Q2 2024 Matador Resources Co Earnings Call
Good morning, ladies and gentlemen. Welcome to the second quarter 2024 Matador Resources Company Earnings Conference Call. My name is Marvin Rivas, and I'll be serving as the operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question and answer session at the end of the company's remarks.
Marvin Rivas: My name is Marvin Rivas, and I'll be serving as the operator for today. At this time, all participants are in listen-only mode.
Marvin Rivas: We will facilitate a question-and-answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website for one year, as discussed in the company's earnings release issued yesterday. I'll now turn the call over to Mr. Mac Schmitz, Senior Vice President, Investment Relations, for Matador. Mr. Schmitz, you may proceed.
Speaker Change: As a reminder, this conference is being recorded for replay purposes, and the replay will be available on the company's website for one year as discussed in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Mac Schmitz, Senior Vice President, Investment Relations for Matador. Mr. Schmitz, you may proceed.
Mac Schmitz: Good morning, everyone. And thank you for joining us for Matador's second quarter 2024 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release. As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available.
Mac Schmitz: Thank you Marvin and good morning everyone and thank you for joining us for Matador's second quarter 2024 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures regularly used by Matador Resources in measuring the company's financial performance.
Speaker Change: Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release.
Mac Schmitz: Actual results and future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-K. In addition to our earnings press release, I would like to remind everyone that you can find a slide presentation in connection with the second quarter 2024 earnings release under the investor relations tab on our corporate website. And with that, I would now like to turn the call over to Mr. Joe Foran, our Chairman, Founder, and CEO. Joe? Thank you.
Speaker Change: As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecasts of future events based on the information that is now available.
Speaker Change: Actual results and future events could differ materially from those anticipated in such statements.
Speaker Change: Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q .
Speaker Change: In addition to our earnings press release, I would like to remind everyone that you can find a slide presentation in connection with the second quarter 2024 earnings release under the Investor Relations tab on our corporate website.
Speaker Change: And with that, I would now like to turn the call over to Mr. Joe Foran, our Chairman, Founder and CEO . Joe? Thank you, Mac, and welcome to the call. We appreciate you taking the time to tune in.
Joseph Wm. Foran: Thank you, Mac, and welcome to the call. We appreciate you taking the time to tune in. We are excited about this quarter, and we're even more excited about the quarters to come in the year ahead.
Speaker Change: We
Speaker Change: We're excited about this quarter. We're even more excited about the quarters to come in the year ahead. The teams have really worked hard, and I'd like to emphasize the amount of teamwork that's behind these numbers that everybody has done their part.
Joseph Wm. Foran: The teams have really worked hard, and I'd like to emphasize the amount of teamwork that's behind these numbers; everybody has done their part. And I want to invite all of you to come see us sometime to see the teamwork, have lunch with them or breakfast, and you can hear how they really do come together and work as a team, which I think has produced these good results. In particular, I have some slides that are on our website that relate to the press release itself and really encourage you to take a look at those. I think they help fill out the story.
Speaker Change: I want to invite all of you to come see us sometime to see the teamwork, have lunch with them or breakfast and you can hear how they
Speaker Change: All of these really do come together and work as a team, which I think has produced these good results.
Speaker Change: In particular, I have some slides that are on our website that connect to the press release itself and really encourage you to take a look at those. I think they help fill out the story.
Joseph Wm. Foran: When we went public in 2012, we were making about 3,300 barrels a day, and today we're over 95,000. So there's been consistent growth across that. It took time and a lot of extra effort by a lot of people, and I want to thank them and particularly our guys in the field. Subhasish Chandra, Benjamin Parham, George Yates, William Byerley, Tom Elsener, Glenn Stetson, Matador Resources Co. Right about 500 million of them are Matadors.
Speaker Change: When we went public in 2012, we were making about 3,300 barrels a day, and today we're over 95,000. So it's been consistent growth across that.
Speaker Change: Time and a lot of teamwork.
Speaker Change: and a lot of extra effort by a lot of people. And I want to thank them and particularly our guys in the field who
Speaker Change: It's like this past quarter in very hot weather, they've kept everything going, and in the cold weather, they're still out there getting it done.
Speaker Change: So, without that help carrying through...
Speaker Change: It would be difficult to sustain this. The net result is that we're reporting that we now have crude reserves of over
Speaker Change: Right about 500 million of Matador
Joseph Wm. Foran: And then Ameridev, if that closes with the customary contingencies and government approvals, we will be boosted to over $600 million. So things are on the right track. We anticipate that these next two quarters, there's a lot of work to be done. If the teams keep working as they have been, I'm confident I'll be here in 90 days telling you again about what a good quarter we have. If you like this last one, this next one should be better.
Speaker Change: And then Ameridev, if that closes with the customary contingencies and government approvals, we will be boosted to over $600 million.
Speaker Change: So things are on the right track. We anticipate these next two quarters. There's a lot of work to be done.
Speaker Change: If the teams keep working as they have been, I'm confident I'll be here in 90 days telling you again what a good quarter we have. If you like this last one, this next one should be better. And with that...
Joseph Wm. Foran: And with that, let me open the phone to questions. Subhasish Chandra, Benjamin Parham, George Yates, Glenn Stetson, Matador Resources Co. Meeting us in person to get a feel for the way we do things and the caliber of people I think is important, but I don't want to try to tell you how to do your job. I just want you to know you're welcome.
Speaker Change: Let me open the phone to questions.
Speaker Change: and try to help, but again, want y'all to know that y'all are welcome to come visit and meet with us, and of course,
Speaker Change: I think that for all the capital and all the technology this business requires, I still think it comes down to people.
Speaker Change: And meeting us in person to get a feel for the way we do things and the caliber of people I think is important, but I don't want to try to tell you how to do your job. I just want you to know you're welcome.
Marvin Rivas: Marvin, we're ready for Q&A. Thanks. Thank you. At this time, we'll conduct a question-
Marvin Rivas: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question. Again, please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gabe Daoud of TD Cowen. Your line is now open.
Speaker Change: Marvin, we're ready for Q&A. Thanks.
Marvin: Thank you. At this time, we'll conduct a question and answer session.
Speaker Change: As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: Ladies and gentlemen, due to time constraints, we ask that you please limit yourself to one question. Again, we ask you to please limit yourself to one question. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Gabe Daoud of TD Cowen. Your line is now open.
Gabriel J. Daoud: Thanks. Hey, morning, everyone.
Gabriel J. Daoud: Thanks. Hey, morning, everyone. Thanks for taking my questions. Let's hope we can maybe, Joe and team, just start with trajectory from here.
Speaker Change: Maybe for Matador standalone, it looks like 50% or so of the activity is
Speaker Change: done in the first half and the other 50% more or less in the second half. So just curious.
Speaker Change: What's maybe driving the big step up in expectations on 4Q volumes? Is it well at performance or maybe better base to client? Just kind of curious what's maybe behind the big step up in 4Q.
Gabriel J. Daoud: Thanks for taking my questions. Maybe Joe and the team can just start with trajectory from here. Maybe for Matador standalone, it looks like 50% or so of the activity is done in the first half, and the other 50%, more or less, in the second half. So just curious, what's maybe driving the big step up in expectations on 4Q volumes? Is it well-performing at performance, or maybe better base declines? Just kind of curious what's maybe behind the big step up in 4Q?
Brian J. Willey: Hey, Gabe. We really appreciate that question. This is Brian Willey, Vice President and Chief Financial Officer. And I think you've hit it on.
Speaker Change: Hey Gabe, we really appreciate that question. This is Bryan Willey.
Brian J. Willey: Thank you, Vice President and Chief Financial Officer.
Brian J. Willey: I mean, it's really the work of the team. Jill started and talked about that from the beginning. And so it's the great teamwork and how the schedule works out that Tom does a really great job with doing the drill schedule and constantly trying to make it better and optimize that schedule. So we had a really great second quarter, and as we look forward into the future, the third quarter and fourth quarter, you're exactly right. And that's even before AmeriDev.
Speaker Change: And I think you hit it on. I mean, it's really the work of the team. Jill started and talked about that from the beginning. And so it's the great teamwork and how the schedule works out. But Tom does a really great job with doing the drill schedule and constantly trying to make it better and optimize that schedule.
Speaker Change: A really great second quarter, and as we look forward into the future, third quarter and fourth quarter, you're exactly right, we increase in the third quarter, as Joe said earlier, and then we expect it to continue to increase and have that step up in the fourth quarter.
Brian J. Willey: I think Joe mentioned AmeriDev; we're extremely excited about that closing and having the opportunity to do that, of course, subject to regulatory approvals and the other customary closing conditions, but excited to integrate those assets. I think one of the great stories of this quarter and the second quarter is the Dagger Lake Southwells, which I'll pass it off to Chris to talk about in a minute, but bringing those on efficiently and doing a very good job and bringing them on a little bit sooner than we even expected and just really integrating those advanced assets, I think it shows how consistent we are in integrating the assets and being able to do that over time.
Speaker Change: And that's even before AmeriDev. I think, you know, Joe mentioned AmeriDev, which we're extremely excited about that closing and having the opportunity to do that, of course, subject to regulatory approvals and the other customary closing conditions. But excited to integrate those assets. I think one of the great stories of this quarter and the second quarter is
Speaker Change: The Dagger Lake Southwells, which I'll pass it off to Chris to talk about in a minute, but bringing those on efficiently and doing a very good job and bringing them on a little bit sooner than we even expected.
