Q3 2024 Evolution Petroleum Corp Earnings Call
Operator: Good morning everyone, and welcome to the Evolution Petroleum third quarter fiscal year 2024 earnings release conference call. All participants are in a listen-only mode. Should you need assistance, please contact a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Ask a question; you may press the star and then one, and you're touched on the telephone. So to withdraw your question, you may press the star. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Brandi Hudson, Investor Relations Manager.
Good morning, everyone and welcome to the evolution Petroleum third quarter fiscal year 2024 earnings release Conference call.
Brandi Hudson: All participants are in a listen only mode should you need assistance. They may have a conference specialist by pressing the star key followed by zero.
Brandi Hudson: After todays presentation, there will be an opportunity to ask questions.
Brandi Hudson: I ask a question you May press Star and then one on your Touchtone telephone.
Brandi Hudson: Draw your questions you May press star two.
Brandi Hudson: Please also note today's event is being recorded.
Brandi Hudson: At this time I'd like to turn the floor over to Brandy Hudson Investor Relations manager.
Brandi Hudson: Please go ahead thank.
Brandi Hudson: Thank you. Welcome to Evolution Petroleum's fiscal Q3 2024 earnings call. I'm joined by Kelly Lloyd, President and Chief Executive Officer, Mark Bunch, Chief Operating Officer, and Ryan Stash, Senior Vice President, Chief Financial Officer, and Treasurer. We released our fiscal 2024 third quarter financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release in the Investors section of our website.
Brandi Hudson: Thank you welcome to evolution Petroleum fiscal Q3, <unk> 24 earnings call I'm joined by Kelly White, President and Chief Executive Officer, Mark Bunch, Chief operating Officer, and Ryan Stash, Senior Vice President Chief Financial Officer, and Treasurer, We released our fiscal 2024 third quarter financial.
Brandi Hudson: Our results after the market closed yesterday, please refer to our earnings press release for additional information containing these results you can access our earnings release in the investors section of our website.
Brandi Hudson: Please note that any statements and information provided in today's call speak only as of today's date, May 8, 2024, and any time-sensitive information may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to the risks, assumptions, and uncertainties as described in our SEC filings. However, actual results may differ materially from those
Brandi Hudson: Please note that any statements and information provided in today's call speak only as of today's date May eight 2024, and any time sensitive information may not be accurate at a later date.
Brandi Hudson: We undertake no obligation to update any forward-looking statements. During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release. Kelly will begin today's call with some opening comments. Mark will provide an update on our properties and plans as they relate to our ongoing strategy of maximizing shareholder returns, and Ryan will provide a brief overview of our fiscal quarter highlights.
Brandi Hudson: Discussion today will contain forward looking statements of management's beliefs and assumptions based on currently available information. These forward looking statements are subject to the risks assumptions and uncertainties as described in our SEC filings actual results may differ materially from those expected.
Brandi Hudson: We undertake no obligation to update any forward looking statements.
Brandi Hudson: During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release.
Brandi Hudson: After our prepared remarks, the management team will be available to answer any questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the investor section of our website. With that, I will turn the call over to Kelly.
Brandi Hudson: Kelly will begin today's call with some opening comments Mark will provide an update on our properties and plans as they relate to our ongoing strategy of maximizing shareholder returns and Ryan will provide a brief overview of our fiscal quarter highlights. After our prepared remarks, the management team will be available to answer any questions. As a reminder, this conference call is being recorded.
Brandi Hudson: If you wish to listen to a webcast replay of today's call. It will be available on the investors section of our website with that I will turn the call over to Kelly.
Kelly W. Loyd: Thanks, Brandi. During our last quarterly call, we told you that we were working to increase our scale and economic efficiency. We told you that expanding regionally and further diversifying our production base are important goals for us. Most importantly, we also told you that the point of all this is to increase our cash flow and, therefore, either extend our dividend fairway, allow us to increase our dividend, or do both.
Kelly: Thanks Brandy during our last quarterly call. We told you that we were working to increase our scale and economic efficiency.
Kelly W. Loyd: Old you that expanding regionally and further diversifying our production base our important goals for US. Most importantly, we also told you that the point of all this is to increase our cash flow and therefore, either extend our dividend fairway allow us to increase our dividend or do both.
Kelly W. Loyd: With our current asset base and the additions of our recent scoop stack acquisitions and participation in the operations at Shavaroo, we've come a long way towards achieving what we set out to accomplish. And we have done so while keeping our balance sheet in our comfort zone and adding no incremental dilution. In fact, we repurchased shares during the quarter. Additionally, we added to our producing asset base and our portfolio of drilling locations. We entered into two prolific areas, the Permian Basin and the Anadarko Basin.
Kelly W. Loyd: With our current asset base and the additions of our recent scoop stack acquisitions and participation in the operations that jabiru, we've come a long way towards achieving what we set out to accomplish.
Kelly W. Loyd: And we have done so while keeping our balance sheet in our comfort zone, and adding no incremental dilution.
Kelly W. Loyd: In fact, we repurchased shares during the quarter.
Kelly W. Loyd: We added to our producing asset base and our portfolio of drilling locations.
Kelly W. Loyd: We entered into two prolific areas, the Permian basin and the Anadarko basin.
Kelly W. Loyd: We increased our oil production as a percent of sales. In fact, this quarter represented a record amount of oil production net to the company. And by the end of the quarter, we had participated in 35 newly drilled wells, or wells in progress, 32 in the scoop stack, and 3 in Shavaroo, which represent some of the most economic returns the company has seen to date. Evolution today versus evolution a year ago looks very promising.
Kelly W. Loyd: We increased our oil production as a percent of sales.
Kelly W. Loyd: In fact, this quarter represented a record amount of oil production net to the company.
Kelly W. Loyd: And by the end of the quarter, we had participated in 35 newly drilled wells or wells in progress 32 in the Scoop stack and three should have a room, which represent some of the most economic returns the company has seen to date.
Kelly W. Loyd: Evolution today versus evolution of year ago looks very promising.
Kelly W. Loyd: Our oil production for the fiscal third quarter this year versus last year is up by approximately 19%. Our NGL production is the same, and our natural gas production is down by roughly 4%. These numbers only include about half of the quarter for the scoop stack acquisitions as the transaction closed on 2-12 and less than two-thirds of the quarter for the new Chavarro wells as all three wells were only finished being placed on production in early February and ramped up in production as frack fluid was recovered.
Kelly W. Loyd: Our oil production for the fiscal third quarter. This year versus last year is up by approximately 19%.
Kelly W. Loyd: Our NGL production is the same and our natural gas production is down by roughly 4%.
Kelly W. Loyd: These numbers only include about half of the quarter for the Scoop stack and acquisitions as the transaction closed on 212 and less than two thirds of the quarter for the new chaparral wells as all three wells were only finished being placed on production in early February and ramped up in production as Brad.
