Q3 2024 Genesis Energy LP Earnings Call
The Dwayne Morley, Grant Sims
The Dwayne Morley, Grant Sims
Greetings and welcome to the Genesis Energy LP 3rd Quarter 2024 earnings conference call.
At this time, all participants are now listening only most. The question and answer session will follow the formal presentation.
If anyone should require operator assistance, please press star zero on your telephone keypad.
As our minders, this conference is being recorded. It is now my pleasure to introduce Dwayne Morley, Vice President of Investor Relations. Thank you Dwayne, and may begin.
Good morning. Welcome to the 2024 third quarter conference call for Genesis Energy. Genesis Energy has four business segments. The offshore pipeline transportation segment is engaged in providing the critical infrastructure to move oil produced from the long-lived world-class reservoirs in the deep water Gulf Mexico to onshore Rhoining Centers.
The Soda and Sulphur Services segment includes Trona and Trona-based exploring mining, processing, producing, marketing and selling activities, as well as the processing of our gas streams to remove sulfur-error, finding operations.
The onshore facilities and transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products including crude oil and refined products.
The Marine Transportation segment is engaged in the maritime transportation of primarily refined petroleum products.
Genesis's operations are primarily located in Wyoming, the Gulf Coast States, and the Gulf of Mexico.
Speaker Change: During this call, management may be making forward-looking statements within the meanings of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The law provides safe harbor protection to encourage companies to provide forward-looking information. Genesis intends to avail itself of those safe harbor provisions and directs you to its most recently filed in future filing for the Security's Exchange Commission.
We also encourage you to visit our website at Genesisenergy.com. We're a copy of the press release we issued this morning is located. The press release also presents a reconciliation of non-gap financial measures to the most comparable Gap financial measures.
Speaker Change: At this time, I would like to introduce Grant Sims, you know, of Genesis Energy LP. Mr. Sims will be joined by Kristen Jeff Alitis, Chief Financial Officer and Chief Legal Officer, Ryan Sims, President and Chief Commercial Officer and Louis Nichol, Chief Accounting Officer.
Thanks, Roy. Good morning, everyone. Thank you for listening to the call. As we mentioned in our earnings release this morning, we have always expected 2024 to be a transition year. As we move closer and closer to the inflection point when we will complete our current major capital spending program.
The short time away from a notable step-change and realize segment margin, and most importantly, be in position to generate cash from operations in excess of the cash costs of running and sustaining our businesses, starting in the back half of 2025 and accelerating into 26.
I'm here today to reiterate my confidence in this central thesis.
Having said that, we certainly did not reasonably expect 2024 to be as challenging as it has turned out to be.
While our financial performance in the first three quarters of the year has been well below our original expectations.
We believe a majority of what is impacted Genesis this year has been the result of one time items and other factors outside of our control.
Importantly, we expect most of these challenges will be remedied by Uran, hopefully leading to a more constructive operating environment moving forward.
Speaker Change: We are in any event evaluating a number of cost cutting and efficiency opportunities to help offset these near-term challenges.
We believe the actions we are taking and will continue to take in the coming months and quarters. Not only reflect our full alignment with our stakeholders, but are also representative of our commitment to maximizing the available cash flow in the years to come.
Speaker Change: We believe 2025 will deliver meaningful growth over 2024 in the financial performance of certain of our statements.
Driven by the mid-year startup for a contracted offshore development, as well as getting a number of the technical operational issues, and certain existing offshore fields behind this.
A sequential improvement in our Marine Transportation segment resulting from fewer scheduled drybox and steady-to-improving market fundamentals and steady-to-improving performance from our on-shore facilities segment.
As we said here today, we do see certain challenges in our so-called sole for services businesses, continuing into 2025.
While we expect to achieve better and more consistently efficient operations at West Maco and Granger next year, we are seeing macroeconomic headwins which likely will pressure so-to-ash prices, at least in the early part of next year.
In our sulfur services business, we have continued to have challenges on the production side of our largest sulfur fundery, and are facing competitive pressures from Chinese flight in South America.