Speaker Change: And it's really integrating those advanced assets. I think it shows how consistent we are.
Speaker Change: in integrating the assets and being able to do that over time. And we expect the same thing with AmeriDev, that we'll be able to integrate those assets and be consistent and integrate those into our program. I'm looking forward to that. So I'm going to pass it over to Chris. He can talk a little bit about the Fagler Lake South Wells and some of the efficiencies we have with those.
Brian J. Willey: And we expect the same thing with AmeriDev, that we'll be able to integrate those assets and be consistent and integrate those into our program. I'm looking forward to that. So I'm going to pass this over to Chris. He can talk a little bit about the Dagger Lake Southwells and some of the efficiencies we have with those.
Christopher P. Calvert: Yeah, hi Gabe, this is Chris Calvert, Executive Vice President and Chief Operating Officer. Brian highlighted teamwork, and I think, you know, we can discuss on this call, you know, reduced D&C costs per foot, I'm sure people might ask about OFS pricing, but I think while those are great results, I think the underlying story is just everybody doing the small things and just kind of pushing on the rock in kind of their respective manners. And I think Dagger Lake South is really kind of the prime example of all the culmination of those things.
Speaker Change: Yeah, hi Gabe, this is Chris Calvert, Executive Vice President, Chief Operating Officer.
Christopher P. Calvert: Brian highlighted the teamwork and I think, you know, we can discuss on this call, you know, reduced D&C costs per foot, you know, I'm sure people might ask about OFS pricing, but I think...
Speaker Change: While those are great results, I think the underlying story is just everybody doing the small things and just kind of pushing on the rock in their respective manners. And I think Dagger Lake South is really kind of the prime example of all the culmination of those things. You look at it from an operational perspective.
Speaker Change: We had talked about our pilot test for our first trimal frac completion process, and Dagger Lake South was a perfect example of that to where we had a six well pad that yielded about a $350,000 savings per well, but once again, that really could not have been done without the teamwork and the groups of
Christopher P. Calvert: But once again, that really could not have been done without the teamwork and the groups of the production team, the facilities team working with recycled water, the operations team planning with the land group for right away and surface use agreements, a lot of things that had to come together to yield that $350,000 savings per well. And on top of that, the added benefit of getting accelerated production just due to reduced days on well, you know, the simulfrac and trimulfrac efficiencies that those pull forward. You're doing trimulfrac yields about a 50% reduction in completion time on well. And so I think, you know, the end result being we have wells online faster, but I think, you know, we don't want to forget or understate the teamwork that goes into the results of those processes.
Speaker Change: The production team, the facilities team working with recycled water, the operations team planning with the land group.
Speaker Change: For more information, please visit www.FEMA.gov
Speaker Change: You're doing trimal frac yields about a 50% reduction in completion time on well. And so I think, you know, the end result being we have wells online faster, but I think, you know, we don't want to forget or understate the teamwork that goes into the results of those processes.
Scott Hanold: Thank you. One moment for our next question. Our next question comes from the line of Scott Hanold of RBC Capital Markets. Your line is now open.
Speaker Change: Our next question comes from the line of Scott Hanold of RBC Capital Markets. Your line is now open.
Scott Hanold: Good morning. Hey, you know, obviously you've had some pretty good success with both, well, with the two large pads you did with the advance acquisition, the Margarita and Dagger Lake. Just kind of curious if you can give us some color on, you know, really it's a two-part question here. One, the path forward on that set of assets, but number two, do you like that Cube development strategy? Is that something that you think you could apply to a larger portion of your acreage?
Scott Hanold: Thanks. Good morning.
Scott Hanold: Hey, you know obviously you've had some pretty good success with both well with the two large pads You did with the advanced acquisition the margarita and the digger like Just kind of curious if you can give us some color on
Speaker Change: You know, really, it's a two part question here. One, the path forward on that set of assets. But number two, do you like that cube development strategy? Is that something that you think you could apply to a larger portion of your acreage position?
Tom Elsener: Hey, it's Scott Mourning. This is Tom Elsener.
Tom Elsener: Thank you for the question. Obviously, we're very proud of the Dagger Lake South and the Margarita properties. Their results have been excellent and have exceeded all of our expectations. We expect to drill another dozen or so wells on the advanced properties in the back half of this year. We'll have a couple of rigs heading out there in the third quarter to drill some really nice two-and-a-half mile long laterals.
Scott Mooring: Hey, Scott. Good morning. This is Tom Elsener. Thank you for the question. Obviously, we're very proud of the Dagger Lake South and the Margarita properties. Their results have been excellent and have exceeded all of our expectations.
Scott Mooring: We expect to drill another dozen or so wells on the advanced properties in the back half of this year. We'll have a couple of rigs heading out there in the third quarter to drill some.
Tom Elsener: We definitely like getting these wells drilled all at the same time, but we will work very closely with our midstream team and with Glenn Stetson. As Chris mentioned, all the teamwork and coordination to get these wells online. These are very prolific targets, and I would definitely have to give my hats off to Ned Frost and the geoscience team for identifying targets like the third bone strain carbonate. Transcribed by https://otter.ai. Those wells that I mentioned will most likely be online in the first half of 2025, so more to come on exactly how those do, but again, we expect very consistent results with the strong oil cuts kind of in the mid- And we've seen the great IPs on Dagger Lake South, and we expect to see the same type of results on this next batch of wells. Yeah, hey, Scott.
Speaker Change: Some really nice two and a half mile long laterals. We definitely like that these, getting these wells drilled kind of all at the same time, but we all worked very closely with our midstream team and with Glenn Stetson.
Speaker Change: As Chris mentioned, all the teamwork and coordination to get these wells online, these are very prolific targets and I would definitely have to give my hats off to Ned Frost and the geoscience team for identifying targets like the third bone strain carbonate.
Speaker Change: This is something that we've transferred this knowledge between the different groups, and we expect to drill these wells kind of all throughout the advanced properties.
Marty: Marty, those roles that I mentioned will most likely be online in the first half of 2025, so some more to come on, exactly how those do. But again, we expect very consistent results with the strong oil cuts kind of in the mid-80s and low water to oil ratios, and we've seen the great IPs on the deadly south, and we expect to see the same type of results on this next batch of wells. Yeah, hey, Scott, this Glenn. I just want to kind of pile on to what Tom said, and when we think about Cube Development and, you know, Dagger Lake South was a pretty good example of having to consider, you know, all the different factors when we're going into it. And again, that careful coordination and planning, when we purchased the advanced assets a year ago, we immediately put plans into place with Pronto to go out and build the connector from the Pronto system down to the Dagger Lake South properties, and then the connector that goes from Pronto over to San Mateo. And really, the value of all that was exemplified this quarter, as we turned on this 21 wells, and we were making around 30 million cubic feet a day of gross, gross gas.
Speaker Change: Those walls that I mentioned will most likely be online in the first half of 2025.
Speaker Change: More to come on exactly how those do, but again, we expect very consistent results with the strong oil cuts in the mid-80s and low water-to-oil ratios. We've seen the great IPs on the Dagger Lake South, and we expect to see the same type of results on this next batch of wells.
Glenn W. Stetson: Scott, this is Glenn. I just want to kind of pile on top of what Tom said. And when we think about cube development and, you know, Dagger Lake South is a pretty good example of having to consider all the different factors when we're going into it. And again, that careful coordination and planning. When we purchased the advanced assets a year ago, we immediately put plans into place with Pronto to go out and build the connector from the Pronto system down to the Dagger Lake South properties and then the connector that goes from Pronto over to San Mateo.
Glenn W. Stetson: Yeah, hey, Scott, this is Glenn. I just want to kind of pile on to what Tom said, and when we think about cube development and, you know, Dagger Lake South was a pretty good example of
Scott: of having to consider all the different factors when we're going into it. And again, that careful coordination and planning. When we purchased the...
Speaker Change: Advanced Assets a year ago, we immediately put plans into place with Pronto to go out and build the connector from the Pronto system down to the Dagger Lake South properties and then the connector that goes from Pronto over to San Mateo
Glenn W. Stetson: And really, the value of all that was, was exemplified this quarter, as we turned on those 21 wells, and we were making around 30 million cubic feet a day of gross, gross gas. All that gas went to the Marlin plant, and there were days where we were exceeding, you know, the capacity of that plant, and we utilized the connector to send those volumes to San Mateo. All that resulted in days that were close to San Mateo and Pronto, and coordination between all the groups to be able to execute on a project.
Speaker Change: And really, the value of all that was exemplified this quarter as we turned on those 21 wells and we were making around 30 million cubic feet a day of gross.
Scott: All that gas went to the Marlin plant, and there were days where we were exceeding, you know, the capacity of that plant. We utilized the connector to send those volumes to San Mateo. All that resulted in days that were closed to San Mateo and Pronto, processing close to half a BCF a day of gas. And, you know, not to be ignored is that we were also making, you know, thousands of barrels of oil, the day, close to 20,000 barrels of oil, and 70,000 barrels of water. And so, you know, these are things when you're, when you're developing on a cube basis, that need to be, you know, planned out meticulously. And I think that our team has done a fantastic job with the careful coordination between all the groups to be able to execute on a project of that scale.
