Q4 2023 HNR Acquisition Corp Earnings Call
Operator: Greetings. Welcome to the Hnr Acquisition Corp. Announces the date of its 2023 Financial Results and Webcast and 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 keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Michael Porter. Sir, you may begin.
Greetings welcome to the H&R acquisition Corp announces date of 2023 financial results and webcast and conference call at.
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 keypad. Please note. This conference is being recorded I will now turn the conference over to your host Michael Porter, Sir you may begin.
Thank you Holly good morning, ladies and gentlemen, and welcome to the H NRA acquisition Corp, Yearend conference call I have to read the forward looking statement and then we'll get into the call. This call includes forward looking statements that involves risks and uncertainties that could cause actual results.
Michael Porter: Thank you, Holly. Good morning, ladies and gentlemen, and welcome to the HnrA Acquisition Corp year-end conference call. I have to read the forward-looking statement, and then we'll get into the call. This call includes forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from what is expected, including the funding of the trust account to further extend for a period for the company to consummate an initial business combination if needed.
Michael Porter: Words such as expect, believe, anticipate, intend, estimate, seek, and similar words and expressions are intended to identify such forward-looking statements. Statements Related to Further Events of Future Results Based on Current Available Information and Reflect the Company's Current Management Belief The Company's expectations are disclosed in the Company's documents filed from time to time. True Edgar with the SEC. One last point before we start. There is a slight delay between our slides, so don't think there's anything wrong with the system. I'd now like to introduce our President and CEO, Dante. Good morning, the meeting is yours.
The differ materially from what is expected, including the funding of the.
The trust account four to further extend for a period for the company to consummate an initial business combination if needed words, such as expect believe anticipate intend estimate seeks and similar words and expressions are intended to identify such forward looking statements, but the absence.
Statement related to further events or future results based on current available information and reflect the company's management's current belief the company expects to expectations are disclosed in the company's documents filed from time to time through Edgar with the FCC.
Dante: Good morning, Mike. Thank you for that.
One last point before we start there is a slight delay in between our slides. So don't think there's anything wrong with the system I'd now like to introduce our president and C. E O Dante good morning, the meeting as yours.
Dante: Good morning, Mike. Thank you for that is our first earnings call I'm going to take a few minutes to discuss our our team and and brag about them just a little bit here, So greetings and welcome to all the participants thank you for dialing in.
Dante: As our first earnings call, I'm going to take a few minutes to discuss our team and brag about them just a little bit. So, greetings and welcome to all the participants. Thank you for dialing in.
Dante: Our team, our management team is comprised of myself. I come from a 30-plus year public company background, and most of that was in energy. The two major firms I work with, relevant to HnrA, are Sun Oil and Jacobs Engineering. And from both those companies, we have alumni in our management. So you're gonna hear from Jesse Allen, our Vice President of Operations. He comes from over 30 years of oil and gas experience, most significantly many years with Chesapeake as a completions engineer familiar with the Permian, which is totally appropriate for this asset. You're going to hear from Mitch Trotter, our CFO. Mitch and I worked together for 20 years at Jacobs Engineering.
Dante: Our team our management team is comprised of myself I come from Ah Ah Ah Ah 30, plus year public company background and most of that in energy are the two major firms I worked with I'll say relevant to H R E Sun oil and Jacobs engineering.
Dante: And from both those companies we have alumni on our on our management team.
So you're going to hear from Jesse Allen, our Vice President of operations. He comes from over 30 years of oil and gas are most significantly a many years with Chesapeake as completions engineer familiar with the Permian, which is a totally appropriate for this asset.
Dante: You're going to hear from Mitch broader our CFO, Mitch and I worked 20 years of Jacobs Engineering. We are we know each other of course and we turned in Fabulous results over our over our complete run with with Jacobs, David Smith, Our General Counsel he has over 30.
Dante: We know each other, of course, and we turned in fabulous results over our complete run with Jacobs. David Smith, our General Counsel, has over 30 years of oil and gas legal experience, and we rely on him for so many things. We have Matt O'Garrick with Pryor Cashman.
Dante: The years of oil and gas legal experience and we rely on him for for so many things we have battled garrick with Pryor cashman. He's our S. E C specialist attorney and all our filings, including the 10-K get vetted through his group.
Dante: He's our SEC Specialist Attorney, and all our filings, including this 10K, get vetted through his group. We have, um... Porter, who's our Public Relations person. I'm just introducing you, and we have a history with you. Then I'm going to go through the board.
Dante: We have.
Dante: Mike.
Dante: Border Who's our public relation.
A person I've just you introduced it you and where we have history with you then I'm going to go through the board. We have three members of the independent Board, we have Byron blouse, who comes from Blackstone private equity. Many years. There is a as a managing director and then we have Joe and Joey Salvucci Oh.
Dante: We have three members of our independent board. We have Byron Blount, who comes from Blackstone Private Equity, where he spent many years as a managing director. And then we have Joe and Joey Salbucci, owners and managers of Peak Technical Resources, one of the nation's preeminent staffing companies. So that's our board. That's our management team. And it's a dream team for me.
Dante: Owners and managers of peak technical resources, one of the nation's preeminent staffing staffing companies. So that's our that's our board that's our management team and it's a dream team for me it's the the the.
Dante: It's the most fun group, and the most experienced group I've had the pleasure to work with. So we feel very comfortable that we will get it done, we will deliver on our promises, and that we're focused on serving the shareholder. I also want to say that this team, this board, and this management team have all made substantial cash and time investments in initially the SPAC and now the public company that we have become to the point where we probably own just under a third of the common shares outstanding.
Dante: Most fun group most experienced group I've had the pleasure to work with so we feel very comfortable that we will get it done we will deliver on our promises and that we're focused on serving the shareholders.
Dante: I also want to say that this team. This board. This management team have all made substantial cash in time investments in those and initially this back and and now the public company that we have become a to the point, where we we probably own just under a third of the common shares outstanding.
Dante: Andy.
Dante: And these previous working relationships make us more efficient at communicating with one another, more honest, and more transparent. And we believe that that's going to bear fruit for our shareholders. I also want to close the team by just saying we serve the shareholders. We understand that. That's how we run.
Speaker Change: And these prior working relationships make us more efficient to communicate with one another more orders more transparent and we believe that that's going to go to bear fruit for our shareholders.