We would expect to have a better idea on these items when we discuss our outlook for 2025 and more detail next January or February. However, even with these challenges, we continue to expect growth and adjust to Diva Dawn 2025 over 2024.
When combined with limited growth capital spending, we will, believe we will, in fact, turn the corner and become cash flowpossed next year. Giving us the flexibility to begin focusing on capital allocation and earnest.
Speaker Change: If we look at the on 2025, the combination of increasing volumes across our offshore infrastructure.
Setting a marginal improvement from our Marine Transportation on Shore Facility Cypher. And they return towards a more normalized, so-called pricing environment. Which we believe is only a matter of win, not if all will combine to drive increasing results.
Importantly, over the next few years, we have identified no growth capital projects and remain committed to not pursuing any meaningful growth projects.
and the near term. In essence, because we believe we have light to found nature for meaningfully higher and sustainable, adjusted even dock for the foreseeable future.
Speaker Change: We continue to believe the partnership as adequate financial flexibility, an liquidity, and we will be in a position to utilize our future excess cash flow to simplify and strengthen our capital structure by redeeming our high-cost convertible preferred and paying down debt in absolute terms.
This action should, in turn, lower our cost of capital and ultimately reduce the long-term annual cash costs of running our businesses, the 14th over time, even more flexibility and levers we can pull to maximize unit holder value.
and Summary, absent unforeseen circumstances, we remain confident we have laid the foundation to be able to create long-term value for everyone in the capital structure in the coming years.
Now it's a briefly under individual business cycle.
Speaker Change: and the other one.
As mentioned in our earnings release, our offshore segment continue to be negatively affected by lingering operational and technical issues.
In a couple of our large fields where we touch the molytools multiple times by about oil and gas gathering, as well as downstream transportation, which is you can, for our higher margin volumes versus the alternative where we might just handle the volume once for downstream transportation.
In almost 40 years of focusing on the deep water Gulf of Mexico in its world-class hydrocarbon-bearing reservoirs, I have never seen a screen of technical operating issues across multiple operators and multiple fields all occur right on top of one another.
Speaker Change: Whether it involves dropping a joint of casing onto clowlands and a controlling billacle in 5800 feet of water. The failure of a sleeve not being able to be remotely activated to choke off water inflows and a multi-zone completion.
The Separation Failure of the Production 2, we're stringing a 17,000 foot well with the stringing at twin well needing to be preampively addressed.
Speaker Change: For the failure of a completion screen allowing production to be in a plodal lines to get sanded up, needless to say, our producer customers have recently experienced a number of unfortunate, unexpected, and rare items, which in turn obviously has negatively affected our financial performance this year.
Speaker Change: Well, we had originally expected the operators to complete the necessary repairs during the third quarter. The various recent weather challenges in the Gulf of Mexico caused delays in getting the appropriate equipment and service providers on site to complete the necessary repairs on the original timeline.
That being said, we have seen a small portion of the effect of production restored to date, but are now being told complete mitigation repairs are not expected to be completed until the end of the year.
As a result, these interruptions will also have a negative impact on our fourth quarter results.
and our conversations with the affected producer operators, each every iterated they expect to know long-term, negative impacts to the underlying reservoirs and expect to see these volumes return by the end of the year or certainly by early next year.
Speaker Change: We will ultimately benefit from these volumes moving through our offshore infrastructure.
It will just be shifting the recognition of the economic benefit to us. I'll little to the right. It doesn't go away.
Given some of these recent challenges, I took the opportunity over the last four or five weeks to personally go meet with senior executives at most of our key producer-shipper customers in the Gulf of Mexico.
I can relate that those with the mechanical issues are working diligently to remedy the lost volumes as quickly as possible.
But more importantly, all of them remain very excited and confident about the expectations for their newly sanctioned projects.
The potential for additional future developments around their existing infrastructure, when their infrastructure or subsea opportunity, as well as exploratory opportunities they have already identified, under their existing valid leases in the Gulf of Mexico.
