Q4 2024 Comstock Resources Inc Earnings Call
[music].
All these stories are real
Thanks for watching!
I looked at the temperatures in Frisco or is 15 degrees Fahrenheit minus two.
Scroll they look at New York It was not team feeling like five Chicago for feeling like a minus four.
But in Boston It was 15 feeling like too.
So now let me tell you the story the latest news about Comstock resources, which is a pure natural gas company.
We're excited to report today the great success, we've had to date at our Western Haynesville play in Texas.
Over the past five years, we have been acquiring acreage in the western Haynesville based on geologic data, we put together, including well option that many producing vertical wells in the area.
Today, we hold 518000 net acres in our Western Haynesville area. In addition to our 301000 net acres.
In our legacy Haynesville area.
This 580000 net acres in the western Haynesville represents a massive footprint that is fairly contiguous allowing us to drill two wells from a single pad to hold to shepherd units as we drilled north and south.
From the same pad.
Our initial western Haynesville, well the sharply I'm well was turned to sales in April of 2022.
We waited five months before we spud, our second well evaluating the circle lounge performance by the.
The end of 2023, we had several wells producing and today, we have 18 western Haynesville wells producing.
During our leasing phase are hard working land team never lost perspective, our focus is they've built our position with acquisitions and grassroots leasing. It. We now have around 28000 leases that make up the 518000 net western Haynesville acres.
Fortunately.
80% of this acreage is HP paid from our acquisitions of deep rights that leaves us around 70 wells to be drilled over the next five years, the HP pay the entire footprint.
[music].
At the beginning of our undertaking to derisk, the western Haynesville, well by well, we made sure that 100% of our team held no distorted view of reality.
<unk> is true.
There is an old Cowboys same quote if the horses dead dismount 'inner-quote well.
Our western Haynesville horse looks to be very much alive, and particularly a triple crown winner.
Even our secretary and are making.
Given the success, we saw we decided to forego the M&A market and focus on organic growth.
The challenge in the Western Haynesville was not geological as were confident the shale is there. The challenge was drilling 10000 foot horizontal wells at vertical depths of 19000 feet, where temperatures can exceed 400 degrees.
Speaker Change: As we will report today, our operations team led by Dan Harrison has met the challenge was the first 18 successful wells there.
Speaker Change: We've continued to get better and better as we hone in on a formula to drill and complete other Bossier, our haynesville wells in this area, we have substantially reduce the well cost as Dan will review later today, which puts the returns from these wells superior to the returns we see.
Speaker Change: C and our legacy Haynesville area.
Speaker Change: We've been very cautious as we developed our western Haynesville footprint 2000, 22021 were mainly focused on leasing at 2023 reached out to quantum capital solutions to help US fund the midstream build out for the new flight quantum permitted up to 300 million.
Speaker Change: For the build out of the gathering and treating system center Western Haynesville.
Speaker Change: At 224, we kept two rigs busy in the western Haynesville and turned 11, new wells to sales and now we have four rigs in the new plays and we will drill 20 more wells this year.
Speaker Change: The creation of the Western Haynesville opportunity is quite a feat for a company of our size. This could not have happened without the total support of Jerry Jones and his family at around 71% of Comstock.
Speaker Change: I saw the vision they got into waves with us as we kept our focus to capture the prize of proving a vast natural gas reserves beneath our to our 518000 net acre footprint.
Speaker Change: Today, we feel the land grab is over.
Speaker Change: With us holding the 518000 net acres, we also own and control our midstream system with quantum as our partner our western Haynesville well results look very promising at a time when America needs more natural gas.
Speaker Change: To meet the growing demand for LNG.
Speaker Change: And all of the industrial growth along the Gulf Coast.
Speaker Change: Western Haynesville is located several hundred miles from the Gulf Coast were 100 billion plus.
Speaker Change: LNG facilities are located.
Speaker Change: Our location is why LNG companies utilities and data centers and industrial users are contacting us to be a future supplier to.
Speaker Change: We have substantial natural gas reserves near the proximity of the growing demand on the Gulf Coast will service well look in the next decade, the Golden age of natural gas is here.
Speaker Change: On the leading edge of technology to unlock the value.
Speaker Change: The western Haynesville.
Speaker Change: Des is the very first day, we have shown the location of our 518000 net western Haynesville acres as we have closed the large acquisitions, we had been working on and captured much of the leases that we wanted.
Speaker Change: Also we are providing specific well that on the first 18 wells as we now have a large enough sample size to evaluate the results of.
Speaker Change: So now I'll open up this call with our standard introduction of disclaimer.
Speaker Change: If you have it all go to slide one.
Speaker Change: Welcome to the Comstock resources fourth quarter, 2024 financial and operating results Conference call. You can view a slide presentation during or after this call by going to our website at www Comstock Resources' Dot com and downloading the quarterly results presentation, there you'll find a presentation titled fourth quarter 2020.
Speaker Change: Before results I am Jay Allison Chief Executive Officer of Comstock and with me is Roland Burns, our President and Chief Financial Officer, Dan Harrison, Our Chief operating Officer, and Ron Mills, our VP of finance and Investor Relations.
Speaker Change: Please refer to slide two in our presentations and note that our discussions today will include forward looking statements within the meaning of securities laws, while we believe the expectations in such statements to be reasonable there can be no assurance that such expectations will prove to be correct now.
[music].
Speaker Change: You would go over to slide four slide three which is our 2024 accomplishments.
Speaker Change: On slide three we highlight our major 2024 accomplishments.
Speaker Change: Most importantly.
Speaker Change: We successfully navigated last years very low natural gas prices, our realized gas price before hedging of $1 98 per Mcf in 2024.
Speaker Change: Presented a 30 year low if you exclude the 2020 COVID-19 year.
Speaker Change: We acted early in 2024 to significantly reduced our capital spending by releasing two operated rigs and one frac spread we also suspended our quarterly dividend to conserve cash flow, we increased our hedging program, which improved our 2020 for realized gas price by 20.
Ladies and gentlemen, thank you for standing by while country, the fourth quarter 'twenty 'twenty four Comstock resources earnings Conference call.
Speaker Change: Percent.
Speaker Change: It also safeguards, our 2025 and 2026 drilling programs targeting.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you wouldn't hear an automated med survives in your hand as raise to withdraw your question. Please press star one one again.
Speaker Change: Targeting 50% of our expected production.
Speaker Change: Sure up our balance sheet by adding a $105 million through an equity private placement.
With our majority stockholder and enhanced our liquidity with a $400 million senior notes offering there.
Speaker Change: During this year of low natural gas prices were also able to grow our western haynesville footprint.
Speaker Change: Please be advised that today's conference is being recorded I would like now to turn the conference over to your speaker today, Jay Allison Chairman and CEO. Please go ahead Sir.
Speaker Change: More than doubled our acreage position to 518000 net acres by acquiring 265000 net acres at a cost.
Thank you and good morning, everyone.
Speaker Change: $4.
Speaker Change: One per acre.
Speaker Change: What a fantastic morning here in Frisco, Texas, which snowflakes coming down when I woke up.
Speaker Change: We've made terrific progress proving up our western Haynesville exploratory play.
Speaker Change: I looked at the temperatures in Frisco is 15 degrees Fahrenheit minus two.
Speaker Change: We successfully turned 11 wells to sales with an average IP rate of 38 million cubic feet per day, and now have a total of 18 wells producing into play.
Speaker Change: Scroll and look at New York It was not team filling lot five Chicago for feeling like a minus four.
Speaker Change: In the fourth quarter, we were able to significantly reduced our drilling and completion costs in a western haynesville compared to the 2023rd level the drilling cost per lateral foot and our new play are down 33% and our completion costs per lateral foot are down 28% overall.
Speaker Change: And in Boston, It was 15 filling like too.
Speaker Change: So now let me tell you the story the latest news about Comstock resources, which is a pure natural gas company.
Speaker Change: We are excited to report today the great success, we've had to date and our western Haynesville play in Texas over.
Speaker Change: All our 2024 drilling program delivered solid results.
Speaker Change: Over the past five years, we have been acquiring acreage in the western Haynesville based on geologic data, we put together, including well logs from the many producing vertical wells in the area today.
Speaker Change: And proved reserve growth despite.
Speaker Change: The lower activity last year.
Speaker Change: Drilled 50 or 42 nine net wells successfully operated Haynesville Bossier wells with a strong.
Speaker Change: We hold 518000 net acres in our Western Haynesville area. In addition to our 301000 net acres and our legacy Haynesville area. This 518000 net acres in the western Haynesville represents a massive footprint that is fairly contiguous.
Speaker Change: Average IP rate of 26 billion per day.
Speaker Change: Our 2024 drilling program reflects a 107% of our 2020 for production and drove 6% reserve growth.
Speaker Change: With 899 Bcf of drilling related reserve additions and achieved an overall finding costs at.
Speaker Change: It's allowing us to drill two wells from a single pad to hold two separate units as we drilled north and south.
Speaker Change: At $1 per Mcf.
Speaker Change: Despite suspending our quarterly dividend, we still delivered the highest 2020 for total shareholder return among public E&P company trading on a major exchange.
Speaker Change: From the same pad.
Speaker Change: Our initial western Haynesville wells, the <unk> well was turned to sales in April of 2022.
Speaker Change: We waited five months before we spud, our second well evaluating the circle lounge performance.
Speaker Change: If you flip over to page four.
Speaker Change: At the end of 2023, we had seven wells producing and today, we have 18 western Haynesville wells producing.
Speaker Change: Haynesville shale footprint slide.
Speaker Change: Slide four is an overview first time ever of our acreage footprint position in the Haynesville Bossier shale in East, Texas and North Louisiana.
Speaker Change: During our leasing phase are hard working land team. Nevertheless perspective, our focus is they've built our position with acquisitions and grassroots leasing. It. We now have around 28000 leases that make up the 518000 net western Haynesville acres.
Note that this map is to scale, it's not distorted.
Speaker Change: We have a million 99 sales and gross and 819000 net acres that is perspective for commercial development of the Haynesville and Bossier shales.
Speaker Change: The left is our emerging <unk>.
Speaker Change: Fortunately.
Speaker Change: Western Haynesville and on the right is our legacy Haynesville area since the beginning our leasing program in the Western Haynesville plug in 2020, we have grown our acreage position to 518000 net acres.
Speaker Change: 80% of this acreage is HP paid from our acquisitions of deep rights that leaves us around 70 wells to be drilled over the next five years, the HB pay the entire footprint.
Speaker Change: We still have around 1300 net locations to drill on our 301000 net acres in the legacy Haynesville, which currently has 895 net producing wells at our legacy Haynesville acreage is 48% developed for the Haynesville shale at 8% and develop for la.
Speaker Change: At the beginning of our undertaking to derisk, the western Haynesville, well by well, we made sure that 100% of our team held no distorted view of reality.
Speaker Change: Reality is true.
Speaker Change: There is an old Cowboys same quote if the horses did dismount 'inner-quote well.
Speaker Change: Bossier shale in comparison, our western Haynesville has only 18 net producing wells and is virtually undeveloped.
Speaker Change: Our western Haynesville horse looks to be very much alive and potentially a triple crown winner, even a secretary and are making.