Speaker Change: I also want to.
Speaker Change: Close the team, we're just saying we served the shareholders we get that that's how we run that that that influences every decision, we make and and I'm I'm very proud to state that.
Dante: That influences every decision we make, and I'm very proud to state that. Now on to my first bullet, which is really, we're no longer a SPAC. We used to be a SPAC, and I'm so happy we're no longer a SPAC because, frankly, that was painful.
Speaker Change: Now no onto my first bullet, which is really Oh, we're no longer is back we used to be is back and I'm. So happy we're no longer is back because frankly that was painful we got it done we ceased to be is back on November 15th with our acquisition of.
Dante: We got it done. We ceased to be a SPAC on November 15th with our acquisition of Poco Resources, a property in New Mexico that produces oil and, more importantly, makes money. We went public, we bought a moneymaker, and we generated $10 million in EBITDA for the year, including our predecessor company, which is to say our former owner of the asset, Pogo, which was CIC Partners. And our plan is to get to $30 million in EBITDA within three years.
Speaker Change: Pogo resources, a property in new Mexico that produces oil and more importantly makes money.
Speaker Change: We went we went public we bought a moneymaker and we generated as a year, including our predecessor company, which is to say our former former owner of the asset Pogo, which was CIC partners 10 million in EBITDA and our plan is to get to 30 million in EBITDA.
Speaker Change: Within three years.
Dante: And again, all these statements we make you can find in our lengthy 10-K that became public to all this morning at 6 a.m. Okay, I'm going to talk about what we bought, why we like it, and even maybe why we love it.
Speaker Change: And again all of these statements, we make or you can find in our lately 10-K that became public to all our this morning at six a M.
Speaker Change: Okay, I'm going to talk about what we bought why we like it and and and even maybe why we love it.
Dante: The POGA resources own 13,700 Permian acres, all contiguous. It is 100% Permian clay, and for the most part, it's drilled up on 40 acres. We have 342 producers and 207 injectors, and that brings us about 1,100 barrels of oil per day, supported by a water flood. A water flood is a recovery method that you're going to hear more about from Jesse that prolongs the life of a field.
The Pogo resources 113700, Permian acres, all all contiguous it is 100% Permian play and for the most part it's drilled up on 40 acres. We have 342 producers 207 injectors and that brings us about 11.
Speaker Change: Barrels of oil per day supported by by a waterflood.
Speaker Change: A waterflood is a is a recovery method that you're going to hear more about from Jesse that prolongs the life of the field, but but most significantly about this property, we have 960 million barrels of oil in place.
Dante: But most significantly, about this property, we have 960 million barrels of oil in place, with 15 million proven recoverable reserves. So our work ahead of us is to capture as much of the 960 million barrels as we can and get the recoverable barrels to be much, much higher than what we have today. So we mentioned in a press release that we think we have behind-pipe potential, meaning we can just perforate the well, stimulate those new perforations, and recover an additional 30 plus million barrels of oil. This is a substantial increase in what we have today. We also have a relatively low cost to develop these unproven reserves by just working with these existing 500 wellbores, actually 550 wellbores.
Speaker Change: With 15 million proven recoverable reserves. So our our work ahead of US is to capture as much of the 960 million barrels as we can and get the recoverable barrels to be much much higher than what we have today.
Speaker Change: So we have mentioned in the press release that we think we have behind pipe potential, meaning we can just perforate wells stimulate those new perps and recover an additional 30 30 plus million barrels of oil. This is a substantial increase in what we have today.
Speaker Change: We also have relatively low cost to develop these these unproven reserves.
Speaker Change: By just working with these existing 500, well boars actually 550, well bores and our plan is to fund. This capital are mostly from cash flow, but we have to get the flywheel going so near term, we are raising cash and you're going to hear about that from our CFO.
Dante: And our plan is to fund this capital mostly from cash flow, but we have to get the flywheel going, so near term, we are raising cash, and you're going to hear about that from our CFO. You're going to hear from Jesse about our solid plan to increase production, and you'll get an insight into our operational leadership to achieve this upside. With that, I'm going to turn it over to our CFO, Mitch Trotter
CFO: You're going to hear from from Jesse ourselves solid plan to incur.
CFO Mitch: Increased production and you'll get an insight to our operational leadership to achieve this upside with that I'm going to turn it over to our CFO Mitch daughter.
Mitch Broader: Alright, Thanks, a lot I am it's crowded the CFO and I want to thank you for your interest and they generate which is a good company with a property full of potential a great teams don't they laid out and.
Mitch Trotter: Thanks, Dante. Hello, I am Mitch Trotter, the CFO, and I want to thank you for your interest in HnrA, which is a good company with a property full of potential, a great team, as Dante laid out, and we're making money. I would like you to, at some point, dive deep into our 10-K that was just released. It has a whole lot of good information about us.
Mitch Broader: We're making money.
Mitch Broader: I would like you to at some point that deep into our 10-K that was just released it has a whole lot of good information about us it is quite lengthy.
Mitch Trotter: It is quite lengthy, and the timing of it was due to complexities. Not complexities with respect to our basic numbers, but complexities with respect to the deal and the entity structure required by the seller. Also, want you to note in the financials, they are two-year results; pretty much the entire time was that of the predecessor, with only the last six weeks combined. So let me touch on a few of the financial numbers now, and during the Q&A, you have an opportunity to ask more, obviously.
Mitch Broader: The timing of it was due to complexities not complexities with respect to our basic numbers, but complexities with respect to the deal and the entity structure required by the seller.
Mitch Broader: Also want you to note in our financials. They are two year results pretty much the entire time was out of the predecessor with only the last six weeks combined so let me touch on a few of the financial numbers now and during the Q&A you have an opportunity to ask more obviously and if.
Mitch Trotter: And if you have a lot more detailed questions, and this is a conference call, we'll gladly set up individual sessions to talk about the financials or about property and operations. So on to the numbers, first revenue. In 2023, revenues were $27 million, and this was lower than 2022.
Mitch Broader: You'd have a lot more detailed questions and this is a conference call. We'll gladly set up individual sessions to talk about the financials or about property and operating results not just the financials call.