Speaker Change: gross gas
Speaker Change: All that gas went to the Marlin plant, and there were days where we were exceeding the capacity of that plant, and we utilized the connector to send those volumes to San Mateo. All that resulted in days that were close to San Mateo and Pronto.
Speaker Change: processing close to half a BCF a day of gas and so, you know, and not to be ignored is that we were also making, you know,
Speaker Change: [inaudible]
Speaker Change: , to be able to execute on a project of that scale.
Marvin Rivas: Thank you. We'll move on to our next question.
Joseph Wm. Foran: I just, this is Joe. I just like to add that our midstream business has really been enabled because they were there ready to go when the wells were ready to go. And they made it work, even though they were approaching the nameplate capacity and got all that oil, gas, and water properly sold, disposed of, and I give a lot of credit to them, Justin and others. Processing, Justin, you want to say what y'all were doing during that period? Yes, sir.
Joe: I just, this is Joe, I just like to add to that, our midstream business has really enabled, because they were there ready to go when the wells were ready to go, and they made it worse, even though they were approaching the nameplate capacity, and get all that oil, gas, and water properly sold.
Speaker Change: Thank you. We'll move on to the next question.
Speaker Change: I'd just, this is Joe, I'd just like to add to that, our midstream business has really enabled, because they were there ready to go when the wells were ready to go, and they made it work, even though they were approaching the name plate capacity.
Justin: And, and dispose of, and give a lot of credit to the, to the Justin and others processing. Justin, you want to say what y'all were doing during that period.
Speaker Change: and get all that oil, gas and water properly sold and disposed of and give a lot of credit to them, Justin and others.
Speaker Change: Processing, Justin, you want to say what y'all were doing during that period?
Zach Forum: Thank you. One moment for our next question. Again, as a reminder, please limit yourself to one question due to time constraints. Transcribed by https://otter.ai. Our next question comes from the line of Zach Forum of JPM. Your line is now open.
Justin: Yes, sir. Senior Vice President of Operations Midstream, Justin. So, as Glenn said, we are filling up Marlin, and for the last 45 days or so, we've consistently exceeded the nameplate of that facility. So we're very excited about that. And then utilize the connector line to swing the gas over to the Black River as well. And so we look forward to the rest of the year and the development plans and approaching nameplate on both of those facilities. And then also setting water gathering records on the St. Mateo side as well, as we've turned a number of record number wells into line this quarter.
Justin: Yes, sir.
Justin: Senior Vice President Operations Midstream, Justin. So, at Glen said, we were filling up Marlin, and for a lot of 45 days or so, we've consistently exceeded the nameplate of that facility, so we're very excited about that, and then utilize the connector line to swing the gas over to the block river as well. And so, we look forward to the rest of the year in the development plans and approaching namesplate on both of those facilities, and then also setting water gathering records on the same Mateo side as well. As we've turned a number of, a number of wells to inline this quarter.
Justin: Yes, sir. Senior Vice President Operations Midstream, Justin. So as Glenn said, we were filling up Marlin and for the last 45 days or so, we've consistently exceeded the nameplate of that facility. So we're very excited about that. And then utilize the connector line to swing the gas over to the Black River as well. And so we look forward to the rest of the year and the development plans and approaching nameplate on both of those facilities.
Speaker Change: And then also setting water gathering records on the St. Mateo side as well as we've turned a record number of wells to in line this quarter.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Again, as a reminder, please limit yourself to one question due to time constraints.
Speaker Change: Our next question comes from the line of Zach Farrum of JPM. Your line is now open.
Zach Farrum: Thanks for taking my question. You took down your DNC per foot guidance to 960 per foot at the midpoint. That's down about 5% versus prior guidance and over 10% year-over-year. Can you just talk about the drivers of that decline in DNC cost? You know, what's the split of cost deflation versus efficiency gain?
Christopher P. Calvert: Yeah, hi Zach. This is Chris Calvert again.
Christopher P. Calvert: I'll take that. Thank you for noticing. Obviously, we're extremely proud of that revision down in the second half of the year down to the kind of the 960 number that we're talking through. As far as you know, the drivers behind that, I think it's still kind of the story that we've spoken about in the last few quarters. It's sustainable efficiencies and approved processes, you know, as we look at simulfrac, trimulfrac, spending fewer days drilling on wells, U-turn savings, things of that like that.
Zach Farrum: Yeah. Hi, Zach. This is Chris Calvert again. I'll take that.
Christopher P. Calvert: Thank you for noticing, obviously, we're extremely proud of that revision down in the second half of the year, down to the 960 number that we're talking through. As far as the drivers behind that, I think it's still kind of the story that we've spoken to on the last few quarters.
Christopher P. Calvert: It's Sustainable Efficiencies in Approved Processes. You know, as we look at SimulFrec, TrimulFrec,
Christopher P. Calvert: We are focused on sustainable process improvements that we can carry forward regardless of OFS pricing environments. Now, moving into the second half of this year, we do feel like we are in a more competitive OFS market. There have been some services that have become a little bit more competitive from a pricing standpoint. However, a lot of the drivers that push that are efficiencies and win-win situations that we have between ourselves and our vendors.
Christopher P. Calvert: Spending less days drilling on wells, U-turn savings, things of that like. We are focused on sustainable process improvements that we can carry forward regardless of OFS pricing environments.
Christopher P. Calvert: Now, moving into the second half of this year, we do feel like, you know, we are in a more competitive OFS market. There have been some services.
Christopher P. Calvert: that have become a little bit more competitive from a pricing standpoint. However, a lot of the drivers that push that are efficiencies and win-win situations that we have between ourselves and our vendors.
Christopher P. Calvert: When you look at something like Simofrac and Trimofrac, this is truly a win-win for us and our service providers, whether it's Halliburton or Patterson next year, where when we are able to go out on Simofrac or Trimofrac wells, we are getting 12-18 stages per day. That's really a win-win for both providers. That just continues that efficiency story for both us and our service providers. U-turns are the same story. We're spending less time drilling these wells.
Christopher P. Calvert: You know, you look at something like simulfrac and trimulfrac.
Christopher P. Calvert: This is truly a win-win for us and our service providers, whether it's Halliburton or Patterson vis-a-vis next year.
Christopher P. Calvert: to where when we're able to go out and simulfract or trimulfract wells, we are getting 12 to 18 stages per day, and so that's really a win-win for both providers.
Christopher P. Calvert: And that just kind of continues that efficiency story for both us and our service providers.
Christopher P. Calvert: On the third U-turn well that we drilled, we drilled it in about 50% of the time as the average of our first two. You look at drivers that are really pushing these costs down. While we believe in a deflationary OFS market in the second half of this year, the majority of it is driven by efficiencies. Those efficiencies that are pulled forward by the operations team, once again, those really couldn't be possible without the work of the land teams and the geology team identifying different subsurface targets. We get to tell the good story of the DNC cost per foot going down, but it really isn't possible without the work of everybody else that's pushing on the process.
Christopher P. Calvert: U-turns are the same story. We're spending less time drilling these wells. On the third U-turn well that we drilled,
Christopher P. Calvert: We drilled it in about 50% of the time as the average of our first two. And so you look at drivers that are really pushing these costs down and while we are what we believe in a kind of a deflationary OFS market.
Christopher P. Calvert: in the second half of this year.
Christopher P. Calvert: The majority of it is driven by efficiencies, and those efficiencies that are pulled forward by the operations team.
Christopher P. Calvert: Once again, those really couldn't be possible without the work of the land teams.
Christopher P. Calvert: You know, the geology team of identifying different subsurface targets. And so it's really, we get to tell the good story of the DNC cost per foot going down, but it really isn't possible without the work of everybody else that's kind of pushing on the process.
Joseph Wm. Foran: You know, Chris, that's a good answer. There are two things I want to emphasize. When you talk about efficiencies, a lot of what that is is saving time on the well, saving days. Every time you save a day, you save money. They've enabled a lot of that and set you up to set your 300 grilling records. And the second part of that teamwork is that, again, the midstream is there to assure flow assurance and that when you're ready to go online, they're ready to go online.
Christopher P. Calvert: You know, Chris, that's a good answer. There are two things I want to emphasize is your MaxComm room is helping when you talk about efficiencies, a lot of what that is is saving time on the wells, saving days on wells. Every time you save a day, you save money.
Speaker Change: They've enabled a lot of that and set help you set your 300 grilling records in the second
Speaker Change: Part of that teamwork is that, again, the midstream is there to assure flow assurance.
Joseph Wm. Foran: And working between Patterson and the other vendors we have on the next tier, as you mentioned, the more we work with them, there's a joint, we're not trying to beat them down on price, we are looking for ways to save time and make more effective whatever work that they're doing. And so there's real collaboration, which we hope to keep expanding. Yeah, I think that's, that's, that's perfect.
Speaker Change: and that when you're ready to go online, they're ready to go online.