Speaker Change: Paired to our legacy Haynesville.
Speaker Change: Given the success, we saw we decided to forego the M&A market and focus on organic growth.
Speaker Change: We expect our western Haynesville acreage can provide more inventory per acre versus the legacy Haynesville look.
Speaker Change: The challenge in the Western Haynesville was not geological as were confident the shale is there. The challenge was drilling 10000 foot horizontal wells at vertical depths of 19000 feet, where temperatures can exceed 400 degrees.
Speaker Change: Given the higher paid thickness and pressures we encounter in the Western Haynesville, we expect the western haynesville to yield significantly more resource potential per section than our legacy Haynesville wells.
Speaker Change: As we will report today, our operations team led by Dan Harrison has met the challenge was the first 18 successful wells that they've continued to get better and better as we hone in on the formula to drill and complete other boger, our haynesville wells in this area, we have substantially reduced the well.
Speaker Change: I will now turn it over to Roland to discuss the financial results, we reported today Roland.
Roland Burns: Alright, Thanks day on <unk>.
Roland Burns: <unk> will cover our fourth quarter financial results our production in the fourth quarter average 135 Bcf per day, which is 12% lower than the fourth quarter of 2023, reflecting our decision to drop two rigs early in 'twenty, four and drop and have that Frac holiday that we had in the third quarter.
Speaker Change: Cost is then we will review later today, which puts the returns.
Speaker Change: These wells are superior to the returns we see in our legacy Haynesville area.
Roland Burns: The only way we turned to sales in our legacy Haynesville area in the quarter.
Speaker Change: We've been very cautious as we've developed our western Haynesville footprint 2020 in 2021 were mainly focused on leasing.
Roland Burns: Our horseshoe well that we discussed last quarter.
Roland Burns: So oil and gas sales in the quarter declined 5% to $336 million due to the lower production level, which was partially offset by better natural gas prices.
Speaker Change: In 2023 reached out the quantum capital solutions to help US fund the midstream build out for the new play quantum committed up to $300 million for the build out of the gathering and treating systems into western Haynesville and.
Roland Burns: EBITDAX for the quarter was $252 million and we generated $223 million of cash flow during the quarter.
Roland Burns: We reported adjusted net income of $46 million for the fourth quarter or <unk> 16 per share.
Speaker Change: At 224, we kept two rigs busy in the western Haynesville and turned 11, new wells to sales and now we have four rigs in the new plays and we will drill 20 more wells this year.
In the fourth quarter, we recognized a $52 million tax benefit.
Roland Burns: <unk> primary to R&D credits and other credits and also due to a reduction in the Louisiana state corporate tax rate.
Speaker Change: The creation of the Western Haynesville opportunity is quite a feat for a company of our size. This could not have happened without the total support of Jerry Jones, and his family who own 71% of the Comstock.
Roland Burns: A higher provision for depreciation depletion and amortization accounted for the loss before income taxes in the quarter. The higher amortization rate resulted from the decreased our proved undeveloped reserves, which are determined under SEC rules, where you have to use the first of the month average price looking back for the previous.
Speaker Change: All the vision they got into waves with us as we kept our focus to capture the prize of proving a vast natural gas reserves beneath our to our 518000 net acre footprint today.
Roland Burns: 12 months.
Roland Burns: And of course that price was very low in 2024.
Roland Burns: On slide six we recap the annual.
Speaker Change: Today, we feel the land grab is over with US holding the 518000 net acres, we also own and control our midstream system with quantum as our partner our western Haynesville well results look very promising at a time when America needs more natural gas.
Roland Burns: <unk> thousand 24 financial results.
Roland Burns: Production for the full year averaged one four bcf per day, which is very comparable to the production we had in 2023.
Roland Burns: Natural gas prices that we realized in 2024 fell by 7%, resulting at our oil and gas sales decreasing 7% to $1 3 billion.
Speaker Change: To meet the growing demand for LNG.
Speaker Change: <unk>.
Speaker Change: And all of the industrial growth along the Gulf Coast.
Speaker Change: Our western Haynesville is located several hundred miles from the Gulf Coast were 100 billion plus.
Roland Burns: EBITDAX in.
Roland Burns: 2024 totaled $850 million, and we generated $675 million of cash flow.
Speaker Change: <unk> LNG facilities are located.
Roland Burns: With weaker natural gas prices in that higher DD&A expense, we reported an adjusted net loss of $69 million in 2024 or 24 per share compared to the 133 million of net income we had in 2023.
Speaker Change: Our location is why LNG companies utilities and data centers and industrial users are contacting us to be a future supplier.
Speaker Change: To have substantial natural gas reserves near the proximity of the growing demand on the Gulf Coast will serve us well in the next decade, the Golden age of natural gas is here we are.
Roland Burns: On slide seven we further break down our natural gas price realizations in the quarter and for the year.
Roland Burns: The previous quarters.
Roland Burns: Accordingly, Nymex settlement price averaged $2 79 per Mcf in the fourth quarter and the average Henry hub spot price in the quarter averaged $2 42.
Speaker Change: On the leading edge of technology to unlock the value.
Speaker Change: Now the western Haynesville.
Speaker Change: Today is the very first day, we have shown the location of our 518000 net western Haynesville acres as we have closed the large acquisitions, we have been working on and captured much of the leases that we wanted.
Roland Burns: The 45% of our gas in the fourth quarter were sold in the spot market. So the appropriate market price reference price for our gas that quarter was $2 62.
Speaker Change: We also are providing specific well that on the first 18 wells as we now have a large enough sample size to evaluate the results of.
Our realized gas price during the fourth quarter averaged $2 32 stance reflected a <unk> <unk> differential for the quarter.
Roland Burns: We were at 51% hedged in the fourth quarter, so that improved our realized gas price our realized gas price to $2 70.
Speaker Change: So now I'll open up this call with our standard introduction the disclaimer.
If you have it all go to slide one.
Speaker Change: Welcome to the Comstock resources fourth quarter, 2024 financial and operating results Conference call. You can view a slide presentation during or after this call by going to our website at www Comstock resources Dot com and downloading the quarterly results presentation, there you'll find a presentation entitled fourth quarter 2020.
Roland Burns: We also had a five set up lift to our overall gas price realization from purchasing third party gas to utilize our available transport.
Roland Burns: On slide eight we detail our natural gas hedge position that we have to protect cash flows.
Roland Burns: This year and in 2026.
Roland Burns: We have approximately 50% of our gas production hedged for this year at an average price of $3 48 to <unk> or better.
Speaker Change: Q4 results I am Jay Allison Chief Executive Officer of Golf stock and with me is Roland Burns, our President and Chief Financial Officer, Dan Harrison, Our Chief operating Officer, and Ron Mills, our VP of finance and Investor Relations.
Roland Burns: 22% is in price swaps in there.
Roland Burns: The remaining is the form of cost.
Speaker Change: Please refer to slide two in our presentations and note that our discussion today will include forward looking statements within the meaning of securities laws, while we believe the expectations in such statements to be reasonable there can be no assurance that such expectations will prove to be correct now.
Roland Burns: <unk> collars with a floor of $3 50, and a ceiling of $3 80.
Roland Burns: For 2006.
Roland Burns: 59% of our hedge position is in collars with the same floor level of $3 50, but a higher ceiling price of $4 35.
Speaker Change: You would go over to slide four slide three which is our 2024 accomplishments.
Roland Burns: And then the remaining 41% of our 26 hedge position.
Roland Burns: Alright.
Speaker Change: On slide three we highlight our major 2024 accomplishments.
Roland Burns: Gas price swaps, which averaged $3 51 per mcf.
Speaker Change: Most importantly.
We successfully navigated last years very low natural gas prices, our realized gas price before hedging of a $1 98 per Mcf in 2024.
Roland Burns: On slide nine we detail our operating cost.
Roland Burns: <unk>.
Roland Burns: And our EBITDAX margin, our operating cost averaged <unk> 72 in the fourth quarter, which was <unk> <unk> lower than the third quarter rate, our EBITDAX margin improved to 73% in the fourth quarter as compared to 67% in the third quarter.
Speaker Change: Presented a 30 year low if you exclude the 2020 COVID-19 year.
Speaker Change: We acted early in 2024 to significantly reduced our capital spending by releasing two operated rigs and one frac spread we also suspended our quarterly dividend to conserve cash flow, we increased our hedging program, which improved our 2020 for realized gas price by 20.
Roland Burns: So our production and AD valorem taxes were down <unk> in the quarter, primarily reflecting the lower statutory severance tax rate, we have in Louisiana, which went into effect in the middle of the year.
Roland Burns: And our lifting cost in the quarter increased three <unk>, where our gathering costs were down five assets in the quarter.
Speaker Change: Percent.
Speaker Change: It also safeguards, our 2025% in 2026 drilling programs targeting.
Roland Burns: Overall, our G&A costs were unchanged at five in the fourth quarter.
Speaker Change: <unk> targeting 50% of our expected production.
Speaker Change: Sure up our balance sheet by adding a $105 million through an equity private placement.
Roland Burns: On slide 10, we recap our spending on drilling and other development activity that we had in the fourth quarter and for all of last year. We spent a total of $240 million on development activities in the fourth quarter.
Speaker Change: With our majority stockholder and enhanced our liquidity with a $400 million senior notes offering <unk>.
Speaker Change: During this year of low natural gas prices were also able to grow our western haynesville footprint.
Roland Burns: And we spent 902 billion for the full year.
Roland Burns: In 2024, we drilled 32 or $25 eight net horizontal haynesville wells and 18% or $17. One net Bossier wells, we turned 48 wells or $42 nine net operated wells to sales, which had an average initial production rate of 26 million per day.
Speaker Change: More than doubled our acreage position to 518000 net acres by acquiring 265000 net acres at a cost of $4.
Speaker Change: All one per acre.
Speaker Change: We've made terrific progress proving up our western Haynesville exploratory play.
Speaker Change: We successfully turned 11 wells to sales with an average IP rate of 38 million cubic feet per day, and now have a total of 18 wells producing and applied.
Roland Burns: Yes.
Roland Burns: On slide 11, we recap our proved reserves at the end of 2024 determined based on year end Nymex market prices, which have been adjusted for our differentials as compared to the much lower prices that we'd have to use for SEC purposes.
Speaker Change: In the fourth quarter, we were able to significantly reduced our drilling and completion costs in a western haynesville compared to the 2022 level the drilling cost per lateral foot and our new play are down 33% and our completion costs per lateral foot are down 28% overall.
Roland Burns: Determined DD&A in the financial statements.
Roland Burns: Using year end Nymex prices were able to grow our proved reserves by 6%, even though we had reduced overall drilling activity last year.
Speaker Change: All our 2024 drilling program delivered solid results and.
Speaker Change: And proved reserve growth despite.
Roland Burns: Our proved reserves totaled seven tcf.
Speaker Change: The lower activity last year.
Roland Burns: We added 899 Bcf of drilling additions, which replaced 170% of what we produced last year of 528 Bcf a day.
Speaker Change: We drilled 50 or 42 nine net wells successfully operated Haynesville Bossier wells with a strong average IP rate of 26 billion per day.
<unk>.