Kelly W. Loyd: Food was recovered.
Kelly W. Loyd: Today we have a much deeper and higher quality inventory of drilling locations versus a year ago with economics that are very compelling. We believe that with our current inventory of assets, we have the firepower to fund our dividend for many years to come with the potential for growth, particularly as natural gas prices recover as expected. And we certainly don't intend to rest now.
Kelly W. Loyd: Today, we have a much deeper and higher quality inventory of drilling locations versus a year ago with economics that are very compelling.
Kelly W. Loyd: We believe that with our current inventory of assets, we have the firepower to fund our dividend for many years to come with the potential for growth, particularly as natural gas prices recover as expected and.
Kelly W. Loyd: And we certainly don't intend to rush now we're always on the look out for the next highly accretive transaction that will benefit our shareholders.
Kelly W. Loyd: We're always on the lookout for the next highly accretive transaction that will benefit our shareholders. From October of 2019 through February of 2024, Evolution has participated in six major transactions, putting over $119 million to work for our shareholders. During that time, we've paid down over $41 million of borrowings, while our share count has remained virtually unchanged. Since we began paying dividends 10 years ago, we have returned over $3.45 per share to shareholders in cash and another $0.26 per share in share repurchase.
Kelly W. Loyd: These six major transactions have added substantial volumes of proved oil, natural gas, and NGLs, all of which gain us exposure into different, largely uncorrelated markets, both by product and location, many of which have recently experienced outsized favorable pricing versus other sales points. These six major transactions also provide Evolution with hundreds of undrilled upside locations operated by proven and experienced teams. We can either choose to participate, by non-consent, or even sell many of these undeveloped locations, depending on which will bring the most value to our shareholders at the time.
Kelly W. Loyd: From October of 2019 through February of 2024.
Kelly W. Loyd: Pollution has participated in six major transactions, putting over $119 million to work for our shareholders. During that time, we've paid down over 41 million of borrowings well our share count has remained virtually unchanged.
Kelly W. Loyd: Since we began paying dividends 10 years ago, we have returned over $3.45 per share to shareholders in cash and another 26 cents per share in share repurchases.
Kelly W. Loyd: These six major transactions have added substantial volumes of proved oil natural gas and Ngls all of which gained this exposure into different largely uncorrelated markets, both by product and locations.
Kelly W. Loyd: Of which have recently experienced outsized favorable pricing versus other sales points.
Kelly W. Loyd: The six major transactions also provide evolution with hundreds of under ELD upside locations operated by proven and experienced teams.
Kelly W. Loyd: We can either choose to participate non consent or even sell many of these undeveloped locations, depending on which will bring the most value to our shareholders at the time.
Kelly W. Loyd: Throughout the years and across many diverse transactions, our goal remains the same as it has been since 2013, the year we paid our first of 42 and counting consecutive dividends. That goal is to maximize total shareholder returns by carefully evaluating every dollar we use to drive dividend payments, share repurchases, and replenishing and or growing our cash flow-producing asset base, all while avoiding significant dilution or over-leveraging our balance sheet. I'll hand it over to Mark now, who will give you an update from an operational standpoint on some of our recent actions supporting our strategy.
Kelly W. Loyd: Throughout the years and across many diverse transactions. Our goal remains the same as it has been since 2013 the year, we paid our first a 42 and counting consecutive dividends.
Mark: Our goal is to maximize total shareholder returns by carefully evaluating every dollar we use to drive dividend payments share repurchases, and replenishing and or growing our cash flow producing asset base.
Mark: All while avoiding significant dilution or over leveraging our balance sheet.
Kelly W. Loyd: I'll hand, it over to Mark now, who will give you an update from an operational standpoint on some of our recent actions supporting our strategy.
Mark Bunch: Thanks, Kelly. I will focus on some of our notable items since our listeners can refer to our press release and 10-Q filings for additional details. Our latest acquisition, Scoop Stack, is a very exciting add to the company's portfolio. We closed on this acquisition on February 12th.
Mark: Thanks, Kelly I will focus on some of our notable items since our listeners can refer to our press release and 10-Q filings for additional details.
Mark Bunch: Our latest acquisition Scoop stack is a very exciting add to the company's portfolio. We closed on this acquisition on February 12 on a pro forma basis for the third quarter. The net production rate was approximately 550 Boe per day, which was essentially flat with the production rate at the effective date of.
Mark Bunch: On a pro forma basis for the third quarter, the net production rate was approximately 1,550 BOE per day, which was essentially flat with the production rate at the effective date of the acquisition, November 1st, 2023. Also, on the effective date of the acquisition, we acquired over 300 gross drilling locations, 21 of which were ducts. At the close of the third quarter, 19 of the 21 ducts had been placed on production, and we have agreed to participate in an additional 15 gross or 0.2 net new horizontal wells across the acreage, of which 13 are currently in progress. Based on limited information, the completed wells have so far, on average, exceeded expectations. Based on current performance, we are confident that ScoopStack will be a real value add for the long term.
Mark Bunch: The acquisition November one 2023.
Mark Bunch: Also on the effective date of the acquisition, we acquired over 300 gross drilling locations 21 of which were decks at the close of the third COVID-19 of the 21 dogs have been placed on production and we have agreed to participate in additional 15 gross or point to net new horizontal wells across the acreage.
Mark Bunch: Of which 13 are currently in progress based on limited information the completed wells have so far on average exceeded expectations based on current performance. We are confident that scoop stack could be a real value add for the long term.
Mark Bunch: At Shavaroo, we brought our first three wells on production around February 1st. All three wells' gross production peaked at between 300 and 375 BOE per day, which is significantly better than our pre-drill estimates. On a pro forma basis for the third quarter, Shavaroo has produced approximately 290 BOE per day net to our interest. In conjunction with the operator, we are planning to drill the next four wells beginning in September 2024, followed by another six wells beginning in April 2025.
Mark Bunch: At <unk>, we brought our first three wells on production around February 1st all three wells gross production peaked at between 300 and 375 Boe per day, which is significantly better than our pre drill estimates on a pro forma basis for the third quarter. Chevre has reached approximately 290 Boe per day.
Mark Bunch: <unk> net to our interest in conjunction with the operator, we're planning through the next four wells beginning in September 2024, followed by another six wells beginning in April 2025, we're very pleased with the results of our drilling program at Chaparral I believe will continue to support the dividend there continued drilling program over the net.
Mark Bunch: We are very pleased with the results of our drilling program at Shavaroo and believe we will continue to support the dividend through a continual drilling program over the next decade. Again, we would like to highlight that the addition of Shavaroo and ScoopStack is a perfect fit for our evolving strategy of both adding long-life production during commodity price downswings and adding undeveloped locations by making acquisitions through the drill bit.
