Q3 2024 Ovintiv Inc Earnings Call
Speaker Change: Good day, ladies and gentlemen, and thank you for standing by. Welcome to Inventive's 2024 Third Quarter Results Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.
Speaker Change: Members of the investment community will have the opportunity to ask questions and can join the queue at any time by pressing star 1.
Speaker Change: For members of the media attending in a listen-only mode today, you may quote statements made by any of the eventive representatives. However, members of the media who wish to quote others who are speaking on this call today, we advise you to contact those individuals directly to obtain their consent.
Speaker Change: Please be advised that this conference call may not be recorded or be broadcast without the express consent of OVINTIV.
Speaker Change: I would now like to turn the conference call over to Jason Verhaest from Investor Relations. Please go ahead, Mr. Verhaest.
Thanks, Joanna, and welcome, everyone, to our third-quarter conference call.
Speaker Change: This call is being webcast and the slides are available on our website at ovintiv.com. Please take note of the advisory regarding forward-looking statements at the beginning of our slides and under disclosure documents filed on EDGAR and CDAR Plus.
Speaker Change: Following the prepared remarks, we will be available to take your questions.
Speaker Change: I'll now turn the call over to our President and CEO, Brendan McCracken.
Thanks, Jason. Good morning, everybody. Thank you for joining us.
Brendan Mccracken: We delivered net earnings of $507 million, or $1.92 per share, and cash flow of $978 million, or $3.70 per share, beating consensus estimates.
Brendan Mccracken: The cash flow beat was driven by both production and cost outperformance, as we exceeded the top end of our production guidance ranges on all products and came in below the bottom end of guidance range on combined TMP and LOE.
Brendan Mccracken: We generated free cash flow of $440 million, which was higher than the second quarter despite lower oil prices.
Brendan Mccracken: We're excited about what we're doing to make sure that our operational excellence transfers all the way through to financial performance.
Brendan Mccracken: With the extra production and lower costs we've delivered this year, we're on track to generate an incremental $200 million more free cash flow.
Brendan Mccracken: We return 60% of our second quarter free cash flow to our shareholders via our base dividend and our third quarter share buyback.
Speaker Change: Importantly, we continued to make progress on debt reduction during the quarter, repaying $210 million for total debt at the end of Q3 at $5.88 billion. I'll now turn the call over to Corey to discuss our third quarter results in more detail.
Corey: Thanks, Brendan. We delivered strong operational performance across the portfolio with third-quarter oil and condensate volumes averaging approximately 212,000 barrels per day.
Corey: and total production of about 593,000 barrels of equivalent per day, beating the high end of our guidance. The production beat was driven by the Permian and the Montigny, where we continue to see strong well results and outperformance from our base volumes.
Corey: Our third quarter capital investment was approximately $538 million, almost at the bottom end of our guidance range.
Corey: We met or beat guidance on every item, continuing to build on our track record as an industry-leading operator.
Corey: Our shareholder returns framework continued to balance the allocation of free cash flow to share buybacks with debt repayment during the quarter. We returned $240 million to our shareholders through shareware purchases of $162 million and base dividends of $78 million.
This represents a competitive cash return yield of approximately 9%.
Corey: Since the inception of our buyback program in the third quarter of 2021 through the third quarter of 2024, we've repurchased more than 40 million shares and distributed approximately $850 million in base dividend payments for total shareholder returns of about $2.7 billion.
Corey: We reduced debt by more than $210 million, and our 12-month trailing leverage ratio was 1.2 times.
Corey: In the fourth quarter, we expect to direct $150 million from our previously disclosed Legacy Disposition Settlement to debt reduction. $50 million of this has already been received and applied to debt reduction in October.
Corey: We continue to make progress towards optimizing our capital structure, decreasing our leverage, and reducing interest expense. We also remain committed to our mid-cycle leverage target of one times, or about $4 billion of total debt, assuming mid-cycle prices.
Corey: The maturity profile of our bonds will allow us to optimize our debt pay down schedule over the next couple of years as we work towards that target.
Corey: Our continuous improvement in capital efficiency will allow us to generate additional cash flow and reach our debt target sooner. This bolsters the resiliency of our business and enables us to withstand market volatility. We remain investment-grade rated, with a stable outlook from all four credit rating agencies.