Roland Burns: We spent $902 billion on that drilling program.
Speaker Change: Our 2024 drilling program replace by 107% of our 2020 for production and drove 6% reserve growth at <unk>.
Roland Burns: Which gives us a finding cost of right at $1 for 2024.
Roland Burns: In addition to the proved reserves.
Speaker Change: 899 Bcf of drilling related reserve additions and achieved an overall funding costs.
Roland Burns: As an additional $2 one tcf of proved undeveloped reserves, which are not included because they are not expected to be drilled within the next five year period as required by SEC rules otherwise they could be included in proved reserves.
Speaker Change: At $1 per Mcf.
Speaker Change: Despite suspending our quarterly dividend, we still delivered the highest 20% 24 total shareholder return among public E&P company trading on a major exchange.
Roland Burns: We also have another two four tcf of tupi or probable reserves and six nine tcf of Threep or possible reserves gave us the total reserve base of $18 four tcf at three basis.
Speaker Change: If you flip over to page four.
Roland Burns: This does not include the reserve potential for much of the Western Haynesville acreage.
Speaker Change: The Haynesville shale footprint slide four is an overview first time ever of our acreage footprint position in the Haynesville Bossier shale in East, Texas and North Louisiana.
Roland Burns: <unk>.
Roland Burns: Slide 12 recaps our capitalization at the end of 2024, we ended the quarter with $415 million of borrowings outstanding under our credit facility, giving us $3 billion in total debt, including our outstanding senior notes.
Speaker Change: Note that this map is to scale, it's not distorted.
Speaker Change: We have a million 99 sales and gross and 819000 net acres that is prospective for commercial development of the Haynesville and Bossier shales.
Roland Burns: Our borrowing base is currently at $2 billion and our elected commitment under our credit facility remains at one 5 billion.
On the left is our emerging west.
Speaker Change: Western Haynesville and on the right is our legacy Haynesville area since the beginning our leasing program in the Western Haynesville plug in 2020, we have grown our acreage position to 518000 net acres.
Roland Burns: With improved natural gas prices and the strong hedge position, we expect our leverage ratio to improve significantly as we start to report that 2025 financial results.
Roland Burns: At the end of the fourth quarter, we had approximately $1 $1 billion of financial liquidity.
Speaker Change: We still have around 1300 net locations to drill on our 301000 net acres in the legacy Haynesville, which currently has 895 net producing wells our legacy Haynesville acreage is 48% developed for the Haynesville shale and 8% in developed for <unk>.
Roland Burns: On slide 13, we summarize the market has that we sell our natural gas at our proximity to the growing natural gas demand from LNG terminals petrochemical and industrial complexes, along the Gulf Coast provides us with advantaged gas price realizations compare.
Speaker Change: <unk> shale in comparison, our western Haynesville has only 18 net producing wells and is virtually undeveloped compared to our legacy Haynesville we.
Roland Burns: To most of our natural gas peers.
Roland Burns: 68% of our gas production is held at Gulf Coast markets, using our long term transport agreements with the balance held at the regional hubs at <unk> Carthage in Bethel.
Speaker Change: We expect our western Haynesville acreage can provide more inventory per acre versus the legacy haynesville.
Speaker Change: Given the higher paid thickness and pressures we encounter in the Western Haynesville, we expect the western haynesville to yield significantly more resource potential per section than our legacy Haynesville Ola.
Roland Burns: Selling directly to end users and having access to various Gulf coast hubs provides.
Roland Burns: As the ability to take advantage of changing market conditions.
Roland Burns: On a daily basis, and then starting this year, we have access to storage facility near our backfill plan, giving us greater operational flexibility and the ability to take advantage of seasonal pricing.
Speaker Change: I will now turn it over to Roland to discuss the financial results reported today Roland.
Roland Burns: Alright, Thanks day on.
Roland Burns: On slide five we cover our fourth quarter financial results our production in the fourth quarter averaged 135 Bcf per day, which is 12% lower than the fourth quarter of 2023.
Roland Burns: Sure.
Roland Burns: On slide 14, we show the footprint of our midstream system and our western Haynesville area.
Roland Burns: Late 2023, we partnered with quantum capital solutions to create political gas services defined they needed expansion of our existing midstream assets in the western Haynesville to handle the growing production from this area.
Roland Burns: Second our decision to drop two rigs early in 'twenty, four and drop and have that Frac holiday that we had in the third quarter.
Roland Burns: The only way we turned to sales in our legacy Haynesville area in the quarter.
Roland Burns: So we contributed our pinnacle gathering and treating system to the partnership and then quantum is controlling the capital to build out the gathering and treating system in this area.
Roland Burns: Our horseshoe well that we discussed last quarter.
Roland Burns: So oil and gas sales in the quarter declined 5% to $336 million due to the lower production level, which was partially offset by better natural gas prices.
Roland Burns: Currently have 246 miles of high pressure pipelines that right across the middle of our acreage as you can see on slide 14, and we have a.
EBITDAX for the quarter was $252 million and we generated $223 million of cash flow during the quarter.
Roland Burns: Gas treating plant at battle at the North end of our system and we're currently constructing a new 400 million a day trading plan at Mark Hey, Texas on our southern Air.
Roland Burns: We reported adjusted net income of $46 million for the fourth quarter or <unk> 16 per share.
Roland Burns: So I'll now turn it over to Dan to discuss our operations.
In the fourth quarter, we recognized $52 million tax benefit.
Dan Harrison: Okay. Thanks.
Roland Burns: <unk> primary to R&D credits and other credits and also due to a reduction in the Louisiana state corporate tax rate.
Dan Harrison: Thanks Roland.
Speaker Change: If you look at slide 15. This is our updated drilling inventory at the end of last year 2024.
Roland Burns: A higher provision for depreciation depletion and amortization accounted for the loss before income taxes in the quarter. The higher amortization rate resulted from the decreased our proved undeveloped reserves, which are determined under SEC rules, where you have to use the first of the month average price looking back for the previous.
Speaker Change: Our total operated inventory at year end stands at 1548 gross locations and 1311 net locations.
Speaker Change: It's quite still a 78% average working interest.
Speaker Change: Our non operated inventory, we have 1110 gross locations or 139 net locations, which represents a 13% average working interest.
Roland Burns: 12 months.
Roland Burns: And of course that price was very low in 2024.
Roland Burns: On slide six we recap the annual.
Speaker Change: The drilling inventory is split between Haynesville and Bossier wells.
Roland Burns: <unk> 2024 financial results.
Roland Burns: Production for the full year average one four Bcf per day, which is very comparable to the production we had in 2023.
Speaker Change: <unk> it into our four categories by link.
Speaker Change: Our short laterals are less than 5000 feet or medium laterals of 25000 8500 feet.
Roland Burns: Natural gas prices that we realized in 2024 fell by 7%, resulting at our oil and gas sales decreasing 7% to $1 3 billion.
Speaker Change: Our long laterals are between 80 510000 feet and.
Speaker Change: Our extrorse laterals or.
Speaker Change: Our laterals over 10000 feet.
Roland Burns: EBITDAX in.
Roland Burns: 2024 totaled $850 million, and we generated $675 million of cash flow.
And our gross operated inventory, we now have 53 short laterals 337 medium laterals.
Roland Burns: With weaker natural gas prices in that higher DD&A expense, we reported an adjusted net loss of $69 million in 2024 or 24 per share compared to 133 million of net income we had in 2023.
570, long laterals and 588 extra long laterals.
Speaker Change: Our gross operated inventory is evenly split with 51% in the Haynesville and 49% in the Bossier.
Speaker Change: The app.
Roland Burns: On slide seven we further break down our natural gas price realizations in the quarter and for the year.
Speaker Change: The updated drilling inventory also includes the impact of identifying 113 whore sheet locations.
Roland Burns: The previous quarters.
Speaker Change: The average lateral length of our inventory is now at 9603.
Roland Burns: Correlate Nymex settlement price averaged $2 79 per Mcf in the fourth quarter and the average Henry hub spot price in the quarter averaged $2 42.
Speaker Change: This is up from 9261 fee at the end of the third quarter.
Speaker Change: Due to converting more of our short laterals to the long lateral wells.
Roland Burns: The 45% of our gas in the fourth quarter were sold in the spot market. So the appropriate market price reference price for our gas that quarter was $2 62.
Speaker Change: 75% of our inventory is now composed of laterals greater than 10000 feet.
Speaker Change: And our inventory provides us has over 30 years of future drilling locations based on our current activity levels.
Roland Burns: Our realized gas price during the fourth quarter. It averaged $2 32 stance reflected a 30 <unk> differential for the quarter.
Speaker Change: On Slide 16 is a chart outlining our average lateral length drilled based on the wells that have that have been drilled and have reached TD or total depth.
Roland Burns: We were at 51% hedged in the fourth quarter, so that improved our realized gas price our realized gas price to $2 70.
Speaker Change: We have split out the data between both our legacy Haynesville and western Haynesville areas.
Roland Burns: We also had a five set up lift to our overall gas price realization from purchasing third party gas to utilize our available transported.
Speaker Change: In 2024% to 39 wells that reached total depth in the legacy Haynesville at an average lateral length.
Speaker Change: 10922 feet.
Roland Burns: On slide eight we detail our natural gas hedge position that we have to protect cash flows.
Speaker Change: The individual lengths range from 4222 feet to 17400 feet.
Roland Burns: This year and in 2020.
Speaker Change: So our record longest lateral now stands at 17400 feet.
Roland Burns: We have approximately 50% of our gas production hedged for this year at an average price of $3 48 or better.
Speaker Change: In 2024 of the 11 wells that reached total depth in the Western Haynesville had an average lateral length of 10182 feet.
Roland Burns: 22% is in price swaps.
Speaker Change: The longest lateral we have drilled to date in the western Haynesville had.
Roland Burns: The remaining is the form of Costless costless collars with a floor of $3 50, and a ceiling of $3 80.
I had a lateral length of 12763 feet.
Speaker Change: In the fourth quarter, we only turned one well to sales in the legacy Haynesville area and this was our Sebastian number five horse you will that we discussed on our third quarter conference call.
Roland Burns: For 2006.
Roland Burns: 59% of our hedge position is in collars with the same floor level of $3 50, but a higher ceiling price of $4 35.
Speaker Change: And the Western Haynesville, we turned six wells to sales during the fourth quarter and five of these wells.
Roland Burns: And then the remaining 41% of our 26 hedge position.
Speaker Change: Turning to sales over the last 10 days of the quarter of the year.
Roland Burns: Yes.
Roland Burns: Gas price swaps, which averaged $3 51 per mcf.
Speaker Change: To recap our long lateral activity to date, we have drilled 110 wells with laterals longer than 10000 feet and we have 40 wells.
Roland Burns: On slide nine we detail our operating cost per <unk>.
Roland Burns: Cfe and our EBIT margin our operating cost.
Speaker Change: With laterals over 14000 feet.
Speaker Change: Sure.
Roland Burns: Average 72 in the fourth quarter, which was <unk> <unk> lower than the third quarter rate, our EBITDAX margin improved to 73% in the fourth quarter as compared to 67% in the third quarter.