Mark Bunch: Stick eight.
Mark Bunch: Again, we would like to highlight that the addition of chevron's scoop stack or perfect fits for our evolving strategy of both adding a long life production during commodity price down swings and adding undeveloped locations by making acquisitions to the drill bit we need this is crucial to enhancing our ability to maintain or increase production.
Mark Bunch: We view this as crucial to enhancing our ability to maintain or increase production at an attractive rate of return for years to come. As for our legacy properties, we had a successful third quarter. Jonafield still receives a premium over Henry Hub pricing since we sell into the West Coast market and continues to perform as expected at its historical decline rate. The Williston asset production increased slightly due to the One Oak grassland system downtime in the prior quarter, even though we did experience some downtime due to a winter storm in January.
Mark Bunch: At an attractive rate of return for years to come.
Mark Bunch: As for our legacy properties, we've had a successful third quarter Jonah field still receives a premium over Henry hub pricing since we sell into the west coast market and continues to perform as expected at its historical decline rate. The Williston asset production increased slightly due T D. One oak grassland system downtime in the pre.
Mark Bunch: Near quarter, even though we did experience some downtime due to winter storm in January.
Mark Bunch: The Barnett Shell asset experienced some downtime due to a winter storm in January as well, but subsequently, operations were resumed with production back on its historical decline rate. The operator continues to work on ways to reduce operating expenses there. Hamilton Dome continued to perform very well even though it experienced more downtime due to well workovers than usual at the beginning of the quarter.
Mark Bunch: The Barnett shale asset experienced some downtime due to winter storm in January as well.
Mark Bunch: Subsequently operations will resume with production back on its historical decline rate. The operator continues to work on ways to reduce operating expenses there.
Mark Bunch: Hamilton Dome continued to perform very well, even though experienced more downtime between well workovers unusual at the beginning of the quarter net production was only slightly down from the previous quarter.
Ryan Stash: Net production was only slightly down from the previous quarter. At Dell High, production was affected during the quarter by winter storms that impacted oil production and repeated downtime from rental turbine failures impacting NGL production, both of which were resolved by the end of the quarter. The CO2 purchase pipeline was taken offline for preventative maintenance at the end of February, and the operator anticipates resuming CO2 purchases in June 2024. This will reduce del high field LOE during this time period.
Ryan Stash: At Delhi production was affected during the quarter by winter storms that impacted oil production and repeated downtime from rental turbine failures impacting NGL production, both of which resolved by the end of the quarter. The C. O. Two purchase pipeline was taken offline for preventative maintenance at the end of February.
Ryan Stash: And the operator anticipates resuming C O two purchases in June 2024, this will reduce Delhi field L. O E. During this time period. The deal continues to inject recycled C. O two which is the bulk of the normal C. O two injection and we do not anticipate a significant production impact from that.
Ryan Stash: [noise] temporarily decreased Sia two injection volumes.
Ryan Stash: The operators also indicated at Delhi is expected to be certified as carbon capture utilization and storage site designated for enhanced oil recovery by December.
Ryan Stash: The field continues to inject recycled CO2, which is the bulk of a normal CO2 injection, and we do not anticipate a significant production impact from the temporally decreased CO2 injection body. The operators also indicated that Del High is expected to be certified as a carbon capture utilization and storage site designated for enhanced oil recovery by the summer. All in all, fiscal quarter 3 production increased 14% from the prior quarter to 7,209 net BOE per day, with oil increasing 27% and natural gas and NGLs each increasing approximately 10%, with drilling results and the contribution of the acquisitions more than offsetting normal declines, maintenance, and weather-related downtime. Now, I'll turn it over to Ryan to discuss the highlights of the quarter.
Ryan Stash: All in all fiscal cortisol production increased 14% from the prior quarter to 7209, net Boe per day with oil, increasing 27% and natural gas Ngls, each increasing approximately 10% with drilling results and the contribution of the acquisitions more than offsetting normal declines.
Ryan Stash: Maintenance and weather related downtime.
Ryan Stash: I'll turn it over to Ryan to discuss the highlights of the quarter.
Ryan Stash: Thanks, Mark. As Brandi mentioned earlier, we released our earnings yesterday, which includes more information on our results. My comments will focus mainly on the highlights of the current quarter. This quarter, we had total revenues of $23 million, adjusted net income of $1 million, and adjusted EBITDA of $8.5 million. Our financial results demonstrated the positive impact of our ScoopStack acquisitions and Shavaroo drilling program as revenue and EBITDA were higher than last quarter despite receiving lower realized prices due to the continued weakness in natural gas.
Ryan Stash: Thanks, Mark as Brendan mentioned earlier, we released our earnings yesterday, which contains more information on our results My comments will focus mainly on the highlights of the current quarter.
Ryan Stash: This quarter, we had total revenues of $23 million adjusted net income of $1 million and adjusted EBITDA of $8 5 million.
Ryan Stash: Our financial results demonstrated the positive impact of our scoop stack acquisitions, and <unk> drilling program as revenue and EBITDA were higher than last quarter, despite receiving lower realized prices due to the continued weakness in natural gas.
Ryan Stash: On the development side, we spent $2.6 million in CapEx, primarily related to the drilling and completion of the three initial wells at Shavaro. We ended the quarter with $3.1 million in cash on hand and borrowings of $42.5 million on our credit facility. Our cash balance and borrowings do not yet include the impact of net cash we expect to receive for the final purchase price adjustment on the ScoopStack acquisition.
Ryan Stash: On the development side, we spent $2 6 million in Capex, primarily related to the drilling and completion of the three initial wells at chaparral.
Ryan Stash: We ended the quarter with $3 1 million in cash on hand, and borrowings of $42.5 million on our credit facility.
Ryan Stash: Our cash balance and Barrings do not yet include the impact of net cash we expect to receive for the final purchase price adjustment on the scoop stack acquisitions.
Kelly W. Loyd: As of March 31st, we recorded an interim settlement receivable of $3.3 million and expect additional cash upon the final settlement set to occur during the fourth fiscal quarter. We continue to expect to remain at or below our leverage target of 1x proforma EBITDA. We entered into oil and gas hedges during the quarter and after the quarter, in order to comply with the terms of our current facility. We also amended our credit facility to give us more flexibility regarding the mix of individual commodities we are required to hedge.
Ryan Stash: As of March 31st we recorded an interim settlement receivable of $3 3 million and expect additional cash upon the final settlement set to occur during the fourth fiscal quarter. We continue to expect to remain at or below our leverage target of one times pro forma EBITDA.
Kelly W. Loyd: We entered into oil and gas hedges during the quarter and after the quarter in.
Kelly W. Loyd: In order to comply with the terms of our credit facility.