Mitch Trotter: But in 2022, oil prices spiked up over $100, and natural gas was triple what it's running today. And the production timing of the field was driven by the predecessor based on their needs and when they wanted to do stuff. For getting revenues, the chart on the right shows you that we are 95% oil from a revenue standpoint. But most importantly, our oil is hedged at 60% for 2024 and 50% for 2025. This is the right balance for us.
Mitch Broader: So onto the numbers first the revenues 20 twenty-three revenues were 27 million and this was lower than 2022, but in 2022 oil prices spiked up over $100 natural gas was a was triple what it's running today.
Mitch Broader: And the production timing of the field was driven by the predecessor based on you know their needs and when they wanted to do stuff.
Mitch Broader: For getting off revenues the chart on the right shows you that we are 95% oil a from a revenue standpoint.
Mitch Broader: But most importantly, our oil is hedged at 60% for 2024, and <unk> 50 per cent for 2025.
Mitch Trotter: It helps cover, obviously, debt service and the base level of operating expenses. We don't plan to increase it anymore, but I'll tell you, if oil spikes way on up there, we'll lock in some more. But right now, we have no need or plan.
Mitch Broader: This is the right balance for us it helps cover obviously debt service and base level of operating expenses.
Mitch Broader: We don't plan to increase anymore, but I'll tell you if oil spikes way on up there will work and some more but right now we have no need or plan to.
Mitch Trotter: Now on to the cost side. Lift costs are our largest operating expenses, and they're the largest flexible variable item we have. Previous predecessors did spend more in 2023 than they did in 2022, but that was based on their situational needs, how they were developing the property and getting it in condition. And they also, you know, they had a short-term focus while they were selling the property.
Mitch Broader: Now on to the cost side lift costs, they're our largest operating expenses.
Mitch Broader: And they're the largest flexible variable item we have.
Mitch Broader: Predecessor did spend more in 'twenty two 'twenty three than they did in 2022, but that was based on their situational needs. How they were developing the property and getting it in condition.
Mitch Broader: And they also know they had a short term focus while they were selling the property.
Mitch Trotter: We have a long-term focus, so we're laying it out. Our spending will be viewing this as a building block for the growth of our company, in which we have a property that has a very long, multiple decades of long-term revenue stream with predictable cost, CapEx, and production. So we will... do that accordingly.
Mitch Broader: We have a long term focus so we're laying it out.
Our spins will be viewing this as a building block for growth of our company in which we have a property that has a very long multiple decades of long term revenue stream with predictable cost.
Mitch Broader: Capex and production so we will.
Mitch Broader: Do that accordingly.
Mitch Trotter: The other section of cost, really the highlight here, are the one-time, non-regular, non-recurring type of costs. Most of those are spelled out below the line, but I do want to bring your attention to operating income. There is 10 million in acquisition costs, and there's another two and a half million of one-time costs for the clothes that are buried in the G&A costs. So that's a total of $12.5 million that's up there that obviously reverses or mitigates both operating income and the net loss of $4 million that's reflected for 2023 when you combine the two. Now we'll talk more about the Q&A if you have questions, but I want to turn it over to Jesse, our VP of Operations, because it's important that you understand our business and our operations. Go ahead, Jesse.
Mitch Broader: The other section of cost really the highlight here are the one time non regular recurring type of cost most of the there's a spell out below the line, but I do want to bring your attention up in the operating income there is $10 million of acquisition costs and Theres, another two and a half a million of one time cost.
Mitch Broader: For the clothes that are buried in the G&A cost.
Mitch Broader: So that's a total of $12 5 million, that's up there that obviously reverses or mitigates the AR, but the operating income and the net loss of 4 million. That's reflected for 2023 when you combine the two.
Mitch Broader: Uh huh.
Mitch Broader: Now we will talk more in the Q&A, if you have questions, but I want to turn it over Jesse VP of operations, because it's important that you understand our business and our operations go ahead Jesse.
Jesse Allen: Okay, thank you, Mitch. I appreciate that.
Jesse Alan: Okay. Thank you Mitch I appreciate that good morning, My name is Jesse Alan and I'm, The Vice President of operations and my focus is to increase production and of course, our reserve base.
Jesse Allen: And my focus is to increase production and, of course, our reserve base. So, how are we going to do that? Well, first, we're going to be optimizing each of our producing wells. So, when we took over, we did have quite a few wells that were down. And so, we've had a rig running, a workover rig, since the middle of November when we took over. And we are putting wells that have been down or wells that were idle back into production. So, that's one way.
Jesse Alan: How are we going to do that well.
Jesse Alan: Well first we're gonna be optimizing our each of our producing way also when we took over we did have quite a few wells that were down and so we've had a rig running a workover rigs since the middle of Borg Middle of November when we took over and we are putting wells that had been down or wells that were idle background.
Jesse Alan: Production. So that's one way the second way is the optimization of our injection wells in our injection rates.
Jesse Allen: The second way is the optimization of our injection wells and our injection rate. Again, when we took over, we had several injection wells that were down for various reasons. And here, over the past month, we've gotten a second well service workover rig to return those wells back to injection. Now, in doing this, of course, we feel like we'll be bringing several hundred barrels of oil a day back into production, which is obviously part of our plan to increase our production.
Again, when we took over we had several injection wells that were down for various reasons and here over the past month, we've gotten a second well service workover rig to return those wells back to injection now in doing this of course, we we feel like we'll be bringing.
Jesse Alan: Several hundred barrels of oil a day back on into production, which obviously is part of our plan to increase our production.
Jesse Allen: And in addition, there will be several infrastructure upgrades. When we did take over, we did have to do several small projects to keep everything running. And what I will do is, further along in my presentation, here in my talk, I'll talk about those infrastructure upgrades. And finally, we want to improve our team culture, our field team culture. We were fortunate when we took over in that we were able to hire and retain all of our field operating employees, which was key. That enabled us to hit the ground running. Of course, these guys know how to operate the field since they have been there for the past four plus years.
Jesse Alan: And in addition to.
Jesse Alan: Ooh.
Jesse Alan: There'll be several infrastructure upgrades when we did take over we did have to do.
Jesse Alan: Several small projects to keep everything running and what I will do is.
Jesse Alan: Further along in my presentation here My talk I'll talk about those infrastructure upgrades and finally, we want to.