Our Off-Works Fanchion Project remains unscheduled and we continue to expect to complete most of the construction work by the end of the year. We expect the finalized the connection of the new Sync pipeline to the Shandu Afloading Production System, once it arrives at its final location in the Gulf of Mexico.
With such work expected to be completed in the first quarter 2020.
Both the Shannon Bow and Salamaka new developments and are combined almost 200,000 barrels of oil per day of incremental production handling capacity remain on schedule to be on line and begin in the second quarter of 2025.
Similarly to other recent new developments, we continue to expect each of these to ramp up very quickly and reach a initial pre-production within three to six months of their respective dates of first production. If not sooner.
and both cases, the operators anticipating producing, anticipate producing it rates materially higher than our take-or-play levels. Perhaps even higher than their original internal expectations when they sanction the projects.
These two new floating production facilities are also expected to serve as host-platforms for additional future sub-c developments or tie-back opportunities, which could sustain or increase these cash flows to us for years and years into the future.
Speaker Change: In addition to the monument field, which is a sub-c-top act of Shenandoah that we announced last quarter, we remain in active discussions with other producers to utilize the incremental pre-built capacity on the sink lateral and or on the chop's pipeline.
Speaker Change: Importantly, these ongoing discussions around the connection of additional infield subs here, secondary recovery development opportunities, would not require any incremental capital on our part and could turn to production as early as next year and certainly over the next few years.
Speaker Change: I also wanted to take a moment to comment on the recent judicial events around the 2020 Biological opinion or by up issued by the National Marine Fisheries Service.
In mid-August, I Maryland District Judge found the existing 2020 buy-up. Did not meet certain requirements, stemming from the endangered species. And that's issued in order to vacate such buy-up as of December 20, 2024.
This ruling could have seen it theoretically, and validated certain permits and put parties at risk of liability for activities that could harm protected species in the Gulf of Mexico.
Fast forward, as we expected, the upstream community was the champion with dealing with this matter in court. And on October 21, 2024, the same district to Ajahn Maryland extended the date of the cater of the 2020 buy-up to May 21st, 2025.
Furthermore, the National Marine Fisheries Service has publicly committed to issue a new and fully compliant viat before this date.
Well, we do not anticipate any future risks surrounding this matter. We will be constantly monitoring the situation.
Speaker Change: In the end, we remain confident that we and our producer customers will continue to be fully compliant with the new biop 1st issue and will continue to be stewards of the environment and the waters in which we operate in together.
Starting now to our so-to-insolful services segment, our so-to-ash business significantly under performed or expectations during the quarter, as we continue to experience production challenges and higher maintenance spending at our West Vaco production facility.
As a result of our operating performance over the first nine months of the year, our Alkalight Leadership Team is keenly focused on identifying the root causes of the production challenges.
Employment and new initiatives and proactive measures to mitigate such in the future.
Speaker Change: and reduce operating costs and maintenance spending to further streamline and lower the cost of our soda ash operations to allow us to maintain our position as America's largest and lowest cost producer.
Well, never compromise your argument to safer and responsible operations.
Speaker Change: In the near term, we must focus on cost.
Speaker Change: Just since last quarter, the next Fort Market for soda has for lack of a better description. God, I'm pretty sloppy.
Chinese domestic inventory levels in the availability of exports out of China have both recently increased.
Speaker Change: In fact, X-Wort from China in September were the highest since July of 2023.
The increase to five natural soldiers from the Baroon Development in Mongolia, the parachute had been consumed totally within China, at least until a reason.
There are recent indications that Chinese domestic man must be softening as evidence by such increase in inventory and availability of exports.
We are however encouraged by the recent changes in monetary policy and rumor-traditional fiscal policies designed to stimulate the Chinese economy. But these will take time to become effective.
In the meantime, the apparent increase of availability of so-dash outer China is leading our export customers to expect lower prices.
In fact, we expect to see lower export prices in the fourth quarter.
