Q1 2024 Antero Midstream Corporation Earnings Call

Operator: Greetings and welcome to Antero Midstream's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. And a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Justin Agnew, Vice President of Finance and Investor Relations.

Greetings and welcome to Antero Midstream first quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: One should require operator assistance during the conference.

Operator: Press Star Zero on your telephone keypad.

Operator: Mind you This conference is being recorded.

Operator: I would now like to turn the conference over to your host Justin Agnew, Vice President of Finance and Investor Relations.

Justin James Agnew: Good morning, and thank you for joining us for Antero Midstream's first quarter investor conference call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I would also like to direct you to the home page of our website at www.anteromidstream.com, where we have provided a separate earnings call presentation that will be reviewed during today's call. Today's call may also contain certain non-GAAP financial measures.

Justin James Agnew: Good morning, and thank you for joining us for Antero Midstream first quarter Investor Conference call.

Justin James Agnew: A few minutes going through the financial and operating highlights and then we'll open it up for Q&A.

Justin James Agnew: I would also like to direct you to the homepage of our website at Www Dot Antero midstream Dot com, where we've provided a separate earnings call presentation that will be reviewed during today's call.

Justin James Agnew: Today's call May also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures.

Justin James Agnew: Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable gap financial measures. Joining me on the call today are Paul Rady, Chairman, CEO, and President of Antero Resources and Antero Midstream, Brendan Krueger, CFO of Antero Midstream, and Michael Kennedy, CFO of Antero Resources and Director of Antero Midstream. With that, I'll turn the call over to Paul.

Justin James Agnew: Joining me on the call today are Paul Rady, Chairman, CEO, and President of Antero resources, and Antero Midstream Brendan Krueger CFO of Antero Midstream and Michael Kennedy CFO of Antero resources and director of Antero Midstream.

Paul M. Rady: Thanks, Justin. Good morning, everyone.

Paul: Thanks, Justin good morning, everyone.

Paul M. Rady: Okay.

Paul M. Rady: In my comments, I will discuss our capital projects completed in the first quarter, operational efficiencies in our water business, and AR's peer-leading free cash flow break-even cost. Brendan will then go through our first quarter results, which set multiple company records. Let's start with slide number three titled Continued Asset Optimization. At the end of the first quarter, we placed our Grays Peak Compressor Station in service, as depicted in the light blue outline on the north part of our map. This station was the second compressor station that utilized relocated compressor units, which resulted in approximately $15 million in capital savings.

Paul M. Rady: In my comments I will discuss our capital projects completed in the first quarter operational efficiencies in our water business and a ars peer leading free cash flow breakeven costs Brandon.

Paul M. Rady: Let's start with start with slide number three titled continued asset optimization.

Paul M. Rady: Station was the second compressor station that utilize re relocated compressor units, which resulted in approximately $15 million in capital savings.

Paul M. Rady: Gray's Peak has an initial capacity of 160 million cubic feet a day and will support the future throughput growth in the liquids-rich corridor of AR's acreage position. Importantly, Gray's Peak was placed online slightly ahead of schedule and on budget. This exemplifies our just-in-time capital investment philosophy and integrated planning with Antero Resources. Looking ahead, you can see in the yellow highlighted box where the future expansion of Grays Peak Station will occur.

Paul M. Rady: This exemplifies our just in time capital investment philosophy, and integrated planning with Antero resources.

Paul M. Rady: Looking ahead, you can see in the yellow highlighted box, where the future expansion of the Grays peak station will occur.

Paul M. Rady: Our visibility into the future development of our dedicated acreage allows us to phase in capacity over time as needed. This maximizes our project rates of return and drives our peer-leading return on invested capital. In addition to our capital efficiencies, we had significant operational efficiencies on the freshwater side of the business, highlighted on slide number four titled 2024 Completion Efficiency. During the first quarter, Antero Midstream delivered 113,000 barrels per day of freshwater to AR, which was running 1.3 completion crews on average.

Paul M. Rady: Our visibility into the future development of our dedicated acreage allows us to phase in capacity over time as needed.

Paul M. Rady: Yeah.

Paul M. Rady: This maximizes our project rates of return and drives our peer leading return on invested capital.

Paul M. Rady: In addition to our capital efficiencies, we had significant operational efficiencies on the freshwater side of the business highlighted on slide number four titled 'twenty 'twenty four completion efficiencies.