Speaker Change: and working between Patterson and
Speaker Change: And the other vendors we have next tier, as you mentioned, is more we work with them. There's a joint. We're not trying to beat them down on price. We are looking for ways to save time and make
Speaker Change: More effective whatever work that they're doing and so there's real collaboration Which we hope to keep expanding
Christopher P. Calvert: Yeah, I think that's that's the perfect color. I think, you know, if you Zach, if you refer to slide I, you know, we talked to our, excuse me, slide H, we talked about MaxCom, the benefits of MaxCom, and the inception since that was kicked off in 2018. You know, the drilling records that have come from that room, but not only that improved targeting, which ultimately yields better productivity, better well recoveries, and improved processes that reduce days on well from the MaxCom room.
Speaker Change: Yeah, I think that's that's that's perfect color. I think, you know, if you Zach, if you refer to slide I
Speaker Change: We talked to our, excuse me, Slide H, we talked to the MaxCom, you know, the benefits of MaxCom and the inception since that was kicked off in 2018.
Speaker Change: You know, the drilling records that have come from that room, but not only that, improved targeting which ultimately yields better productivity, better well recoveries.
Speaker Change: improved processes that reduce days on well from the maxi-comm room. And not only that, just as a training tool to where when we have young engineers and geologists that are coming to the company, potentially out of college, they're working side by side, seven days on, seven days off.
Christopher P. Calvert: And not only that, just as a training tool where when we have young engineers and geologists that are coming to the company, potentially out of college, they're working side by side, seven days on, seven days off, you know, working through well planning, working through steering to make these wells better targets, and ultimately leading to better recoveries. And then after a year or two years, those asset, excuse me, those geologists and engineers, join asset teams. And so they have built in the comradery of working side by side for a year or two years; it just continues to improve the efficiency and the communications between the team.
Speaker Change: working through well planning, working through steering to make these wells, to target these wells better and ultimately lead to better recoveries.
Speaker Change: And then after a year or two years, those asset, excuse me, those geologists and engineers join asset teams. And so they have built-in comraderies of working side by side for a year or two years that just continues to improve the efficiencies and the communications between the teams.
Neal David Dingmann: Our next question comes from the line of Neal Dingmann of Truce. Your line is now open.
Speaker Change: Our next question comes from the line of Neal Dingmann of Truth. Your line is now open.
Neal David Dingmann: Morning, Joan team. How are you doing? Hey, Neal. Hey, Neal.
Joseph Wm. Foran: Hey, Joe, quick important one. You didn't mention if we come up there to see you all, if you'll be paying for breakfast. I wanted to get that out of the way first. I just wanted to make sure you're going to be paying for breakfast when we come up to visit you. I thought that would be important to get out of the way.
Neal David Dingmann: Morning, Joan team. How you doing?
Neal David Dingmann: Hey Neal. Hey Neal.
Neil: Hey Joe, quick important one. You didn't mention if we come up there to see you all if you'll be paying for breakfast. I wanted to get that out of the way first.
Neil: I just wanted to make sure you were going to be paying for breakfast when we come up to visit you. I thought that would be an important one to get out of the way for.
Joseph Wm. Foran: That depends on how many questions you ask. Joe, my question is about the midstream position. It's, you know, now that you've had pinion and you know, you've got San Mateo Prado advanced. I would love to hear your guys' take as far as how much more build out you all think you need in the area and, you know, now that you've added pinion, does that sort of complete the full takeaway position in the area? Now, I don't think so.
Neil: That depends on how many questions you ask. Joe, my question is around the midstream position. You know, now that you've had Pinion and you've got San Mateo Prado Advanced,
Speaker Change: I would love to hear you guys take as far as how much more build out you all think you need in the area and you know now that you've added pinion does that sort of complete the full take away position in the area?
Joseph Wm. Foran: We're going to be open to whatever makes sense or makes money and that enhances the system we already have. I mean, I don't think we'll put a loan pipeline up in Chavis County or something like that where we don't have anything near it. It'll be expected to be near our properties and where we can fold that in to make this system where, like these connectors, give you more options, and the ability to offload from one plant to another just makes us, Subhasish Chandra, Benjamin Parham, George Yates, William Byerley, Tim Rezvan, John Freeman, on what we do.
Joseph Wm. Foran: Now, I don't think so. I know we're going to be open to whatever makes sense or makes money. And
Neil: that
Speaker Change: Enhances the system we already have.
Speaker Change: I mean, I don't think we'll put a loan pipeline up in Chavis County or something that we don't have anything near. It'll be expected to be near our properties and where we can fold that in to make this system where, just like these connectors.
Speaker Change: give you more options and the ability to offload from one plant to another just makes us, that's much more effective. We're going to be careful.
Joseph Wm. Foran: And, and, you know, Greg Krug has done, I think, a magnificent job. If you remember, Neal, back when we were going public, we were asked on the road show all the time if we had any takeaway problems, and that was primarily in the Eagleford at the time, but everywhere we went, we got asked that question, so it meant that others were having that problem. And we said, one night at dinner, we said, what are we going to do about that? It seems like others are having problems.
Speaker Change: on what we do. And, and, you know, Gregg Krug has done I think, a magnificent job. If you remember, Neal, back when we were going public, we were asked
Neal: on the road show all the time.
Neal: Are we having any takeaway problems? And that was primarily in the Eagleford at the time, but everywhere we went we got asked that question, so it meant that others were having that problem.
Neal: One night at dinner, we said, what are we going to do about that? It seems like others are having problems.
Joseph Wm. Foran: And the suggestion was made to talk to Gregg again, who's been a friend for a long time, and see if we can get him to come over and run that part of the show for us. And he did, and he's put together a great group, and not just in the midstream business, but also in measurement, and you know, run a 24-7 measurement room and helps out with the auditing of various accounts and finding lost barrels, a big contributor in many respects. And through him, he's been the strategic guy that says. He'd recommend this and that, and it comes before, again, the executive team and then possibly the board, depending on the size.
Gregg Krug: And the suggestion was made was go talk to Gregg again, who's been a friend for a long time, and see if we can get him to come over and run that part of the show for us, and he did, and he's put together a great group, and not just in the
Gregg Krug: midstream business, but also
Gregg Krug: in measurement.
Gregg Krug: And, you know, run a 24-7 measurement room.
Gregg Krug: and helps out with the auditing of various accounts and finding lost barrels. A big contributor in many respects and through him, he's been the strategic guy that says,
Speaker Change: He'd recommend this and that, and it comes before, again, the executive team, and then possibly the board, depending on size.
Joseph Wm. Foran: And that's put us in a position, just like Chris saves days on wells with drilling, we save days not having to wait for the midstream connections. I think we're very open and following the drill bit where if we open up a new area to drill and the like, and we look at the pipeline situation, and we think we can enhance that area, we'll go and do it. We don't have any limits and say that's all you're ever going to get, Gregg, enough that he's put together a great team and where we're drilling, we expect to have a midstream presence. I hope I said that right, Gregg.
Speaker Change: And that's put us in a position, just like Chris saves days on wells with drilling, we save days not having to wait for the midstream connections.
Speaker Change: I think we're very open and following the drill bit where we open a new area to drill and the like.
Speaker Change: We look at the pipeline situation and we think we can
Speaker Change: enhance that area, we'll go and do it. We don't have any limits.
Speaker Change: And so that's all you're ever going to get, Gregg, enough that he's put together a great team.
Neal David Dingmann: And where we're drilling, we expect to have a midstream presence. I hope I said that right, Gregg, is that? Yeah, thanks, Joe. Yeah, I, Neal, that's a good question. I think that, you know,
Gregg Krug: Thanks, Joe. Yeah, I Neal, that's a good question. I think that, you know, in order to keep up with the drill bit, we're going to have to continue to grow our midstream presence. It's continually growing with good growth every year, and we're going to have to keep up in order to have adequate and flow assurance. And so that is, that's the primary goal is to always stay on top of that, stay in front of it, actually. So that's what we're going to be focusing on is continually looking at that opportunity.
Neal: In order to keep up with the drill bit, I mean, we're going to have to continue to grow our midstream presence out there.
Speaker Change: It's continually growing with good growth every year and we're going to have to keep up in order to have adequate inflow assurance take away.
Speaker Change: And so that is, that's the primary goal, is to always stay on top of that, stay in front of it, actually.
Speaker Change: and so that's what we're going to be that's what we're going to be focusing on is is continually looking at that at opportunities well I have one other thing our third third party participants has
Joseph Wm. Foran: Well, I have one other thing. Our third party participants has Subhasish Chandra, Benjamin Parham, George Yates, Glenn Stetson, Matador Resources Co. Subhasish Chandra, Benjamin Parham, George Yates, Glenn Stetson, Matador Resources Co. Subhasish Chandra, Benjamin Parham, George Yates, Glenn Stetson, Matador Resources Co. And with that, that is the benefit as far as to the third party as well, is that they'll get the benefit of that type of mentality. Unknown Speaker,
Speaker Change: has really continued to grow.
Speaker Change: And so that's made it more likely where they're drilled, it's not just our drill bit, but where they're drilled, we want to be sure we're servicing them properly. Well, absolutely, and that's one thing we try to emphasize to third parties as well, is that
Speaker Change: We're going to be there for them as well, because we have a producer mentality when it comes to shutting off production and curtailing production is just not an option for us.
Speaker Change: That's not what we do. We want to stay in front of this. And with that, that is the benefit as far as to the third party as well, is that they'll get the benefit of that type of mentality.
