. Ursaner: Hi, thanks for taking the follow-up. I just wanted to try to follow up on the HV because there's a lot of moving parts, to make sure I understand. So, the Eddy Shaft Project is the best way to think about it. That's kind of like a stopgap for this year's evaporation production. And then you have the initial brine pool for the IP30 well, 330 million gallons. But that's a little bit of a stopgap for kind of next year until you get the residence time from the injection, to then get out to 2025, where you sort of have it all hitting at that point. And it's kind of like a step up in the stopgap, if that makes sense. Yeah, that's a great way to put it.
Hi, Thanks for taking the follow up.
Wanted to try to follow up on the HPE, just because theres a lot of moving parts make sure I understand so.
Eddie shaft project is the best way to think about that's kind of like stopped app for this year's evaporation production and then you have.
The initial brine pool for the IP 30, well the 330 million gallon, that's a little bit of like a stop gap for kind of next year until you get the residence time from the injection and then get out to 'twenty, five where you sort of have been all hitting at that point and it is kind of like a step up.
In the stop gap if that makes sense.
Yes, that's a great way to put it we're fortunate that the Eddie shaft project turned out to be a little bit better than a stop gap.
Robert P. Jornayvaz: We're fortunate that the Eddie Schaaf project turned out to be a little bit better than a stopgap, but IP30B will be, in the heart of that brine pool, the best brine that's been cooking there for several years since the original IP30 well failed three years ago. So that brine has had significant residence time. We've tested it numerous times.
But.
30, <unk> will be.
In the heart of that Brian pool of diverse Brian Thats been cooking there for several years since the original IP 30, well failed three years ago. So that Brian has had significant residence time, we've tested it numerous times, we know that to be 10%, Brian grade, it's the best Brian that the <unk>.
Robert P. Jornayvaz: We know that to be 10% brine grade, it's the best brine that the company has, and there's enough to pump it for at least a year and a half, if not two years, which gives it to the other mines that are currently being flooded, given our new pipeline. So let's not forget that we built an entire new pipeline system that's already, the capital's been spent, so that we're now re-injecting, and much higher levels are filling up the mines. So, in 2024, it will be the first time in four years where we're injecting significantly more than we're withdrawing, which has very positive long-term benefits to your brine grades and the brine that' So the investment's been made in the pipeline system. We just need to get IP30B drilled successfully, which we're doing as we speak.
Company has.
There is enough to pump it for at least a year and a half if not two years, which gives the.
On the other mines that are currently being flooded given our new pipeline. So let's not forget that we built an entire new pipeline system. That's already the capital has been spent so that were renewed where now reinjecting.
And much higher levels.
Filling up the mines. So in 2024 will be the first time in four years, where were injecting significantly more than we're withdrawing.
Which has very positive long term benefits to you Brian grades and the Brian that's available too so.
So the investments been made in the pipeline system.
We just need to get well IP 30 be drilled successfully which we're doing as we speak that literally creates a long term Penn will affect because we can pull from that Brian Poole for at least 18 months, if not two years, while everything else gains residents time at the highest.
Robert P. Jornayvaz: That literally creates a long-term pinwheel effect because we can pull from that brine pool for at least 18 months, if not two years, while everything else gains residence time at the highest injection rate it's seen since the inception of the model. But so the IP30, as well, the operational life there is obviously, that touches on a number of these different pools. So obviously, the short-term focus is this.
<unk> right. It has seen since the inception of the mine.
What's the IP <unk> well the operational life. There is up obviously that touches on a number of these different pool. So obviously the short term focus is this.
Robert P. Jornayvaz: And I apologize, it's the initial brine pool that's at a lower depth than the eddy shaft. Is it, I don't know what you're calling that one, but the initial pool. So after that, hopefully, the IP30 well is extracting from all the other pools that you're not tapping for the next year or so. Now those all have successful operating extraction wells in existence and numerous wells in those other caver
And I apologize, it's the initial Brian pool, that's at a lower depth than the Eddie Shat is it I don't know what you are calling that one but the initial pool.
After that hopefully then 30 well is extracting from all of the other pools that you are not tapping them for the next year or so.
Those all have successful operating.
Extraction wells in existence in numerous wells in those other caverns and so.
Robert P. Jornayvaz: So, you know, I would just ask that people go to our IR deck. We try to lay out all the different caverns, the well systems, and everything that's there so that you can very easily see which wells and how many different injection and withdrawal wells that we currently have that are operating in great shape. It just gives all those other abandoned mines that are now flooded additional time for Brian Gray to get hired because of residency.
I would just ask that people go to our IR deck, we tried to lay out all the different caverns, the wealth systems and everything that's there. So that you can very easily see which wells and how many different injection and withdrawal wells that we currently have that are operating in.
In great shape.
It just gets all of those other.
Abandoned mines that are now flooded.
Additional time for the Brian grade.
Two to get higher because of residence time.
Robert P. Jornayvaz: And so we thought the best way to explain that to our stockholders was to give them maps, so that they can literally look along as we speak about some of these more complex mining operations. And so just in that, I'm in the presentation on page 7, you're talking about the MOAG example, because now you're talking about nine, I think it was nine percent or higher on some of these pools, you know, that's like the higher end of the range of where the brine is. Maximum of Brine Availability, you know, is that, is there a similar chart on the HB, or is it just, you know, if you can get 9% brine grades, you're going to have, assuming decent evaporation, you're going to have great performance out of HB. It's kind of the easiest way to think about it. That's the easiest way to think about it. And just to give you perspective, the brine is actually 10% underground. And to get it up through the pipeline, we have to dilute it because it's so saturated with potash.
So we thought the best way to explain that to our stockholders is to give them maps.
So that they can literally look along as we speak to some of these.
More complex mining issues.
And so just in that.
Presentation.
Page seven you are talking about the Moab example, because now youre talking about nine I think it was 9% or higher.
Paul.
The higher end of the range of where.
I guess the Brian.
Brian availability.
Is that is there a similar have you given a similar chart on the H b.
Or is it just.
If you can get 9% primary as youre going to have assuming decent evaporation youre going to have great performance out of HB is kind of the easiest way to think about it.
That's the easiest way to think about it and just to give you a perspective, the Brian is actually 10% underground and to get it up through the pipeline with diluted because its a saturated in potash.
Robert P. Jornayvaz: Okay. Okay, awesome. Thanks for taking the call. I appreciate it. This concludes the question and answer session. I would now like to turn the conference back over to Bob Jornayvaz for any closing remarks. Thank you everyone for your time today. We wish you a great week, and we really appreciate your interest in Intrepid. We really look forward to the upcoming quarters. Thank you very much. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Okay.
Okay awesome. Thanks for taking the follow up I appreciate it.
This concludes our question and answer session I would now like to turn the conference back over to Bob <unk> for any closing remarks.
Thank you everyone for your time today.
Wish you a great week and we really appreciate your interest in intrepid.
And we really look forward to the upcoming quarters. Thank you very much.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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