Speaker Change: Slide 17 outlines the wells that were turned to sales in the legacy Haynesville in 2024.
Speaker Change: In 2024 returned 37 wells in the legacy Haynesville to sales.
So our production and AD valorem taxes were down three sets in the quarter, primarily reflecting the lower statutory severance tax rate, we have in Louisiana, which went into effect in the middle of the year.
Speaker Change: The individual IP rates on these wells range from 9 million a day to 42 million cubic feet a day with an average test rate of 23 million a day.
Speaker Change: The average lateral length was 10140 feet and the individual laterals range 4222 feet.
Roland Burns: And our lifting cost in the quarter increased three <unk>, where our gathering costs were down five six in the quarter.
Speaker Change: 15330 feet.
Roland Burns: Over all our G&A costs were unchanged at <unk> and.
Speaker Change: This list includes our first four if you will the Sebastian 11, Acu number five.
Roland Burns: In the fourth quarter.
Roland Burns: On slide 10, we recap our spending on drilling and other development activity that we had in the fourth quarter and for all of last year. We spent a total of $240 million on development activities in the fourth quarter.
Speaker Change: That was turned to sales in October with an IP rate of $31 million a day.
Speaker Change: Which we discussed.
Speaker Change: On the third quarter call.
Speaker Change: Other than the horseshoe well, we did not turn on any new wells to sales in the fourth quarter. So we deferred that completion activity to wait for the improved natural gas prices.
Roland Burns: And we spent 902 billion for the full year.
Roland Burns: In 2024, we drilled 32 or $25 eight net horizontal haynesville wells and 18% or $17. One net Bossier wells, we turned 48 wells or $42 nine net operated wells to sales, which had an average initial production rate of 26 million per day.
Speaker Change: Two of our six rigs are currently drilling on our legacy Haynesville acreage.
Speaker Change: We do expect to add another rig to the legacy area later this year.
Speaker Change: The gas prices remain attractive.
Speaker Change: Slide 18 outlines the wells that we turned to sales in the western Haynesville in 2024.
Roland Burns: Yes.
Roland Burns: On slide 11, we recap our proved reserves at the end of 2024 determined based on year end Nymex market prices, which have been adjusted for our differentials as compared to the much lower prices that we'd have to use for SEC purposes.
Speaker Change: In 2024, we had 11 wells turned to sales the individual IP rates on these wells range from 31 million a day up to 44 million cubic feet a day with an average.
Speaker Change: First rate of 38 million cubic feet per day.
Speaker Change: The average lateral length of 10032 feet at the individual levels.
Roland Burns: Determined DD&A in the financial statements.
Roland Burns: Using year end Nymex prices were able to grow our proved reserves by 6%, even though we had reduced overall drilling activity last year.
Speaker Change: Range from 70, 764 feet up to 12055 feet.
Speaker Change: Six of the 11 wells returned to sales in the fourth quarter and.
Roland Burns: Our proved reserves totaled seven tcf.
Speaker Change: Five of those.
Speaker Change: Turning to sales the last 10 days of the year, we do have four of our six rigs are currently drilling on our western Haynesville acreage.
Roland Burns: We added 899 Bcf of drilling additions, which replaced the 170% of what we produced last year of 528 Bcf.
Roland Burns: We spent $902 billion on that drilling program.
Speaker Change: Slide 19 highlights the total drilling days in the footage per day drilled in the legacy Haynesville.
Roland Burns: Which gives us a finding cost of right at $1 for 2024.
Speaker Change: 2024 wells in our legacy Haynesville area averaged 26 days to total depth. This represents a 10% improvement over 2023.
Roland Burns: In addition to the proved reserves.
Roland Burns: There is an additional two one tcf of proved undeveloped reserves, which are not included because they are not expected to be drilled within the next five year period as required by SEC rules otherwise they could be included in proved reserves.
Speaker Change: Over the last eight years, our drilling time and the legacy Haynesville area has averaged 27 five days.
Speaker Change: The improvement in the drilling days is a function of the footage drilled per day.
Roland Burns: We also have another two four tcf of <unk>, our probable reserves and $6 nine tcf of Threep or possible reserves give us the total reserve base of $18 four tcf at three basis.
Speaker Change: And in 2024, we averaged 920 feet per day drilled in the legacy Haynesville.
Speaker Change: Representing a 6% improvement over the 22023 average of 867 feet per day.
Speaker Change: Since 2017, the footage drilled per day has increased 35% with the fourth quarter of 'twenty four.
Roland Burns: This does not include the reserve potential for much of the Western Haynesville acreage.
Speaker Change: Footage drilled per day at 1012 feet is up 49% since 2017.
Roland Burns: Slide 12 recaps our capitalization at the end of 2024, we ended the quarter with $415 million of borrowings outstanding under our credit facility, giving us $3 billion in total debt, including our outstanding senior notes.
Speaker Change: Our best well drilled to date in the legacy Haynesville averaged 1461 feet per day.
Speaker Change: There was a number of drivers to the recently improved drill times in our legacy Haynesville.
Roland Burns: Our borrowing base is currently at $2 billion and our elected commitment under our credit facility remains at $1 5 billion.
The main driver has been drilling the longer laterals.
Speaker Change: 2017, our average lateral length has increased by nearly 4000 feet.
Roland Burns: With improved natural gas prices and the strong hedge position, we expect our leverage ratio to improve significantly as we start to report that 2025 financial results.
Speaker Change: In addition to just the normal things of minimizing problems in maintaining consistency or other factors leading into drilling efficiencies and then the application of.
Speaker Change: Managed pressure drilling rig upgrades and the continued improvement in our downhole motor performance.
Roland Burns: At the end of the fourth quarter, we had approximately $1 1 billion of.
Roland Burns: Our financial liquidity.
Roland Burns: On slide 13, we summarize the market has that we sell our natural gas at our proximity to the growing natural gas demand from LNG terminals.
Speaker Change: Slide 20 highlights the significant improvements achieved in our drilling times in the western Haynesville.
Speaker Change: Since we split our initial well in the fourth quarter of 2021, we have seen significant and continuous improvement in our drilling times.
Roland Burns: Our chemical and industrial complexes, along the Gulf Coast provides us with advantaged gas price realizations compared to most of our natural gas peers.
Speaker Change: Our first three wells were drilled in 2022.
Speaker Change: And averaged 95 days to reach TD and this includes executing very difficult sidetrack, we had on our second well.
Roland Burns: 68% of our gas production is sold at Gulf Coast markets, using our long term transport agreements with the balance held at the regional hubs at <unk>.
Speaker Change: Our average drilling time improved 26% down to 70 days in 2022, and we improved another 19% down to <unk>.
Roland Burns: Carthage in Bethel.
Roland Burns: Selling directly to end users that having access to various Gulf coast hubs provides.
Speaker Change: <unk> 57 days in 2024.
Speaker Change: We drilled 21 wells to total depth through the end of the year.
Roland Burns: As the ability to take advantage of changing market conditions.
Speaker Change: The fastest wells drilled to TD and 41 days and that was during the fourth quarter.
Roland Burns: On a daily basis, and then starting this year, we have access to a storage facility near our battle plan, giving us greater operational flexibility and the ability to take advantage of seasonal pricing.
Speaker Change: This represents an improvement of 45% or 35 days compared to our first well in our first well that was drilled to total depth in 75 days.
Roland Burns: On slide 14, we show the footprint of our midstream system and our western Haynesville area in.
Speaker Change: The improvement in drilling days as a function of the footage drilled per day in our first three wells in 2022 averaged 281 feet per day.
Roland Burns: In late 2023, we partnered with quantum capital solutions to create pinnacle gas services.
Speaker Change: That has steadily improved to 487 feet per day in 2024.
Roland Burns: They needed expansion of our existing midstream assets in the western Haynesville to handle the growing production from this area.
Speaker Change: We averaged 547 feet per day in the fourth quarter of 24, and the fastest willingness group drilled a record 608 feet per day.
Roland Burns: So we contributed our pinnacle gathering and treating system to the partnership and then quantum is controlling the capital to build out the gathering and treating system in this area.
Speaker Change: On average our daily drilling footage has doubled since we started in 2022 through the end of 'twenty four.
Roland Burns: We currently have 246 miles of high pressure pipelines that run across the middle of our acreage as you can see on slide 14, and we have a.
Speaker Change: There are several drivers behind our improved drilling performance and the western Haynesville.
Roland Burns: Gas treating plant at battle at the North end of our system and we're currently constructing a new 400 million a day trading plant at Mark Hey, Texas on our southern area.
Speaker Change: <unk> in the vertical hole, we've improved our casing point selections, we've streamlined our casing designs.
Speaker Change: See faster drilling in the vertical.
Roland Burns: So I'll now turn it over to Dan to discuss our operations.
Speaker Change: <unk> selection.
Speaker Change: And in the laterals utilizing thermal <unk> and continue to see more consistent downhole motor performance.
Roland Burns: Okay.
Dan Harrison: Thanks Roland.
Dan Harrison: If you look at slide 15. This is our updated drilling inventory at the end of last year 2024.
Speaker Change: We continue to have just with the additional drilling activity.
Dan Harrison: Our total operated inventory at year end stands at 1548 gross locations and 1211 net locations.
Speaker Change: We also started incorporating two well pads in our drilling program in mid in the middle of last year.
Dan Harrison: It's quite still a 78% average working interest.
Speaker Change: On Slide 21 is a summary of our is the summary of our D&C costs through the fourth quarter for our mid smart long lateral wells.
Dan Harrison: Our non operated inventory we have 1110 gross locations were 139 net locations, which represents a 13% average working interest.
Speaker Change: Located on the East, Texas, North, Louisiana legacy acreage position.
Speaker Change: This covers all of the wells with laterals greater than 8500 feet in length.
Dan Harrison: The drilling inventory is split between Haynesville and Bossier wells.
Speaker Change: Our drilling cost are based on when the wells reached TD this better aligns with when the drilling dollars are spent completion cost per foot continues to ease the turn to sales dates.
Dan Harrison: About it into our four categories by link.
Our short laterals are less than 5000 feet or medium laterals of 5000 8500 feet.
Dan Harrison: Long laterals are between 80 510000 feet and.
Speaker Change: In the fourth quarter, our drilling cost averaged $660 a foot. This is a 1% decrease compared to the third quarter and in the fourth quarter. Our completion cost came in at $863 a foot.
Dan Harrison: Our strong levels or.
Dan Harrison: All levels over 10000 feet.
Dan Harrison: And our gross operated inventory, we now have 53 short laterals 337 medium laterals.
Speaker Change: Represents a seven 5% increase compared to the third quarter.
Speaker Change: During the fourth quarter, we only turned the one well to sales in the legacy Haynesville and that was that Sebastian <unk>.
Dan Harrison: 570, long laterals and 588 extra long laterals.
Speaker Change: <unk> number five single Horseshoe.
Dan Harrison: Our gross operated inventory is evenly split with 51% in the Haynesville and 49% in the Bossier.
Speaker Change: Then we turned to sales in October.
Speaker Change: Both the drilling and completion cost trends show the impact of the significant inflation that took place starting in 2022.
Dan Harrison: The updated drilling inventory also includes the impact of identifying 113 whore sheet locations.