Paul M. Rady: During the first quarter Antero midstream delivered 113000 barrels per day of fresh water to a R who was running 1.3 completion crews on average.

Paul M. Rady: The last time AM delivered a similar amount of water during a quarter, AR was running two completion crews on average, so this is a 35% improvement. As depicted on the left-hand side of the page, AR averaged 11.3 completion stages per day, which is a quarterly company record and a 44% increase compared to 2022.

Paul M. Rady: The last time AAM delivered a similar amount of water during a quarter. Yeah. It was running two completion crews on average. So this is a 35% improvement as.

Paul M. Rady: As depicted on the left hand side of the page a R averaged 11, three completion stages per day, which is a quarterly company record and a 44% increase compared to 2022.

Paul M. Rady: This performance is partially due to AEM's integrated freshwater delivery system. This system provides industry-leading water delivery and deliverability rates and eliminates the need for water trucks, significantly reducing congestion on our pad site. In addition, an underappreciated aspect of our operations is the integrated planning between AR and AM. This starts with efficient pad design incorporating gathering and water lines. System communication between upstream and midstream teams and the elimination of non-productive time. To put our planning sets into perspective, since AM acquired the water business almost ten years ago, we have had zero missed completions with our freshwater delivery system, which is outstanding.

Paul M. Rady: This performance is partially due to a integrated freshwater delivery system.

Paul M. Rady: This system provides industry, leading water deliver be deliverability rates it eliminates the need for water trucks, which significantly reduces congestion on our pad sites. In addition in an underappreciated aspect of our operations is the integrated planning between <unk> and <unk>.

Paul M. Rady: This starts with efficient pad design, incorporating gathering and water lines.

Paul M. Rady: There is consistent communication between upstream and midstream teams and the elimination of nonproductive time.

Paul M. Rady: Our planning SaaS into perspective, since <unk> acquired the water business almost a decade ago, we have had zero missed completions with our freshwater delivery system, which is an outstanding achievement.

Paul M. Rady: Adding to the development stability at AR is its premium natural gas price realizations, highlighted on slide 5, titled, Not All Transport to the Gulf Coast is Equal. This map illustrates AR's firm transportation portfolio directly into the heart of the LNG corridor. With several new LNG facilities starting up over the next several years, we expect to see a widening spread between sales points near Henry Hub and sales points outside of the Tier 1 market.

Paul M. Rady: Adding to the development stability at a or is its premium natural gas price realizations highlighted on slide five titled not all transport to the Gulf Coast is equal.

Paul M. Rady: This map illustrates ar's firm transportation portfolio directly into the heart of the LNG corridor.

Paul M. Rady: With several new LNG facilities, starting up over the next several years, we expect to see a widening spread between sales points near Henry hub and sales points outside of the tier one markets.

Paul M. Rady: The Blue Call Out Box highlights a recent quote from a research commodity team that emphasizes this view. They believe sales points within 100 miles of Mandrey Hub could see prices above $5 per MMBTU, while sales points outside of that range could price at $3 to $4 per MMBTU.

Paul M. Rady: Blue call out backs, hi, Colette ox highlights of recent quote from a research commodity team that emphasizes this view they believe sales points within 100 miles of mandatory hub could see prices above $5 per M. B to you while sales points outside of that range could price at three to $4 per.

Paul M. Rady: M M B to you.

Paul M. Rady: Importantly, 75% of AR's firm transportation delivers gas to these Tier 1 markets, providing direct exposure to these premium priced gas, solidifies AM's position as the critical first-mile infrastructure to supply LNG across the globe. I'll finish my comments on slide number six titled, AR has the lowest free cash flow break even. We previously put this slide out highlighting that AR's break-even natural gas price was $2.27 on an unedged basis. As you can see on the left hand side of the page, AR generated approximately $10 million of unhedged free cash flow in the first quarter of 2024 when NYMEX gas averaged $2.24 per MMBTU.

Paul M. Rady: Solidifies <unk> position as the critical first mile infrastructure to supply LNG across the globe.

Paul M. Rady: We pre released previously put this slide out highlighting that arris breakeven natural gas price was $2 27 on an unhedged basis as you can see on the left hand side of the page a R generated approximately $10 million of unhedged free cash flow in the first quarter of 2024 when Nymex.

Paul M. Rady: Next gas averaged $2 24.