Kelly W. Loyd: We also amended our credit facility to give us more flexibility regarding the mix of individual commodities. We are required to hedge we now have the option to hedge 40% of oil production or 25% of oil and gas production for each individual month, given the extremely low prices of natural gas throughout calendar year 2000.
Kelly W. Loyd: We now have the option to hedge 40% of oil production or 25% of oil and gas production for each individual month. Given the extremely low price of natural gas throughout calendar year 2024, we are currently only hedging oil production for that period. We also hedged natural gas beyond the required 12-month period to capitalize on the high prices available in calendar year 2025 and beyond. Our goal for our hedging program will continue to be to reduce downside commodity price risk while maintaining the maximum amount of upside available.
Kelly W. Loyd: <unk> 24, we are currently only hedging oil production for that period.
Kelly W. Loyd: We also hedged natural gas beyond the required 12 month period to capitalize on the high prices available in calendar year 2025 and beyond.
Kelly W. Loyd: Our goal for our hedging program will continue to be to reduce downside commodity price risk, while maintaining the maximum amount of upside available as such we will continue to monitor the market and may add additional opportunistic hedges.
Kelly W. Loyd: As such, we will continue to monitor the market and may add additional opportunistic hedges. On the shareholder return front, we paid a 12-cent dividend in March and declared another 12-cent dividend to be paid in June, which will mark our 42nd and 43rd consecutive quarterly dividends and 7th and 8th consecutive dividends at the current level. We also repurchased approximately $800,000 worth of shares during the quarter. I'll hand it over to Kelly now for closing comments. Thanks, Ryan.
Kelly: On the shareholder return front, we paid a 12 cent dividend in March and declared another <unk> 10 dividend to be paid in June which will mark our 40, <unk> and 40, <unk> consecutive quarterly dividend and seventh and eighth consecutive dividends at the current level. We also repurchased approximately $800000 worth of shares during the quarter.
Kelly W. Loyd: I'll hand, it over to Kelly now for closing comments.
Kelly: Thanks Ryan.
Kelly W. Loyd: At Evolution, we accomplish our strategy of maximizing total shareholder returns by carefully weighing the use of every dollar we put to work for all our stakeholders, always with an eye towards increasing or extending the runway of our dividend for many years to come. We have a proven track record of paying dividends with higher yields than the S&P 500 and our peers, returning cash to shareholders of over $3.45 per share over the last 10 years.
Kelly: At evolution, we accomplish our strategy of maximizing total shareholder returns by carefully weighing the use of every dollar we put to work for all our stakeholders always with an eye towards increasing or extending the runway of our dividend for many years to come.
Kelly W. Loyd: We have a proven track record of paying dividends with stronger yields than the S&P 500, and our peers returning cash to shareholders of over $3.45 per share over the last 10 years.
Kelly W. Loyd: We are building our company into one designed to cover our dividend and our capital spending even in challenging times like we see today with natural gas pricing while maintaining ample capacity to return cash to shareholders. We have built and continue to build a diverse, resilient set of assets strategically designed to facilitate and complement our consistent approach to returning cash to shareholders. In building this base, our balance sheet has remained rock solid, and we've added no material dilution.
Kelly W. Loyd: We are building our company into one designed to cover our dividend and our capital spending even in challenging times like we see today with natural gas pricing, while maintaining ample capacity to return cash to shareholders.
Kelly W. Loyd: We have built and continue to build a diverse resilient set of assets strategically designed to facilitate and complement our consistent approach to returning cash to shareholders in.
Kelly W. Loyd: In building this base our balance sheet has remained rock solid and we've added no material dilution with that I'll turn it over to the moderator to begin the Q&A session. Thank you very much.
Kelly W. Loyd: With that, I'll turn it over to the moderator to begin the Q&A session. Thank you very much. Ladies and gentlemen, at this
Operator: Ladies and gentlemen, at this time, we'll begin that question and answer session. If you'd like to ask a question, please press star and one on a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.
Speaker Change: Ladies and gentlemen at this time, we'll begin that question and answer session. If you'd like to ask a question. Please press star and one using a touchtone telephone.
Operator: Once again, that is a star and then one to join the question. We'll pause momentarily to assemble the roster from Forthlink Capital. Please go ahead with your question.
Operator: It's all your questions you May press star two.
Operator: If you are using a speaker phone we do ask you. Please pick up your handset prior to pressing the keys to ensure the best quality.
Operator: Once again that is star and then wanted to join the question queue.
Speaker Change: We will pause momentarily to assemble the roster.
Operator: Yeah.
Operator: Okay.
Fourthlink Capital: Fourth line capital. Please go ahead with your question.
Donovan Due Schafer: Hey guys, thanks for taking the questions. So, the first question I want to ask is, so, for the certification for Delhi and that... (inaudible).
Speaker Change: Hey, guys. Thanks for taking the question.
Forthlink Capital: So the first question I wanted to ask about is so for the certification for Dal high and that expectation to happen.
Forthlink Capital: Summer that sounds more or less like a you know reiterating a consistent statement that kind of we've heard before in terms of that timeline. There was it was there an incremental step or or just sort of it's more of a thing like it's on track and that is still there.
Speaker Change: Expectation and then have you advanced in your negotiations or conversations around that with the operator.
Unknown Executive: Thanks Donovan. So to answer your question, it's really going steady as she goes. The updates are no, they still expect it to be in the same time frame they did. So as far as advancing negotiations and where that's going to shake out, no, we're not there yet.
Speaker Change: Thank you Donovan so.
Speaker Change: So to answer your question, it's really steady as she goes the updates are no. They still expected to be in the same timeframe. They did so.
Unknown Executive: So as far as.
Unknown Executive: Advancing negotiations and where that's going to shake out and no we're not there yet.
Donovan Due Schafer: Okay and just kind of real quick and I don't know if you'll have the answer or not but do you know for phase 5 for Delhi because I've had this thought or you know speculation or wondering that that it could sort of nudge Exxon over into having more of a desire to do phase 5 because you know that's more pore space conceivably to inject co2 into did you know has that come up at all in conversations and do you know if that requires additional or that can just you can expand a project and it's kind of automatic.
Speaker Change: Okay, and just kind of real quick and I don't know.
Donovan Due Schafer: You'll have to answer or not but do you know for phase five for die because I've had this thought or speculation or wondering that that it could sort of nudge exxon over into having more of a desire to do phase five because you know that's more poor space conceivably.
Donovan Due Schafer: <unk> C O two into.
Donovan Due Schafer: So do you know has that come up at all in conversations and do you know if that requires additional certification or if that can just you can expand a project and it's kind of automatic.
Unknown Executive: So, I'll answer it this way. We certainly think Phase 5 is a very strong economic project on its own merits, and we hope that Exxon will come to that conclusion with the additional benefit of having more pore space to inject CO2. As for additional, I mean, it's within the field, I don't expect it would be, but I'm actually not sure on that.