Jesse Alan: Improve our our team culture, our field team culture, we were fortunate when we took over in that we were able to hire and retain all of our field operating employees, which is which was key.
Jesse Alan: That enabled us to be able to hit the ground running and of course. These guys know how to operate the field since they had been there over the past four plus years.
Jesse Allen: So, major activities in the near future. We have our infrastructure upgrades, which I mentioned earlier. Those infrastructure upgrades mainly involve our producing wells, in that we had several, several wells down due to flow line issues. Most of those flowline issues were leaks just because the lines were so old, so the wells were shut in, and then other wells were plugged either with paraffin or sand or whatever it might be, and so we identified those wells, the pipe was ordered, and we had it on location, and we started that project, returning idle wells with flowline problems.
So major activities in the in the near future, we have our infrastructure upgrades, which I mentioned earlier those infrastructure upgrades, mainly involve our producing wells in that we had several several wells down due to flow line issues.
Jesse Allen: And then second, one of our water injection facilities, the main trunk line, if anyone knows the history of this field, it's been water Floated in the legacy zones for quite a number of years. So a lot of the equipment is old, and so there will be some upgrades we'll have to do, and one of those is the trunk line. And once the pipe is in place, we are scoping the pipe for that project right now, and should have that pipe in the near future.
Jesse Alan: Most of those flow line issues or leaks, just because the lines are sold though the wells were shut in and then other wells had we're plugged either with paraffin or sand or whatever it might be and so we've identified those wells the pipe.
Jesse Alan: Was ordered and we have on location and we've started that project returning again idle wells with a flow line problems and then second one of our water injection facilities main trunk line if anyone knows the history of this field it's Ben.
Jesse Alan: Water flooded in the legacy zones.
Jesse Alan: For quite a number of years. So there is the a lot of the equipment is old and so there will be some upgrades will have to do in one of those is a trunk line in one side of the pipe. We are scoping the pipe for that project right now and should have that that pipe in the near future and so we are hauling some water.
Jesse Allen: And so we are hauling some water at this facility, and so once we get the trunk line in place, we'll again be injecting at this particular facility. In addition, we've got targeted workovers in our seven rivers formation. That is the new water flood that's above all our legacy zones.
Jesse Alan: Or at this facility and so once we get the trunk line in place will again be injecting at this particular facility. In addition, we've got a targeted workovers in our seven rivers formation that is the new waterflood, that's above all our legacy zones. We've got 10 to 12 Workovers targeted there expect <unk>.
Jesse Allen: We've got 10 to 12 workovers targeted there, thank you, and we are prioritizing those workovers now. In addition, we have unperforated and bypassed pay in those legacy intervals that I've mentioned. Those are below our seven rivers, and as you can see on the diagram there, the seven rivers are above the Queen, the Greyburg, and the St. Andrews, and those are our legacy intervals.
Jesse Alan: Several hundred barrels of oil a day, a well probably in the order of about 80 to 100 barrels of oil in these 10 to 12 Workovers and we are pride prioritizing those workovers now in addition.
Jesse Alan: We we have unprovided and bypass pay in those legacy intervals that I've mentioned noser below our seven rivers and as you can see on the.
Jesse Alan: The the diagram there the seven rivers is above the Queen the Gray Bergen, San Andros and those are our legacy intervals and so we have 30 to 40, plus workovers that were prioritizing to add pay and in doing so we anticipate there'll be some some reserve additions there.
Jesse Allen: And so, we have 30 to 40 plus workovers that we're prioritizing to add pay. And in doing so, we anticipate there'll be some reserve additions there. So, I'm very optimistic about our future and the work that we're going to be doing. I love our field team and our management team. Like Dante has said, we all know each other, so we're very comfortable with each other. And we're not opposed to, if necessary, calling someone out if there's something we disagree about, which any good management team ought to have.
Speaker Change: So we're I'm very optimistic about our future and the work that we're gonna be doing I love our field team management team like Dante has said, we all know each other so we're very comfortable with each other and we're not opposed to if necessary, calling someone out if theres something we disagree.
Speaker Change: About which is any good management team at a half.
Dante: So, with that brief overview, I turn the meeting back over to you, Dante. Thank you. Yeah, thank you, Jesse.
Speaker Change: So with that brief overview I'll turn the meeting back over to you Dante. Thank you.
Dante: Yeah, thank you, Jesse. Thank you, Mitch.
Dante: Yeah. Thank you Jessie. Thank you Mitch further participants I'm, just going to summarize I hope what you're what the takeaways were from this call item one we make money we make money right now we made money as a as a company in 'twenty three we're targeting <unk>.
Dante: For the participants, I'm just going to summarize what I hope the takeaways were from this call. Item 1, we make money. We make money right now. We made money as a company in 2023. We're targeting doubling that in the next 18 to 24 months. It's a pretty simple formula.
Dante: Bling that in the next 18 to 24 months and it's a pretty simple formula We're gonna we're gonna.
Dante: We're going to, we're going to. We're going to do workovers, probably with three wigs for the bulk of the balance of the year and just get the production up. We, we have an asset to exploit, which has, uh, 956 million barrels in place, according to our third-party engineering, Cobb & Associates, and we should be able to triple our reserves, our PDP reserves, that means Producing, Development, and Proven, in that same time frame, 18 to 24 months, with minimal capital and minimal geologic risk. We're environmentally conscious, employing water reuse, minimum gas flaring or gas burning, and we do plan in the future to add solar power.
Dante: Where we're gonna do Workovers, probably with three words for the bulk of the balance of the year and just get the production up.
Dante: We we have an asset to exploit which as nine.
Dante: 956 million barrels in place according to our third party engineering carbon associates, and we should be able to triple our reserves, our PDP reserves at that means producing developed.
Dante: And and proven in that same timeframe 18 to 24 months with minimal capital and minimal geologic risk, we're environmentally conscious employing water reuse minimal gas flaring or gas burning and we we do plan in the future to add solar power.
Dante: We're going to increase this production by doing these low-cost workovers to existing wells. That means we don't drill near term. We're not drilling expensive vertical or expensive horizontal wells. I mean, our typical workover on an injector is $20,000. Typical workover on a producer, maybe $100,000.
Dante: We're gonna increases production.
Dante: Bye bye doing these low cost workovers to existing wells that means we don't.