Speaker Change: And looking ahead, we're anticipating our D&C costs on our legacy Haynesville acreage to remain relatively flat to slightly lower for the next couple of quarters.
Dan Harrison: The average lateral length of our inventory is now at 9603 this.
Dan Harrison: This is up from 9261 feet at the end of the third quarter.
Speaker Change: We did start seeing our pipe prices come down late last year, we do expect to maintain these cost savings through the next couple of quarters.
Dan Harrison: Due to converting more of our short laterals to the long lateral wells.
Dan Harrison: 75% of our inventory is now composed of laterals greater than 10000 feet.
Speaker Change: The cost expectations are a little more uncertain out past mid year with the potential uptick in activity looming with the higher gas prices.
Dan Harrison: And our inventory provides us with over 30 years of future drilling locations based on our current activity levels.
Speaker Change: And the possible tariffs.
Speaker Change: Discussions that are weighing a pipe prices.
Dan Harrison: On Slide 16 is a chart outlining our average lateral length drilled based on the wells that had that have been drilled and have reached TD or total depth.
Speaker Change: We are currently running two rigs on our legacy Haynesville acreage and we anticipate adding a third rig later this year if the gas prices.
Speaker Change: Stay attractive.
Dan Harrison: We will split out the data between both our legacy Haynesville and western Haynesville areas.
Speaker Change: Slide 22. This is a summary of our D&C costs through the fourth quarter for all the wells we've drilled in the western Haynesville.
Dan Harrison: In 2024% to 39 wells that reached total depth in the legacy Haynesville at an average lateral length.
Speaker Change: This slide provides the drilling and completion costs are all the wells we've drilled in the play to date.
Dan Harrison: 10922 feet.
Dan Harrison: The individual lengths range from 4222 feet to 17400 feet.
Speaker Change: We have spent a large amount of exploratory capital on our first 10 to 12 wells drilled in the western Haynesville as evidenced by the higher drilling and completion costs.
Dan Harrison: So our record longest lateral now stands at 17400 feet.
Speaker Change: Through the early part of 2024.
Dan Harrison: In 2024 of the 11 wells that reached total depth in the Western Haynesville had an average lateral length of 10182 feet.
Speaker Change: We have accumulated a wealth of knowledge drilling those early wells that is now paying big dividends for us.
Dan Harrison: The longest lateral we have drilled to date in the western Haynesville.
Speaker Change: The early exploratory D&C capital allowed us to hone in on the goodwill designed for future wells and as a result, we've been able to reduce our latest the D&C capital to a point.
I had a lateral length of 12 763 feet.
Dan Harrison: In the fourth quarter, we only turned one well to sales in the legacy Haynesville area and this was our Sebastian number five horse you will that we discussed on our third quarter conference call.
Speaker Change: Lower than our original estimates of roughly double what our legacy Haynesville wells cost.
Speaker Change: Our fourth quarter drilling cost averaged $1396 a foot, while our fourth quarter completion cost theme at $1315 a foot.
Dan Harrison: And the Western Haynesville, we turned six wells to sales during the fourth quarter and five of these wells.
Dan Harrison: Turning to sales over the last 10 days of the quarter.
Speaker Change: In addition to some of the main drivers affecting our drilling efficiency.
Dan Harrison: The year.
Dan Harrison: To recap our long lateral activity to date, we drilled 110 wells with laterals longer than 10000 feet and we have 40 wells.
Speaker Change: As the streamline casing design faster drilling.
Speaker Change: On the vertical hole the utilization of the thermal drill pipe and our improved run times in the lateral.
Dan Harrison: With laterals over 14000 feet.
Speaker Change: This also comes through.
Dan Harrison: Slide 17 outlines the wells that were turned to sales in the legacy Haynesville in 2024.
Speaker Change: The impacts of starting our two well pads in our drilling program in the middle of last year, which.
Speaker Change: Help us to save additional days off our drill times.
Dan Harrison: In 2024, we turned 37 wells in the legacy Haynesville to sales.
Speaker Change: We've also had great execution on our completions and integrating the two well pads into our program has allowed us to be much more efficient with our frac crews and are an IRA.
Dan Harrison: The individual IP rates on these wells range from 9 million a day to 42 million cubic feet a day with an average test rate of 23 million a day.
Speaker Change: Marlin inquiries.
Speaker Change: We do currently have four rigs running in the western Haynesville.
Dan Harrison: The average lateral length was 10140 feet and the individual laterals range from 4222 feet.
Speaker Change: Anticipate staying with the four rigs in the western HIFU for the near future.
Dan Harrison: 15330 feet.
Speaker Change: Also mentioned all our western Haynesville rigs are new rigs that we had purpose built with our western Haynesville drilling program in mind.
Speaker Change: This list includes our first force you will the Sebastian 11, Acu number five.
Speaker Change: In closing I, just decided to get where we are today has been highly rewarding it's been a total team effort across the board everybody pushing to improve in all phases.
Speaker Change: That will start to sales in October with an IP rate of 31 million a day.
Speaker Change: Which we discussed.
Speaker Change: On the third quarter call.
Speaker Change: Other than the horse you will we did not turn on any new wells to sales in the fourth quarter. So we deferred that completion activity to wait for the improved natural gas prices.
Speaker Change: Of our operations.
Speaker Change: I'll now turn the call back over to Dave.
Speaker Change: As all of you know Thats a lot of data when you include the western Haynesville.
Speaker Change: Two of our six rigs are currently drilling on our legacy Haynesville acreage we.
Speaker Change: Rolling data. Thank you for the transparency for the fourth quarter and the full year 2020 for everyone would go to slide 23, our.
Speaker Change: We do expect to add another rig to the legacy area later this year.
Speaker Change: The gas prices remain attractive.
Speaker Change: Direct you to slide 23, where we summarize our outlook for 2025 and 2025, we will remain primarily focused on building a great asset in a western haynesville that will position us to benefit from the longer term growth in natural gas demand. We currently have four operated rigs drilling in the west from Haynesville as Dan said to <unk>.
Speaker Change: Slide 18 outlines the wells that we turned to sales in the western Haynesville in 2024.
Speaker Change: In 2024, we had 11 wells turned to sales the individual IP rates on these wells range from 31 million a day up to 44 million cubic feet a day with an average <unk>.
Speaker Change: Continue to delineate the new play, we expect to drill 20 or $19 nine net wells and turned 17 or $16 nine net wells to sales in the western Haynesville at this year, where we will continue to build out the western Haynesville midstream assets to keep up with the growing production from the area.
Speaker Change: Test rate of 38 million cubic feet per day.
Speaker Change: The average lateral length of 10.
Speaker Change: 32 feet in the individual levels.
Speaker Change: Ranged from 70 764 feet up to 12055 feet.
Speaker Change: Six of the 11 wells returned to sales in the fourth quarter and.
Speaker Change: Yes.
Speaker Change: Midstream expenditures are expected to be $130 million to $150 million. They will all be funded by our midstream partner.
Speaker Change: Bob of those.
Speaker Change: Turning to sales the last 10 days of the year, we do have four of our six rigs are currently drilling on our western Haynesville acreage.
Speaker Change: The legacy Haynesville, we will run two or three rigs depending on bond prices to build production back up by the fourth quarter, we expect to drill 26, or 24, net wells and turned 29% or 22, eight net wells to sales in our legacy Haynesville. This year, we anticipate funding our drilling program.
Speaker Change: Slide 19 highlights the total drilling days in the footage per day drilled in the legacy Haynesville.
Speaker Change: 2024 wells in our legacy Haynesville area averaged 26 days to total depth.
Speaker Change: This represents a 10% improvement over 2023.
Speaker Change: As Robin said out of operating cash flow and using any excess cash flow to pay down debt.
Speaker Change: Over the last eight years, our drilling time and the legacy Haynesville area has averaged 27 five days.
Speaker Change: We continue to have the industry's lowest producing cost structure and expect drilling efficiencies to continue to drive down D&C cost in 2025 in both the western and legacy Haynesville assets, we're in a strong financial liquidity totaling almost $1 1 billion.
Speaker Change: The improvement in the drilling days is a function of the footage drilled per day.
Speaker Change: And in 2024, we averaged 920 feet per day drilled in the legacy Haynesville.
Speaker Change: Representing a 6% improvement over the 22023 average of 867 feet per day.
Speaker Change: Noted on slides $24 25, we provide some specific guidance for the rest of the year I will now turn the call back to the operator to answer questions from analysts who follow the company.
Speaker Change: Since 2017, the footage drilled per day has increased 35% with the fourth quarter of 'twenty four.
Speaker Change: Footage drilled per day 1012 feet is up 49% since 2017.
Speaker Change: Sure.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Our best well drilled to date in the legacy Haynesville averaged 1461 feet per day.
Speaker Change: Draw. Your question. Please press star one again.
There was a number of drivers to the recently improved drill times in our legacy Haynesville.
Speaker Change: And our first question will come from Derrick Whitfield with Texas Capital. Your line is open.
Speaker Change: <unk>.
Speaker Change: Been drilling the longer laterals.
2017, our average lateral length has increased by nearly 4000 feet.
Derrick Whitfield: Well good morning, all and thanks for your time also congratulations on the position you've assembled into western Haynesville as Youre back there's a dream scenario for any one pursuing organic leasing program and a new basin.
Speaker Change: In addition to just the normal things of minimizing problems in maintaining consistency or other factors leading into drilling efficiencies and then the application of <unk>.
Speaker Change: Managed pressure drilling rig upgrades and the continued improvement in our downhole motor performance.
Speaker Change: Thank you.
Speaker Change: Two questions and they're both related to western Haynesville, So referencing slide 18 year drilling arguably the deepest and most complex parts of your position today as we understand the geology.
Slide 20 highlights the significant improvements achieved in our drilling times in the western Haynesville.
Speaker Change: Since we split our initial well in the fourth quarter of 2021, we have seen significant and continuous improvement in our drilling times.
Speaker Change: Have a view on reservoir quality as you move to the west to the shallower portions of the sub basin Shirley D&C cost will decrease that theirs is there a chance that reservoir quality with support recoveries in the two and a half to three bcf per foot Zip code.
Speaker Change: Our first three wells were drilled in 2022.
Speaker Change: And averaged 95 days to reach TD and this includes executing very difficult sidetrack, we had on our second well.
Dan Harrison: Darren This is Dan I think that's a very good question.
Speaker Change: Our average drilling time improved 26% down to 70 days in 2022, and we improved another 19% down to <unk>.
Speaker Change: We are drilling the deeper the deepest hottest stuff.
Dan Harrison: If you look at where the well locations are across the acreage.
Speaker Change: <unk> 57 days in 2024.
Dan Harrison: We havent drilled anything up there on that part of the acreage a lot of that stuff is HB acreage. So.
Speaker Change: We drilled 21 wells to total depth through the end of the year.
Dan Harrison: We're drilling the stuff that we've leased into hold and so that will kind of keep us down in that.
Speaker Change: The fastest wells drilled to TD and 41 days and that was during the fourth quarter.
Dan Harrison: General area and as we plan up to the northeast.
Speaker Change: This represents an improvement of 45% or 35 days compared to our first well the first well that was drilled to total depth in 75 days.