Corey: I'll now turn the call over to Greg to discuss our operational highlights.
Greg: Thanks Corey. Our teams continue to drive efficiency gains in every part of our business during the quarter.
Greg: This is important for a couple of reasons. First, it shifts revenue earlier in time, which increases returns. But it also results in lower costs because many of the services in our business are billed by the number of hours or days on location.
Greg: In the Permian, this was our fastest quarter ever for drilling speed, which averaged more than 2,170 feet per day and was roughly 28% faster than the program average last year.
Greg: On completions, our third quarter average completed feet per day was about 3,875. This was 21% faster than our 2023 program average.
Greg: These cycle time improvements mean that we continue to drive our well costs lower, and during the quarter, our pace setter well cost in the Permian was less than $600 per foot.
Greg: We recently dropped down to 5 rigs from 6 to better align the pace of our drilling and completion activities. We plan to run 5 rigs through the end of the year.
Greg: We continue to see our 2024 Permian well performance tracking our type curve, and we were able to essentially hold volumes flat quarter over quarter at approximately 124,000 barrels per day.
Greg: We've brought 154 wells online since the fourth quarter of last year, and the performance is right in line with our type curve.
Greg: As a reminder, the 2024 type curve is higher than our 2023 well results, incorporating all the improved well productivity we achieved last year.
Greg: We remain fully confident in our ability to meet our type curve in the Permian, which is unchanged from the start of the year.
Greg: In the Montney, we drilled an average of 1,820 feet per day, which was about 6% faster than our 2023 program average.
Greg: We also drilled the longest well ever in the play at more than 18,000 feet. In fact, Ovendove has drilled 14 of the 20 longest wells on record in the Montany.
Greg: On the completion side, our third quarter average of over 5,100 feet completed per day was 24% faster than the program average last year and is on par with our trimal frac averages in the Permian.
Greg: Our Montany and Welland condensate production averaged 32,000 barrels per day in the quarter, and we plan to run three rigs in the play through year-end.
Greg: The Montany has the lowest well cost in the portfolio, and our paste setter wells cost less than $500 per foot for drilling and completions.
Greg: Supported by our oil and condensate productivity, the economics on Remotney Wells remain outstanding.
Greg: Even at current strip pricing, we expect to generate a program-level IRR of more than 60%.
Greg: Note that that over 60% IOR result assumes full exposure to Stripeco, and our actual realized prices have been much better because of our price diversification strategy.
Greg: Moving to the Anadarko, we continue to benefit from the strong free cash flow generation from the asset, in part due to its exceptionally low base decline.
Greg: Our 2024 program was designed to target the oiliest parts of our acreage.
Greg: The early production from these wells has displayed first-year oil cuts of more than 55%, with about 85% of first-year revenue coming from oil.
Greg: The team has made significant progress on drilling speed, now averaging over 2,600 feet per day in less than 8 days from spud to rig release, or about 28% faster than the 2023 program average.
Greg: This improvement contributed to our new pace setter DNC cost in the Anadarko of about $500 per foot, enhanced the economics of our 8-well program, which we completed during the quarter. We currently have one active rig in the play, which we will continue to run through the end of the year.
Greg: In the UINTA, our strong wealth performance combined with our continued progress on cost reductions has made the play competitive in our portfolio, with margins similar to what we receive in the Permian.
Greg: Our largely undeveloped land base of approximately 137,000 net acres, with about 1,000 feet of collective pay, means we have significant scale and running room in the play.
Greg: Our third quarter oil and condensate production of 29,000 barrels per day is consistent with our expected go-forward run rate for production from the asset.
and Jason Verhaest.
Jason Verhaest: As of the end of the third quarter, we have brought on line 27 net wells, our total expected turn in lines for the year.
Jason Verhaest: We recently resumed drilling into play, and we plan to run one rig through the end of the year.
I'll now turn the call back to Brendan.
Thanks, Greg.
Brendan Mccracken: Capital efficiency and free cash generation remain the hallmark of our 2024 program, as we work to generate superior and durable returns for our shareholders.
Speaker Change: For the third time this year, we're increasing our production guidance while maintaining our targeted capital spending. We expect to deliver higher volumes across all product streams.
Speaker Change: This includes 210,000 barrels a day of oil in condensate, up 5,000 barrels a day from our expectations at the start of the year, and up 10,000 barrels a day from our original outlook in June of last year.