Dante: We're not drilling near term, we're not drilling expensive vertical or expensive horizontal wells I mean, where are typical workovers auto injector are $20000 difficult work over on a producer maybe $100000. If we were to drill a new well out there out in this field it it costs north of two.
Dante: If we were to drill a new well out in this field, it would cost north of $2 million, including completion, stimulation, and the work. We're going to employ operational excellence and apply all the science to make sure that we spend every dollar wisely. And we've got that, I think, with the team that we've got. We're not mentioning how we're supported by other geologists. We have...two other geologists, and one other reservoir engineer that are adding value every day in our technical office in Houston. As Jesse mentioned, we have massive potential behind pipe, which means we just got to figure out where to drill and how to water flood it and how to stimulate it.
Dante: Dollars, including completion stimulation of the works well.
Dante: We're gonna employee operational excellence and apply all the science to make sure that we spend every dollar wisely and we've got that I think with the team that we've got we were not mentioning how were supported with our other geologist we have.
Dante: The two other geologists one other reservoir engineer that are adding are adding value every day at our technical office in Houston.
Dante: As Jesse imagine, we have massive potential behind pipe, which means we just got to figure out how to wear the perf and how to waterflood it how to stimulate it.
Dante: As Mitch mentioned, we have low commodity risk through hedging, as Jesse mentioned, low geologic risk because we've got 550 wells penetrating this formation, and lower overall risk with a proven team. And finally, I'm just going to say our stock price is at a very low point for entry. So that, I have to confess, that's my opinion. The guys probably say you can't say that, but I just feel it's a low price for entry. With that, I'm going to turn it back over to Mike to line us up for Q&A.
As Mitch mentioned, we have we have low commodity risk through hedging.
As Jesse mentioned low geologic risk because we've got 550 wells better trading. This this formation and lower overall risk with a proven team and finally I I I I just got to say our stock price is it a is it a very low point for entry so that I have to confess.
Dante: It's my opinion, but any other guys probably say you can't say that but I just feel it's a low price for entry with that I'm going to turn it back over to.
Dante: Mike.
Mike: The two lines us up for Q&A. Please.
Mike: Yeah.
Michael Porter: Thank you, Dante. Holly, would you start the Q&A session, please? Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate...
Mike: Thank you Dante Hollywood you start the Q&A session. Please.
Operator: Certainly. At this time, we will be conducting a question and answer session. If you would 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 would like to remove your question from the queue. We do ask that you limit yourself to two questions. If you have additional questions, you may re-enter the queue. 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.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Dante Hollywood: Confirmation tone will indicate your line is in the question queue.
Dante Hollywood: You May press Star two if you would like to remove your question from the queue.
Dante Hollywood: We do ask to please limit yourself to two questions. If you have additional questions you may reenter the queue.
Dante Hollywood: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Dante Hollywood: One moment, please while we poll for questions.
Dante Hollywood: Okay.
Dante Hollywood: Yeah.
Yeah.
Dante Hollywood: Yes.
Okay Holly can begin.
Operator: Okay, Holly, you can begin.
Operator: Your first question for today is from Tim Moore with EF Hutton.
Holly: Your first question for today is from Tim Moore with E F Hutton.
Tim Moore: Thanks, and congratulations, everyone, on your maiden conference call and being pretty well-positioned to triple your daily production volume rate over the next few years. You know, one thing I just wanted to maybe start off with was you're making pretty good progress, it seems, on the basic maintenance and repairs and downhaul, cost efficiencies, and modernization. I think I heard maybe 30 to 40 workovers are kind of going to be tackled. I'm just wondering, you know, how that has gone so far and have you kind of already done the more time-consuming ones?
Tim Moore: Thanks, and congratulations everyone on your meeting conference call I'm being pretty well positioned to triple your.
Tim Moore: Daily production volume rate over the next few years, you know one thing I just want to maybe start off with was you're making pretty good progress it seems.
On the basic maintenance and repairs and downhaul cost efficiencies modernization I think I heard maybe 30 to 40, workovers kind of going to be tackled.
Tim Moore: Just wondering you know how has that gone so far and have you kind of already done the more time consuming ones.
Yeah.
Dante: Yeah, Jesse, why don't you field this?
Tim Moore: Yeah, Jesse why don't you feel this one please.
Jesse Alan: Yes, Hey, Tim. Thank you for your question, yes, what we'd been doing mainly is a we've had a workover rig a well service rig running since we took over in mid November and most of what.
Jesse Allen: Yes, Hey Tim, thank you for your question. Yes, what we've been doing mainly is we've had a work-over rig, a well-service rig running since we took over in mid-November, and most of what that rig has been doing is returning wells that were down, key wells that maybe had gone down for whatever reason, and so we're getting those back into production. And then when we took over, there were quite a few idle wells, and so that rig is tackling those.
Jesse Alan: That rig has been doing is returning wells that were down T wells that maybe had gone down for whatever reason and so we're getting those back on production and then when.
Jesse Alan: When we took over there were there were quite a few idle wells. So that rig is tackling knows but in the meantime, the team that did I have assembled to Dante mentioned.
Jesse Allen: But in the meantime, the team that I have assembled, Dante mentioned several consultants, a reservoir engineering consultant and a petrophysical well log analyst consultant. They are concentrating on the workovers, and as I said, we had 10 to 12 targeted workovers in the seven rivers and then 40 plus or minus that we've identified in the legacy. There are many, many more as we get into this that will be identified. So to answer your question, Tim, we've mainly been concentrating on getting wells back on for right now, and then in the not-too-distant future, we'll then start tackling those workovers and those targeted seven-river workovers, where we'll do some additional stimulation. Does that answer your question, Tim? It definitely does.
Jesse Alan: Several consultants reservoir engineering consultant in our Petro physical World Lager analyst consultant, we are confident they are concentrating on the workovers and as I said, we had seven to 10 or 10 to 12 targeted workovers in the seven rivers and then 40.
Jesse Alan: Or minus that we've identified in the legacy there are many many more as we get into this that will be identified so to answer your question, Tim we've mainly been concentrating on getting wells back on for right now and then here in the not too distant future. We'll then start tackling those workovers and those targeted seven rig.
Jesse Alan: Workovers, we'll do some additional stimulation.
Jesse Alan: Does that answer your question Tim.