Dan Harrison: The kind of the near term activity next couple of years.
Dan Harrison: But kind of the answer to your question I think.
Dan Harrison: As you get up in that acreage you are talking about it does get shallower the tvd's gets shallower and a little bit cooler.
Speaker Change: The improvement in drilling days as a function of the footage drilled per day in our first three wells in 2022 averaged 281 feet per day.
Dan Harrison: I think it just remains to be seen what the EUR is are going to look like but.
Dan Harrison: I would certainly think maybe a hair lastest, if you're just correlated to that but we also expect our D&C cost are going to be a lot lower when we drill up there in the future.
Speaker Change: That has steadily improved to 487 feet per day in 2024.
Speaker Change: We averaged 547 feet per day in the fourth quarter of 2004, and the fastest willingness group drilled a record 608 feet per day.
Dan Harrison: I think our D&C costs are going to be a lot lower just drill and where we're at now in the future.
Dan Harrison: We're still kind of going up the learning curve, we haven't plateaued, yet on even the lower cost that we're at today.
Speaker Change: On average our daily drilling footage has doubled since we started in 2022 through the end of 'twenty four.
Dan Harrison: And to your point I think it's really good we didn't start out with the easy yet depths, we started out with a deeper depths the hottest depth and.
Speaker Change: There are several drivers behind our improved drilling performance and the western Haynesville.
Speaker Change: <unk> in the vertical hole, we've improved our casing point selections, we have streamlined our casing designs.
Dan Harrison: We looked at what reality look back and I look really good and that's where we ended up with these 18 wells there was a big enough data set.
Speaker Change: GE faster drilling and <unk>.
Speaker Change: <unk> improved bit selection.
Speaker Change: And in the laterals utilizing thermal <unk> and continuing to see more consistent downhole motor performance.
Dan Harrison: We could actually come out and talk about the cost and in all major tier one plays a more you drill the wells and complete them.
Speaker Change: We continue to have just with the additional drilling activity.
Dan Harrison: Typically the cost structure comes down exactly like it did in the core of the Haynesville Bossier going back to 2008 to 2011.
Speaker Change: We also started incorporating two well pads in our drilling program in mid in the middle of last year.
Speaker Change: Okay and as my follow up I wanted to focus on the D&C cost compression you are highlighted on page 20.
Speaker Change: On slide 21 is a summary of our is the.
Speaker Change: The summary of our D&C costs through the fourth quarter for our mid smart long lateral wells.
Dan Harrison: Two <unk>.
Dan Harrison: Particularly focusing on the completion side the degree of the step down in Q4 suggests theirs.
Speaker Change: <unk> on the East, Texas, North, Louisiana legacy acreage position.
Dan Harrison: More opportunity, there, which is kind of what Dan suggested as well.
Speaker Change: This covers all the wells with laterals greater than 8500 feet in length.
Dan Harrison: In comparison to your legacy Haynesville.
Dan Harrison: <unk> added costs largely associated with higher trading pressures are there or are there other considerations and I guess more broadly how much lower can you drive that.
Speaker Change: Our drilling costs are based on when the wells reached TD this better aligns with when the drilling dollars are spent completion cost per foot continues to ease the turned to sales dates.
Dan Harrison: I think we have more room to probably lower our cost.
In the fourth quarter, our drilling cost averaged $660 a foot. This is a 1% decrease compared to the third quarter and in the fourth quarter. Our completion cost came in at $863 a foot.
Dan Harrison: On the drilling side I mean, we've seen we've seen a bigger drop on the drilling side and the completion side.
Dan Harrison: I think we.
Dan Harrison: We have room to lower the completion cost a little bit further I think that Q4 cost we havent here at <unk> thousand $515, a foot thats kind of a number that we're planning.
Speaker Change: This represents a seven 5% increase compared to the third quarter.
Speaker Change: During the fourth quarter, we only turned the one well to sales in the legacy Haynesville and that was that Sebastian.
<unk> with for the future wells just for forecasting.
Speaker Change: <unk> number five single Horseshoe.
Dan Harrison: You asked about treating pressures, yes, so as far as compared to the legacy Haynesville.
Speaker Change: Then we turned to sales in October.
Speaker Change: Both the drilling and completion cost trends show the impact of the significant inflation that took place starting in 2022.
Dan Harrison: The treating pressures are definitely much higher down here just based on the depth and the Frac gradients.
Speaker Change: And looking ahead, we anticipate in our D&C costs on our legacy Haynesville acreage to remain relatively flat to slightly lower for the next couple of quarters.
Dan Harrison: He is in the western Haynesville Fracs very consistently so it's been really it's been really kind of trouble free but its a lot more horsepower and.
Dan Harrison: We do pump slightly bigger jobs in the western Haynesville on average, we pumped about 4000 pounds per foot and in the core we pump about 3500 pounds per foot. So that's also part of it yes.
Speaker Change: We did start seeing our pipe prices come down late last year, we do expect to maintain these cost savings through the next couple of quarters.
Speaker Change: The cost expectations are a little more uncertain out past mid year with the potential uptick in activity looming with the higher gas prices.
Dan Harrison: Yes, and Dan I would add you look at comparing the Western Haynesville has had a legacy haynesville.
Speaker Change: And the possible tariffs.
Dan Harrison: We are having to build all the infrastructure the new pads.
Speaker Change: Discussions that are waiting on pipe prices.
Dan Harrison: And where.
Dan Harrison: We're really starting from scratch there legacy Haynesville, you've got a lot of infrastructure that we built long time ago, and very often using pads. We built a long time ago. So yes. There is a huge difference in the upfront costs. These early wells are buried all of that cost in the numbers and then as you come back in.
Speaker Change: We are currently running two rigs on our legacy Haynesville acreage and we anticipate adding a third rig later this year if gas prices.
Speaker Change: Stay attractive.
Speaker Change: Slide 22. This is a summary of our D&C costs through the fourth quarter for all the wells we've drilled in the western Haynesville.
Dan Harrison: Infill drill and continue to develop you'll have less and less of that cost to the future wells would be able to utilize that investment we're making today.
Speaker Change: This slide provides the drilling and completion cost for all the wells we've drilled in the play to date.
Speaker Change: We have spent a large amount of exploratory capital on a first in the 12 wells drilled in the western Haynesville as evidenced by the higher drilling and completion costs.
Speaker Change: And not just to add to what Roland said, we are building larger pads in the western hinesville to be able to come back drill future wells.
Dan Harrison: Great update guys.
Speaker Change: Through the early part of 2024.
Speaker Change: Thank you.
Speaker Change: We have accumulated a wealth of knowledge drilling those early wells that is now paying big dividends for us.
Speaker Change: And the next question comes from Carlos Escalante with Wolfe Research. Your line is open.
Speaker Change: The early exploratory D&C capital allowed us to hone in on the goodwill designed for future wells and as a result, we've been able to reduce our latest the D&C capital to a point.
Carlos Escalante: Hey, good morning, gentlemen, I wanted to first congratulate you all on the incremental color on the western Haynesville rates, that's really encouraging to see the results.
Speaker Change: Lower than our original estimates of roughly double what our legacy Haynesville wells cost.
Speaker Change: Let me start with a follow up to the last question, but more geared towards the development plan could you speak perhaps where Dan could you speak to what a typical development plan will look like for your average what's their haynesville path in terms of how many wells you.
Speaker Change: Our fourth quarter drilling cost averaged $1396 a foot, while our fourth quarter completion cost theme at $1315 a foot.
Speaker Change: Would expect on any given part and what your general assumption for spacing would be.
Speaker Change: In addition to some of the main drivers affecting our drilling efficiency.
Speaker Change: The streamline casing design faster drilling.
Speaker Change: Knowing of course that it's probably too early to know what the right spacing is.
Speaker Change: On the vertical hole the utilization of the thermal <unk> and our improved run times in the lateral.
Speaker Change: Yes.
Speaker Change: The last piece of that it's definitely too early drill.
Speaker Change: This also comes from the impacts of starting our two well pads in our drilling program in the middle of last year, which.
Speaker Change: Drilling the whole acreage dwells are spread out so we haven't really honed in on what the spacing is going to be I think we're going to have to accumulate a lot of data in the future.
Speaker Change: Help us to save additional days off our drill times.
Speaker Change: We've also had great execution on our completions and integrating the two well pads into our program has allowed us to be much more efficient with our frac crews and are in a row.
Speaker Change: I went into what the optimum spacing will be in the Bossier versus in the Haynesville.
Speaker Change: Areas, where it's stickier versus standard I think we can all yield different answers so.
Speaker Change: Wireline growth.
Speaker Change: We do currently have four rigs running in the western Haynesville.
Speaker Change: I don't have a direct answer to that question, but.
Speaker Change: As far as future development.
Speaker Change: We anticipate staying with the four rigs in the western HIFU for the near future.
Speaker Change: We strive to drill everything with two well pads that we can.
Speaker Change: Also missing all of our western Haynesville rigs are new rigs that we had purpose built with our western Haynesville drilling program in mind.
Speaker Change: We are drilling and we're holding acreage in some places you just can't because the acreage doesn't give you the opportunity to drill two laterals.
Speaker Change: In closing I, just want to say to get where we are today has been highly rewarding. It's been a total team effort across the board everybody pushing to improve in all phases.
Speaker Change: Wells on the pad.
Speaker Change: So.
Speaker Change: I think we're probably looking at about half 50, maybe 60% of our wells any given year will be on two well pads and the others will be singles.
Speaker Change: Of our operations.
Jay Allison: I'll now turn the call back over to Jay.
Speaker Change: We strive to make as many two well pads as we can but that's probably going to be our mix for the next couple of years.
Jay Allison: As all of you know Thats a lot of data when you include the western Haynesville.
Speaker Change: Rolling Dan. Thank you for the transparency for the fourth quarter and the full year 2020 for everyone would go to slide 23.
Speaker Change: And one thing we've tried to do if you look we've derisked, maybe 26 miles of this slide we show that on them now.
Speaker Change: And our goal is by the end of 2025 drilling 20 more wells.
Speaker Change: I direct you to slide 23, where we summarize our outlook for 2025 and 2025, we will remain primarily focused on building a great asset in a western haynesville that will position us to benefit from a longer term growth in natural gas demand. We currently have four operated rigs drilling in the west from Haynesville as Dan said.
Speaker Change: And hopefully all of those are to hold acreage might be one or two we just have to drill outside of holding acreage, but the goal is to drill all of those wells to delineate what this footprint really looks like what the value is what the resource potential is and along with our partner with quantum we will build.
We continue to delineate the new play we expect to drill 20 or $19 nine net wells and turned 17 or 16 nine net wells to sales in the western Haynesville at this year.
Speaker Change: The gathering treating and the midstream to complement the program of 25 26, I think by the end of 'twenty five definitely by the end of 'twenty six.
Speaker Change: We will have fully de risked this whole 518000 net acre play.
Speaker Change: We will continue to build out the western Haynesville midstream assets to keep up with the growing production from the area.
Dan had mentioned a lot of it is <unk>. So we don't really plan on drilling on the AWP acreage until we hold.
Speaker Change: Midstream expenditures are expected to be $130 million to $150 million.