Speaker Change: So I'll answer I'll answer it. This way we are we certainly think phase five is a is a very strong economic project on its own merit and we hope that that Exxon will come to that conclusion with the additional benefit of having more poor space to inject a C O two as for.
Unknown Executive: Additional I mean, it's within the field I don't expect it would be but I'm actually not sure on that.
Donovan Due Schafer: Okay, and then turning to Shavaroo, some language jumped out at me in the release saying, you know, and I know you guys have heard John Bair. So, we've secured a lot of different locations that you can participate in, so it's not new per se that it's something you want to do this or like having it on the table, but in the release, the language you say that your plans are to systematically participate in the remainder.
Unknown Executive: Okay.
Unknown Executive:
Donovan Due Schafer: And then turning to chaparral some language jumped out at me in the release thing.
Donovan Due Schafer: You know and I know you guys have secured these are a lot of different locations that you can participate in so it's not.
Donovan Due Schafer: New per se that it's something you've been you that you want to do this or like having it on the table, but in the release. The language. You say you know that your plans are to systematically participated and the remainder so beyond you know we've got four engine block.
Donovan Due Schafer: So, beyond, we've got four, and Jame Black, two, and then another six, and then the company also expects to systematically participate in future development blocks, holding rights to over 69 additional horizontal well locations in aggregate. Is that... Talking about systematic participation, does that signal or indicate any kind of a, um, Dr. David Locke, Unknown Attendee, Ryan Stash, Brandi Hudson, Bruce Brown, Unknown Attend
Donovan Due Schafer: Two and then another six and then yeah. The company also expects to systematically participate in future development blocks holding rights to over six additional horizontal well locations in aggregate is that.
Speaker Change: Talking about systematic participation does that signal or indicate any kind of a.
Donovan Due Schafer: Hmm.
Speaker Change: Flipping of a switch or something where you kind of feel like you are.
Speaker Change: Of course, if things change and you start to get some bad well results or something you'll reassess, but does that kind of indicate you're at a point, where you're kind of feeling like Gee whiz, we're kind of ready to run with us.
Donovan Due Schafer: At the appropriate pace, you know for for dividend support and so forth, but just that you want to keep doing these over and over.
Unknown Executive: Yes, honestly, is the answer to that. We've got more data, we're more comfortable than we were. Now look, everything's subject to change, but as of now, we intend to systematically keep going with it. So yes, is the answer. Excited about it.
Speaker Change: Yes, we've been.
Speaker Change: Honestly is the answer to that it's a we've got more data where we're more comfortable than we were look everything is subject to change but as of now we we intend to systematically keep going with it. So yes is the answer.
Speaker Change: Cited about it okay, Yeah, and then am I right in kind of picking up on that language like systematic participation that's kind of.
Donovan Due Schafer: Yeah, and am I right in kind of picking up on that language, like systematic participation is kind of... Adjusting a feeling or a reaction to how things have been going. That's a step forward or a step increment.
Donovan Due Schafer: Suggesting a ceiling or a reaction to how things have been going.
Donovan Due Schafer: A step forward or a step incremental debt.
Donovan Due Schafer: Telling the water.
Unknown Executive: Yeah, more confident than a let's wait and see like maybe we were before now; it's, yeah, I
Donovan Due Schafer: Yeah, more confident then I'll, let's wait and see like what maybe we.
Speaker Change: Now, it's yes, I absolutely good catch.
Unknown Executive: Good catch. That was on purpose.
Donovan Due Schafer: Okay, got it. All right, well, thanks guys. I'll take that. I'll jump back in. Perfect. Thanks, Donovan. Once again, if you would like to ask...
Speaker Change: Got it okay.
Speaker Change: Alright, well, thanks, guys I'll take the I'll jump back in the queue.
Speaker Change: Perfect. Thanks Donna.
Operator: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question comes from John White from Roth Capital. Please go ahead with your question.
Speaker Change: Once again, if you would like to ask a question. Please press star and then one to withdraw your question.
Operator: You May press Star two.
Operator: Our next question comes from John White from Roth Capital. Please go ahead with your question.
John Marshall White: Good morning.
John Marshall White: And more of it.
John Marshall White: Yeah, good morning. Congratulations on closing the scoop stack and getting your Shavaroo wells flowing back, very nice additions to the portfolio. Wanted to see about additional detail on the scoop stack. Primarily, where is the acreage? What counties in the Anadarko Basin is the acreage concentrated in?
John Marshall White: Yeah. Good morning, congratulations on closing, the scoop stack and and getting your Shadberry wells flowing back.
John Marshall White: Nice additions to the portfolio wanted to see about additional detail on the scoop stack.
Unknown Executive: So, I can answer that or Mark, but I mean, it's in various places throughout the scoop stack. I would say it's got a large concentration over in Grady and Garvin, and those have kind of been the focus of where most of these wells in progress are.
Unknown Executive: Primarily.
Unknown Executive: Where's the acreage what counties in the Anadarko basin as the acreage concentrated in.
Unknown Executive: So.
Speaker Change: I can answer that or mark, but I mean, it's it's it's in various places throughout the Scoop stack are I would say, it's got a large concentration over and Grady and garvin.
Unknown Executive: And those are those are kind of been the focus on where most of these.
Unknown Executive: These wells in progress are.
John Marshall White: Okay, but I mean, truly, look, it has in a dark, excuse me, Blaine, Canadian, Carter, Custer, Dewey, Garvin, Grady, Kingfisher, McLean, Stevens, it's it's it's the whole scoop stack, but the biggest concentration, and we have the most activity is over there in sort of Grady and Garvin right now. It's got basically
Unknown Executive: Okay.
Mark Bunch: I mean purely look at has Anadarko excuse me Blaine Canadian Carter customer Dewey Garvin Grady Kingfisher Mclean Stevens, it's it's it's the whole scoop stack, but the biggest concentration are and where the most activity is over there and sort of Grady and Garvin right now Scott basically John This is mark, but I, just kind of near where Norman.
Mark Bunch: Basically, John, this is Mark Bunch. It's kind of near where Norman is. No, I know where Grady County is. I've driven around there a lot. So it's pretty spread out across Anadarka.
Mark Bunch: Is.
Mark Bunch: No.
Mark Bunch: I I know who are greedy.
Mark Bunch: Going around there in Lat am.
Mark Bunch: So it's pretty.
Mark Bunch: Pretty spread out across our across the Anadarko.
Speaker Change: Got it.
Unknown Executive: Yes and no. Like I said, it's sort of more concentrated in that grady, eastern grady kind of area. But yes, we do have various species throughout.
Mark Bunch: Yes, and no like I said, it's sort of more concentrated in that.