Jesse Allen: And it seems like you could probably get your lift costs down. I mean, later on, I mean, imagine that your LOE per barrel gets back to, you know, 15, 16 bucks, maybe, maybe next year, right? Yes, so we're, yes, indeed. Yes, we're doing the kind of things that once we do get a well back on production, we don't anticipate having to pull it again, you know, for 8, 10, 12, maybe a year or longer, you know. So we're doing the right things once we get them back on production.
Tim Moore: They're definitely does and it seems like you probably get your.
Speaker Change: With cost down and then later on I mean, I imagine that your LOE per barrel I'll get back to you know 15 16 Bucks maybe.
Tim Moore: Next year I guess, so we're typically yes, indeed, yes, we're doing the kinds of things that once we do get a well back on production, we don't anticipate having to pull it again.
For 810, 12, maybe a year or longer you know so we're doing the right thing. So once we get them back on production.
Tim Moore: Oh, that's great. I was just wondering, you know. I know Dante mentioned this a little bit earlier.
Speaker Change: Oh, that's great.
Speaker Change: And I was just wondering you know I know Jonathan you mentioned this a little bit earlier that really amazing March news I think your stock price doubled about the potential oil recovery you know its a double or maybe even triple your proven reserves.
Dante: You had that really amazing March news. I think your stock price doubled because of the potential oil recovery, you know, to double or maybe even triple your proven reserves. You know, Dante kind of gave a little bit of a time horizon maybe on that, I think, just in the prepared remarks. I mean, can you just remind me when you think you'll probably do the analysis and all the engineering to kind of have those proven reserves added? Is that something kind of over the next 12 to 18 months?
Speaker Change: Dumping kind of gave a little bit of a time horizon, maybe and then I think just in the prepared remarks I mean can you just remind me when do you think youll, probably do the the analysis and all the engineering to kind of have those proven reserves and you added is that something kind of over the next 12 to 18 months.
Dante: Yeah, I'm going to try to answer that. You know, adding proven reserves has to be done in accordance with, I'll say, our third-party engineer's prescription. So the hard work of going through the wells, identifying those producing zones, figuring out where the perfs should go, and then figuring out how big or small the stimulations should be is just about done. So that's what Jesse's been doing with the technical team in Houston. And to get there, behind the scenes, we had to transport boxes of data to go through just to validate that we know what we have and know where we're going to go with that. Now, you'd think, well, we just shoot some holes, produce it, and then add reserves. It has to be in accordance with what the third-party engineer will sign off on.
Speaker Change: Yeah, I'm going to try to answer that you know, adding proven reserves.
Have to be done in accordance with I'll say, our third party engineers prescription.
Speaker Change: So the hard work of going through the wells identifying those producing zones figure out where the Perps should go and then and then figuring out how big or small should the stipulations. B is is just about done so that that's what jess he's been doing with the technical team.
Speaker Change: And Houston, and and and to get there behind the scenes, we had to transport boxes of data to go through just to validate that we know what we have and know where we're going to go with that now.
Speaker Change: You'd think well, we just shoot some holes produce it and then add reserves. It it has to be in accordance with what the third party engineer will sign off too. So we're in that process time to figure out you know can we can we add 10 million reserves by doing five workovers, we don't know the answer yet.
Dante: So we're in that process, Tim, to figure out, you know, can we add 10 million reserves by doing five workovers? We don't know the answer yet, we're still working that out, but I'll just say our hunch is we probably have to do 10 or 20 workovers to prove production to the third-party engineer to then claim we've developed those additional recoverable reserves. So we're in that process. I think it's gonna take six months before you're gonna see our reserve numbers change.
Speaker Change: We're we're we're still working that but you know.
Speaker Change: I'll just say our our hunch is you know, we probably have to do 10 or 20 workovers to prove production to the third party engineer did then claim we've we've developed those.
Additional recoverable reserves. So we're in that process I think it's going to take six months before you're going to see our reserve numbers change.
Dante: But we're on that path, and it's not just for reporting purposes. It's to get production. We're after oil production, but along the way, we're after proving these reserves and also proving our Methodology. Did that answer that question, Tim?
Speaker Change: But we're on that path and it's not just for reporting purposes, it's to get production, where after oil production, but along the way where after proving these reserves and also proving our methodology does did that answer that Tim.
Tim Moore: That's exactly what I was looking for. That timeline is even better than I thought. That's great, Dante, and you know I'm kind of limited to two questions, so maybe I'll ask one combined question as my last one.
Tim Moore: That's exactly what I was looking for that's timelines, even better than I thought that's great content and you know I know I'm kind of limited to two questions. So maybe I'll ask them. One combo question as my last one.
And it might be helpful for investors to kind of learn a little bit more about.
Tim Moore: It might be helpful for investors to kind of learn a little bit more about You know, how you're uncovering some additional water flood patterns for proximity volume leverage, like maybe what you're going to probably do with Turner A and B, those plots there. And then maybe if you could talk a little bit about too how you're also kind of pushing water back to oil producers, and you've got those water resources, you know, the offset land lease. That'd be great.
Tim Moore: Now how you're uncovering some additional waterflood patterns for proximity volume levers like maybe what you could probably do return a M. B those those plots on there and then just maybe if you could talk a little bit about too on how you were also kind of pushing water back to oil producers and you've got those water resources.
Land leases and stuff that would be great.
Jesse Allen: Sure, thank you for that.
Speaker Change: Sure. Thank you for that Matt back to you Jesse please.
Jesse Allen: Well, let's see, Tim. Yeah, our third party, Reservoir Engineering Consultants Party, they've mapped out a development plan for the Seven Rivers water flood, and so we will be following that plan. And mainly, that plan is to convert current producers from the legacy up into the Seven Rivers and the associated water injection wells from the legacy into the Seven Rivers. And so it's a coordinated development plan to add those additional patterns. And you have mentioned Turner A and Turner B.
Jesse Alan: Well, let's see Tim.
Tim Moore: Yes, the our third party reservoir engineering Ah.
Jesse Alan: Our consultants party. They are they have mapped out a development plan for the seven rivers waterflood and so we will be following that plan and mainly that plan is to convert our current producers from the legacy up into the seven rivers and the associated a water injection well.
Jesse Alan: <unk> from the legacy into the seven rivers and so it's a coordinated development plan.