Speaker Change: Maybe 70 more wells, we need to drill in the next several years.
Speaker Change: They will all be funded by our midstream partner.
Speaker Change: And the legacy Haynesville, we will run two or three rigs depending on bond prices to build production back up by the fourth quarter, we expect to drill 26, or 24, net wells and turned 29% or 22, eight net wells to sales in our legacy Haynesville This year.
Speaker Change: <unk> our entire footprint.
Speaker Change: Thanks for the project My second question is on the.
Speaker Change: The capex trend on a per well basis.
Speaker Change: I think that.
Speaker Change: It's very encouraging to see that.
Speaker Change: Anticipating funding our drilling program as Robin said out of operating cash flow and using any excess cash flow to pay down debt.
Speaker Change: You saved on both fronts, the drilling and completion completion side, but given that the western haynesville is materially harder and deeper than legacy Haynesville you would almost think that youre drilling savings will be will hit a plateau. Soon if you will whereas on the completion side.
Speaker Change: We continue to have the industry's lowest producing cost structure and expect drilling efficiencies to continue to drive down D&C cost in 2025 in both the western and legacy Haynesville assets.
Speaker Change: You might you haven't reap the full benefits of a full development cycle. So I was wondering if you can perhaps speak to how on the completion side.
Speaker Change: <unk> financial liquidity totaling almost $1 1 billion noted on slides $24 25, we provide some specific guidance for the rest of the year I will now turn the call back to the operator to answer questions from analysts who follow the company.
Speaker Change: You will achieve greater savings what what are you doing specifically in terms of your completion design and how much headroom do you see on the drilling side.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: As a whole.
Speaker Change: So kind of alluded to that a little bit earlier I think.
Speaker Change: Draw. Your question. Please press star one again.
Speaker Change: We will see we haven't we haven't reached the plateau on the call is first of all in the Western Haynesville I mean, obviously with all of the thousands of wells and we drilled up in the legacy area.
Speaker Change: And our first question will come from Derrick Whitfield with Texas Capital. Your line is open.
Speaker Change: It is just a small little tweaks here and there to monitor things it's great execution.
Derrick Whitfield: Well good morning, all and thanks for your time also congratulations on the position you've assembled into western Haynesville as Youre back there is a dream scenario for anyone pursuing organic leasing program and a new basin.
Speaker Change: Shaves off just a day here in a day there that's not the case in the western Haynesville and the Western Haynesville, we've been going up a steep learning curve. We've cut awful lot of days, we haven't reached a plateau yet I think we're going to drive these cost lower we're going a lot more days off.
Speaker Change: Thank you.
Speaker Change: Two questions and they're both related to western Haynesville, So referencing slide 18, you're drilling arguably the deepest and most complex parts of your position today as we understand the geology.
Speaker Change: In the future.
Speaker Change: More of that I see more about just a percent.
Speaker Change: Sure.
Speaker Change: The reduction in cost on the drilling side and on the completion side.
Speaker Change: You have a view on the reservoir quality as you move to the west to the shallower portions of the sub basin Shirley D&C costs with decrease that theirs is there a chance that reservoir quality with support recoveries in two and a half to three bcf per foot Zip code.
Speaker Change: We are comping the same the same frac job right now and all of the Western Haynesville wells.
Speaker Change: I will make one note.
Speaker Change: On Slide 22, there was in Q2 showed a high completion costs.
Speaker Change: 970 Bucks a foot and it is we just had one well that quarter and we pump what we call our big Frac, We put we put 6000 pounds per foot on that well for a data point just to monitor how that well produces in the future.
Dan Harrison: Darren This is Dan I think Thats a very good question.
Speaker Change: We are drilling the deeper the deepest hottest stuff.
Dan Harrison: If you look at where the well locations are across the acreage.
We havent drilled anything up there on that part of the acreage a lot of that stuff is HB acreage. So.
Speaker Change: Compared to all our others, which is while that one stands out but.
Dan Harrison: We're drilling the stuff that we've leased in the hold and so that will kind of keep us down in that.
Speaker Change: We've had really great execution on the completion side really today so.
Dan Harrison: General area and as we plan up to the northeast.
Speaker Change: What I will say the completion costs coming down as much as the drilling on a percentage basis, yes.
Dan Harrison: For the kind of the near term activity next couple of years.
Speaker Change: Yes. The other thing we have manage the wells a little differently each will select a prototype and.
Dan Harrison: But kind of the answer to your question I think.
Dan Harrison: As you get up in that acreage you are talking about it does gets shallower TBD gets shallower and a little bit cooler.
And we learn how to manage all of the wells would go back and we previewed what circle them look like what we could do or didn't do and how well it's performed.
Dan Harrison: I think it just remains to be seen what the EUR is are going to look like but.
Dan Harrison: I think Dan who wants to comment on just well managed from but we're getting better and better and better which is a learning curve from having the 18 wells.
Dan Harrison: I would certainly think maybe a hair less if you're just correlated to that but we also expect our D&C cost are going to be a lot lower when we drill up there in the future.
Dan Harrison: I would say, we definitely have been conservative on how we're drilling the wells down and.
Dan Harrison: And I think our D&C costs are going to be a lot lower just drill and where we're at now in the future.
Dan Harrison: Based on all of the things we're seeing.
Dan Harrison: We're just making adjustments.
Dan Harrison: We're still kind of going up the learning curve, we haven't plateaued, yet on even the lower cost that we're at today.
Dan Harrison: On how we on how we do that manage the drawdown how hard we pulled the wells when we flow them back and clean them up turn on the sales and then where we've set the rate.
Dan Harrison: And to your point I think it's really good we didn't start out with the easy yet depths, we started out with a deeper depths the hottest steps and.
Dan Harrison: After that.
Dan Harrison: And what that will do they will give more predictability give more stability.
Dan Harrison: We looked at what reality look back and I look really good.
Dan Harrison: It will give us what the real top curve might look like what the Dropdowns might look like when the wells have been producing one or two or three years.
Dan Harrison: And Thats, where we ended up with these 18 wells there was a big enough data set so that we can actually come out and talk about the cost and in all major tier one plays the more you drill the wells and complete them.
<unk> gotten to that point, yet, but I think the goal today was.
Dan Harrison: When you trusted us for five years, and we haven't given you all the data and today that goal was to tell you that we think the land grab is over so we can give you that footprint.
Dan Harrison: Typically the cost structure comes down exactly like it did in the core of the Haynesville Bossier going back to 2008 to 2011.
Dan Harrison: We think that the midstream is secure so we can tell you a little more about it and particularly the data set is big enough.
Dan Harrison: Sure.
Dan Harrison: Okay, and just my follow up I wanted to focus on the D&C cost compression you highlighted on page 20.
Dan Harrison: Two.
Dan Harrison: So that you can at least look at that as a beginning point to see what we can improve from there.
Dan Harrison: Specifically focusing on the completion side the degree of that step down in Q4 suggests there's.
Dan Harrison: More opportunity, there, which is kind of within suggested as well.
Dan Harrison: I would tell you that if you go back and you look at the first 18 wells ever drilled in the core.
Dan Harrison: But in comparison to your legacy Haynesville.
Dan Harrison: The Haynesville Bossier, Norway, you compare those to the wells, we drill today hires or lock lights out better.
Dan Harrison: The added costs largely associated with higher trading pressures are there or are there other considerations and I guess more broadly how much lower can you drive that.
Dan Harrison: No.
Charles Meade: And our next question comes from Charles Meade with Johnson Rice. Your line is open.
Dan Harrison: I think we have more room, probably lower our cost.
Dan Harrison: On the drilling side I mean, we've seen we've seen a bigger drop on the drilling side and the completion side.
Dan Harrison: Yes.
Speaker Change: Good morning, Jay Rone, and Dan and I'll add my voice to the course of congratulations not just on the assembly and this position, but also the great progress you've been screaming and yelling for us and you've lost your voice I now understand.
Dan Harrison: I think we have room to lower the completion cost a little bit further I think that Q4 <unk>.
Dan Harrison: We have a near at <unk> $515, a foot that's kind of a number that were planned.
Dan Harrison: Yes.
Dan Harrison: Planning with for the future wells just for forecasting.
Speaker Change: That's the least of my problems Jake.
Dan Harrison: Yes.
Dan Harrison: Jay you already anticipated one of them.
Dan Harrison: You asked about treating pressures, yes, so as far as compared to the legacy Haynesville.
Speaker Change: My first question when you started talking about the Derisking of the position you talked about the.
Dan Harrison: The trading pressures are definitely much higher down here, just based on the depth and the Frac gradients.
Speaker Change: Your first wells here, you've derisked, along a kind of about a 26 mile southwest northeast access if I'm just eyeball on your map there on what is I think it's page 18.
Dan Harrison: He is in the western Haynesville Fracs very consistently so it's been really it's been really kind of trouble free but its a lot more horsepower and.
Speaker Change: Yes.
I bought I would say thats maybe de risk.
We do pump slightly bigger jobs in the western Haynesville.
Speaker Change: Now, 20%, 30% of your position I was wondering if you could you could give an opinion on that and then maybe also ramp in <unk>.
Dan Harrison: On average, we pumped about 4000 pounds per foot and in the core we pump about 3500 pounds per foot. So thats also part of it yes.
Dan Harrison: Yes, and Dan I would add you look at comparing the western Haynesville has had the legacy haynesville.
Speaker Change: <unk> you.
Speaker Change: As you go up dip are you go north.
Speaker Change: What are the risks as it formation thickness.
Speaker Change: We are having to build all the infrastructure that new pads.
Speaker Change: Or is it just is it porosity that that is the risk that is good.
Speaker Change: And we're really starting from scratch there in the legacy Haynesville, you've got a lot of infrastructure that we built long time ago, and very often using pads. We built a long time ago. So yes. There is a huge difference in the upfront costs. These early wells are buried all of that cost in the numbers and then as you come back in.
Speaker Change: Determine exactly how much of this <unk> really works well.
Speaker Change: Well.
Speaker Change: If you noticed on the slide are kind of my introduction I said that.
Speaker Change: Now this slide on page four it has to scale.
Speaker Change: Sometimes theres trickery, you don't have many acres, which you don't put it to scale new compared to your other acreage and it looks it looks skewed. So we said we just want to make sure you know, it's not distorted footprint because you would think it could be distorted because theres so much of it.
Speaker Change: Infill drill and continue to develop you'll have less and less of that cost future wells would be able to utilize that investment we're making today.
Speaker Change: But not just to add to what Roland said, we are building larger pads in the western haynesville to be able to come back drill future wells.
Speaker Change: Because our legacy Haynesville I mean, it's some of the most valuable acreage in North America, we believe because of where it's located and all the locations that we have left to drill in the haynesville as well as only 8% of the Bossier is developed.
Speaker Change: Sure.
Speaker Change: Great update guys.
Speaker Change: Thank you.
Speaker Change: And the next question comes from Carlos <unk> with Wolfe Research. Your line is open.
Speaker Change: So when you when you go back to the beginning.
Speaker Change: Hey, good morning, gentlemen, I wanted to first congratulate you all on the incremental color on the Western Haynesville, It's that's really encouraging to see the results.