Paul M. Rady: In combination, AR's capital efficiency, liquids pricing uplift, and premium natural gas price realizations result in development stability that underpins AM. As a midstream provider, we desire to service producers with the lowest overall break-even costs, and AR certainly meets that test. With that, I will turn the call over to Brendan.

Paul M. Rady: In combination.

Brendan: As a midstream provider, we desire to service producers with the lowest overall breakeven costs and they are certainly meets that test.

Paul M. Rady: With that I will turn the call over to Brendan.

Brendan E. Krueger: Thanks, Paul. I will begin my comments on slide 7, titled First Quarter 2024 Highlights. The first quarter of 2024 was a record-breaking quarter, both financially and operationally. Antero Midstream's organic growth strategy delivered a 4% and 6% increase in gathering and processing volumes, respectively.

Brendan: Thanks, Paul I'll begin my comments on slide number seven titled first quarter 2024 highlights. The first quarter of 2024 was a record breaking quarter, both financially and operationally.

Brendan: Antero midstream is organic growth strategy delivered a 4% and 6% increase in gathering and processing volumes, respectively compared to last year.

Brendan E. Krueger: We deliver double-digit EBITDA growth combined with double-digit declines in capital year-over-year. The growing EBITDA and declining capital resulted in $182 million of free cash flow before dividends and $74 million of free cash flow after dividends, both of which were company records. All of this record free cash flow was utilized to reduce absolute debt during the quarter. In combination, our EBITDA growth and declining debt resulted in leverage declining to 3.1 times. 3.3 times by year-end 2020.

Brendan: We delivered double digit EBITDA growth combined with double digit declines in capital year over year.

Brendan E. Krueger: The growing EBITDA and declining capital resulted in $182 million of free cash flow before dividends and $74 million of free cash flow after dividends.

Brendan E. Krueger: Strong first quarter results place us on track to achieve our full year 2024 guidance. Looking ahead to the second quarter, we expect modest throughput growth compared to the first quarter, offset by lower expected freshwater delivery volumes as a result of AR reducing its completion cruise to one in February, consistent with our full year guidance. I'll finish my comments in slide number eight, titled Executing on Debt and Leverage Reduction. This page illustrates AM's free cash flow after dividends and leverage since we announced our three times leverage target in the fourth quarter 2022 earnings. As you can see, after the initial outspend to fund the drilling partnership growth in the first half of 2022, we transitioned to generate consistent free cash flow after dividends. The first quarter represented the seventh consecutive quarter of generating free cash flow after dividends, which totaled almost $270 million on a cumulative basis.

Brendan E. Krueger: The strong first quarter results place us on track to achieve our full year 2024 guidance looking ahead to the second quarter, we expect modest throughput growth compared to the first quarter offset by lower expected freshwater delivery volumes as a result of a or reducing its completion crews to one in February consistent with our full year guidance.

Brendan E. Krueger: I'll finish my comments on slide number eight titled executing on debt and leverage reduction plan.

Brendan E. Krueger: This page illustrates aam's free cash flow after dividends and leverage since we announced our three times leverage target and the fourth on our fourth quarter 2022 earnings release.

Brendan E. Krueger: This has been used to reduce absolute debt and internally finance two highly accretive bolt-on acquisitions. In summary, our business continues to operate as efficiently as any midstream company in the industry and delivers consistent returns through commodity cycles. We are on track to achieve our 3x leverage target in the back half of 2024, which is almost a year and a half ahead of our initial target laid out at the end of 2020. Dispositions AM to pursue an incremental return of capital to shareholders. With that, Operator, we are ready to take questions.

Brendan E. Krueger: This has been used to reduce absolute debt and internally financed two highly accretive bolt on acquisitions.

Brendan E. Krueger: In summary, our business continues to operate as efficiently as any midstream company in the industry and delivers consistent returns through commodity cycles.

Brendan E. Krueger: We are on track to achieve our three times leverage target in the back half of 2024, which is almost a year and a half ahead of our initial target laid out at the end of 2020.

Brendan E. Krueger: This positions AAM to pursue incremental return of capital to shareholders with that operator, we are ready to take questions.

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Operator: A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the Q.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: One moment, please, while we poll for questions. Our first question comes from Naomi Marfasha with UBS. Please proceed with your question. Good morning, all.

Naomi Marfasha: Our first question comes from Naomi My fascia with UBS. Please proceed with your question.