Jesse Alan: To add those additional patterns and.
Jesse Allen: Those were two pilots where our predecessor had converted those wells from the legacy intervals to the Seven Rivers. And at first, they were very disappointing because there had been some prior production in the Seven Rivers, but lo and behold, after injecting water, we did see a classic water flood response. And I'm pretty sure that's what you're referring to. And so we don't anticipate in the
Jesse Alan: And you have mentioned the Turner, a turn or be those were two pilots.
Jesse Alan: Pilots, where they the preview our predecessor had converted those wells from the legacy intervals to seven rivers.
Jesse Alan: And at first they were very disappointing because.
There had been some prior production and seven rivers, but lo and behold after injecting water. We did see a classic waterflood response, and I'm pretty sure that's what you're referring to and so we don't anticipate in the is that what you were talking about there are chance that's exactly what I was talking about yeah, now that that that hits it.
Tim Moore: That's exactly what I was talking about.
Jesse Allen: So, as we move forward with our Seven Rivers Water Flood Patterns, many of those patterns will be at the virgin reservoir pressure, and so we're more into a pressure maintenance, you know, maintain production mode for future water flow patterns. So hopefully, that's what you were looking for.
Jesse Alan: Yes.
Speaker Change: Yep and so.
Speaker Change: As we've moved forward with our seven rivers waterflood patterns many of those patterns will be at the.
Speaker Change: The Virgin reservoir pressure and so we're more into a pressure maintenance and maintain production mode for future waterflood patterns.
Speaker Change: That's what you were looking for yeah, and I I I.
Dante: Yeah, and to that point, in our 10K, we mentioned 115 more waterflood patterns to develop in 2024 through 2027. So we're committed to that. That's our highest priority. But along the way, we're also committed to adding reserves beyond the seven rivers by developing the behind-pipe potential that we're very excited about as well.
Speaker Change: To that point in our 10-K, we mentioned 115 more waterflood patterns to develop in 2024 through 2027. So we we were committed to that that's probably that's our highest priority, but along the way we're all.
Speaker Change: So.
Speaker Change: We're also committed to adding reserves beyond the seven rivers by developing the behind pipe potential that we're we're very excited about as well.
Tim Moore: So, Tim, technically, that was a third question, just, you know, just that nobody's counting, but that was a third question, sir. No, I am done. I am done, and I appreciate the elaboration. Thank you.
Speaker Change: So Tim technically that was a third question just you know just that nobody's counting but that was a third questions or no I'm done I'm done and I appreciate the elaboration. Thank you.
Operator: Your next question for today is from Todd Felty with ABC News.
Speaker Change: Your next question for today is from Todd sell T with aegis financial.
Todd Felty: Hey guys, thanks for taking my questions and congratulations on all the recent successes. Regarding EBITDA, I know you guys said you did about 10 million last year. Do you expect to be able to increase that, and is there a kind of quantified number that you can give for this year given the stable oil prices? I know that you know it's a moving number. So, we can't make forward projections and all that, but yes, it was about $10 million last year, and at the levels we're running, the oil prices, the lift costs are very consistent, so I won't say that's our number or anything greater, but that's a reasonable expectation without giving projections. [inaudible]
Todd Sell: Hey, guys. Thanks for taking my questions and congratulations on all the recent successes.
Todd Sell: Regarding the EBITDA I know you guys said you did about $10 million last year do you expect to be able to increase that and is there a kind of a quantified number that you can give for this year given stable oil prices I know that you know, it's a moving number.
Speaker Change: Yeah, that's all true yeah.
Speaker Change: So we can't make forward projections and all that but yes. It was about $10 million last year and that the levels, where we're running the oil prices are the lift calls for very consistent so.
Speaker Change: I won't say, that's our number or greater but let's say oh, a reasonable expectation without giving projections are apologize we can't do that but I understand I think is fair, okay, but on all the time and all the on all the rig cost you know I don't anticipate the charges will be any.
Speaker Change: We're near the 12 and a half million onetime charges you had last year, but is there kind of a ballpark number that we're looking at and charges for this year.
Mitch Trotter: So, that $12.5 million; $10 million was classified as acquisition costs, and the $2.5 that was up in G&A. You know, from a non-GAAP SEC, maybe you could classify them as 2 12, because, I mean, now the 2 12 is acquisition cost because they were related fees to instruments that we have going forward that didn't trigger until the acquisition, but it's for things that we've got going, like fees relating to some of the things like our ELOC with White Lion and other things that are in place, couldn't So, no, those are not. Not recurring. None of those are true.
Speaker Change: So that 12 and a half million it.
Speaker Change: It was.
Speaker Change: 10 million was classified as acquisition cost.
Speaker Change: And the two and a half there was up in G&A.
Speaker Change: Yeah.
Speaker Change: You know from our non-GAAP S. E C. Maybe you could classify them as two and a half because I'm another two and a half as acquisition cost because they were related fees to mm instruments that we have going forward that didnt trigger until the acquisition, but it's for things that we've got going.
Speaker Change: Yeah.
Speaker Change: These relating to.
Speaker Change: Some of the things like our HELOC with White line and other.
Speaker Change: Things that are in place that.
Speaker Change: Couldn't turn until then and they have future benefit, but they really get classified as G&A. So no those are not.
Mitch Trotter: They don't relate to the rig costs and all that. Rig costs, of course, as we spend that money, it's either in the lift costs LOE or it's up in, of course, the CAPEX area, just depending on whether we're doing a workover or just maintaining. Sure, that helps. Does that answer your question? Yeah, that clarifies how you classify things.
Speaker Change: Nonrecurring none of them none of those are its a yeah. They do.
Speaker Change: Don't relate to the rig costs and all that.
Speaker Change: Cost of course, as we spend that money, it's either in the lip costs L O.
Speaker Change: Or it's up and of course, the Capex area, just depending on whether we're doing a workover or just are maintained.
Speaker Change: Sure I hope that answers your question, Yeah that clarifies, how you classify things snap your remarks, and then Oh. Your model question, you know I know that you already through the first quarter and almost halfway through the second do you anticipate being able to get your 10-Q out on time before may 15th or are we going to have a 10 human T on that.