Speaker Change: Fourth quarter production is set to average 575,000 to 595,000 BOEs per day, with oil and condensate volumes of about 205,000 barrels a day at the midpoint.
Speaker Change: We expect fourth-quarter capital investment to come in around $550 million at the midpoint, and we remain committed to the midpoint of our full-year guide at $2.3 billion.
Speaker Change: Our 2024 program is repeatable in 2025 and beyond, allowing us to sustain approximately 205,000 barrels a day of oil and condensate production, with capital investment of about $2.3 billion per year.
Speaker Change: In summary, we continue to deliver outstanding results. We're focused on maximizing the profitability of our business, generating significant free cash flow, and maintaining our strong balance sheet. We take great pride in producing safe, affordable, reliable, and secure energy, while delivering superior returns to our shareholders.
Speaker Change: This concludes our prepared remarks. Operator, we're now ready to open the line for questions.
Thank you.
Speaker Change: Ladies and gentlemen, as a reminder, you can join the queue to ask a question by pressing star 1. We will now begin the question and answer session and go to the first caller.
Speaker Change: First question comes from Gabe Dowood at TD Cowan. Please go ahead.
Gabe Dowood: Thanks. Morning, Brendan and team. I was hoping, Brendan, we could maybe start with your capital budget. Obviously, you've highlighted...
Gabe Dowood: your guidance evolution on the volume front and you've increased that quite a bit moving through 2024. But the 2.3 has been pretty static, at least the midpoint of your guidance ranges this year. So given the efficiency gains you've seen, can you maybe talk a little bit about that 2.3 number and how that trends into 2025?
Yeah, for sure, Gabe. Yeah, thanks for the question.
Gabe Dowood: worth reminding ourself of the production shape that we had planned for this year. When we closed the NCAP acquisition, we had a huge number of wells in progress, and we were significantly slowing the activity level down in the assets to run them for free cash and returns.
Gabe Dowood: Now obviously that integration has gone very well and credit to the team.
Gabe Dowood: But we still have that overriding shape in our production profile on where we're landing the oil run rate at a new stable level of 205,000 barrels a day. And so...
Gabe Dowood: We originally guided that landing to come in the first half of this year, but OutPerformance has pushed that landing now into the fourth quarter, which is a fantastic outcome for free cash. And we'll continue to optimize and tune the 25 program and do our official guidance with our year-end results.
Gabe Dowood: You know, as you point out, lots of things going in the right direction, but we're still in the midst of pricing for next year on services and equipment.
Gabe Dowood: and planning the detailed program. So, you know, don't want to get out over our skis. And so, for now, the 2.3 and 205 is the right way to think about next year. And remember, that's 5,000 barrels a day higher than our original guide.
Speaker Change: Got it. Got it. Okay. Okay. Thanks, Brendan. That's helpful. Obviously, stay tuned for some more formal details. And then, I guess, just as a follow-up, maybe, can we get your updated comments on M&A and the AMD markets generally? There's been, obviously, a number of media reports related to you guys. So, we'd love to just get your updated thoughts on all of that. Thanks, Brendan.
Yeah, Gabe, for sure.
Brendan Mccracken: So, I mean, really a consistent message from us on this topic, you know, what I'd say is acquisitions have an extremely high hurdle for us.
Brendan Mccracken: built up a very high-quality portfolio with a deep inventory in each asset. And we're extremely disciplined about how we steward our shareholders' capital. And as you can see from our results and our focus,
Brendan Mccracken: We're really focused on execution and driving free cash flow out of the business. So That's that's kind of where I'd leave that
Thanks Brendan, thanks Gabe. Yeah, thanks Gabe.
Speaker Change: Thank you. The next question comes from Neil Dingman at Truist Securities. Please go ahead.
Neil Dingman: Good morning, Brendan and team. Another excellent quarter. My first question, Brendan, is maybe on your notable continued efficiencies that we, you know, even saw this last quarter. I'm just wondering specifically, the last few quarters, you know, you all have notably outperformed production forecast using what I certainly what seems to be less expected capital. I'm just wondering,
Neil Dingman: Could you give me an idea of maybe some of the bigger drivers around this? Is it certain areas that are outperforming or, you know, different things that Greg and the operation teams are doing? I'm just wondering what would have been the drivers of this continued upside.