1. Even though sequentially, 3rd quarter prizes were up over the 2nd quarter, and 2nd quarter prizes were up over the 1st quarter of this year.
We would expect that this current softness will last until 2025 at least early in the year until the global market comes closer into balance.
In that regard, I'm reminded of Warren Buffett's saying that in a commodity business, it is hard to look a lot smarter than your dumbest competitor.
Speaker Change: At some of the prices we believe are being offered.
We know the sellers at best are seeing marginal revenue covered their marginal production cost with no contribution to their fixed costs.
As we all learned in principles of economics, this behavior can occur in short run, but it is not sustainable in the law of drugs.
As a result, we would expect certain producer suppliers to curtail production, which will obviously help tighten the market and ultimately lead to higher prices.
Speaker Change: As I said earlier, we are America's lowest cost producer.
and our brand-based facilities, ELDM at West Vaco and our Optimized Granger Facility, are among the lowest cost-sode-ach production facilities in the world.
Our Heart Cops competitors.
Both domestically and abroad will have to carry the load of the supply response needed near-term to bring the so-to-ash market more into balance.
Speaker Change: Regardless of the ultimate timing of such production rationalizations.
Which would happen sooner rather than later if high-cost synthetic producers in Europe and China were to begin to act more rationally, we remain committed to the so-called Ash business.
We intend to work diligently to further optimize our cost structure and make any necessary adjustments to maintain and strengthen our competitive advantage.
and confident that the steps we are evaluating regarding our production costs.
We're not only helping us in the short term, but we'll enhance our ability to benefit sooner from the inevitable balancing of the market. And the higher and sustainable commodity prices that will undoubtedly follow.
Our Marine Transportation segment continues to operate in-line with our expectations as the broader market conditions remain very favor.
We continue to operate with utilization rates at our near 100% or practical available capacity for all classes of our vessels.
Speaker Change: and Expect Day Rights to Main Strong. If not slightly increased sequentially, as are existing term and spot charters, renew over the remainder of the year and throughout 2025.
Speaker Change: Importantly, we are also nearing the completion of our heaviest regulatory dry docking year on record for our offshore fleet.
Speaker Change: By Eurean, we expect to have completed such required work for six of our nine blue water vessels.
With two of our smaller offshore vessels scheduled to go in for work in the first quarter of 2025. Upon completion of these dry dockings early next year, and absolutely any unforeseen events, we expect to have a clear runway to drive sequential improvement.
By simply operating our vessels for more available days in 2025 relative to 2024 and almost certainly at higher, relaxed day rates.
As a result, we could reasonably see a scenario where next year's marine transportation segment could be up by more than 10% year over year if not higher.
Speaker Change: These are Market Fundamentals, with October around frame number of years in the future, with net retirement to older equipment, not ours, by the way given the relatively young age of our assets.
and the need to see day rates increase another 30% or so. And we expect to sustain their well into the future before anyone is likely to undertake a significant new build program.
In summary, with the unforeseen challenges to our adjusted event on 2024, we expect the four-year to come in below the end of our previous guidance range.
Speaker Change: Additionally, our bank calculated total debt to EBITDA ratio will increase to greater than five times in future periods, at least for a while, as we deal with the arithmetic challenge of such lower EBITDA in the denominator negatively affecting such calculated ratio.
Speaker Change: However, that will take care of itself over time as we realize growing a dresser-debut dog and begin to play down debt in future periods.
As I have mentioned in the past and were reiterated again, the value proposition to Genesis remains unchanged and intact, at least from our perspective.
We remain keenly focused on getting to the back half of 2025 and the inflection point where we stop spending growth capital and start harvesting significant and growing cash flows and excess of the cash costs of running and sustaining our businesses.
The Sexes Cash Flow will allow us to simplify our capital structure, lower our overall cost of capital, maintain prudent leverage, and have the ability to opportunistic and drive long-term value for our unit holders for many years ahead.
Speaker Change: Finally, I'd like to say to the Management Team that the Management Team and the Board of Directors remain steadfast in our commitment to building long-term value for all our stakeholders. Regardless of where you are in the capital structure.