Todd Felty: Thank you very much. And then, a final question, you know. I know that we're already through the first quarter and almost halfway through the second. Do you anticipate being able to get your 10-Q out on time before May 15th, or are we going to have a 10-QNT on that? Logistics from the day to 12 days from now, I'll just say it's tight. And we do get a five-day extension or whatever to the 20th, which is a Monday.
Speaker Change: <unk>.
Speaker Change: So.
Speaker Change: Logistics from the day to 12 days for now I'll just say it's.
Speaker Change: Tight and we do get a five day extension or whatever to the 20th which is a Monday.
Todd Felty: And I don't know which it'll be. We're well underway with closing the books, you know, over the quarter, three months. But a lot of the entries had to wait until the final entries for the 10K.
Speaker Change: And I don't know what it'll be we're well under way of closing the books Uh Huh.
Speaker Change: I don't know.
Speaker Change: The third quarter three months.
But a lot of the entries had to wait until the final entries for the 10-K, a and there theyre going in right now and we are already teed up we're working with our auditors.
Mitch Trotter: And they're going in right now. And we are already teed up. We're working with our auditors. And so we're in the process. We're doing the analysis, flux analysis, and change analysis, and the backup schedules, and everything that's needed for that.
Speaker Change: And so we're in process, we're doing an analysis flux analysis and change analysis in the backup schedules and everything that's needed for that so I can't tell you. If we'll make the 15th but I will tell you. It's obviously a very tight schedule the to be able to turn that in this one won't have all of those.
Mitch Trotter: So I can't tell you if we'll make the 15th, but I will tell you it's obviously a very tight schedule to be able to turn back. And this one won't have all those complexities of, you know, the closing costs. I mean, there'll be certain things that have to be updated, like the You know, tax provision was extremely complicated, and you never would have thought it, but that had to do with the entity structure, but that kind of goes away.
Speaker Change: Implex cities of the closing costs, I mean, there'll be certain things that have to be updated like the.
Speaker Change: Yeah tax provision was extremely complicated and you never would have thought it but that had to do with the entity structure, but that kind of goes away there'll be little updates in some of the instruments that derivative and stuff with respect to.
Mitch Trotter: There'll be little updates and some of the instruments, the derivatives, and stuff with respect to like the commodity and all that. They're not recurring. They should flip relatively easily. So we're not expecting big issues there. It's just, sure. Now it's just. Collapse time.
Speaker Change: Like the commodity and all that there no recurring they should flip relatively easy so we're not expecting big issues. There. It's just sure mountain system.
Speaker Change: At this time thing.
Todd Felty: So I really appreciate you taking the questions. That answer is mine, and I look forward to witnessing your success and profitability in the near future. Great. Thanks so much, Todd. Bye.
Speaker Change: Sure well I really appreciate you taking the questions and answers to mine and I look forward to witnessing your a success and profitability in the near future great. Thanks, So much Todd.
Speaker Change: Yeah.
Operator: There are no further questions from the phone lines. We will now take webcast questions. If you would like to ask a question via the webcast, please click on the Ask Question box on the left side of your screen, type in your question, and hit Submit. I will hand the call back to management for the webcast questions.
Speaker Change: There are no further questions from the phone lines, we will now take webcast questions if.
Speaker Change: You would like to ask a question through the webcast. Please click on the ask a question box on the left side of your screen type in your question.
Speaker Change: Net.
Speaker Change: I will hand, the call back to management for the webcast questions.
Speaker Change: Yeah.
Speaker Change: Mike.
Operator: He must be looking for you.
Speaker Change: I must be looking to do.
Operator: I don't see any questions on the board. Holly, are there any questions? Okay. No, but I would like to close the call first.
I don't see any questions on the board Holly do you are there any questions.
Speaker Change: Okay now I would like to close the call first management will be in New York on May 14th 15th and 16th and we will be attending the F E F Hutton conference if.
Operator: Management will be in New York on May 14th, 15th, and 16th and will be attending the E.F. If you would like to meet with management, just please contact me, and we will try to fit you into our schedule. Dante, the close is yours.
Speaker Change: If you would like to meet with management just please contact me when we were trying to fix your winter schedule Dante to closed as yours.
Dante: Yeah, well, listen, we really appreciate everyone that dialed in, and we really love the questions asked by Tim and Todd. So we hope we get more participants next time. But our mission is clear. We are here to serve the shareholders, and the shareholders want to see their earnings go up. That's what we're working toward, and it's a pretty simple formula for an oil company. You know, run a good, clean show, be safe, be environmentally conscious, and get the production to go up.
Speaker Change: Yeah, well listen we really appreciate everyone that dialed in and we really love the questions asked by Jim and Dod. So we hope we get more participants next time, but where we where our mission is clear. We are we are here to serve the shareholders and the shareholders want to see their earnings go up that's what we're working toward and and it's a pretty.
Speaker Change: Simple formula for an oil company you know run a one a good clean show be safe be environmentally conscious and get the production to go up and with the Permian like so many other Permian producers, we have multiple zones. So made it. So there's so many opportunities to increase production, where where we're at.
Dante: And with the Permian, like so many other Permian producers, we have multiple zones, so many opportunities to increase production. We're just prioritizing it, doing it as responsibly and as efficiently as possible. And you will see this. Now I think that the real results are going to come out in the second quarter of this year and certainly in the third and fourth quarters of this year. So rig activity is only going to increase.
Dante: And I think that's my closing comments. I'm grateful to all the investors. I'm grateful to all of our team, our former CEO, Dean Rojas, and our founder, Donald Gurree. I'm grateful for all their contributions. And with that, I just turn it back over to you, Mike.
Speaker Change: Just prioritizing that doing it as responsibly and as efficiently as possible and you will see this now I think that the real results are going to come up in the second quarter of this year and certainly by the third and fourth quarters of this year. So the rig activity is only going to increase and.
Speaker Change: I think that's that's my closing comments I'm grateful to all the investors I'm grateful to all of our team are our former C. E O deed Rojas and our our founder Donald Gloria I'm Grateful for all their contributions and with that I just turn it back over to you Mike.
Michael Porter: Good. Thank you very much, everybody. We'll talk to you again for our first quarter earnings call. Have a great day. Bye-bye.
Mike: Great. Thank you very much everybody, we'll talk to you again for our first quarter earnings call have a great day Bye bye.
Speaker Change: Bye bye.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.