Glenn W. Stetson: Yeah, Neal, Glenn, Stetson, and I would just, you know, continue to pile on for what Joe and Gregg said and say two things. One is that we're continuing to be focused on building this new 200 million cubic feet a day cryogenic gas processing facility at the Marlin plant. That project remains, you know, on time and on budget and looking forward to the first half of next year, getting that plant online. And I do commend the teams for their efforts thus far in the year.
Speaker Change: Yeah, I'd...
Neal David Dingmann: Neil, this is Glenn Stetson, and I would just, you know, continue to pile on for what Joe and Gregg said and say two things. One is, you know, we're continuing to be focused on building this new 200 million cubic feet a day cryogenic gas processing facility at the Marlin plant.
Speaker Change: That project remains on time and on budget, and looking forward to the first half of next year, getting that plant online. And I do commend the teams of the efforts.
Glenn W. Stetson: They built over 50 miles of pipe and compressor stations to accommodate the production from a lot of these new wells that were turned on this last quarter. And then, you mentioned Pinion; I just wanted to make sure that it wasn't overlooked that we highlighted in the release that Ameridev themselves have approximately 135 miles of pipeline of infield gathering that they have built themselves, which was, you know, a similar philosophy to Matador in controlling a lot of that gathering and processing.
Speaker Change: You know, thus far in the year, they've built over 50 miles of pipe and compressor stations to accommodate the production from a lot of these new wells that were turned on this last quarter.
Glenn W. Stetson: So they, That 135 miles of height is crude water and gas gathering and high-pressure gas pipelines for gas lift. So I think it just further exemplifies the strategic nature of the midstream business, and Ameridev has a good chunk of it too.
Speaker Change: And then, you know, also, you mentioned Pinion. I just wanted to, not to be overlooked, we highlighted in the release that Ameridev themselves have approximately 135 miles of pipeline of infield gathering that they have built themselves.
Speaker Change: which was a similar philosophy to Matador in controlling a lot of that gathering and processing.
Speaker Change: They, you know, that 135 miles of high...
Speaker Change: Crewed Water and Gas Gathering and High Pressure Gas Pipelines for Gas Lift. So, I think...
Speaker Change: It just further exemplifies the strategic nature of the midstream business and AmeriDev has a good chunk of it too.
Gregg Krug: Yeah, yeah, this is Greg again.
Gregg Krug: Yeah, yeah, this is Greg. Again, I do want to kind of pile on what Joe mentioned as far as the measurement audit group that we have. That's something that some companies don't have, and that's something that we've taken very seriously. And we've been able to, we've been able to find millions of dollars over the years Unknown Speaker That probably would have just been unnoticed and lost because we audit.
Speaker Change: Yeah, yeah, this is Gregg again. I do want to kind of pile on what Joe mentioned as far as the measurement.
Gregg Krug: All of our systems, we do balance checks every month, and we just don't let anything get by us. And I think we've got a reputation throughout the industry of always staying on top of our business when it comes to measurement. So I take a lot of pride in that.
Gregg Krug: We just don't let anything get by us and I think we've got a reputation throughout the industry of always staying on top of our business when it comes to measurement. So I take a lot of pride in that.
Leo Mariani: Our next question comes from the line of Leo Mariani of Roth. Your line is now open.
Speaker Change: Our next question comes from the line of Leo Mariani of Roth. Your line is now open.
Leo Mariani: Hey guys, I was hoping to dive into AmeriDev a little bit more here. Can you give us maybe an update on where, you know, kind of current production is on the asset? And I want to say that they are possibly running a rig, so just wanted to confirm here that the ninth rig that you're bringing on might be a replacement rig for the rig they're running, you know, once the deal closes.
Leo Mariani: Hey guys, I was hoping to dive into EmeraDev a little bit more here.
Leo Mariani: Can you give us maybe an update on where, you know, kind of current production is, you know, there on the asset?
Speaker Change: And I want to say that they are maybe running a rig, so I just wanted to confirm here that the...
Speaker Change: The ninth rig that you're bringing on, you know, might be a replacement rig, you know, for the rig they're running, you know, once the deal closes, just wanted to kind of get a
Leo Mariani: Just wanted to kind of get a sense of how you're approaching that asset. I assume you're going to continue to drill on it, you know, post-close. I know you've replaced some rigs and other properties in the past.
Speaker Change: A sense of how you're approaching that asset, I assume you're going to continue to drill on it, you know, post-close. I know you've replaced some rigs and other properties in the past. Somebody call her on that would be great.
Unknown Speaker: Somebody call her on, that would be great.
Brian J. Willey: Yeah, Leo, hey, this is Brian Willey. Happy to take that one to start. I'm going to pass it on. I just really appreciate the question. You know, the AmeriDev folks have just been very professional and great to work with. It's the same team that we worked with when we did the ADVANCE acquisition. And so, you know, they ran a rig before we acquired ADVANCE and did just a fantastic job, and we're really excited that they're continuing to do a good job here with AmeriDev.
Speaker Change: Yeah, Leo. Hey, this is Brian Willey. Happy to...
Speaker Change: To take that one to start, I'm going to pass it on. I just really appreciate the question. The Meredith folks have just been very professional and great to work with. It's the same team that we worked with when we did the advance acquisition.
Speaker Change: And so, you know, they ran a rig before we acquired Advance and did just a fantastic job.
Brian J. Willey: As they go forward, and they're running that rig right now, doing a good job as a team, we're coordinating with them. Of course, they're in control of it, and they make the decisions here. But we'll move forward towards closing, you know, subject to regulatory approvals, as mentioned earlier. And so they do just a fantastic job. Our teams are coordinating with theirs. I know that we had a group of our folks down in Austin working with them very closely and just getting ready as we do the due diligence and move forward on the transaction. We are very excited about the acreage.
Speaker Change: We're really excited that they're continuing to do a good job here with Emeritiv. As they go forward, and they're running that rig right now, doing a good job of the team. We're coordinating with them. Of course, they're in control of it, and they make the decisions here. We'll move forward towards closing, subject to the regulatory approvals, as mentioned earlier.
Speaker Change: They do just a fantastic job. Our teams are coordinating with theirs. I know that we had a group of our folks down in Austin and working with them very closely.
Brian J. Willey: It really starts with the rock, and it's a fantastic rock. And maybe I'll pass it over to Tom to talk a little bit more about the rock and then about what AmeriDev is doing. Sure. Thanks, Brian. This is Tom Elsener again.
Speaker Change: I'm just getting ready as we do the due diligence and move forward on the transaction, so very excited about the acreage, it really starts with the rock and it's a fantastic rock and maybe I'll pass it over to Tom to talk a little bit more about the rock and then about what Amerideb is doing.
Speaker Change: Thanks Brian , this is Tom Elsener again.
Leo Mariani: Leo, that's a good question. We're clearly very excited about the Meredith properties and acquisitions.
Tom Elsener: Again, we're kind of in an observation role, and they're clearly doing a very nice job. As Brian mentioned, we expect the same kind of performance.
Speaker Change: Again, we're kind of in an observation role, and they're clearly doing a very nice job.
Tom Elsener: They're not letting up. They're doing a great job down there. They are running one rig, as noted.
Bryan: As Bryan mentioned, we expect the same kind of performance.
Speaker Change: They're not letting up, they're doing a great job down there. They are running one rig, as was noted. They also, at the time of the announcement, had 13 drilled but uncompleted laterals.
Tom Elsener: They also, at the time of the announcement, had 13 drilled but uncompleted laterals. They're in the process of getting those. There are kind of two groups that are in the process of getting the first half of those finished out and brought online. As we noted in the prior release, the estimated production for the third quarter is approximately 25,000 BWI per day and a good 65% oil cut. We're excited to get to work on these properties.
Speaker Change: They're in the process of getting those, there's kind of two groups, they're in the process of getting the first.
Speaker Change: First half of those, you know, finished out and brought online.
Speaker Change: As we noted in the prior release, the estimated production for the third quarter is approximately 25,000 VE per day and a good 65% oil cut.
Tom Elsener: They have over 200 federal permits, and we're very excited to get to work out there. I think that the ninth rig will be ready to be put to work as soon as we can, and we'll be drilling some very nice wolf bone wells and some bone spring targets as well. As we noted, we had 431 gross, 371 net locations that we're very excited to put to work and get to work with our midstream group and work with Pinion.
Speaker Change: You know, we're excited to get to work on these properties. They have, you know, over 200 federal permits, and we're very excited to
Speaker Change: Which was great to get to work out there I think that the 9th RIG
Speaker Change: We'll be ready to put to work as soon as we can, and we'll be drilling some very nice wolf bone wells and some bone spring targets as well. As we noted, we had 431 gross, 371 net locations.
Speaker Change: , work and get to work with the, you know, working with our midstream group and working with Pinyin.
Tom Elsener: We just can't wait to get that going. We'll look forward to talking about that more once we close the deal. It's expected to happen late in the third quarter, and then we'll give you an update from then.
Speaker Change: We just can't wait to get that going. We'll look forward to talking about that more once we close the deal. It's expected to happen late in the third quarter, and then we'll give you an update from then.
John Christopher Freeman: Our next question comes from the line of John Freeman of Raymond James. Your line is now open.