We believe the decisions we are making reflect this commitment and our confidence in Genesis moving forward. I'd once again like to recognize our entire workforce for their individual efforts and unwavering commitment to saving responsible operations.
I am extremely proud to be associated with each and every one of you. With that I'll turn it back to the moderator for questions.
Thank you. We'll now begin talking a question and answer session. If you would like to ask your questions please press star 1 in your telephone keypad.
Make confirmation from one to keep your line as in the question tube. May press start, you will feel like you'll remove your question from the kit. For participants using speaker equipment and may be necessary to pick up your hands that before pressing the star keys. One more one please, my little poll for questions.
You made it.
Speaker Change: Thank you. Our first question is from Michael Bloom with Wells Harlow. Please proceed with your question.
Thanks for the good morning everyone. I wanted to ask about 2020's size. I appreciate that you're looking for an inflection point in the back out of the year.
and the first half of the year seems like things could be a little bit softer. You'll have elevated leverage, so should we assume that...
You're point where you're going to begin to minigly raise the distribution. Could be delayed a bit here. Would you feel a spectat to happen in 2025 or is it now more likely at 2026 event?
Michael Goodquash, and I think it's a little bit premature to answer specifically. I would say that we are at a point in this fall of we are...
Speaker Change: Putting together our 2025 Plan.
and the fundamental building blocks of that are really getting the updated producer profiles, or production profiles from our...
Producer customers in the Gulf of Mexico, which obviously draft things and is that...
Speaker Change: As I mentioned in the prepare-term arcs, certainly the excitement around the new facilities and the over-performance relative to previous expectations is going to be part of that. That's obviously a big driver of 2025.
Speaker Change: as we sit here today, only about 50% of our...
Inticipated, so-ashells of soda ash in 2025, or at either a known price or a price that is so big to a known copper collar.
So we have a little bit of, we have some time and as you know, November and December is when we will in earnest set the prices for.
or with our customers for the early part of 2025. Obviously we believe that prices should increase as we go through 2025 and so it's our intent that we'll go as short-term as possible.
But again, that's something that we're currently working on and is I made reference also to We are keenly focused on
Ring and Cost and Operating expense, again without compromising safe operations.
and other things and so that's an ongoing process. So a very long-winded answer to I can't sit here today and give you our view of what 25 is. As we referenced it, we'll let you know that on the fourth quarter call.
and how all that plays into the capital allocation program. I think it's going to be driven by what the result of that is as we go through this this budgeting process and then have further discussions with the board in January.
Speaker Change: Thank you.
Thank you. Our next question is from Wade Souty with Capital One. Please pursue your question.
Good morning everyone. Thank you. I'll take my question.
Just expand maybe a little bit on any of the Michael's question before looking out next year and beyond, I want to say it was last quarter. You also sort of laid out a couple of maybe high levels.
Hi, little view on Ebit. 25 and 26. Just thinking about it. Really.
is taking the step back. Any delta between your par of you and today would it be fair to say that's mostly a function of
Speaker Change: with your changing view is on soda ash and the environment there with the video.
I don't know, maybe a 5% impact from offshore next year delays. Mostly it's dependent on the sewed ash environment. Is that a fair way to think about it?
I would say that yes, the majority of the...
The Delta is going to be driven by, as I said in the prepared remarks, that just literally within the last 90 days, we've seen, I think, on the scribe, it has been rather sloppy.
Again, we've been here before. This is...
So-Dash Market has been around since the 1860s and the natural producers have been in collusion ourselves. He started the natural production in South West Wyoming since around the early 1950s.
Speaker Change: We've been through this before and high-cost producers are going to have to shut him because they can't cover their cost and ultimately prices will rise and those of us that have a cost advantage will benefit from that.
Market's take time to work. I think that it's also the interplay with the amount of costs that we are targeting or thinking about.
Speaker Change: as we...
Speaker Change: Review our operations to maintain that cost competitive advantage how much we can get out in light of a slightly...