Yeah, thanks, Neil. And, yeah.
Speaker Change: Really, it's been a very intentional exercise and a lot of the, or really everything we are doing from an innovation perspective is driven in the service of generating more free cash from the business.
Speaker Change: And so, you know, I'll talk a bit about some of the operational things like you asked, but I would also say it extends all the way through the business to our bottom line financial performance to drive that incremental free cash.
Speaker Change: But I would say, look, this is a skill we've built up over time. And like you pointed to, the results are speaking for themselves.
Speaker Change: We did investor tours in both the Permian and Monty this year and really what we were doing there is showcasing the sophistication and cutting-edge work that our teams are doing.
Speaker Change: A few things I'd point to, what started a foundation really has been our data strategy. So a lot of what we do is analytical and engineering and geoscience work, and you have to have great data to do that with.
Speaker Change: Over a number of years here, we've built up a unique private data set across North America that I think has given us a real edge to understand true causality.
Speaker Change: And then second, we've kind of combined that with a real lean in on our culture of innovation where, you know, throughout the entire team, everybody's engaged on being curious and trying to find those new opportunities.
Speaker Change: And one of the things we showcased on those Montany and Permian tours this year was the AI machine learning automation that we've deployed, not only in our DNC operations, but also in our production operations.
Speaker Change: We're excited about how those things are leading to best-in-class drilling and completion speed and costs.
but also lowering our base decline across the portfolio.
Speaker Change: Maybe the final thing I'd leave you with is, you know, really working hard to break down
Speaker Change: you know maybe a bit of an industry bad habit around being insular within the company walls and
Speaker Change: One of the things we often say is the only infinite rate of return available to us is learning from another operator's risk capital, and we've been really outward-focused at studying and watching the leading-edge things that our peers are doing and then backward-incorporating those back into our business.
Speaker Change: And finally, I would just say to your question, it's really spread across all the assets. We've been working hard to create collaboration across each asset in the portfolio and move those ideas rapidly around the company. So a lot there, Neil, but it's an important part of the story.
Speaker Change: No, very, very detailed. I appreciate that. And then maybe second question for Greg. Well, maybe on the same line a little bit. Specifically, you know, just Greg, you're, you know, I like the slide in there you talked about
Speaker Change: And it's notable to optimize a Permian program. And I was just curious, you know, when you look at it today versus maybe a year ago, you know, are things like DNC activity or logistics? I'm just wondering.
Speaker Change: where you're seeing, you notice a couple of wells that cost are not only coming down, but the returns are at record levels. And I'm just wondering, is that largely driven through, you know, more e-fleets and completions? Or, you know, what are you doing to sort of set these records?
Thanks for your question, Neil, and, you know, it's...
Speaker Change: As Brendan was mentioning, it's really the combination of a lot of things that the teams are working on to improve our...
Speaker Change: It's a combination of high-performance rigs, it's the better frag fleets. When it comes to E-fleets, they're a great part of the fleet and part of the improvement, but it really comes down to whatever equipment you're using, how well you can execute with it. We always point to, you know, there's three things you can do to improve returns. Place laterals in the right place, design your jobs to optimize productivity per foot.
Speaker Change: And the teams are working on all of those fronts, which is what's showing up in the strong execution and performance.
Speaker Change: As Brendan mentioned, that's allowed us to push back that landing zone in the Permian back to the fourth quarter. And going forward, you know, if we think about the Permian and specifically, we've gotten to a point where we feel like, you know, five rigs and one frack crew will get our whole program drilled, and that same, you know, match of rigs and frack fleet will do a lot more feet now than it would have done a year ago. And so that's why we dropped from six rigs down to five, but we feel like that's kind of the go-forward status quo for us.
Speaker Change: running five rigs in a frat crew and just being as efficient as we can using all the different technologies that are available to us.
Thank you both. Yeah, thanks Neil.
Speaker Change: Thank you. The next question comes from Neil Mehta at Goldman Sachs. Please go ahead.
Neil Mehta: Thanks so much guys. Two relatively easy questions for me. One is, one of the big debates
Speaker Change: We produce a lot of gas in the Western Canada market and in the Permian and both of those markets have been horrific for gas prices through the summer months.