Naomi Marfasha: Hi, good morning all. Thank you for taking my question. Maybe to start, if you could touch on the theme of increased demand for power related to AI and data centers. Just curious about the opportunity set that AIM has and if you've taken any steps to commercialize on the AI trend. Thank you.

Naomi Marfasha: Hi, good morning, all.

Naomi Marfasha: Thank you for taking my question maybe to start if you could touch on the team of increased demand for power.

Naomi Marfasha: Does that does just curious on your thoughts Nick you said that the impasse and if you've taken any steps to commercialize.

Speaker Change: Thank you.

Paul M. Rady: So in the data center, I don't know if you caught the AR call, but we went through how much demand is coming from that in our basin, but we also went through our firm transport portfolio to the Gulf Coast. And that's where we're going to be directing all of our gas. All competition is good. Gulf Coast, we think we'll get the premium for that. So that's where AR is focused, and, of course, that would underpin AM. Investments and Allow AM Visibility into decades worth of development of this asset.

Naomi Marfasha: So on the data center I don't know if you caught the AR call, but we went through how much demand is coming from that in our basin, but also went through our firm transport portfolio to the Gulf Coast, and Thats, where were going to be directing all of our gas all competition is good Gulf.

Paul M. Rady: Coast, We think we'll get the premium for that so that's where our focus and of course that would underpin ams investments and allow AAM visibility into a decade's worth of development of this asset.

Speaker Change: Thanks for the color maybe two maybe.

Naomi Marfasha: Thanks for the color. Maybe to switch gears to some ROC opportunities, AM did announce buyback authorization last quarter and indicated that buybacks would start post hitting the three times leverage target. Since we're almost there, how should we think about the timing of buybacks and capital allocation priorities between M&A and buybacks?

Naomi Marfasha: Maybe to switch gears, just a macro if you watch the DS aimed at announced buyback authorization basketball that indicate an indicated that buybacks are to start hitting the stock was in the three times leverage target since they're on was that how should we think about the timing of buybacks and capital allocation that it means many on buybacks.

Brendan E. Krueger: Thanks for the question. This is Brendan.

Naomi Marfasha: Yeah no. Thanks for the question this is Brendan I.

Brendan E. Krueger: I think as we've talked about on past calls as well, I mean, we look at everything in terms of return and overall capital. So as we approach this three times leverage target, as we mentioned, in the second half of this year, we'll look to It will be positioned as well to buy back shares, or pay down further debt, or execute further bolt-on acquisitions. We've got the $500 million program out there, as you mentioned, and we do see attractiveness in our shares still today. So as we sit here today, share buybacks would continue to make a lot of sense, but we'll certainly evaluate that as we... hit that three-times target, hopefully in the second half.

Brendan: I think as we've talked about on past calls as well I mean, we look at everything in terms of return on an overall capital. So as we approach the three times leverage target, whereas we mentioned second half of this year well look at.

Brendan E. Krueger: It'll be positioned us well to buy back shares or pay down further debt or execute further bolt on acquisitions.

Brendan E. Krueger: Got the $500 million program out there as you mentioned and we do see attractiveness in our shares still today. So as we sit here today share buybacks would continue to make a lot of sense, but we'll certainly evaluate that as we as.

Brendan E. Krueger: As we hit that three times target hopefully in the second half of this year.

Naomi Marfasha: Thanks for the colors. Color, hope you guys have a great rest of your day.

Speaker Change: Thanks for the colors.

Brendan E. Krueger: Hope you guys have the gains recipe.

Operator: Our next question comes from John Mackay with Goldman Sachs. Please proceed with your question.

Naomi Marfasha: Okay.

Naomi Marfasha: <unk>.

Naomi Marfasha: Our next question comes from John Mckay with Goldman Sachs. Please proceed with your question.

John Ross Mackay: Hey, all. Thanks for the time.

John Ross Mackay: Well thanks for the time, maybe it will pick up that last one a little bit and maybe not to.

John Ross Mackay: Maybe we'll pick up that last one a little bit. Maybe not to put words in your mouth, but it does, you know, it had sounded like the buyback was kind of clearly front of the line for capital allocation decisions. But I just may be looking for clarification on that last comment there. Are you guys seeing maybe more bolt-on opportunities than you'd expected before that look a little more attractive? I guess I'm just curious if that kind of stack has changed at all, or maybe I'm just reading a little too much into your last comment there. Thanks.