Speaker Change: Our next question comes from the line of John Freeman of Raymond James. Your line is now open.
John Christopher Freeman: The topic I wanted to follow up on was just some of what Chris was talking about earlier, just the reduced days on wells, cycle time improvements, and just trying to kind of reconcile maybe the updated guidance with the ninth rig. So it looks like y'all are saying you get an incremental four gross operated wells with the addition of that ninth rig, and in 2Q alone, you were able to bring online four more gross operated wells than you had planned on.
John Christopher Freeman: Hi guys.
John: Hey John
John: The topic I wanted to follow up on was just some of what Chris was talking about earlier on just the reduced
John Christopher Freeman: days on wells, cycle time improvements, and just trying to kind of reconcile maybe the updated guidance with the ninth rig. So it looks like y'all are saying you get an incremental for gross.
Speaker Change: Operator Wells or the addition of that ninth rig and in 2Q alone, y'all were able to bring online.
John Christopher Freeman: So I'm just trying to understand how much of those incremental wells in 2Q was due to kind of what you were talking about earlier, Chris, just cycle time improvements versus just maybe kind of a timing sort of an issue and how to think about maybe that four-year guide if it necessarily might have an upward bias if these kind of cycle times kind of continue.
Speaker Change: for more gross operator wells than y'all had planned on. So I'm just trying to understand.
Speaker Change: How much of those incremental wells in 2Q was due to, kind of what you were talking about earlier, Chris, just cycle time improvements versus just...
Speaker Change: Maybe kind of a timing sort of an issue and how to think about maybe that four year guide if it necessarily might have an upward bias if these kind of cycle times kind of continue.
Brian J. Willey: Yeah, John, this is Brian. We'll pass it to Chris in a minute. But just thanks for the question. I think it's a fantastic question. And we're excited to be able to talk about efficiencies. Chris always likes that.
Brian J. Willey: Yeah, John , this is Bryan. We'll pass it to Chris in a minute, but just thanks for the question. I think it's a fantastic question, and we're excited to be able to talk about efficiencies. Chris always likes that. And looking to Q2, you're right. We brought on four additional gross wells than we had expected.
Christopher P. Calvert: That's part of the beat that we had.
Christopher P. Calvert: As we go forward, we do think that additional rig, that ninth rig, will add about four wells. And so not much production in the year, just because those wells will be turned online, you know, late in December . But we are excited about that rig, and Chris can talk a little bit more about the ninth rig and some of the efficiencies that it will produce for us.
Christopher P. Calvert: Hey John, Chris Calvert, good question. You know, the efficiencies and spending less time on Wells is, like I said, it's a story that we've been talking through for many quarters now. And so, you know, when we look at quarterly timing, there's always a lot of push-pull with Wells when they're coming on, especially if they kind of straddle a quarter. But the ninth rig specifically, like Tom had mentioned, we're excited to be able to use that to do the AmeriDev integration once that closes.
Christopher P. Calvert: And, and, you know, looking to Q2, you're right; we brought on four additional gross wells than we'd expected. That's part of the, you know, beating that we had. And as we go forward, we do think that additional rig, that ninth rig, will add about four wells. And so not much production this year, just because those wells will be turned online late in December, but we are excited about that rig. And Chris can talk a little bit more about the ninth rig and some of the efficiencies that it'll produce. Yeah, hey John, Chris Calvert, good question.
Christopher P. Calvert: Hey John , Chris Calvert, good question.
Christopher P. Calvert: You know, the efficiencies and spending less time on wells is, like I said, it's a story that we've been talking through for many quarters now. And so, you know, when we look at quarterly timing, there's always a lot of push-pull with wells when they're coming on, especially if they kind of straddle the quarter.
Christopher P. Calvert: But the 9th rig specifically, like Tom had mentioned, we're excited to be able to use that to do the AmeriDev integration once that closes. But looking at really the efficiencies...
Christopher P. Calvert: You know, looking at really the efficiencies, you know, I think one of the things that I would truly point to is the increased utilization of TriMULFRAC. You know, we did our first pilot test of TriMULFRAC with Six Dagger Lake South Wells. We're actually on our second test of TriMULFRAC right now.
Speaker Change: You know, I think one of the things that I would truly point to is the increased utilization of Trimalfrac. You know, we did our first pilot test of Trimalfrac with the Six Dagger Lake Southwells.
Christopher P. Calvert: And we've, you know, potentially identified a third TriMULFRAC, which will be a remote TriMULFRAC, possibly later this quarter. And so I think those are the efficiencies that are really pushing or, I guess, reducing those cycle times. And so, you know, we've factored in savings from SimulFRAC, reduced drilling days from SimulFRAC, but the incremental that we're seeing from TriMULFRAC is something that we really didn't guide to at the beginning of the year.
Speaker Change: We're actually on our second test of TRIMELFRAC right now, and we've potentially identified a third TRIMELFRAC, which will be a remote TRIMELFRAC potentially later this quarter. And so I think those are the efficiencies that are really pushing, or I guess reducing, those cycle times.
Speaker Change: We factored in savings from Simulfrac, reduced drilling days from Simulfrac, but the incremental that we're seeing from Trimulfrac is something that we really didn't guide to at the beginning of the year. You look at the reduction in days on well, whether it's on the drilling side or completion side.
Christopher P. Calvert: And so you look at the, you know, reduction in days on well, whether it's on the drilling side or the completion side, it does. It stems back to just improved processes, you know, getting upgraded better equipment from Patterson. You know, when we look at the ability to drill longer laterals, you know, upsized pumps, you know, high torque top drives, increased setback ability that allows us to push lateral lengths north of two, two and a half miles, you know, improved cycle times with U-turn wells, which I had said before.
Speaker Change: It does, it stems back to just improved processes, you know, getting upgraded better equipment from Patterson, you know, when we look at the ability to drill longer laterals, you know, upsized pumps, you know, high torque top drives, increased setback ability that allows us to push lateral lengths north of two, two and a half miles.
Christopher P. Calvert: But it's these partnerships with our vendors that have allowed us to get kind of the better equipment, which that ninth rig is definitely one of. And so that really kind of all comes together with these reduced cycle times. And so it's hard to kind of put a number on how these four wells equate to this efficiency, but it's something that we're just continually looking at and pushing throughout the program looking forward.
Speaker Change: you know, improved cycle times with U-turn wells such I had said before, but it's these partnerships with our vendors that have allowed us to get kind of the better equipment, which that ninth rig is definitely one of.
Speaker Change: And so, that really kind of all comes together with these reduced cycle times. And so, it's hard to kind of put a, you know, these four wells equate to this efficiency, but it's something that we're just continually looking at and pushing throughout the program looking forward.
Lina Phillips Johnson: Our next question comes from Lina Phillips Johnson of Capital One Securities. Your line is now open. Hey guys, thank you.
Lina Phillips Johnson: Our next question comes from Lina Phillips Johnson of Capital One Securities. Your line is now open. Hey, guys. Thank you.
Speaker Change: Our next question comes from Lina Phillips-Johnson of Capital One Securities. Your line is now open.
Lina Phillips-Johnson: Hey guys, thank you. I'm just a follow-up on Leo's question regarding the AmeriDef properties. I realize that production is still on track for, you know, $25,000 to $26,000 a day for Q3, but, you know, as we think out, as we think out to Q4, just given the uncompleted lateral...
Tom Elsener: Would you expect the emeritus, standalone volumes to be directly flat versus but their core, or would you expect a little bit of growth there? It helps, this is Tom Elsener. You know, I think we would look forward to commenting more on that, you know, again after the, after the do closes.
Speaker Change: Would you expect the AmeriDev standalone volumes to be directionally flat versus the third core or would you expect a little bit of growth there?
Tom Elsener: Hey, folks, this is Tom Elsener. You know, I think we would look forward to commenting more on that, you know, again, after the bill closes. There are two groups of drilled but uncompleted laterals. The first group is going on now, and the second, you know, is a little bit more uncertain as to the exact timing. And I think it'd probably be more appropriate for us to comment on that once we
Speaker Change: Hey folks, this is Tom Elsener. You know, I think we would look forward to commenting more on that, you know, again, after the bill closes.
Unknown Executive: There are two, there are two groups of drilled that uncompleted laterals. The first group going on now and the second, you know, is, is a little bit more uncertain as to the exact timing, and I think it could probably just be more appropriate for us to comment on that once we close.
Speaker Change: There are two groups of drilled but uncompleted laterals. The first group going on now, and the second, you know, is a little bit more uncertain as to the exact timing. And I think it would probably just be more appropriate for us to comment on that once we close.
Kevin MacCurdy: Our last question comes from the line of Kevin Maccurdy of Pickering Energy Partners; your line is not open.
Kevin Moreland MacCurdy: Our last question comes from the line of Kevin MacCurdy of Pickering Energy Partners. Your line is now open.
Speaker Change: Our last question comes from the line of Kevin MacCurdy of Pickering Energy Partners. Your line is now open.
Joe: Good morning, and thank you for taking my question. This year, your legacy program will be about eight and a half rags, with really just fake rigs contributing to production in 2024. And that resulted in pretty material growth throughout the year. Obviously, when you get the emeritus volumes, your maintenance production levels will increase. Without asking for too much detail on 2025, do you think that a nine rig program is sufficient to hold those volumes flat or, or even grow a little bit.