Unknown Executive: Grady Eastern Grady kind of area, but yes, we do have various pieces throughout.
Unknown Executive: and Unknown Speaker. Is there a concentration of operators, or is that pretty diversified too? There's, you know, we have a big position with Oventive and Continental, there's some with EOG, Marathon, Gulfport, it's, you know, there's probably, in total, somewhere around, realistically, around 20 operators that we'll end up dealing with, but those, the ones I mentioned are the other majors. Those are good names. Oh, I left out Continental Resources, too. Sorry. Yeah, that's a big one. No, you mentioned it.
Unknown Executive: And.
Unknown Executive: Is there a concentration of operators.
Unknown Executive: Or is that pretty diversified too.
Unknown Executive: There's a you know we have a big position with <unk> and continental are theres some with.
Unknown Executive: EOG a marathon Gulfport, it's yeah, there's probably in total at somewhere around like realistically a lot around 20 operators that you will end up dealing with but those are the ones I mentioned are the other major ones.
Unknown Executive: Those are good names.
Unknown Executive: O Olive garden Continental resources K sorry.
Unknown Executive: One.
Unknown Executive: No you mentioned.
Unknown Executive: And what is the primary formation being targeted? Mostly like the Woodford, but they also look for the Sycamore, and anything in the Mississippi. Excuse me, the way they pool theirs, they pool the larger sections. So a lot of times, this section is a pretty good size that they pool. All right, so 640. Well, actually, a lot of them now are getting to be 10,000 foot laterals, so they're actually going to be, you know, 1280. Okay, thank you.
Speaker Change: And what is the primary formation being targeted.
Unknown Executive: Mainly like the Woodford, but they also look for the Sycamore anything in the Mississippi and eat it.
Unknown Executive: Excuse me the way they pool, there's a pool of larger section. So a lot of times. The section is it's pretty good size that they pool.
Unknown Executive: Alright, so sick 40.
Unknown Executive: Yeah, well actually that a lot of them now are going to be 10000 foot lateral so they were actually going to be 12 eighteens.
Speaker Change: Thank you.
Unknown Executive: I know you don't give guidance, but, uh... With the initial results from ScoopStack and obviously the Shavaroo results, is the feeling we should see your percentage of oil cut of total production increase over time? Yeah, John, yeah, you should see that because both of them are especially chavrous and really oily, and Scoop Stack is oilier than our current mix.
Speaker Change: I know you don't give guidance.
Unknown Executive: With the initial results from Scoop stack and obviously the shaft route resolved.
Unknown Executive: That is the feeling we should see your percentage of oil cut of total production increase overtime.
Unknown Executive: Yeah, John Yeah, you can see that because both you know that both of them are especially chevron's really oily.
Unknown Executive: In the Scoop stack is is all layer than our current mix.
Unknown Executive: Yeah, the only caveat, John, would just be, you know, you know, we obviously have more insight into Chabiru timing and drilling and the scoop stack. Depending on what happens with gas prices, we could see some areas that have more gas content get drilled. Right now, they're focused more on the oil and liquids areas, which makes sense. But you know, there is some gas there too, right? So that there's a little bit of TBD depends on what the operators drill.
Speaker Change: Yeah, the only caveat John would just be.
Unknown Executive: We obviously have more insight into chaparral timing and drilling in the scoop stack, depending on what happens with gas prices, we could see some areas that have more gas content get drilled right right now they're focused more on the oil and liquids areas, which makes sense, but.
Unknown Executive: There is some gas there too right, so that theres, a little bit TBD depends on what the other operators drill.
John Marshall White: Okay, thanks for the additional detail. I really appreciate it, and I'll pass it back to the operator. Thanks, John.
Speaker Change: Okay. Yeah. Thanks for the additional detail Ah I really appreciate it and I'll pass it back to the operator.
Speaker Change: Thanks, John.
Operator: And once again, if you would like to ask a question, please press star and one. And ladies and gentlemen, although we are showing no additional questions, actually, we do have an additional question. This comes from Bruce Brown from Brown Capital. Please go ahead with your question.
Speaker Change: And once again, if he would like to ask a question. Please press star and one.
Operator: And ladies and gentlemen, Im showing no additional question actually we do have an additional question. This comes from Bruce Brown from Brown capital. Please go ahead with your question.
Bruce Brown: Good morning, fellas. Thanks for the good work. I just had a, I know it.
Bruce Brown: Yeah. Good morning Fellows, thanks for the good work.
Bruce Brown: I just had a I know it.
Bruce Brown: You've given no real guidance, but I'm just wondering if prices stay right around where they are today for like the next 12 months, which is probably not going to happen, but let's assume it does. Would your asset based lending line be paid down significantly?
Bruce Brown: You've you've given no no real guidance, but I'm just wondering if if prices stay right around where they are today.
Bruce Brown: The next 12 months, which is probably not going to happen, but let's assume it does what's your asset based lending line be paid down significantly.
Ryan Stash: Yeah, so thanks, Bruce. Obviously, we're not paying for guidance. Really, what we're looking at, and to answer your question, is a balance of paying down our line versus capital, right? And one of the big unknowns, obviously, is how much capital we'll have in the scoop stack given pricing. I would say we're generating enough cash to significantly pay down the line, but we may choose to spend more and reinvest in CapEx and pay the line down a little bit slower.
Speaker Change: Yeah. So obviously, we're not paying guidance it really what we're what we're looking at and to answer. Your question is a balance of paying down our line versus capital right and one of the big unknown is obviously, it's how much capital we'll have in the scoop stack given pricing yeah I.
Ryan Stash: I will say, we're generating enough cash to significantly pay down, but we may choose to spend more and reinvest in capex and pay the line down a little bit slower, but we're certainly going to remain below our target of one times EBITDA and as I mentioned now from a cash flow perspective, yes, we're generating plenty of cash to build a pay down.
Ryan Stash: But we're certainly going to remain below our target of one times EBITDA. And as I mentioned, from a cash flow perspective, yes, we're generating plenty of cash to be able to pay it down if we want. But we do have capital projects that we think are really attractive that we'll probably put some capital into as well.
Ryan Stash: We do have capital projects that we think are really attractive that would probably put some capital to as well.
Unknown Executive: Do you have any comment on additional capital projects in the
Ryan Stash: Do you have any comment on additional capital projects are in the Williston.
Unknown Executive: Sure, so we are working with the Operator There's Foundation. What's interesting is that area, if you're talking about drilling new wells, we're actually getting kind of excited. It's starting to get drilled, and the activity is moving towards us. So we're going to kind of wait and see and see how things move towards us there. So we're getting incrementally more excited about that area. As far as other projects within the field, I think they're just general workovers. Mark?
Speaker Change: Sure. So we are working with the operator there is foundation, what's interesting is that area is.