Chopper, or slightly more negative outlook, at least for their first part of 25. So again, I can't, I don't want to get out over my skis as we're rolling all of this up.
with the data points that I referred to and my response to Michael was. But I think that we are to get back to the central.
The theme and thesis is...
We're going to hit the Inflaction Point, so matter of where not if and depending upon the...
Speaker Change: Performance of the So-Dash Business relative to the recovery overcoming the
Technical and operational issues in the Gulf that we've been explicit about and the performance and over performance out of the new growth coming from the Gulf of Mexico. We need to kind of roll all of that up and be able to better answer the question and January.
Speaker Change: and on fire up understood.
Speaker Change: I appreciate that day and that's a vacuum corner he really think but as I think about it and you think there's a normalization and so to ask him let's say the 26th time frame really the out year shouldn't be all that affected from your prior view is that it's
is at the fair state of the New York.
I think that's an absolute fair statement. I mean, if we return to normalcy and keep our costs in line and...
Speaker Change: on the so-called as business in particular, we anticipate that everything should be...
Speaker Change: and yep.
Speaker Change: and the back half of 25 and certainly into 26 and beyond everything is 100% intact. Again, as I described 24 is, it has turned out to be even more challenging than what we could have reasonably anticipated.
Speaker Change: and especially in regards to the Calculate Labored Ratio that...
Speaker Change: and Sticks with this on an LTM basis.
Speaker Change: [inaudible] Also the headline number is early slung the total funded debt to Joseph E. B. D. Rayshow.
Speaker Change: is a...
You know, that's going to stick with this for a while, but I agree with your hypothesis or your statement that this has no effect on late 25 and 26 and beyond assuming a normalization financial results out of the soda ash business.
Speaker Change: Thanks for that, appreciate it. Just which gears to offshore you gave us some kind of good color on some of the operational technical issues impacting your producer customers.
I think I heard there were-
couple of different producers that are very, very free producers. Would you mind kind of going through some of the technical issues one more time this?
is better understand what's happening out there and I totally appreciate it. It's all hitting at once but just kind of curious.
and I got a very careful. Yeah, and we got to be very careful because obviously we're in under NDAs with them. I tried to give you a flavor for a couple of the types of instances which occurred.
and the process of drilling a brand new development will the drilling rig.
Speaker Change: Lossed going of casing, which flowed it down, 50-100 feet of water and landed on top of some existing flowlands and control and billiards for some producing wells. So obviously...
Speaker Change: One has to go through the process of a removing that and then be going in and testing and making sure that it no damage was occurred. So, this is not like you back a truck up and start pulling tubing and stuff.
Speaker Change: and Sons was in a multi-avv zone completion well with the Head of Pre-Install of Mechanical Sleep to be able to shut off the purse and one of the zones.
and that zone started producing water.
Sleep couldn't be remotely.
Move to shut off that water and as a result, they had to go into the workover when you do in workovers.
7,000 feet of water on 27,000 feet well, it's not the easiest and quickest overnight solution to do things.
You know, it's again, if you go back and once I published the...
for Paird remarks, I gave a couple of other examples, but, you know, so again, it's things that are totally beyond our control and quite...
Frankly, they're pretty rare and unexpected from the producing community. And as I said, I've never seen a quarter or two where you have this many kind of fall-on top of each other, but let's get it behind us and get on the stuff.
You know, as you can tell...
and if you look at the offshore performance in the first quarter, $97 million versus $72 million in the third quarter, I can unequivocally sit here and pound the table, but that's not a decline.
Speaker Change: and the production capability associated with the attached and known facilities. That is driven by something completely outside of our control and the operators control.
Speaker Change: Thank you.
As a reminder, if you'd like to ask a question, please press star 1 on your telephone key tab.
Speaker Change: Our next question is from Alvair Scata with RBC Capital Markets. Please proceed with your question.
Hey, good morning everyone, and thanks for taking my question. I guess I just want to follow up there on Weed's question.