John Ross Mackay: But put words in your mouth, but it does yeah. It had sounded like the buyback was kind of clearly front of the line for capital allocation decisions, but I just maybe looking for a clarification on that last comment. There are you guys seeing maybe more bolt on opportunities than you'd expected before that look a little more attractive I guess, just curious of that that kind of stack has changed at all or.

John Ross Mackay: I'm, just reading a little too much into your your last comment there. Thanks.

Brendan E. Krueger: Yeah, no, I mean, I think it's the same messaging we've been given over the last several quarters, which is, you know, share buybacks, as we sit here today, continue to make a lot of sense for further return of capital, you know, to the extent we come across opportunities similar to past opportunities on the bolt-on, where you've got high visibility into the assets, and we'll certainly look at those types of opportunities Share buybacks do continue to make a lot of great return of capital today.

Speaker Change: No I mean, I think it's the same messaging, we've been giving over the last several quarters, which is.

Brendan E. Krueger: Share buybacks as we sit here today I continue to make a lot of sense for further return of capital.

Brendan E. Krueger: To the extent, we come across opportunities similar to past opportunities on the bolt on where you've got high visibility into.

Brendan E. Krueger: Into the assets and we'll certainly look at look at those type of opportunities.

Speaker Change: Yes sure.

Brendan E. Krueger: Share buybacks do continue to make a lot of sense.

John Ross Mackay: Okay, no, that's absolutely clear. Thanks for that.

Brendan E. Krueger: As we look at return on capital today.

Speaker Change: No that's absolutely clear thanks for thanks for that maybe just shifting gears.

John Ross Mackay: Maybe just shifting gears... On the AR call, you know, there was a comment about there being one pad, I guess, in the third quarter that could push to the right or be deferred a little bit given where dry gas pricing is right now. Maybe if you could just kind of frame up for us what that could mean for AM volumes back half of the year. I imagine it's a relatively small impact, but maybe just tie that together for us.

John Ross Mackay:

John Ross Mackay: On the call.

John Ross Mackay: A comment around there is the one pad I guess in the third quarter that could push to the right or be deferred a little bit given where we're a.

John Ross Mackay: Try gas pricing is right now maybe if you could just kind of frame up for us what that could mean for you know hey, I'm volumes back half of the year I imagine, it's it's a relatively small impact, but maybe just tie that together for us.

Michael N. Kennedy: Yeah, this, Mike, it would not come on this year, so it would have no impact on AM volumes.

John Ross Mackay: Yeah. This is Mike I will not come on this year. So it had no impact on volumes.

Michael N. Kennedy: I'll be just coming on the water side then. Hi, just on the water side.

Michael N. Kennedy: Can you just comment on the water side then.

Speaker Change: Just on the water side.

John Ross Mackay: Alright, I got it. Thank you, guys. I appreciate the time.

Speaker Change: Alright got it. Thank you guys I appreciate it thanks John.

Operator: Our next question comes from Zach Van Everen with TPH and Company. Please proceed with your question.

Speaker Change: Our next question comes from Zach Van Evren with T. P. H and company. Please proceed with your question.

Zackery Lee Van Everen: Hey guys, thanks for taking my question. Just a follow-up from the AR call. It sounds like they revised up their guidance kind of on the liquids-rich area a little bit. You know, does that just provide more confidence around your volume forecast of flat to slight growth, or are you guys leaning more towards that slight growth kind of higher end of the volume guidance?

Speaker Change: Hey, guys. Thanks for taking my question just a follow up from the a or call. It sounds like they revised their guidance kind of on the liquids rich area a little bit you know does that just provide more confidence around your volume forecast of flat to slight growth or are you guys leaning more towards that slight growth kind of higher end of the volume guide.

Zackery Lee Van Everen: <unk>.

Brendan E. Krueger: No, I think ARs were solely driven by the liquid side of things, so no change on the AM prime, just overall, I think. It just solidifies the guidance we've put out there already.

Speaker Change: No I think we're.

Speaker Change: So it really driven by the liquid side of things. So no change on the a M. Brian just overall I think you know solidifies the guidance, we've put out there already.

Zackery Lee Van Everen: Gotcha, that makes sense. And then, you know, it does look like your guys' JB frack is full. I know on previous calls you mentioned there's plenty of capacity in the area on, you know, non-JB fracks. Do you guys have to pay any third-party frack fees, and if so, would those show up just in direct op-ecks under the GMP segment?