Joseph Wm. Foran: Hey, good morning, and thank you for taking my question. This year, your legacy program will be about eight and a half rigs, with really just eight rigs contributing to production in 2024. And that resulted in pretty substantial growth throughout the year. Obviously, when you get the AmeriDev volumes in, your maintenance production levels will increase. Without asking for too much detail on 2025, do you think that a nine rig program is sufficient to hold those volumes flat or even grow a little bit?
Kevin Moreland MacCurdy: Hey, good morning, and thank you for taking my question. This year, your legacy program will be about eight and a half rigs, with really just the eight rigs contributing to production in 2024. And that resulted in pretty material growth throughout the year.
Speaker Change: Obviously, when you get the AmeriDev volumes in, your maintenance production levels will increase. Without asking for too much detail on 2025, do you think that a nine-rig program is sufficient to hold those volumes flat or even grow a little bit?
Joseph Wm. Foran: This is Joe, and I'm going to, I guess, kick it off and then ask Tom and Chris and Ryan to comment, but this is where the days on wells become important, because if you can reduce the days on well, your existing rig fleet can drill that many more wells. So, we hope that the rigs will become more efficient, and as Chris pointed out, they're coming with new equipment. Subhasish Chandra, Benjamin Parham, George Yates, and Glenn Stetson, Matador Resources Co., 2025.
Joe: This is Joe, and I will, I guess, kick it off and then ask Tom and Chris and Ryan to comment. But what this is where that days on wells become important is that if you can reduce days on well, your existing rig fleet can drill that many more wells. So we hope that the rigs will become more efficient, and as Chris pointed out, they're coming with new equipment, new techniques that also should reduce days on well. So that's, that's an important factor as we plan out 2025 and many rigs we need and many wells we're going to drill by how effective are they going to be.
Speaker Change: This is Joe, and I'm going to, I guess, kick it off and then ask Tom and...
Speaker Change: and Chris and Ryan to comment, but this is where that days on wells become important, is that if you can reduce the days on well, your existing rig fleet can drill that many more wells.
Speaker Change: So, we hope that the rigs will become more efficient, and as Chris pointed out, they're coming with new equipment.
Joseph Wm. Foran: Subhasish Chandra, Benjamin Parham, George Yates, Glenn Stetson, Matador Resources Co. But look where we'd be if we didn't have the midstream today, how vulnerable we'd be to, transcripts provided by Transcription Outsourcing, LLC. You know, the water disposal capacity and the like.
Christopher P. Calvert: new techniques that also should reduce the days on wells. So that's an important factor as we plan out.
Christopher P. Calvert: 2025
Christopher P. Calvert: how many rigs we need and how many wells we're going to drill by how effective are they going to be. So these next two quarters are going to help us understand that better.
Joe: So these next two quarters are going to help us understand that better, and we'll go from there.
Joe: We've never been a company that just grown for growth site, but is part of a plan and a team game, those where does this situation so that our capital spend is it goes to the right sources some of it years we could have grown if we. Didn't put some into the mystery, but look where we be. If we didn't have the mystery today, how vulnerable we'd be. A lot of situations, and we wouldn't have the flow assurance, and we wouldn't necessarily have a quick capture or the. You know the the water disposal capacity in the line, so that was a deal where we were playing for the long term.
Christopher P. Calvert: We've never been a company that's just grown for growth's sake, but is part of a plan and a strategy.
Christopher P. Calvert: Team Game is where does this situate us so that our capital spend is
Christopher P. Calvert: It goes to the right sources. Some of the years we could have grown if we didn't put some into the midstream.
Christopher P. Calvert: But look where we'd be if we didn't have the midstream today. How vulnerable we'd be to...
Christopher P. Calvert: A lot of situations and we wouldn't have the flow assurance and we wouldn't necessarily have a quick hiccups or
Joseph Wm. Foran: So that was a deal where we were playing for the long term, diverting some capex we could have spent on drilling rigs for a midstream business. And we think that was the right thing. And as far as drilling is concerned, we expect to, We fully challenge our teams to come up with a growth strategy, but at the same time, we want to keep our flexibility when an opportunity like Meridab or Advance comes up because a lot of people don't or won't sell their good rock, their best rock, they keep for themselves.
Christopher P. Calvert: are the
Christopher P. Calvert: You know, the water disposal capacity and the like. So that was a deal where we were planning for the long term, diverting some CapEx we could have spent on drilling rigs for a midstream business, and we think that was the right thing.
Joe: The burning some campaigns we could spend on drilling rigs for a midstream business and we think that was a right thing, and as far as drilling, we expect to. We fully challenge our teams to come up with a growth. Strategy, but same time we want to keep our flexibility. We're in an opportunity like a maridab or advanced comes up. Because a lot of people don't.
Christopher P. Calvert: And as far as drill it, we expect to...
Christopher P. Calvert: We fully challenge our teams to come up with a growth.
Christopher P. Calvert: strategy, but at the same time, we want to keep our flexibility when an opportunity like a Meridab or Advance comes up because a lot of people don't
Joe: Or won't sell their good rock, they're best rock, they keep for themselves. So when you head off to these, like them come up where you had a chance at acquiring really quality rock, we wanted to be sure we did that. So we've done the slow but careful steps with our rate count. This year, to where we could grow the rig cast or last minute, depending on things.
Christopher P. Calvert: or won't sell their good rock.
Joseph Wm. Foran: So when opportunities like them come up where you have a chance at acquiring really quality rock, we wanted to be sure we did that. We've We've done slow but careful steps with our rig count this year so that we could grow the rig count or less, net depending on things. Fortunately, we were ready when Meredith K. Mutt came in, and we've paid down our line of credit so that our current RBL is paid off completely. We have zero borrowed on it.
Christopher P. Calvert: They're best rock. They keep for themselves. So when you had opportunities like them come up where you had a chance at acquiring really quality rock, we wanted to be sure we did that.
Christopher P. Calvert: We've
Christopher P. Calvert: We've done the slow but careful steps with our rig count this year to where we could grow the rig count or lessen it, depending on things. Fortunately, we were ready when...
Joe: Fortunately, we were ready when Meredith came up, and we paid down our line of credit, like our RBL. Our current RBL is paid off completely; really, it was a row bar and audit, and so we have that line of credit to go towards. Meredith or building out some of the midstream, and that's been helpful. So a lot of our strategy to be direct is we try to build in as many options as we can each year, because each year is a surprise. There are some surprises every year, and we just want that flexibility for financially as well as having the line of equipment and the right people.
Meredith: Meredith came up.
Meredith: We've paid down our line of credit like our current RBL has paid off completely.
Meredith: We have zero borrowed on it, and so we have that line of credit to go towards meredev or building out some of the midstream and That's been helpful so a lot of our strategy
Joseph Wm. Foran: And so we have that line of credit to go towards, Maridev is building out some of the midstream, and that's been helpful. So, a lot of our strategy... to be direct as we try to build in as many options as we can each year because each year is a surprise. There are some surprises every year. And we just want that flexibility financially, as well as having the right equipment and the right people. So it's a balancing act between that. And our teams have done a, I think a really good job making adjustments as things go along. I mean, you couldn't predict COVID.
Meredith: To be direct, as we try to build in as many options as we can each year, because each year is a surprise on
Meredith: There are some surprises that occur every year and we just want that flexibility for financially as well as having the right equipment and the right people. So it's a balancing act through that and our teams have done, I think, a really good job making adjustments as things go along. I mean, you couldn't predict COVID.
Joe: So it's a balancing act through that, and our teams have done a really good job making adjustments and things go along. I mean, you couldn't predict COVID. And that happened not that I hope we get another situation like that, but you know, you just, for quite a prepare for all the contingencies and keep your flexibility and options open. I know that may sound like platitudes, but we, we tried to maintain that flexibility, and we found that's been a good strategy over 40 years. As you know, we started out with 270,000 in 1983. We didn't have many options in, we could have each year we tried to get better on that, and the teams have done a real good job ready to pivot as those circumstances change.
Joseph Wm. Foran: And that happened. Not that I hope we get another situation like that, but, you know, you just try to prepare for all the contingencies and keep your flexibility and options open. I know that may sound like platitudes, but we have tried to maintain that flexibility, and we have found that it's been a good strategy over 40 years. As you know, we started out with 270,000 in 1983. We didn't have many options, and each year we've tried to get better at that, and the teams have done a real good job being ready to pivot as those circumstances change. So, you know, I'll ask my Chief Financial Officer, Brian, to tell you that. I hope that it coincides with what he's planning. Yes, sir, Joe.
Meredith: And that happened. Not that I hope we get another situation like that, but, you know, you just try to prepare for all the contingencies and keep your flexibility and options open. And I know that may sound like platitudes, but...
Meredith: [inaudible]
Meredith: We tried to maintain that flexibility and we found that it's been a good strategy over 40 years.
Meredith: As you know, we started out with 270,000 in 1983. We didn't have many options then.
Meredith: We did annually each year. We tried to get better on that, and the teams have done a real good job ready to pivot as those circumstances change.
Joe: So, you know, I asked my chief financial officer to say, is that, I hope that coincides with what he's planning.