Unknown Executive: If youre talking about drilling new wells were actually getting kind of excited it's starting to get drilled in the activities moving towards us.
Mark Bunch: So we're going to kind of wait and see and look look how things move towards us. There. So we were getting incrementally more excited about that area as far as other projects within the field and I think it's just general Workovers Mark Yeah.
Mark Bunch: Yeah, it's just general workovers, general fix up. We're also doing some electrification in some areas that will improve efficiency, reduce operating costs. But, you know, no wells are planned to be drilled right now, at least in the near term.
Mark Bunch: Yeah, It's just general workout general picks up we're often doing some electrification in some areas that will improve efficiency reduce operating cost, but no no wells planned to be drilled right now at least like a near term.
Mark Bunch: Thank you, Mark. I appreciate it. Good day, Bruce.
Speaker Change: Thank you Mike I appreciate it.
Mark Bunch: Thanks Bruce.
Operator: And our next question is a follow-up from Donovan Schafer from Northland Capital. Please go ahead with your follow-up, and Mr. Schafer, is it possible your phone is on mute?
Mark Bunch: And our next question is a follow up from Donovan Schafer from Northland Capital. Please go ahead with your follow up.
Donovan Due Schafer: Sorry about that. Okay.
Donovan Due Schafer: And Mr. Shaffer is it possible your phone is on mute.
Donovan Due Schafer: So talking about organic growth, kind of the levers that you guys have to pull, you know, at this point, we've got the Williston, the scoop stack. Well, I guess, yeah, you've got I can't remember if you're in a position to, you know, accelerate on the gas or not, that may not be, but there's like puds there. And then you've got, you know, the Shavaroo.
Donovan Due Schafer: Sorry about that okay.
Donovan Due Schafer:
Donovan Due Schafer: So talking about organic growth kind of the levers that you guys have to pull them at this point, we've got the Williston and the Scoop stack well I guess, yeah, you've got some.
Donovan Due Schafer: Are there I can't remember if you're in a position to.
Donovan Due Schafer: To accelerate on the gas or not that may not be but but there's like pause there and then you've got you know the chaparral.
Donovan Due Schafer: So the question is, do you feel like there's a need to kind of add any more? Organic growth potential, you know, shoe M&A type stuff, or do you feel, given your size as a company and kind of what you see from, you know, flow funds, CapEx, and other things over, you know, the next, say, 12 months or so, do you feel like you're kind of pretty content or pretty good?
Donovan Due Schafer: Question is do you feel like there's a need to kind of add any more.
Donovan Due Schafer: Organic growth potential yeah, sure M&A type stuff or do you feel like given your size as a company and kind of what you see from them.
Donovan Due Schafer: Flow of funds Capex and other things over.
Donovan Due Schafer: Over the next say 12 months or so did you feel like you're kind of pretty content pretty good you've got.
Donovan Due Schafer: You've got everything you sort of need, unless something really opportunistic comes along. You know, I think you said in the Scoop Stack that you've seen more things come across your desk or more people kind of pitching things. So maybe if there's a great opportunity, but otherwise, in terms of what you need, [inaudible]
Donovan Due Schafer: Everything you sort of need unless something just really opportunistic comes along.
Donovan Due Schafer: You know I think you've said in the scoop stack, you've seen more things come across your desk or more people kind of pitching things. So maybe if there's a great opportunity, but otherwise in terms of what you need in your portfolio.
Donovan Due Schafer: For any type of organic growth potential or do you think using more or is it just kind of.
Donovan Due Schafer: If you sat there now.
Kelly W. Loyd: Hey, thanks Donovan, this is Kelly. The answer is, we had a definite focus to make sure we added that arrow to our quiver, right? And we've, like I said, we've come a long way to accomplishing that. But along with everything else, you're never done.
Donovan Due Schafer: Hey, Thanks, Jonathan This is Kelly so.
Kelly: The answer is we had a a definite focus to make sure we added that arrow to our quiver right and we've like I said, we've come a long way to accomplishing that but along with everything else that you're never done. So if the next deal that comes along is pure PDP in it.
Kelly W. Loyd: So if the next deal that comes along is pure PDP, and it fits wonderful with our portfolio, then that's the deal we're going to do if it's highly accretive for us. If the next one comes along, and it does have an organic growth piece, we're certainly going to consider it. So again, it's like you said, if it's the right deal and it's really accretive for our shareholders, for sure. But I would say it's not as much of a push as it might have been prior to these last two acquisitions or partnerships. But it's certainly never off the table. How about
Kelly W. Loyd: And it fits wonderfully with our portfolio and that that's the that's the deals we're going to do if it's highly accretive for us.
Kelly W. Loyd: If the next one comes along and it does have an organic growth piece.
Kelly W. Loyd: We're certainly going to absolutely consider it so.
Kelly W. Loyd: Again, it's it's like you said if it's the the right deal and it's really accretive for our shareholders for sure. It is I would say, it's not as much of a push as it might've been a prior to these last two acquisitions or partnerships.
Kelly W. Loyd: But it certainly never off the table how about that.
Donovan Due Schafer: Okay, that's good. Um, and kind of related to this, um, you, I think Mark made the comment that, um, Unknown Attendee, Ryan Stash, Brandi Hudson, Bruce Brown, Unknown Attendee, Ryan Stash, you know, that's just sort of the type of thing you can't really comment on. I know you guys place dividend protection first, in any case.
Speaker Change: Okay. That's good.
Donovan Due Schafer: And kind of related to this.
Donovan Due Schafer: Yeah, I think mark made the comment that.
Donovan Due Schafer: With Shaffer route and maybe it was also a reference to the scoop and stack, but just with those.
Donovan Due Schafer: The combination of those that's extended the dividend helps the dividend coverage for a decade or more or something like that.
Donovan Due Schafer: Curious if there's any kind of quantification you could give I mean I could ask it in the form of like G was could you do a dividend increase or something but that's.
Donovan Due Schafer: You know that's just sort of the type of thing you can't really comment on I know you guys place dividend protection first in any case. So is there any kind of quantification or analysis or a sense yet.
Donovan Due Schafer: And maybe now is talking about shopper at from this kind of systematic participation standpoint, do you have an internalized sense of how much how many extra years. These have gotten your or you know a stress test test case, where you say you know what you think you have the dividend covered as it is for.
Donovan Due Schafer: So is there any kind of quantification or analysis or a sense that, you know, maybe now it's talking about Chabarro from this kind of systematic. Unknown Attendee, Ryan Stash, Brandi Hudson, Bruce Brown,
Donovan Due Schafer: X number of years is there any color or anything you can give there that'd be helpful.