You know, these one-time issues that we've seen and granted their rare.
What gives you the confidence that as we go into 2025, you know, we're not going to see issues, or are there protections in place? And I guess just from a broader perspective, when can we expect some?
I guess less volatility in the offshore segment would that be like starting in the second quarter of 2025? Any help there would be appreciated?
Speaker Change: Again, I would describe this as, you know, on the verge of being a calamitous coincident.
of things that kind of individually can happen from time to time, but all of them happen in it once, especially at some of what I would call the high value.
Fields from our perspective is very unusual.
Speaker Change: Clearly, the producers and operators have a greater economic incentive to...
Not have these occur and if they do occur to fix them as soon as they can safely and responsibly do it I mean they get $70 a barrel we get a couple of dollars a barrel so you know
Speaker Change: It's a bit unfortunate but again I kind of tie back a little bit to the...
to the comparison I just made to the first quarter offshore margin being in the Zipcode $97 million versus $72 million.
That is not something that anybody anticipated, even the second quarter was, I think, around 86 or something, which was the beginning of the realization of some of these.
some of these mechanical issues. So again, and our all-aconsay is it in my 40 years working in the deep water Gulf of Mexico from an infrastructure point of view. I've never seen this much occur.
I don't think it's indicative of...
Speaker Change: Thanks everybody is prudent and doing what they can to do safe and responsible and economic operations.
Speaker Change: Hopefully, you know, we get it behind us and we get to a more normalized.
Right, so, you know, if that kind of equates to, you know, ninety to ninety five million dollars a quarter, stabilized before you start seeing the ramp from, Shannon Dwayne's Salamaka, that's kind of how we view the world.
Speaker Change: [inaudible]
Speaker Change: Ok.
and that's helpful. And then, just on teaching years here, can you talk a little bit about these issues at what they go that affected production? And then, I don't know if you were able to at this point, but to provide any word detail into some of these remediation efforts and cost cutting and streamlining efforts. And if you're able to quantify, like, your goals there.
Yeah, I mean it's a number of things at Westbaco including things as simple as...
Speaker Change: conveyor belts moving from the sub-surface mining operations to the oil pile upstairs, having an unusual...
Speaker Change: Uh...
Several months from a performance behavior point of view and that's again, that's going back in perspective for 70 plus years of continuous mining.
Speaker Change: to discover some structural issues and a mind shaft that from a safety point of view has to be immediately fixed because we're not going to take any risk on those types of important.
Speaker Change: So again, we have our team focused, this is very unusual. I mean, if you look at kind of a historical basis, we have been consistently...
Improving or total are production statistics. Again, not at the expense of maintaining cycle operations, but just again, it's kind of...
Speaker Change: 24s, then kind of a...
Rough Year from an operational point of view. So again, we're stepping back, we've instructed and we have everybody sign off from the management team.
to step back, evaluate processes, what changes we need to make in order to address and reduce the number of incidences, which affect our production capabilities. And at the same time, then...
Take a hard look at our overall fixed cost.
It's both from across the board and make a determination. If we tighten our belt and...
Can we hit our production numbers in maintain safe and responsible operations and do it cheaper in future periods to aid deal with the near-term realities of softness and prices, but as I also said by doing so then we will benefit even more as soon as we see the tightening and the turnaround in prices.
That's what we can control at this point, and that's what we're focused on being on with what we can control and being in position to benefit when the market allows us to do even better.
I think that makes a lot of sense. Do you think this is something that, as you go into this process or something that you can at least, you know, identify what changes you need to make? Is it something that you think you can do in the near term or is this going to be a year or multi-year type of process?
You know, sprinting between now and the end of the year and having processes in place and steps identified and steps implemented to hit the ground running in 2025.
Thank you very much. Thank you.
Thank you. There are no further questions at this time. I'd like to hand the floor back over to Grant Sims for any closing comments.
Thanks again everyone for dialing in and listening and we appreciate your interest in the Genesis story and we'll talk soon. Thank you.
This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
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