Brendan E. Krueger: Got you that makes sense and then it does look like your guys as J P. E. Frac is full I know on previous calls you mentioned theres plenty of capacity in the area on non baby Fracs you guys have to pay any third party Frac CS and if so what does show up just indirect opex under the G&P segment.

Brendan E. Krueger: Yeah, we don't have any fees we're paying on that front, so there's nothing to note there.

Speaker Change: Yeah, we don't we don't have any fees were paying paying on that front. So nothing nothing to note.

Zackery Lee Van Everen: Okay, perfect. That's all I had. Thanks, guys.

Brendan E. Krueger: Sir.

Zackery Lee Van Everen: Okay perfect. That's all I had thanks guys.

Brendan E. Krueger: Thanks, Greg.

Zackery Lee Van Everen: Yeah.

Operator: Our next question comes from Ned Baramov with Wells Fargo. Please proceed with your question.

Brendan E. Krueger: Our next question comes from Ned <unk> with Wells Fargo. Please proceed with your question.

Ned Antonov Baramov: Hey, thanks for taking the question. One more on capital allocation, if I may. I called the approximately $2 million repurchase of your 2026 senior notes. Could you maybe elaborate a little bit more on the decision to buy back debt in the first quarter and whether your capital allocation framework assumes further debt paydown this year?

Ned Antonov Baramov: Hey, Thanks for taking the question one more on capital allocation, if I may I I called the approximately 2 million dollar repurchase of your 2026 senior notes. So could you maybe elaborate a little bit more on the decision to buy back debt in the first quarter and whether your your capital.

Ned Antonov Baramov: Allocation framework assumes further debt pay down this year.

Brendan E. Krueger: Yeah, no good question. I mean, just to rewind a little bit, we did issues and senior notes in January and paid off our revolver. You know, if you look at our senior notes outstanding, just to the extent that it makes sense to repurchase notes versus having cash on the balance sheet, I think we'd certainly look to buy bonds like you saw us do at the end of the quarter. But again, as we approach that three times leveraged target, then we'll look at further return of capital beyond the debt.

Brendan E. Krueger: Yeah No. Good question I mean, we get the gist of relying a little bit we did issues in senior notes in January we paid off our revolver.

Brendan E. Krueger: If you if you look at our senior notes outstanding.

Brendan E. Krueger: To the extent that it makes sense to repurchase notes versus having cash on the balance sheet I think we'd certainly look to buy in bonds like you saw us do at the end of the quarter.

Brendan E. Krueger: But again.

Ned Antonov Baramov: That makes sense. And then, it seems you guys completed a small acquisition of gathering systems and other facilities in the first quarter. Not a material number relative to overall spending, but still, it would be great to get some additional details on that purchase.

Brendan E. Krueger: Yeah, we did purchase, you know, it's a relatively sizable line, but just not much volume flowing through it. So we paid $2 million for a nice asset that gives us a lot of optionality to further, you know, capital savings. I think you've seen us over the years reuse compressor units. And then through some of the bolt-on acquisitions, we've been able to save on future capital expenditures. I think that this is a good way to think about it.

Speaker Change: Yeah, we did purchase.

Ned Antonov Baramov: It's a relatively sizable line, but just not not much volume flowing through it though paid $2 million for a nice asset it gives it a lot of.

Brendan E. Krueger: Optionality to further capital savings I think you've seen us over the years reuse.

Brendan E. Krueger: Our compressor units.

Brendan E. Krueger: It's an asset that doesn't have much volume flowing through it. We picked it up at a very attractive price, and we think it could be very helpful in terms of infrastructure to pick it up at a very low price.

Ned Antonov Baramov: Okay, that's great. Thanks Brendan. That's all I had.

Brendan E. Krueger: All right, thanks, Ned. Thanks. As a reminder, if you'd like to ask a question, please press star 1 on.

Ned Antonov Baramov: Attractive pieces of infrastructure to pick up at a very low price.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. There are no further questions at this time. I'd like to turn the call back over to Justin Agnew for brief closing comments.

Speaker Change: Alright, thanks to an extent.

Justin James Agnew: Thank you, operator, and thank you to everybody who joined today's call. Please feel free to reach out with any follow-up questions.

Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.