Ryan Stash: Yeah, I mean, so this is Ryan Donovan. Yeah, look, I mean, I don't think we can comment specifically on, you know, as you mentioned, long-term sort of guidance here. But what I will tell you is, obviously, you can look at the assets themselves and how much cash flow they bring, and you can sort of model out how much we think should remain in the future. So from there, you can obviously see quite a bit of dividend coverage, you know, I think we're looking over at least the near term, you know, we're going to generate a good amount of cash flow, and we have potential uses, right?
Speaker Change: Yeah, I mean, so as Ryan Todd then yeah look I mean, I don't think we can comment specifically on you know as you mentioned.
Ryan Stash: Long term sort of guidance here, but what I will tell you is you know.
Ryan Stash: Obviously, you can look at the assets themselves and how much cash flow. They bring and you can sort of model out how much we think shall remain in the future. So from there you can obviously see quite a bit of dividend coverage I think as we're looking over at least the near term we're going to generate a good amount of cash flow and we have potential uses right.
Ryan Stash: One of those measures is increasing the dividend. However, others are also reinvesting in the business, right? So now that we have this organic growth leg, we have more capital to put to work than we did in the past, right? Whereas in the past, we could have just returned it all to shareholders. Now we'll probably take some of that capital and put it back into the business. I'll let you know that at the board level, we certainly look at every single dollar we put to work and whether that makes sense to reinvest in the business, buy stock, or raise a dividend. Obviously, our goal is to keep it as a sustainable business at our base dividend or better for a long period of time.
Ryan Stash: Of those is increasingly evident however, others are also reinvesting in the business right now that we have this organic growth lag we have more capital to put to work than we have in the past right, whereas in the past we could've just return at all to shareholders now will probably take some of that capital and put it back into the business to keep sustaining.
Speaker Change: Our production level, so I know I'm not exactly answering your question but.
Ryan Stash: I'll, let you know that at the board level. We certainly look at every single dollar we put to work and whether that makes sense to reinvest in the business by stock raise the dividend. Obviously are our goal is to keep it for a sustainable business at our base dividend or better for a long period of time.
Donovan Due Schafer: And I suppose because you guys don't, you characteristically do significantly less hedging than a lot of other gas companies in practice. That whole pathway just sort of becomes accelerated with upward commodity price cycles. Is that correct?
Ryan Stash: And I suppose because you guys do you characteristically do.
Donovan Due Schafer: <unk> significantly less hedging.
Donovan Due Schafer: And then a lot of other kind of oil and gas companies.
Donovan Due Schafer: In practice.
Donovan Due Schafer: That all that whole pathway, just sort of becomes accelerated with part with upward commodity price cycles.
Donovan Due Schafer: Is that correct like you would in that situation, where you know if natural gas recovers materially or oil climbs you know in some material way that just puts you in a position to kind of double down where you think it makes sense and then.
Ryan Stash: Like you would, it's in that situation where, you know, if natural gas recovers materially or oil climbs, you know, in some material way, that just puts you in a position to kind of double down where you think it makes sense. And then, you know, add in, or layer in more assets that give you. The number of years of coverage you'd want, but then also at a higher dividend because you've gotten this almost like a windfall of sorts with what commodity prices may do on the upside. So, kind of the right way to think about it.
Ryan Stash: Add in layer in more assets that give you.
Ryan Stash: Kind of a number of years of coverage you'd once but then also at a higher dividend because like you you've gotten this almost like a windfall of sorts with with what commodity prices may do on the upside to kind of the right way to think about it.
Donovan Due Schafer: Yeah, I mean, except that I would say, you know, obviously, we're looking out multiple years. So let's take, for instance, you know, we saw gas, you know, not too long ago, run up past five, eight, $9, right? You saw us actually, we helped to pay down some of our debt repayment at that point, and we bought back quite a bit of shares. So, you know, again, the dividend is just one tool.
Speaker Change: Yeah, I mean, except that I would say you know obviously, we're looking out multiple years. So let's take for instance, when we saw gas you know not.
Donovan Due Schafer: Not too long ago run up past $589 right you saw its actually we hope to pay down some of our debt repayment at that point and we bought back quite a bit of share. So.
Donovan Due Schafer: The dividend is just one tool and so if we were to see if we saw a price recovery that we feel is sustained for a long period of time, then that's one thing, but if it's natural gas all it takes is really well now there's a warm winter and all bets are off right. So it's hard to really forecast gas at a $5 level for a long term, but if we were to get you know a run.
Donovan Due Schafer: And so if we were to see, you know, if we saw a price recovery that we feel is sustained for a long period of time, then, you know, that's one thing. But if it's, you know, natural gas, all it takes is, you know, a warm winter, and all bets are off, right? So it's hard to really forecast gas at a $5 level for the long term. But if we were to get, you know, a run again here, then we could look to, again, accelerate debt paydown, we could buy back some additional shares, and even look at acquisition opportunities, right? So again, it would be all of those things that would be examined.
Donovan Due Schafer: [inaudible]
Donovan Due Schafer: Again here, then we could look to again accelerate debt pay down we could buy back some additional shares even look at acquisition opportunities right. So again it would be all of those things would examine.
Unknown Executive: To follow on and carry on with where he's going with our base sort of commodity price expectations. You know, we've said many times we think we can absolutely have great dividend coverage for many years to come. With something above that, it is cash flow with which we will make a prudent decision at the time about what to do with it.
Speaker Change: I mean, just okay just to follow on.
Unknown Executive: And carry on with where he's going with our base sort of commodity price expectations. Yeah. We.
Unknown Executive: <unk> said, many times, where we think we can absolutely have great dividend coverage for many years to come with something above that it is a it is cash flow with which we will.
Unknown Executive: Make a prudent decision at the time what to do with it so.
Ryan Stash: Yeah, okay. That makes a lot of sense.
Speaker Change: Yeah, no. Okay that makes a lot of sense all right. Thank you guys for taking all the questions I appreciate it.
Unknown Executive: Terrific, yeah, thank you.
Donovan Due Schafer: All right. Thank you guys for taking all the questions. I appreciate it. Turek. Yeah.
Speaker Change: Yeah. Thank you.
Operator: And ladies and gentlemen, once again, in showing no questions at this time, I'd like to turn the floor back over to management for any closing remarks. We just want to say thank you all for joining us today.
Speaker Change: And ladies and gentlemen, once again and showing no questions. At this time I'd like to turn the floor back over to management for any closing remarks.
Unknown Executive: If you have any further questions, feel free to contact Brandi, who is our IR manager. So thank you all very much.
Operator: And ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for joining us. You may now disconnect your lines.
Operator: We just wanted to say thank you all for joining us today and.
Brandi Hudson: If you have any further questions bill.
Operator: Feel free to contact our Brandy, who is our IR manager. So thank you all very much.
Operator: And ladies and gentlemen, with that we'll conclude today's conference call. We thank you for joining.
Operator: You may now disconnect your lines.