Speaker Change: So what we set up over the last several years is base and egress out of both of those places. So we really tried to minimize our exposure to those two markets.
Speaker Change: And that, you know, has been paying off. And so, really, we're kind of continuing to lean into that strategy.
Speaker Change: with the acquisition in the Permian. We picked up a bunch of WAHA exposure with those assets, and we just recently secured some additional capacity starting late next year.
Speaker Change: to egress gas out of the Permian. So we'll be kind of bringing that pie chart that's in the appendix slides of ours back into a kind of more normal place for us where we're getting most of our gas outside of Aco and most of our gas outside of Oahu.
Speaker Change: Okay, that makes sense, Brendan. And then, you know, you talked a little bit about the UINTA in the deck, but just curious on your perspective of...
Speaker Change: of monetization of that asset, how we should think about whether that asset could trade, and any comments you would have on the process there.
Speaker Change: Yeah, no, for sure, Neil. And I think, you know, pretty consistent message here from us.
Speaker Change: You know, we're always thinking about how we can create value with our portfolio.
That's our job.
Speaker Change: But, you know, we focus down to the four assets that we have today and they're all great assets. They're competitive for capital.
Speaker Change: Delivering consistent returns across the portfolio and with the UINTA, what's really helped there is getting our margin competitive. And then the team's been working to drive down drilling costs. So, yeah, I think that's where I'd leave it.
Thank you, sir. Thank you.
Speaker Change: Thank you. The next question comes from Doug Luggett at Wolf Research. Please go ahead.
Speaker Change: Thanks. Good morning, everyone. Thanks for taking my questions. Brendan, you know, two kind of philosophical questions, I guess. When you look at the extraordinary progress you've made with, you know, every other quarter you're doing a new piece at or well in one of your basins.
Speaker Change: It seems that, as we look to 2025, there's a choice coming for OVINTIV, which is...
Speaker Change: Some options given to you by the strength of your operations. Which of those two would you rather take higher production or lower capital?
Speaker Change: Yeah, it's a great dilemma to have and, you know, what I'd say is we'll be driven by value and really free cash generation.
Speaker Change: the kind of couple of the parameters that we'll look at as as we make those decisions is going to be
Speaker Change: How do we feel about the macro? So is the world looking for more barrels and BTUs? And then also, how do we look from a load-leveled perspective? Because we really feel like the efficiency gains that the load-leveled program that we're set up for is.
Speaker Change: is helpful. So, you know, if you look at what we did this year, we chose to kind of let production float out and harvested the free cash flow there. We found that to be the more accretive choice. And so we'll do the same calculus next year. And
Speaker Change: You know, if the world turns out a little more bearish and it makes sense to pull the capital back and just kind of keep the volumes flat, then that's the choice we would make in that instance.
Speaker Change: Okay, we will watch for the guidance. Thank you for that. I did see I had two philosophical questions, and you'll have to forgive me for the second one. Execution-wise, it's been flawless pretty much since you took the helm.
Speaker Change: You've done your share of deals. You're a $10 billion company in a $2 trillion sector. It's kind of tough.
Speaker Change: So my question is, how do you gain relevance? Putting good assets in the hands of good, strong management is...
Speaker Change: is a way to create value. But I wonder, do you think you have the scale to compete for investor dollars? And if not, what might you do to change that?
Speaker Change: Yeah, and again, I would say the driver here is going to be shareholder value, you know, we're always engaged in a strategic conversation around how we do that and what's the most effective way to do that.
Speaker Change: The innovation and efficiency gains tend to be driven from that group, and we're certainly at the forefront of doing that.
Speaker Change: I think from a scale perspective, look, you know, I think there is an investor relevancy scale but I think we're there. We continue to have a lot of engagement and, you know, don't see that as a barrier as we sit here today. But look, we're always looking for how we create the most shareholder value.
Speaker Change: Could I maybe put a Part B on that and ask you if you would care to comment about whether you're currently engaged in any particular M&A discussions?
Speaker Change: As you know, Doug, we are not able to ever comment on that, so I'm afraid I can't answer that one.
Worth a try. Thanks Brendan. Take care.
Speaker Change: Thank you. The next question comes from Kalle Ackermann at Bank of America. Please go ahead.
Hey, good morning, guys. Thanks for getting me on.
Speaker Change: I guess my first question is on Permian oil. It seems to be holding up a little bit better than expected here It's still above your soft guide of 115 to 120. So aesthetically it looks like you've already mitigated the decline
Speaker Change: from the NCAP transaction. When do you think that you'll have a better understanding of where that's going to send it out?
Speaker Change: Well, yeah, I think, Clay, great question. What we pointed to here was landing that at around 120,000 barrels a day, and, you know, really seeing that landing happen in the fourth quarter here. So, we pushed that kind of...
Speaker Change: production up through the middle part of this year, which is great because it let us harvest more free cash and more value. And we're kind of in the midst of that landing right now.
Speaker Change: Got it, and I appreciate that. My second is a follow-up on the operational improvements. The stat that jumped out this quarter was the drilling times in the Permian. If you were to extrapolate those cycle times for 25, how many more wells do you think you'll drill in 25 over 24?
Yeah, I think, you know, if you looked at our...
Speaker Change: Tills for this year, it would put us in the upper end of that till range year over year.
That's great color. I appreciate that. Thanks.
Yep, thank you.
Speaker Change: Thank you. The next question comes from Arun Jeyaram at J.P. Morgan. Please go ahead.
and Jason Verhaest.
Speaker Change: Good morning. Brendan, I was wondering if you could discuss your thoughts on the implications of LNG Canada, which could start mid-next year, and implications for the Canadian gas market as well as your position in the mining.
Brendan Mccracken: Yeah, I think, you know, look, this is going to be a long-term great thing for Canadian gas. I think, you know, LNG Canada could start up early 2025. We don't have any special insight there, but that would be kind of the best steering we would have.
Brendan Mccracken: and then ramp up through the year. So you're talking about 2.2 BCF a day of incremental takeaway, which is a big share of the Canadian gas market.
Brendan Mccracken: But what we see when we look at the landscape there is the number of gas-leveraged operators have drilled into that upcoming capacity.
Brendan Mccracken: Perhaps not unlike what we see in the Permian, where egress fills relatively quickly, new egress fills relatively quickly. That's probably going to be the dynamic that we see with LNG Canada. So we would say ACO is going to tighten, but it probably might have a bit of a transitory feature to it.
Brendan Mccracken: That's kind of been a cautious tone that we've taken, and anything better than that is upside for us. And then, of course, what we're really excited about is some of the projects.
Brendan Mccracken: coming in behind LNG Canada Phase 1 that, you know, probably are more towards the end of the decade, but offer even more egress out of the basin and will continue to support ACO pricing.
Speaker Change: Brendan, I was wondering if you could characterize what you're seeing in the A&D market, obviously a large trade potentially in the Midland Basin, but just thoughts on what you're seeing and the ability to maybe leverage what looks to be one of the lower cost structures in the Permian Basin and other basins to your advantage.
and Jason Verhaest. Thank you.
Speaker Change: Yeah, Ren, for sure. I think, you know, probably the biggest notable feature has been the increase in valuations that have been paid in the A&D market from when we did our deal.
Speaker Change: And so, you know, for us, acquisitions have a very high hurdle because we've already built up a really high quality portfolio with a deep inventory there. So, you know, we're just very disciplined with how we're stewarding the shareholder capital and that's how you should expect us to behave.
Okay, thanks.
Thank you.
Speaker Change: Thank you. Next question comes from Jeff Jay at Daniel Energy Partners. Please go ahead.
Jeff Jay: Hi guys, I just have one. I noticed you said that 60% of your Permian completions were trimal frac. I'm wondering if that's sort of a good go forward right for your 2025 plan or if there's upside to that 60%?
Speaker Change: Yeah, I think that's a decent place to start. We're still putting the final details on next year's plan, so it could move around a little bit, but clearly we've marched up over the course of the year and with more and more of the program in Triumalfrac mode, so it's probably a decent place to start for 25.
Excellent. Thank you.
Speaker Change: Thank you. Jeff, you donated your extra question to Doug, I guess.
Speaker Change: Thank you. At this time, we have completed the question and answer session and will turn the call back to Mr. Verhaest.
Jason Verhaest: Thanks, Joanna. Thanks, everyone, for joining us today. Our call is now complete. Thanks, everybody.
Speaker Change: Ladies and gentlemen, this concludes your conference for today. We thank you for participating and we ask that you please disconnect your lines.