Brian J. Willey: So, you know, I'll ask my Chief Financial Officer, Brian , to tell you that.
Joe: Yes, sir, Joe, that's, I fully agree. I think this is, you know, we often talk about it being a people in a relationship business and, you know, maybe two things that would just just note on the relationship side with the banks that we talked about a merit of a few times today. And just wanted to thank our banks and the great support that they have been. We visit each one of the 19 banks in their offices earlier this year, and we were able to develop those relationships with those approved very fruitful in the hours as they've been supportive of the emerative acquisition.
Brian J. Willey: I fully agree. I think this is, you know, we often talk about it being a people and a relationship business. And, you know, maybe two things I would just note on the relationship side with the banks that we've talked about emergent a few times today. And just wanted to thank our banks for the great support that they have been.
Speaker Change: I hope that coincides with what he's planning.
Brian J. Willey: We visited each one of the 19 banks in their offices earlier this year, and we were able to develop those relationships, and those have proved very fruitful now as they've been supportive of the acquisition. And then, you know, the relationships and the people that are employees. It really starts with our employees, and we have a great intern program this summer. I think 30 interns. They've been fantastic.
Speaker Change: And just wanted to thank our banks and the great support that they have been. We visited each one of the 19 banks in their offices earlier this year and we were able to develop those relationships and those have proved very fruitful now as they've been supportive of the emeriti of acquisition.
Joe: And then, you know, the relationships and the people at our employees, it really starts with the armed employees, and we have a great interim program this summer. I think 30 interns; they've been fantastically just keep getting better and bringing them in, and that's in the brightest. And, you know, I look at our employee stock purchase plan. That's an opportunity where our employees can buy shares in the company. And normally in employee stock purchase plan, a good participation rate is probably 50%, 60%. And I think in our last period we have, or people could participate, we actually had 95% participation, which is almost unheard of.
Speaker Change: You know the relationships and the people at our employees, it really starts with our employees and we have a great intern program this summer, I think 30 interns, they've been fantastic, we just keep getting better and bringing them in.
Brian J. Willey: We just keep getting better and bringing in the best and the brightest. And, you know, I look at our employee stock purchase plan. That's an opportunity where our employees can buy shares in the company. And normally, a good participation rate is probably 50 percent, 60 percent.
Speaker Change: and I look at our employee stock purchase plan, that's an opportunity where our employees can buy shares in the company, and normally an employee stock purchase plan a good participation rate is probably 50%, 60%.
Brian J. Willey: And I think in our last period we had where people could participate, we actually had 95 percent participation, which is almost unheard of. And so it really just shows that we're all rowing in the same direction. Everybody's working together. It really just comes down to the people and the teams, and it's a great business, a fun business to be in. Well, one other thing I want to add to show the importance and the integral nature of our midstream. We've added Susan Ward, who was at Shell for many years and was their chief financial officer when Shell Pipeline went public.
Speaker Change: period we have where people can participate, we actually had 95% participation, which is almost unheard of. And so it really just shows that we're all rowing in the same direction. Everybody's working together. It really just comes down to the people and the teams, and it's a great business. It's a fun business to be in.
Joe: And so, it really just shows that we're all rowing the same direction; everybody's working together and really just to come down to the people and the teams. And it's a great business, the fund business, to be in.
Joe: Well, one other thing I want to add to show the, you know, the importance and the integral nature of our midstream.
Brian J. Willey: So that gives us another pair of eyes. Are we, are we headed in the right direction? And we're using it to its best advantage. And Greg and his team have put together just a great group, and I know that the results that we have and what the midstream has done and also built out relationships with a real blue chip list of companies that are our third party partners. Just as important that we treat them right as any of our teams on their deals. So there's still a lot of wood for us to chop there, but I think that attention is making us a better company.
Speaker Change: Well, one other thing I want to add to show the
Joe: We've added to our board Susan Mord, who was the child for many years and was their chief financial officer when Child Pipeline went public. So that gives us another pair of eyes. So we, are we headed in the right direction and we're using it to its best advantage, and Greg and his team have.
Speaker Change: The importance and the integral nature of our midstream, we've added to our board Susan Ward, who was at Shell for many years and was their Chief Financial Officer when Shell Pipeline went public. So that gives us another pair of eyes. Are we...
Joe: and put together just a great group, and I know that the results that we have and what the midstream has done, and also built out relationships with the real blue chip listed companies that are our third party partners. It's just as important that we treat them right as any of our teams on their deals. So there's still a lot of wood for us to chop there, but I think that attention is making us a better company.
Speaker Change: and put together just a great group.
Speaker Change: I know that the results that we have and what the midstream has done and also built out relationships with a real blue chip list of companies that are our third party partners and it's
Speaker Change: Just as important that we treat them right as any of our teams on their deals. So there's still a lot of wood for us to chop there, but I think that attention is
Speaker Change: making us a better company.
Unknown Executive: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call.
Marvin Rivas: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd like to turn the call over to management for closing remarks.
Magma: I'd like to turn a call over to Magma for closer remarks. Well, thank you very much, and thank you for the participation. And now that I've had some time to think about the truth is, come in about breakfast, I just want to share everybody that if you come have breakfast with us, you will not have to pay; we'll be happy to buy that breakfast. And the last thing I do want to close on, because it didn't quite get the attention, the teams working have turned out an amazing amount of work, and that I want you to talk about when we came out here. We had three zones that we were after and where we gone from there.
Speaker Change: Thank you, ladies and gentlemen. This ends the Q&A portion of this morning's conference call. I'd like to turn the call over to management for closing remarks.
Joseph Wm. Foran: Well, thank you very much, and thank you for your participation, and, you know, now that I've had some time to think about, you know, Truist's comment about breakfast, I just want to assure everybody that if you come and have breakfast with us, you will not have to pay.
Speaker Change: Well, thank you very much and thank you for the participation.
Speaker Change: You know, now that I've had some time to think about...
Speaker Change: Truist's comment about breakfast, I just want to assure everybody that if you come have breakfast with us, you will not have to pay.
Unknown Speaker: Transcribed by https://otter.ai
Joseph Wm. Foran: We'll be happy to buy that breakfast, and the last thing I want to close on because it didn't quite get the attention. The team's working has turned out an amazing amount of work, and Ned, I want you to talk about when we came out here. We had three Zones that we were after, and where have we gone from there?
Speaker Change: We'll be happy to buy that breakfast. And the last thing I do want to close on, because it didn't quite get the attention, the teams working have turned out an amazing amount of work. And Ned, I want you to talk about when we came out here, we had three zones that we were after. And where have we gone from there?
Edmund L. Frost: Here it is, Joe. Thank you. This is Ned Frost, EVP of Geosciences, and Joe is referring to when we started out in the Delaware Basin, we had 3 discrete zones that we targeted, the second bone spring, the Wolf Camp AXY, and the Wolf Camp B. And today, we are producing from 11 different zones with 25 discrete target intervals that we can map regionally around the basin. To do this, it's like so many other parts of Matador.
Edmund Frost: Here Joe, thank you. This is Mad Frost, EVP of Geosciences, and Joe's referring to when we started out in the Delaware Basin. We had three discrete zones that we targeted: the Second Bone Spring, the Wolf Camp AXY, and the Wolf Camp B. Today, we are producing out of 11 different zones with 25 discrete target intervals that we can map regionally around the basin. So to do this, it's like so many other parts of Matador; it requires all the teams working together. A lot of people have their hands on that, from reservoir engineers to land to drilling and operations, from, you know, being able to complete these wells. So we were really proud of how we've advanced the ball over the years, and we're very confident that there's a lot more to come. So we appreciate your support, and we'll continue to do what we do.
Edmund L. Frost: Here, Joe, thank you. This is Ned Frost, EVP of Geosciences, and Joe's referring to when we started out in the Delaware Basin, we had
Edmund L. Frost: 3 discrete zones that we targeted, the second bone spring, the Wolf Camp AXY, and the Wolf Camp B.
Edmund L. Frost: Today we are producing out of 11 different zones with 25 discrete target intervals that we can map regionally around the basin.
Edmund L. Frost: It requires all the teams working together. A lot of people have their hands on that, from reservoir engineers to land to drilling and operations. You know, being able to complete these wells. So we're really proud of how we've advanced the ball over the years, and we're very confident that there's a lot more to come. So we appreciate your support, and we'll continue to do what we do.
Speaker Change: To do this, it's like so many other parts of Matador. It requires all the teams working together. A lot of people have their hands on that from...
Speaker Change: from reservoir engineers to land to drilling and operations from, you know, being able to complete these wells, so
Speaker Change: We're really proud of how we've advanced the ball over the years and we're very confident that there's a lot more to come, so we appreciate your support and we'll continue to do what we do.
Unknown Executive: All right with that, I'm through, but thank you all for listening in and your time. We really appreciate it; we know it's valuable and appreciate the relationship.
Joseph Wm. Foran: All right, with that, I'm through. But thank you all for listening in and your time. We really appreciate it. We know it's valuable and we value it
Speaker Change: All right, with that, I'm through, but thank you all for listening in and your time. We really appreciate it. We know it's valuable and appreciate the relationship.
Unknown Executive: Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect.
Unknown Speaker: Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect.
Speaker Change: Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect.