Full Year 2024 Baytex Energy Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Beta <unk> Energy Corps fourth quarter and year end conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.
The presentation there'll be an opportunity for analysts to ask questions to join the question queue. You May Press Star then one on your telephone keypad. You may also submit questions in writing at any time using the form in the lower section of the webcast frame should you need assistance. During the conference call you may signal, an operator by pressing Star then zero.
[music].
I would now like to turn the conference over to Brian Ector, Senior Vice President capital markets and Investor Relations. Please go ahead.
Okay.
Thank you for standing by this is the conference operator, welcome to the Bay tax Energy Corp, fourth quarter and year end conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.
Speaker Change: Thank you Michael.
Speaker Change: Ladies and gentlemen, and thank you for joining us to discuss our fourth quarter and full year 2024 financial and operating results.
After the presentation, there will be an opportunity for analysts to ask questions to join the question queue. You May Press Star then one on your telephone keypad. You may also submit questions in writing at any time using the form in the lower section of the webcast frame.
Speaker Change: Today, I am joined by Eric Greg <unk>, our President and Chief Executive Officer, Chad <unk>, Our Chief Financial Officer, and Chad Lundberg, our Chief operating officer.
Speaker Change: While listening please keep in mind that some of our remarks will contain forward looking statements within the meaning of applicable securities laws.
Should you need assistance during the conference call. He may signal, an operator by pressing Star then zero.
Speaker Change: I refer you to the advisories regarding forward looking statements oil and gas information and non-GAAP financial and capital management measures in yesterday's press release.
I would now like to turn the conference over to Brian Ector, Senior Vice President capital markets and Investor Relations. Please go ahead.
Brian Ector: Thank you Michael and good morning, ladies and gentlemen, and thank you for joining us to discuss our fourth quarter and full year 2024 financial and operating results.
Speaker Change: On the call today, we will also be discussing the evaluation of our reserves at year end 2024.
Speaker Change: These evaluations have been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to United States or other disclosure standards.
Speaker Change: Today, I'm joined by Eric Greg <unk>, our President and Chief Executive Officer, Chad <unk>, our Chief Financial Officer and Chad.
Speaker Change: Our remarks regarding reserves are also forward looking statements.
Speaker Change: Chad Lundberg, our chief operating officer.
Speaker Change: Although lower amounts referenced in our remarks are in Canadian dollars unless otherwise specified.
Speaker Change: While listening please keep in mind that some of our remarks will contain forward looking statements within the meaning of applicable securities laws.
Speaker Change: And following our prepared remarks, we will be taking questions from analysts. In addition, if you are listening in today via the webcast you will have the opportunity to submit an online question and time permitting we will strive to answer your questions.
I refer you to the advisories regarding forward looking statements oil and gas information and non-GAAP financial and capital management measures in yesterday's press release.
Speaker Change: On the call today, we will also be discussing the evaluation of our reserves at year end 2024.
Eric: With that I will now like to turn the call over to Eric.
Eric: Thanks, Brian Good morning, everyone and welcome to our year end 2024 conference call.
Speaker Change: These evaluations have been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to United States or other disclosure standards are.
Eric: I am excited to discuss our 2024 results, but first I want to take a moment and recognize the hard work of our high quality teams in Texas and Western Canada.
Speaker Change: Our remarks regarding reserves are also forward looking statements.
Speaker Change: Although lower amounts referenced in our remarks are in Canadian dollars unless otherwise specified.
Eric: We have a strong and resilient organization that we are all proud to be part.
Speaker Change: And following our prepared remarks, we will be taking questions from analysts. In addition, if you are listening in today via the webcast you will have the opportunity to submit an online question and time permitting we will strive to answer your questions.
Eric: I would like to give special mention to our field staff, who work under extraordinary conditions. We were reminded of that again this year with extremely cold temperatures across North America.
Eric: We are grateful to our employees and contractors for their commitment to operating safely and their perseverance to deliver energy to power People's lives.
Eric: And with that I will now like to turn the call over to Eric.
Eric: Thanks, Brian Good morning, everyone and welcome to our year end 2024 conference call.
Eric: Let's turn to the highlights of 2024.
Eric: Okay.
Eric: Our 2020 for production and capital expenditures.
Eric: I am excited to discuss our 2024 results, but first I want to take a moment and recognize the hard work of our high quality teams in Texas and Western Canada.
Eric: We're in line with our original full year guidance and our results speak to our disciplined capital allocation philosophy that continues to deliver increased per share returns.
Eric: We have a strong and resilient organization that we are all proud to be part.
Eric: In 2024, we generated 10% production per share growth and grew reserves per share across all categories.
Eric: I would like to give special mention to our field staff, who work under extraordinary conditions. We were reminded of that again this year with extremely cold temperatures across North America.
Eric: We improved our cash cost structure by 5% on a BOE basis, we increased our <unk> net asset value per share by 13% and we reduced net debt by 5% in Canadian dollar terms and 13% in U S dollar terms.
Eric: We're grateful to our employees and contractors for their commitment to operating safely and their perseverance to deliver energy to power People's lives.
Eric: Let's turn to the highlights of 2024.
Eric: Okay.
Eric: Our 2020 for production and capital expenditures.
Eric: It's important to keep in mind that most of our debt is held in U S dollars and converted to Canadian dollars for reporting purposes.
Eric: We're in line with our original full year guidance and our results speak to our disciplined capital allocation philosophy that continues to deliver increased per share returns.
Eric: On the reserves front, we replaced over 100% of our production on both <unk> and <unk> bases.
Eric: Importantly, our booked drilling locations within our <unk> reserves report represent only half of our net risk drilling inventory.
Eric: In 2024, we generated 10% production per share growth and grew reserves per share across all categories.
Eric: We generated strong PDP recycle ratios of one nine times and two seven times on a <unk> basis.
Eric: We improved our cash cost structure by 5% on a BOE basis, we increased our <unk> net asset value per share by 13% and we reduced net debt by 5% in Canadian dollar terms and 13% in U S dollar terms.
Eric: Respectively.
Eric: Which reflects the efficiency of our capital program and our high netback oil weighted portfolio.
Eric: It's important to keep in mind that most of our debt is held in U S dollars and converted to Canadian dollars for reporting purposes.
Eric: Across these important value creation measures I am pleased to say that our team delivered now I'll turn the call over to Chad <unk> cost to discuss our financial results.
Eric: On the reserve front, we replaced over 100% of our production on both <unk> and <unk> bases.
Chad Lundberg: Thanks, Eric.
Chad Lundberg: 2024 results demonstrate our commitment to generating meaningful free cash flow and delivering strong shareholder returns, we generated free cash flow of $656 million in 2024, and consistent with our plan and the timing of our capital program over 70% of this free cash flow was generated in the second half of the year.
Eric: Importantly, our booked drilling locations within our <unk> reserves report represent only half of our net risk drilling inventory.
Eric: We generated strong PDP recycle ratios of one nine times and two seven times on a <unk> basis.
Chad Lundberg: With our balanced shareholder return framework, we allocate about half of our free cash flow to debt reduction and the balance of shareholder returns, which includes share buybacks and our quarterly dividend.
Eric: Respectively.
Eric: This reflects the efficiency of our capital program and our high netback oil weighted portfolio.
Chad Lundberg: Across these important value creation measures I am pleased to say that our team delivered now I'll turn the call over to Chad <unk> to discuss our financial results.
Chad Lundberg: In 2024, we repurchased repurchased four 8 million common shares representing 6% of our shares outstanding. In addition, we declared four quarterly dividends of $2 two five per share.
Speaker Change: Thanks, Eric our 2024 results demonstrate our commitment to generating meaningful free cash flow and delivering strong shareholder returns.
Chad Lundberg: Over the last six quarters, we generated free cash flow of $1 1 billion and returned $550 million to shareholders through our share buyback program and dividend. This includes repurchasing more than 10% of our shares outstanding.
Chad Lundberg: We generated free cash flow of $656 million in 2024, and consistent with our plan and the timing of our capital program over 70% of this free cash flow was generated in the second half of the year.
Chad Lundberg: Debt reduction continues to be a priority.
Chad Lundberg: As Erik said in Canadian dollar terms, we reduced net debt by 5% in 2024, but a U S. Dollar terms the reduction was more significantly at a 13% reduction.
Chad Lundberg: With our balanced shareholder return framework, we allocate about half of our free cash flow to debt reduction and the balance of shareholder returns, which includes share buybacks and our quarterly dividend.
Chad Lundberg: A stronger U S dollar benefits, our topline revenues and bottom line free cash flow in 2025, we expect to generate approximately $400 million of free cash flow at U S $70 OTI.
Chad Lundberg: In 2024, we repurchased repurchased 48 million common shares representing 6% of our shares outstanding. In addition, we declared four quarterly dividends of $2 <unk> per share.
Chad Lundberg: Similar to 2024 based on our production profile and timing of capital expenditures. The majority of our free cash flow is expected to be generated in the second half of the year.
Chad Lundberg: Over the last six quarters, we generated free cash flow of $1 1 billion and returned $550 million to shareholders through our share buyback program and dividend. This includes repurchasing more than 10% of our shares outstanding.
Speaker Change: Now I will turn the call over to Chad Lundberg to discuss our operating results.
Speaker Change: Thanks, Chad I am pleased with the results of our 2024 program.
Chad Lundberg: Debt reduction continues to be a priority.
Chad Lundberg: As Erik said in Canadian dollar terms, we reduced net debt by 5% in 2024, but a U S. Dollar terms the reduction was more significantly at a 13% reduction.
Speaker Change: We safely executed on budget and delivered production consistent with our original full year guidance.
Speaker Change: Across our portfolio, we delivered strong drilling and completions performance in the Eagle Ford and Pembina, Duvernay and further delineated, our Clearwater and manville heavy oil acreage.
Speaker Change: A stronger U S dollar benefits, our topline revenues and bottom line free cash flow in 2025, we expect to generate approximately $400 million of free cash flow at U S $70 OTI.
Chad Lundberg: Similar to 2024 based on our production profile and timing of capital expenditures. The majority of our free cash flow is expected to be generated in the second half of the year.
Speaker Change: In the Eagle Ford, we brought Onstream 64 wells, including 51 operated or.
Speaker Change: Our development program was largely focused on the black and volatile oil windows of our acreage and we realized an 8% improvement in operated drilling and completions cost per completed lateral foot over 2023.
Speaker Change: Now I'll turn the call over to Chad Lundberg to discuss our operating results.
Speaker Change: Thanks, Chad I am pleased with the results of our 2024 program.
Speaker Change: We safely executed on budget and delivered production consistent with our original full year guidance.
Speaker Change: In 2025, we intend to run a consistent two rigs one frac crew program and are in the process of realizing a further 7% improvement in drilling and completion efficiency.
Speaker Change: Across our portfolio, we delivered strong drilling and completions performance in the Eagle Ford and Pembina, Duvernay and further delineated, our Clearwater and manville heavy oil acreage.
Speaker Change: Yes.
Speaker Change: In the Eagle Ford, we brought Onstream 64 wells, including 51 operated or.
Speaker Change: And our Canadian light oil business, we brought on stream seven strong wells in the permanent Duvernay and made substantial strides in advancing our understanding of the play.
Speaker Change: Our development program was largely focused on the black and volatile oil windows of our acreage and we realized an 8% improvement in operated drilling and completions cost per completed lateral foot over 2023.
Speaker Change: In 2025, we have expanded our program to include three three well pads and look forward to sharing the results of the program later this year.
Speaker Change: Yes.
Speaker Change: In 2025, we intend to run a consistent two rigs and one Frac crew program and are in the process of realizing a further 7% improvement in drilling and completion efficiency.
Speaker Change: In the Viking we brought on stream 95 wells and anticipate a similar program in 2025.
Our heavy oil business continued to deliver top well results in 2024, we brought Onstream 31 Clearwater wells at <unk>.
Speaker Change: And our Canadian light oil business, we brought Onstream seven strong wells in the Pembina Duvernay and made substantial strides in advancing our understanding of the play.
Speaker Change: Nine wells at Peace River, and 40 wells across the broader Manville group and Lloyd Minister.
Speaker Change: In 2025, we expect to bring on stream 112, heavy oil wells, including 33 Clearwater wells at the <unk>.
Speaker Change: In 2025, we have expanded our program to include three three well pads and look forward to sharing the results of the program later this year.
Speaker Change: As we progressed through the year, our operating teams will continue to focus on safe and efficient development across our portfolio.
Speaker Change: Yes.
Speaker Change: In the Viking we brought Onstream 95 wells and anticipate a similar program in 2025.
Eric: And with that I will turn the call back to Eric for his closing remarks.
Speaker Change: Our heavy oil business continued to deliver top well results in 2024, we brought Onstream 31, Clearwater wells at P volume.
Speaker Change: Thanks, Chad.
Speaker Change: I am pleased with our 2020 for operating and financial results, our free cash flow generation and our demonstrated commitment to safe operations and shareholder returns.
Speaker Change: Nine wells at Peace River, and 40 wells across the broader Manville group and Lloyd minutes there.
Speaker Change: For 2025, our full year guidance is unchanged with exploration and development expenditures of one two to $1 3 billion and production of 150000 Boe per day at the midpoint.
Speaker Change: In 2025, we expect to bring on stream 112, heavy oil wells, including 33 Clearwater wells at the <unk>.
Speaker Change: As we progress through the year, our operating teams will continue to focus on safe and efficient development across our portfolio.
Speaker Change: As Chad Lundberg mentioned, we are planning an efficient level loaded pace of development in the Eagle Ford.
Speaker Change: Further acceleration and advancement of the Pembina, Duvernay and continued efficient heavy oil development.
Eric: And with that I will turn the call back to Eric for his closing remarks.
Speaker Change: Along with a level Viking operation.
Eric: Thanks, Chad.
Speaker Change: We are well capitalized and remain focused on disciplined capital allocation prioritizing safe operations free cash flow generation and shareholder returns and now operator, we are ready to open the call for questions.
Eric: I am pleased with our 2020 for operating and financial results, our free cash flow generation and our demonstrated commitment to safe operations and shareholder returns.
Speaker Change: For 2025, our full year guidance is unchanged with exploration and development expenditures of one two to $1 3 billion and production of 150000 Boe per day at the midpoint.
Speaker Change: We will now begin the analyst question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request to submit your question in writing please use the form in the lower right section of the webcast frame.
Speaker Change: As Chad Lundberg mentioned, we are planning an efficient level loaded pace of development in the Eagle Ford.
Speaker Change: Further acceleration and advancement of the Pembina, Duvernay and continued efficient heavy oil development.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: Along with a level Viking operation.
We are well capitalized and remain focused on disciplined capital allocation prioritizing safe operations free cash flow generation and shareholder returns and now operator, we are ready to open the call for questions.
Speaker Change: We'll pause for a moment as callers join the queue.
Speaker Change: The first question comes from Menno whole shelf with TD Securities. Please go ahead.
Speaker Change: We will now begin the analyst question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
Speaker Change: Thanks, and good morning, everyone I'll start with a question on tariffs given yesterday's update maybe I should know this but have you actually taken effect today and if so what are the mechanics.
Speaker Change: You'll hear a tone acknowledging your request to submit your question in writing please use the form in the lower right section of the webcast frame.
Speaker Change: And how is that flowing through the business and Eric maybe given your strong industry connections in the U S. What is your best guess on how all of this plays out.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: We will pause for a moment as callers join the queue.
Speaker Change: I think first of all good morning, Thanks for the question.
Speaker Change: As far as we know the tariffs have been implemented and are effective. This morning. So that's the best information we've got.
Speaker Change: The first question comes from Menno whole shelf with TD Securities. Please go ahead.
Speaker Change: Thanks, and good morning, everyone I'll start with a question on tariffs given yesterday's update maybe I should know this but have you actually taken effect today and if so what are the mechanics.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: The structure of these is still.
Speaker Change: I think a little bit of a moving target because things are things move around it seems like constantly.
And how is that flowing through the business and Eric maybe given your strong industry connections in the U S. What is your best guess on how all of this plays out.
Speaker Change: What I would say is these are import tariffs so products flowing into the United States.
Speaker Change: The importer is charged to duty and that that duty is the direct kind of first order consequence of the tariff.
I think first of all good morning, Thanks for the question.
Speaker Change: And that's pretty straightforward I think to calculate that.
Speaker Change: As far as we know the tariffs have been implemented and are effective. This morning. So that's the best information we've got.
Speaker Change: Thing that becomes really difficult as the second and third order consequences and how those impacts are distributed through the economy all of the forward and backward linkages and what that means to distribution of impacts.
The structure of these is still.
Speaker Change: My hunch is that.
I think a little bit of a moving target because things are things move around it seems like constantly.
Speaker Change: If the impacts are uniform on Canadian energy imports to the United States that its going to disproportionately impact the Midwest refiners.
Speaker Change: What I would say is these are import tariffs so products flowing into the United States.
Speaker Change: Because of their dependence on pipeline connector WCS.
Speaker Change: The importer is charged a duty and that that duty is the direct kind of first order consequence of the tariff.
Speaker Change: And I expect that to be pretty substantially negative.
Speaker Change: And that's not going to be entirely borne by the Canadian energy exports.
Speaker Change: And that's pretty straightforward I think to calculate.
Speaker Change: Thing that becomes really difficult as the second and third order consequences and how those impacts are distributed through the economy all of the forward and backward linkages and what that means to distribution of impacts.
Speaker Change: What I think will ultimately begin to happen.
Speaker Change: But I think the tariff conversation both the quantum and some nuance between product streams is also probably still a moving target.
Speaker Change: My hunch is that.
Speaker Change: We.
Speaker Change: If the impacts are uniform on Canadian energy imports to the United States that its going to disproportionately impact Midwest refiners.
Speaker Change: R R.
Shielded to a certain degree.
Speaker Change: <unk>, 60% of our production originates on the U S, Texas Gulf Coast sold produced in Texas sold in Texas. The nominated in U S dollars and handled in our in our U S operation Our U S organization.
Speaker Change: Because of their dependence on pipeline connector WCS.
Speaker Change: And I expect that to be pretty substantially negative.
Speaker Change: And thats not going to be entirely borne by the Canadian energy exports.
Speaker Change: <unk> paid down against U S debt with all within the ring fence of the U S to the extent that that.
Speaker Change: What I think will ultimately begin to happen.
Speaker Change: But I think the tariff conversation both the quantum and some nuance between product streams is also probably still a moving target.
Speaker Change: That all happens within the four corners of the U S.
Speaker Change: And that protects us that insulates us to what degree.
Speaker Change: Over the long arc of time, that's all going to that's all going to change and.
Speaker Change: We.
Speaker Change: R R.
Speaker Change: Shielded to a certain degree.
Speaker Change: Kind of share impact, it's difficult to know, but what we do.
Speaker Change: <unk>, 60% of our production originates on the U S. Texas Gulf Coast sold produced in Texas sold in Texas denominated in U S dollars and handled in our in our U S operation Our U S organization.
Speaker Change: Some installation.
Speaker Change: Directly as a consequence of that 60% cash flow from the U S.
Speaker Change: Other than that I think.
Speaker Change: Alright, now other than that the only the only thing I think that is worth pointing out is that the.
Speaker Change: <unk> paid down against U S debt with all within the ring fence of the U S to the extent that that happens within the four corners of the U S.
Speaker Change: The best reflection of tariffs flowing through any of our businesses in Canada is Canadian producers.
Speaker Change: On the basis steps right, we'll watch that that'll that will price the impact in kind of continuous like sorry go ahead Madam.
Speaker Change: And that protects us that insulates us to what degree.
Speaker Change: Over the long arc of time, that's all going to that's all going to change and.
Eric: No that was that was that was great color Eric maybe.
Speaker Change: Kind of share impacts, it's difficult to know, but what we do.
Speaker Change: Maybe I'll just flip over to oil.
Eric: Oil prices there is.
Eric: As you can appreciate there is a growing bearishness out there I'm looking at my screen and were down another $2 $5 today.
Speaker Change: Some installation.
Speaker Change: Directly as a consequence of that 60% cash flow from the U S.
Eric: If we were to assume that oil prices check back to $60 and sit there for a while what what changes should we expect in terms of how you allocate capital into into the end of the year and beyond.
Speaker Change: Other than that I think.
Speaker Change: Alright, now other than that the only the only thing I think that is worth pointing out is that the.
Speaker Change: The best reflection of tariffs flowing through any of our businesses in Canada is Canadian producers.
Eric: Yes, it's a great question menno than we've been.
Speaker Change: On the basis desk right, we will watch that that'll that will price the impact in kind of continuous like sorry go ahead Madam.
Eric: I would like to say preparing for this if you think back to our December 2025 budget, when we released it.
Speaker Change: No that was that was that was great color Eric maybe.
Eric: We marked down against the $65 <unk> environment in that period of time late in 2024.
Speaker Change: Maybe I'll just flip over to oil.
Speaker Change: Oil prices there as you can appreciate there is a growing bearishness out there I'm looking at my screen and four down another $2 $5 today.
Eric: Prices.
Eric: Sure.
Eric: In the mid to high <unk> in the 2025 forecast looked weak.
Eric: Our rally through the end of the year and in the early part of 2025.
Eric: If we were to assume that oil prices check back to $60 and sit there for a while.
Eric: But its weak again and so what I would say is.
Speaker Change: What changes should we expect in terms of how you allocate capital into into the end of the year and beyond.
Eric: I'll reiterate.
Eric: What I, maybe said then even during that budget announcement.
Speaker Change: Yes, it's a great question menno than we've been.
Eric: As we will rationalize low returning projects.
Speaker Change: I would like to say preparing for this if you think back to our December 2025 budget, when we released it.
Eric: When prices.
Eric: Drive those returns to the point of it not being worth investing the capital in and those will be distributed across our portfolio. There's probably no part of our portfolio that will be immune to it.
Eric: We marked out against the $65 <unk> environment and in that period of time late in 2024.
Eric: Prices.
Eric: Because we have a distribution of.
Eric: Sure.
Eric: In the mid to high <unk> in the 2025 forecast looked weak.
Eric: Assets across each play.
Eric: And we're running at.
Eric: Our rally through the end of the year and in the early part of 2025.
Eric: Asset level economics, which are obviously the basis differentials are local pricing and all the rest and so.
Eric: But its weak again and so what I would say is.
Eric: I'll reiterate.
Eric: What I, maybe said then even during that budget announcement.
Eric: <unk>.
Speaker Change: Yes, I can't I can't give you a quantum right now, but what I would say is if prices move down to 60, there will there will be a couple of consequences, one we and many others are likely to.
Eric: As we will rationalize low returning projects.
Eric: When prices.
Eric: Drive those returns to the point of it not being worth investing the capital in and those will be distributed across our portfolio. There's probably no part of our portfolio that will be immune to it.
Pull back on capital activity and that should help solve the problem.
Speaker Change: The other thing that will happen as input costs will fall as a consequence of that reduced activity and that should lower breakeven.
Eric: Because we have a distribution of.
Speaker Change: Not just in our business, but in others as well and so with that I'll kick it back to <unk> and see if <unk> got other thoughts.
Eric: Assets across each play.
Eric: And we're running.
Asset level economics, which are obviously the basis differentials are local pricing and all the rest and so.
Speaker Change: No that's it for now thanks, Eric I'll turn it back.
Speaker Change: Thanks, Matt.
Eric: <unk>.
Speaker Change: Again, if you have a question. Please press Star then one are.
Speaker Change: Yes, I can't I can't give you a quantum right now, but what I would say is if prices move down to 60, there will there will be a couple of consequences, one we and many others.
Speaker Change: Our next question comes from Greg Pardy with RBC capital markets. Please go ahead.
Speaker Change: Hey, Good morning. This is Rob man on for Greg Pardy, and thanks for taking my questions. My first one just around your reported F&D costs, which came in much lower relative to 2023 is there anything specific you could point us towards that drove the improved results.
Speaker Change: Are likely to.
Speaker Change: Pull back on capital activity and that should help solve the problem.
Speaker Change: The other thing that will happen as input costs will fall as a consequence of that reduced activity and that should lower break evens not just in our business, but in others as well and so with that I'll kick it back to you Menlo and <unk> got other thoughts.
Yeah, Yeah, well good morning, Thanks, Robert.
Speaker Change: <unk>.
Speaker Change: Mhm.
Speaker Change: No that's it for now thanks, Eric ill turn it back.
Speaker Change: What I would point to is a couple of things.
Speaker Change: The improvements in Capex and cash costs.
Speaker Change: Thanks, Matt.
Speaker Change: Across the board that helps.
Speaker Change: Again, if you have a question. Please press Star then one are.
Speaker Change: On the F&B and.
Speaker Change: Our next question comes from Greg Pardy with RBC capital markets. Please go ahead.
Speaker Change: Improvements in.
Speaker Change: Performance and in the quality of the.
Speaker Change: Hey, Good morning. This is Rob man on for Greg Pardy, and thanks for taking my questions. My first one just around your reported F&D costs, which came in much lower relative to 2023 is there anything specific you could point us towards that drove the improved results.
Speaker Change: High value oil stream.
Brian Ector: To see if Chad Lundberg has got anything he wants to add to that but I think this.
Brian Ector: This F&D commentary on the whole strong PDP reserves print really is a function of.
Speaker Change: Yeah, Yes, good morning, Thanks, Robert.
Speaker Change: <unk>.
Brian Ector: Across the board improvements and maybe Chad can talk a little bit more about just the capex improvements that have been made across the board, but in particular in the Eagle Ford well.
Speaker Change: Okay.
Speaker Change: What I would point to is a couple of things.
Speaker Change: Improvements in Capex and cash costs.
Speaker Change: Across the board that helps.
Brian Ector: We're just going to go to the results we drove out of the Eagle Ford last year, we saw.
Speaker Change: On the F&B and.
Speaker Change: Improvements in.
Brian Ector: 8% improvement in our capital costs, and that's manifesting itself to the reserves book with respect to future development costs and ultimately driving.
Speaker Change: Performance and in the.
Speaker Change: The quality of the.
Speaker Change: High value oil stream.
Brian Ector: In this case, a stronger F&D, we're proud of.
Speaker Change: I'm going to see if Chad Lundberg has got anything he wants to add to that but I think this.
Brian Ector: In this case, the Texas team, we think we have more efficiencies coming this year.
Speaker Change: This F&B commentary on the whole strong PDP reserves print really is a function of crossover.
Brian Ector: Upwards of 7% that we're starting to realize as we operate now through Q1.
Chad Lundberg: Across the board improvements and maybe Chad can talk a little bit more about just the capex improvements that have been made across the board, but in particular in the Eagle Ford well, Yes, I was just going to go to the results. We drove out of the Eagle Ford last year, we saw.
Brian Ector: So keeping that trend going I think just the last piece of it on Opex thats not all the capital cost equation.
Brian Ector: On the operating front, it's the same a full court press across the entirety of our operation and we have been realizing again some strong results there.
Brian Ector: 8% improvement in our capital costs, and that's manifesting itself to the reserves book with respect to future development costs and ultimately driving.
Brian Ector: No that's great. Thank you.
Speaker Change: Maybe just for my next question shifting gears a little bit.
Brian Ector: In this case, a stronger F&D, we're proud of.
Speaker Change: Just to your Duvernay activity. This year could you provide us with any additional details in terms of timing and drilling program specifics.
Brian Ector: In this case, the Texas team, we think we have more efficiencies coming this year.
Speaker Change: I'll leave it there after that thank you.
Brian Ector: Upwards of 7%.
Speaker Change: Great. Thank you Duvernay we have.
Brian Ector: We're starting to realize as we operate now through Q1.
Speaker Change: Our drilling rig mobilized and we have been drilling ahead since the beginning of the year.
Brian Ector: And so keeping that trend going I think just the last piece of it on Opex, it's not all a capital cost equation on the operating front. It's the same a full court press across the entirety of our operation and we have been realizing again some strong results there.
Speaker Change: We will keep that rig on location drilling these three three well pads.
Speaker Change: And everything is moving according to plan, we continue to make improvements both in the design and execution.
Speaker Change: You might recall last year I was <unk>.
Brian Ector: No that's great. Thank you.
Speaker Change: Really.
Speaker Change: Positively.
Speaker Change: Maybe just for my next question shifting gears a little bit.
Speaker Change: Impressed with the pace of improvement I think we drilled those wells in 2024.
Speaker Change: Just to your Duvernay activity. This year could you provide us with any additional details in terms of timing and drilling program of specifics.
Speaker Change: 20% faster than 10% cheaper than the year prior.
Speaker Change: I'll leave it there after that thank you.
Speaker Change: And we are on course to continue to make improvements.
Speaker Change: Great. Thank you Duvernay we have.
Speaker Change: Not just on the cost side of the business, but on the capital side of the business and importantly, we've.
Speaker Change: Our drilling rig mobilized and we have been drilling ahead since the beginning of the year.
Speaker Change: We've still got levers to pull and designs in the works that will.
Speaker Change: We will keep that rig on location drilling these three three well pads.
Speaker Change: Drive improved.
Speaker Change: Everything is moving according to plan, we continue to make improvements both in the design and execution.
Speaker Change: Well performance out of the reservoir and so I think there's still a lot to lot to go there, but three three well pads are underway and as soon as we have the opportunity to move in the Frac crew on the first pad. We will do so Chad do you want to add some color to the timing there well I was going to add two things. So I mean, we're just releasing our first.
Speaker Change: You might recall last year I was <unk>.
Speaker Change: Really.
Speaker Change: Positively.
Speaker Change: Impressed with the pace of improvement I think we drilled those wells in 2024.
Speaker Change: Well that means we're getting into completion operations you could expect results in the.
Speaker Change: 20% faster than 10% cheaper than the year prior.
Speaker Change: And we are on course to continue to make improvements.
Speaker Change: And the Q2 release time frame on the first pad coming online just to Eric's point, we're going to continue last year as efficiencies he talked about the capital reductions the drill day reductions. We've also moved a long ways on just development of understanding of the play.
Speaker Change: Not just on the cost side of the business, but on the capital side of the business and importantly, we've.
Speaker Change: We've still got levers to pull and designs in the works that will.
Speaker Change: Drive improved.
Speaker Change: Well performance out of the reservoir and so I think there's still a lot to lot to go there, but three three well pads.
Speaker Change: Headline 40% increase in IP last year on our 24 program and then probably even more importantly, just thinking longer term, we're still seeing a trend up on an EUR. So a 15% bump on EUR is over the 23 program and Thats really a result of the frac efficiencies really understand.
Speaker Change: Are underway and as soon as we have the opportunity to move in the Frac crew on the first fat, we'll do so Chad do you want to add some color to the timing there well I was going to add two things. So I mean, we're just releasing our first drill that means theyre getting into completion operations you could expect results in the in the Q2 release timeframe.
Speaker Change: The the stimulation and then a lot of that I think the last point would be the cross border collaboration with the Eagle Ford, where we're really just understanding the unconventional unconventional space and taking our learnings from both areas to deploy into each other and make them better.
Chad Lundberg: On the first pad coming online just to Eric's point, we're going to continue last year's efficiencies he talked about the capital reductions the drill day reductions. We've also moved long ways on just development and understanding of the play.
Headline 40% increase in IP last year on our 24 program and then probably even more importantly, just thinking longer term, we're still seeing a trend up on an EUR. So a 15% bump on EUR is over the 23 program and Thats really a result of the frac efficiencies really understand.
Speaker Change: That's great. Thanks, guys.
Speaker Change: This concludes the question and answer session from the phone lines I'd like to turn the conference back over to Brian Ector for any questions received online.
Brian Ector: Okay. Thank you, yes, we've had a few questions come in online.
Speaker Change: The first question.
Speaker Change: The the stimulation and then a lot of that I think the last point would be the cross border collaboration with the Eagle Ford, where we're really just understanding the unconventional unconventional space and taking our learnings from both areas to deploy into each other and make them better.
Brian Ector: An investor noted the asset exchange on.
Brian Ector: On the <unk> settlement, we are at $44 five net sections of land acquired.
Brian Ector: Just could comment on some additional color around that exchange assets. We exchange was a cashless transaction I believe any color you can share around the.
Brian Ector: In addition to our acreage position, yes, what I would say is.
Speaker Change: That's great. Thanks, guys.
Brian Ector: Clearly the.
Speaker Change: This concludes the question and answer session from the phone lines I'd like to turn the conference back over to Brian Ector for any questions received online.
Brian Ector: The.
Brian Ector: Latex heavy oil team.
Brian Ector: Yeah.
Brian Ector: At <unk> had really moved quickly back in 2020 in 2021 ring fencing and identifying the best quality reservoir.
Okay. Thank you yeah, we've got a few questions come in online.
Brian Ector: The first question.
Brian Ector: An investor noted the asset exchange on the <unk> settlement are at $44 five net sections of land acquired.
Brian Ector: And we've now added some adjacent reservoir.
Brian Ector: Our partner up there.
Brian Ector: And I don't mean, the <unk> the <unk>.
Speaker Change: Just could comment on some additional color around that exchange assets. We exchange was a cashless transaction I believe any color you can share around that.
Brian Ector: Surface owners and the community in which we operate but more importantly, I'm, referring to the operating partner that traded these lands.
Brian Ector: To our acreage position, yes, what I would say is clear.
Brian Ector: They were adjacent to us.
Brian Ector: Clearly the.
The <unk>.
Brian Ector: Werent, having the same success on these lands that we've enjoyed within the confines of our RP.
Brian Ector: Latex heavy oil team.
Brian Ector: At.
Brian Ector: At <unk> had really moved quickly back in 2020 in 2021 ring fencing and identifying the best quality reservoir.
Brian Ector: <unk>.
Brian Ector: Asset boundaries and so.
Brian Ector: It's just good business for both sides too.
Brian Ector: And we've now added some adjacent reservoir or our partner up there.
Brian Ector: Core up a little bit and so we took the strength and scale of our <unk> asset and cored up around it and we had other things to offer the counterparty that we're.
Brian Ector: And I don't mean to <unk>.
The surface owners and the community in which we operate but more importantly, I am referring to the operating partner that traded these lands.
Brian Ector: More valuable to them than they were to us So it's really a win win and.
Brian Ector: And it's good business, we've got a great relationship with the other parties up there.
Brian Ector: They were adjacent to us.
Brian Ector: Werent, having the same success on these lands that we've enjoyed within the confines of our.
It just it just worked out well for both sides.
Speaker Change: Okay. Thanks, Eric.
Speaker Change: A couple of questions and it's kind of a three part question related to the aggregate from a few questions that have come in today, but around the U S. Dollar denominated debt you had some prepared remarks, Eric and Chad you spoke to as well.
Brian Ector: Our <unk>.
Brian Ector: Asset boundaries and so it's.
Brian Ector: It's just good business for both sides to core up a little bit and so we took the strength and scale of our P buy an asset and cored up around it.
Speaker Change: In U S dollars, we paid off $241 million in 2024, which is less in Canadian dollar terms, Eric you just or Chad provide some additional context or color on our on our reporting of our debt and the actual debt repayments overseeing yes, I'm going to start and then kick it over to Chad to fill in the blanks.
Brian Ector: And we had other things to offer the counterparty that we're.
Brian Ector: More valuable to them than they were to us so it's really a win win.
Brian Ector: And it's good business, we've got a great relationship with the other parties up there.
Brian Ector: It just it just worked out well for both sides.
Speaker Change: Because I probably won't get it all comprehensively answered.
Speaker Change: Okay. Thanks, Eric.
Brian Ector: <unk>.
Speaker Change: I think it's really important to understand that most of our debt.
Brian Ector: A couple of questions. There was kind of a three part question related to the aggregate from a few questions that have come in today, but around the U S. Dollar denominated debt you had some prepared remarks, Eric and Chad spoke to as well in U S dollars.
Speaker Change: But both bond issues and most of our facilities.
Speaker Change: Our U S dollar denominated as their native currency so they sit.
Speaker Change: With U S dollar statements and Thats the native currency, so when we report.
Speaker Change: Paid off $241 million in 2024 less in Canadian dollar terms, Eric you, just or Chad provide some additional context or color on our on our reporting of our debt the actual debt repayments overseeing yes, I'm going to start and then kick it over to Chad to fill in the blanks.
Speaker Change: On any of these these debt instruments, we have to convert into Canadian dollars for Canadian reporting purposes and win.
Speaker Change: U S. Canadian FX expands when U S dollar strengthens against the Canadian dollar.
Speaker Change: Because I probably won't get it all comprehensively answered.
Speaker Change: Then what happens is that multiplier goes up and it makes the debt look as though when you when you reported in Canadian dollars look as though it's not going down as fast as Hasnt really is because in the native currency, we're paying it down but its being multiply it against an ever increasing.
Speaker Change: I think it's really important to understand that most of our debt.
Speaker Change: Both bond issues and most of our facilities.
Speaker Change: Our U S dollar denominated as their native currency so they sit.
Speaker Change: With U S dollar statements and Thats the native currency, so when we report.
Speaker Change: Weakening Canadian FX multiplier in that has been difficult to describe.
Speaker Change: On any of these these debt instruments, we have to convert into Canadian dollars for Canadian reporting purposes and win.
Speaker Change: Over time, and so what we're trying to do today and going forward is to describe our U S. Dollar denominated debt in U S dollars paydown because that's the most.
Speaker Change: <unk> Canadian FX expands.
Speaker Change: U S dollar strengthens against the Canadian dollar.
Speaker Change: Then what happens is that multiplier goes up and it makes the debt look as though when you when you reported in Canadian dollars look as though it's not going down as fastest as it really is because in the native currency, we're paying it down but its being multiply it against an ever increasing.
Speaker Change: Clear and straightforward way to do it and it. It then allows readers to understand that we've actually paid down more U S dollar debt.
Speaker Change: In a quantum and the dollars are bigger when you pay down of U S dollar versus the Canadian dollar. So we paid down more than they are than they are bigger dollars. So we've made a lot more impact than has previously been I think appreciated so.
Speaker Change: Weakening Canadian FX multiplier in that has been difficult to describe.
Speaker Change: Over time, and so what we're trying to do today and going forward is to describe our U S. Dollar denominated debt in U S dollars paydown, because thats, the most clear and straightforward way to do it and it. It then allows readers to.
Speaker Change: That kind of a long answer, but chatter, Mike anything you'd like to say beyond that no I believe I'd add anything I think the other commentary would be generally we do have 60% of our business in the U S. So we kind of look at that is that U S dollar debt being naturally hedged against the value of that U S business, we generally use cash flows which we.
Speaker Change: Commit repaying us dollar so.
Speaker Change: <unk> that we've actually paid down more U S dollar debt.
Speaker Change: It is a bit of a nuanced conversion conversation.
Speaker Change: And a quantum and the dollars are bigger when you pay down of U S dollar versus the Canadian dollar. So we paid down more than they are and theyre bigger dollars. So we've made a lot more impact than has previously been I think appreciated so.
Speaker Change: On the day of reporting that the bigger the tickets valued on versus kind of.
Speaker Change: The longer term debt paydown, which is not problematic given the size of our U S business. Another way to think about it would be to add the debt reduction in Canadian dollar terms to the FX line.
That's kind of a long answer, but chatter, Mike anything you'd like to say beyond that no I believe I'd add anything I think the other commentary would be generally we do have 60% of our business in the U S. So we kind of look at that is that U S dollar debt being naturally hedged against the value of that U S business, we generally use cash flows, which we commit repaying us dollar so.
Speaker Change: Those two and that is.
In Canadian dollar terms of what you would have paid down in U S. Dollar terms given the exchange.
Speaker Change: It's a different way to think about it but it's important to understand that the native currency is U S dollars and it has to be converted to Luna for reporting purposes to Canadian dollars for reporting purposes, and Thats an important thing to understand okay. Thanks. Thanks, guys. I think part two of the question and Chad you may have already answered this but have you considered or have we considered.
Speaker Change: It is a bit of a nuanced conversion conversation on the day of reporting that.
Speaker Change: That gets valued on versus kind of.
Speaker Change: The longer term debt paydown, which is not problematic given the size of our U S business, yes, another way to think about it would be to add the debt reduction in Canadian dollar terms to the FX line.
Speaker Change: Hedging the FX rate related to our debt.
Speaker Change: I guess short answer is we have I think when we issued that generally speaking we think of the hedge is a natural hedge against the U S business. So I know I guess another way to think about that is if we had an entirely Canadian business.
Speaker Change: Those two and that is.
Speaker Change: In Canadian dollar terms of what you would have paid down in U S. Dollar terms given the exchange.
We may have considered hedging.
Speaker Change: It's a different way to think about it but it's important to understand that the native currency is U S dollars and it has to be converted to Luna for reporting purposes to Canadian dollars for reporting purposes, and Thats an important thing to understand okay. Thanks. Thanks, guys. I think part two of the question you may have already answered this but have you considered or have we considered.
Speaker Change: The repayment terms in Canadian dollars.
Speaker Change: Some others would in.
Speaker Change: Kind of the Canadian industry, but.
Speaker Change: Again, we think about it is just naturally hedged against our U S business. So I think we think of it. This hedge already it's also important to understand that when the U S. Dollar strengthens our revenues at the topline benefit and that flows all the way through the business to our bottom line free cash flow, which also benefits as a result of a strengthening U S. Dollar if we talk just about.
Speaker Change: Hedging the FX rate related to our debt.
Speaker Change: I guess short answer is we have I think when we issued that generally speaking we think of the hedge is a natural hedge against the U S business. So I know I guess another way to think about that is if we had an entirely Canadian business.
Speaker Change: Capex or just about debt and Canadian terms.
Speaker Change: It gets distorted because of this translation, but you have to understand.
Speaker Change: We may have considered hedging.
Speaker Change: Topline revenues benefit from strong U S dollars and that flows all the way through the business to a stronger free cash flows at the bottom line.
Speaker Change: The repayment terms in Canadian dollars.
Speaker Change: Like some others would.
Speaker Change: So the final question.
Speaker Change: Kind of the Canadian industry, but again, we think about it just naturally hedged against our U S business. So I think we think of as hedged already it's also important to understand that when the U S. Dollar strengthens our revenues at the top line benefit and that flows all the way through the business to our bottom line free cash flow, which also benefits as a result of a stretch.
Speaker Change: Relates to the $1 $5 billion debt target that we have laid out to achieve and are there any opportunities through the portfolio Eric.
Speaker Change: Could.
Speaker Change: To accelerate the timeline to reach the appropriate yes, Thank you, Brian and I think.
Speaker Change: This is an ongoing conversation you might recall at the end of 2023, we sold a third of our Viking.
Speaker Change: And in U S. Dollar if we talk just about capex or just about debt and Canadian terms.
Speaker Change: It gets distorted because of this translation, but but you have to understand.
Speaker Change: We call that asset for again in Plano, and we applied that those proceeds straight to our outstanding debt balance.
Speaker Change: Top line revenues benefit from strong U S dollars and that flows all the way through the business to a stronger free cash flows at the bottom line.
Speaker Change: Just a few months ago, we sold a small thermal operation in Saskatchewan called Robert thermal that also.
Speaker Change: So the final question.
Speaker Change: Relates to the $1 $5 billion debt target that we have laid out to achieve and are there any opportunities through the portfolio Eric.
Speaker Change: Proceeds from that sale also went straight to that.
Speaker Change: And that should should.
Speaker Change: Demonstrate our willingness to continue to find opportunities within our portfolio.
Speaker Change: Could accelerate the timeline to reach the appropriate yes, Thank you, Brian and I think.
Speaker Change: The thing Thats challenging.
Speaker Change: You don't want to sell assets that are disproportionately beneficial to the whole in terms of their free cash generative.
Speaker Change: This is an ongoing conversation you might recall at the end of 2023, we sold a third of our Viking.
Speaker Change: Passive right so.
Speaker Change: You wouldn't want to sell more cash flow than.
Speaker Change: We call that asset for again in Plano, and we applied that those proceeds straight to our outstanding debt balance.
Speaker Change: Then you're getting the benefit of proceeds or sell it to.
Speaker Change: Two lower price. So the answer is yes, we do continue to think about it and we do continue to act on it.
Speaker Change: Just a few months ago, we sold a small thermal operation in Saskatchewan called Robert thermal that also the proceeds from that sale also went straight to that.
Speaker Change: When the opportunity presents itself in the meantime, we will continue acting prudently within our business to generate free cash flow and allocate that free cash flow to both debt repayment and.
Speaker Change: And that should should demonstrate.
Speaker Change: Demonstrating our willingness to continue to find opportunities within our portfolio. The thing that is challenging us.
Speaker Change: Shareholder returns.
Speaker Change: A question on the shareholder return framework.
Speaker Change: You don't want to sell assets that are disproportionately beneficial to the whole in terms of their free cash generative.
Speaker Change: Eric we get questions asked around we talked about the debt repayment I guess, it's just reiterating our commitment to the existing shareholder return framework the composition of buybacks versus the dividend and what your thoughts on the composition of the returns yes. So the fixed base dividend is just that it's too.
Speaker Change: Passe right so.
Speaker Change: You wouldn't want to sell more cash flow then.
Speaker Change: Then you're getting the benefit of proceeds or sell it.
Speaker Change: Two lower price. So the answer is yes, we do continue to think about it and we do continue to act on it.
Speaker Change: And a quarter cents per quarter or <unk> <unk> per share per year.
When the opportunity presents itself in the meantime, we will continue acting prudently within our business to generate free cash flow and allocate that free cash flow to both debt repayment and.
Speaker Change: And that's a fixed base dividend every share benefits from that quarterly.
Speaker Change: The other.
Speaker Change: The other portion of direct shareholder returns is through our normal course issuer bid. So we continue to buy back shares and.
Speaker Change: Shareholder returns.
Speaker Change: A question on the shareholder return framework.
Speaker Change: Eric we get questions asked around we talked about the debt repayment I guess.
Speaker Change: And that continues to improve the business over time.
Speaker Change: And then the other half of the free cash flow is allocated to debt repayment.
Speaker Change: It's just reiterating our commitment to the existing shareholder return framework the composition of buybacks.
Speaker Change: I would point out that.
Speaker Change: The quantum of debt, we get questions on but I think one of the things thats important to understand.
Speaker Change: Is the dividend.
Speaker Change: So on the composition of the returns yes. So the fixed base dividend is just that it's two and a quarter cents per quarter or <unk> <unk> per.
Speaker Change: And our capital structure is that we are termed out.
Speaker Change: To 2030 and 2032 on the notes.
Speaker Change: Per share per year.
Speaker Change: And that's a fixed base dividend every share benefits from that quarterly.
Speaker Change: So this is more than this is five years on one on one node in seven years on another note.
Speaker Change: The other.
Speaker Change: And.
Speaker Change: The other portion of direct shareholder returns us to our normal course issuer bid. So we continue to buy back shares.
Speaker Change: When we refinanced.
Speaker Change: The bonds in 2024, we took a point and a half of coupon out when we refinance them.
Speaker Change: And that continues to improve the business over time.
Speaker Change: In our credit facility by refinancing we are also able to push our credit facility.
Speaker Change: And then the other half of the free cash flow is allocated to debt repayment.
Speaker Change: Term period out two more years to 2028, so we have $344 million Canadian balance on our credit facility.
Speaker Change: I'd point out that.
Speaker Change: The quantum of debt, we get questions on but I think one of the things that's important to understand.
Speaker Change: In a in a decent price environment, that's gone in four or five quarters.
Speaker Change: In our capital structure is that we are termed out.
23% in 2032 on the notes.
Speaker Change: And.
Speaker Change: So this is more than this is five years on one on one node in seven years on another note.
Speaker Change: We have a credit facility with lots of capacity no outstanding balance and years of fixed term remaining before.
Speaker Change: And.
Speaker Change: When we refinanced.
Speaker Change: The bonds in 2024, we took a point and a half of coupon out when we refinance them.
Speaker Change: Bonds become current.
Speaker Change: And that gives us lots of opportunity to buy them in the market and manage that over time and so it's really important to understand the quantum might seem high but the term structure of the debt and the cost of that debt and.
Speaker Change: In our credit facility by refinancing we are also able to push our credit facility.
Speaker Change: Term period out two more years to 2028, so we have $344 million Canadian balance on our credit facility.
Speaker Change: And coupon terms is pretty reasonable it's about 665% on an after tax basis.
Speaker Change: In a in a decent price environment, that's gone in four or five quarters.
Eric You: Okay. Thanks, Eric.
Eric You: A couple of questions have come in on just the.
Speaker Change: And.
Speaker Change: We have a credit facility with lots of capacity no outstanding balance and years.
Eric You: The share price performance globally, Menno alluded to it in his opening questions around WTO high prices, where they are just a comment Eric as we wrap up on the share price and your thoughts around what's going on in the macro environment, yes, well as the macro environment is not good for <unk> and I think the volatility.
Speaker Change: Fixed term remaining before.
Speaker Change: <unk> become current.
Speaker Change: And that gives us lots of opportunity to buy them in the market and manage that over time and so it's really important to understand the quantum might seem high but the term structure of the debt and the cost of that debt and.
Eric You: Not just in oil space Opec's announcement recently to unwind the cuts and put that excess supply back on the market.
Speaker Change: And coupon terms is pretty reasonable it's about 665% on an after tax basis.
Eric You: What has pushed prices down we will continue to.
Eric You: Monitor this situation and react prudently following the economic guidance of our assets.
Eric You: Okay. Thanks, Eric.
Speaker Change: A couple of questions have come in on just the.
Speaker Change: The share price performance globally, Menno alluded to it in his opening questions around WTO high prices, where they are.
Eric You: And we will not make non economic investments and so you.
If the price environment forces us to do so we're prepared to do so but we did roll this budget out in its current construct with an eye towards $65 <unk>, which is kind of where we were when we rolled it out and where we are today.
Speaker Change: Just a comment Eric as we wrap up on the share price and your thoughts around what's going on in the macro environment, yes, well the macro environment is not good for <unk> and I think the volatility.
Eric You: I'm not concerned about the resiliency of the U S economy, I believe the U S economy is strong and I believe almost everyone who.
Eric You: Not just in oil space Opec's announcement recently to unwind the cuts and put that excess supply back on the market.
Eric You: Who is watching the fundamentals.
Eric You: What has pushed prices down we will continue to.
Eric You: Agrees and so.
Eric You: Monitor this situation and react to prudently following the economic guidance of our assets.
Eric You: This period there'll be periods of up cycle and down cycle.
Eric You: And we're prepared to react properly and prudently.
Eric You: And we will not make non economic investments and so.
Eric You: To those downcycle environments.
Eric You: If the price environment forces us to do so we're prepared to do so but we did roll this budget out in its current construct with an eye towards $65 W. Ti, which is kind of where we were when we rolled it out and where we are today.
Eric You: Alright, I think we're coming up on just over 30 minutes here and I think at that point, we will.
Eric You: We will reach the end of today's call. So I'd like to thank everyone for participating for those who submitted questions via the webcast of your question was not addressed.
Eric You: I am not concerned about the resiliency of the U S economy I believe the U S economy is strong and I believe almost everyone who.
Eric You: Please reach out to our investor in Boston, we will be sure to respond.
Eric You: Watching the fundamentals.
Eric You: Thank you operator, and thanks to everyone for participating in our year end conference call and have a great day.
Eric You: Agrees and so.
Eric You: This <unk>.
Speaker Change: Period, there'll be periods of up cycle and down cycle.
Speaker Change: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Eric You: And we're prepared to react properly and prudently.
Eric You: To those downcycle environments.
Eric You: Alright, I think we're coming up on just over 30 minutes, you're in I think at that point, we will.
Eric You: <unk>.
Eric You: <unk> reached the end of today's call. So I'd like to thank everyone for participating.
Eric You: Those who submitted questions via the webcast. If your question was not addressed.
Eric You: Please reach out to our investor in Boston, we will be sure to respond.
Eric You: With that thank you operator, and thanks to everyone for participating in our year end conference call and have a great day.