Speaker Change: In two.
Speaker Change: 2020, 'twenty to 'twenty one two you can see we've tried to outline the patience that we had.
Speaker Change: Let me start with a follow up to the last question, but more geared toward the development plan.
Speaker Change: Why give the dead horse scenario in other words, we're looking to see if this thing works.
Speaker Change: If it doesn't then we're going to get off of it but if it continues to work and quite frankly, Jerry Jones and his family.
Speaker Change: Can you speak, perhaps where Dan could you speak to what a typical development plan will look like for your average what's the Haynesville pop in terms of how many wells you would expect on any given time and what your general assumption for spacing would be.
Speaker Change: <unk> us to Derisk. This thing, which is very hard to do it takes months and bad days. Some good days, but you add it all up what we tried to do is we tried to say.
Speaker Change: Knowing of course that it's probably too early to know what the right spacing is.
Speaker Change: How many acres do we have that we have to drill wells right now in 2021 22 in order to hold leases that we inherited from acquisitions. That's number one and number two we looked at hand.
Speaker Change: Yes.
Speaker Change: The last piece of that it's definitely too early.
Speaker Change: And the whole acreage dwells are spread out so we haven't really honed in on what the spacing is going to be I think we're going to have to accumulate a lot of data in the future of the <unk>.
Speaker Change: How many how many large do we had penetrated the different thicknesses and the Bossier and the Haynesville then we'd look to see what SaaS Macquarie owned or what we needed to buy and then we.
Speaker Change: And what the optimum spacing will be in the Bossier versus in the Haynesville.
Speaker Change: Various words sticker versus standard I think we are going to yield different answers. So.
Speaker Change: We didn't let the horses run wild.
We drill the wells sharply and we pulled the rig back for five months, we let the well tell us what to do.
Speaker Change: I don't have a direct answer to that question, but.
Speaker Change: As far as future development.
Speaker Change: We strive to drill everything with two well pads that we can.
Speaker Change: We did move that rig background, we've kept pretty busy.
Speaker Change: Now we were good we were good stewards to the budget and liquidity.
Speaker Change: We're drilling and we're holding acreage in some places you just can't we just don't have the acreage doesn't give you the opportunity to drill too.
Speaker Change: 1024, we were going to add a third rig we didn't we kept it at two rigs.
Speaker Change: Two laterals.
Speaker Change: Two wells on the pad.
Speaker Change: And it drives what we did we looked at acreage that was expiring we didn't lease hold this acreage in 2021 'twenty two 'twenty three throughput we leased it along the way.
Speaker Change: So.
Speaker Change: We're probably looking at about half 50, maybe 60% of our wells in a given year will be on two well pads and the others will be singles.
Speaker Change: We avoided a big cliff or you had to drill a lot of acres. Because you are at least at all at the same time. We further did out so that we didn't have the issue and at the same time, we had several acquisitions that we bought deeper rights at our HB paid.
Speaker Change: We strive to make as many two well pads as we can but that's probably going to be our mix for the next couple of years.
Speaker Change: And one thing we've tried to do if you look we've derisked, maybe 26 miles of this slide we show that on the MAU.
Speaker Change: And our goal is by the end of 2025 drilling 20 more wells and.
Speaker Change: So as we look at our drilling program in 2025, 2026, 27, we kind of pair that up with quantum and we say how far are we away from our main clinical line, what's the cost structure, what's the gathering cost.
Speaker Change: And hopefully all of those are to hold acreage might be one or two we just have to drill outside of holding acreage, but the goal is to drill all of those wells to delineate what this footprint really looks like what the value is what the resource potential is.
Speaker Change: Look at that.
Speaker Change: The thickness and you do have different thickness. We've told you on some of the calls that we've got maybe.
Speaker Change: Along with our partner with quantum we will build the gathering treating and the midstream to complement the program of 25 26, I think by the end of 'twenty five definitely by the end of 'twenty six.
Speaker Change: 13500 feet of prospective pay in some areas well you look at that that's not true for all of it some of it is going to be the same.
Dan Harrison: We'll have fully de risked this whole 518000 net acre play Dan.
Speaker Change: Our pay thickness that we have in the tier of our of our legacy acreage.
Dan: Dan had mentioned a lot of it is <unk>. So we don't really plan on drilling on the AWP acreage until we hold.
Speaker Change: So.
Speaker Change: Thats 200, 300 feet, whatever but yes.
Dan Harrison: And maybe 70 more wells, we need to drill over the next several years.
Speaker Change: It expands.
Speaker Change: We did choose to drill the deepest hottest hardest first because that would tell you whether we needed to pursue to spend more money on acreage.
Dan: To HCP our entire footprint.
Speaker Change: Thanks for the color Jay My second question is on the.
Speaker Change: More money on seismic and to keep the land group leasing that acreage and feathered into the drilling program.
Dan: The capex trend on a per well basis.
Speaker Change: I think that.
Dan: It's very encouraging to see that.
Speaker Change: Beautiful story to right when you see it because of.
Dan: You've saved them, both from the drilling and completion completion side, but.
Speaker Change: Roland had come up 80% of this is HP.
Dan: Given that the western Haynesville is materially harder and deeper than legacy Haynesville, you would almost think that youre drilling savings will be will hit a plateau. Soon if you will whereas on the completion side you might have and reap the full benefits of a full development cycle. So.
Speaker Change: I mean, 80% and this is the very first time, we've ever shown it to you and you might say well how come gears somewhat acreage generic well.
Speaker Change: A lot of that acreage, maybe one or two other companies to own and we encourage them to drill wells out there maybe there is some little spotty acreage that we don't want to own.
Speaker Change: We're not afraid to have people come out there and Derisk. This with US that's why we show you once we think the land grab is over.
Dan: I was wondering if you can perhaps speak to how on the completion side.
Dan: You will achieve greater savings what what are you doing specifically in terms of your completion design and how much headroom do you see on the drilling side.
Speaker Change: At the end of this quarter I think we will have some more results.
Speaker Change: But I won't you.
Dan: As a whole.
Speaker Change: It's our bank fits our analyst fits for equity owners, it's our bondholders that believe in what we're doing I want you to always know what we're doing.
Dan: So kind of alluded to that a little bit earlier I think.
Dan: We will see we haven't we haven't reached the plateau on the call is first of all in the Western Haynesville I mean, obviously with all of the thousands of wells and we drilled up in the legacy area.
And our goal in 2025 is two two materially derisk, the whole footprint and see what the thickness as our.
Charles Meade: Thanks Charles.
It is just a small little tweaks here and there.
Speaker Change: If you look at it.
Speaker Change: But in our core acreage up some of our best wells are in the areas that are not as the lockup around.
Dan: Minor things, it's great execution.
Dan: Shaves off just a day here in a day there that's not the case in the western Haynesville and the Western Haynesville, we've been going up a steep learning curve. We've cut awful lot of days, we haven't reached a plateau yet I think we're going to drive these cost lower we're going a lot more days off.
Speaker Change: The Elm Grove area.
Speaker Change: <unk>.
Speaker Change: As far as to speculate if at some centers thicker highest <unk> perform I don't think theres any correlation there at all really.
Speaker Change: Is it really more just up gas filled porosity is the biggest determinant then.
Dan: In the future.
Speaker Change: More of that I see more about just the percent.
Speaker Change: Thicker obviously more gas in place right thicker raw, but that does not correlate to the two.
Dan: Sure.
Dan: Reduction in cost on the drilling side and on the completion side. We are comping. The same the same frac job right now and all of the Western Haynesville wells.
Speaker Change: How prolific it'll be we have meaningful bottom hole pressure differences.
Speaker Change: I will make one note on slide 22, there was in Q2 showed a high completion costs.
Interesting and then what.
Speaker Change: One follow up Jay you already touched on this also I think Dan you touched on this.
Speaker Change: 970 Bucks a foot and that is we just had one well that quarter and we pump what we call our big Frac, We put we put 6000 pounds per foot on that well for a data point is to monitor how that well produces in the future.
Dan Harrison: A lot of focus on these newest batch of wells and rightfully so but.
Speaker Change: You continue to watch these other older vintage wells and I'm wondering if you can talk about.
Dan Harrison: What you've learned from them whether about.
Compare at all our others, which is while that one stands out but.
Dan Harrison: The right way to manage the pressure drawdown.
Speaker Change: We've had really great execution on the completion side really today so.
Dan Harrison: Landing zones within these formations or the right completion jobs I know theres everyday that ticks by you add to the data pile from those older vintage wells. So can you just tell us what you've learned off in that respect.
Speaker Change: What I will say the completion costs coming down as much as the drilling on a percentage basis, yes.
Speaker Change: Yes. The other thing we have manage the wells a little differently each will select a prototype and.
Dan Harrison: I think.
Speaker Change: And we learn how to manage all of the wells will go back and review what Circle, then bookmark, what we could do or didn't do and how well it's performed.
Dan Harrison: Yes.
Dan Harrison: We obviously have been really laser focused on the cost just getting the wells down in to date.
Dan Harrison: <unk> zones, I think a lot of these where we where we drill are in the.
Speaker Change: I think Dan who wants to comment on just well managed from but we're getting better and better better which is a learning curve from having the 18 wells.
Dan Harrison: Relatively thicker part of the play so we have it.
We haven't really.
Speaker Change: I would say, we definitely have been conservative on how we're drilling the wells down and based.
Dan Harrison: Got real specific on that.
Dan Harrison: <unk> should be a little higher a little lower.
Speaker Change: Based on all of the things, we're seeing where.
Speaker Change: We're just making adjustments.
Dan Harrison: We just wanted to get the wells down basically to see these things as fast as we could.
Speaker Change: On how we how we do that manage the drawdown how hard we pulled the wells when we flow them back and clean them up turn on the sales and then.
Dan Harrison: As far as the drawdown in.
Dan Harrison: We've been pretty conservative I think we'll probably tweak that a little bit in the future. These last few wells, we like to IP.
Speaker Change: We set the right.
Speaker Change: After that.
Speaker Change: And what that will do they will give more predictability give more stability.
Dan Harrison: Paul I'm, a little bit harder and get the wells clean mature the good claim before we get flowback off of them and then.
Speaker Change: It will give us what the real top curve might look like what the Dropdowns might look like when the wells have been producing one or two or three years, we haven't gotten to that point, yet, but I think the goal today was.
Dan Harrison: Pull the rights back and start them.
Dan Harrison: Basically on the type curve right and this basically let them go from there.
Dan Harrison: Charles sounds like a great added detail, but some of these wells were tube up some we don't it's a big cost variance too. So we figure out what we need to do or not do is we drove more of these wells.
Speaker Change: When you trusted us for five years, and we haven't given you all the data and today. The goal was to tell you that we think the land grab is over so we can give you that footprint.
Speaker Change: Got it thank you Dan and Jay.
Speaker Change: Think that the midstream is secure so we can tell you a little more about it and particularly the data set is big enough. So that you can at least look at that as a beginning point to see what we can improve from there.
Dan Harrison: Thank you.
Speaker Change: And the next question will come from Kelly <unk> with Bank of America. Your line is now open.
Speaker Change: Hey, Good morning, guys, Jay Rolling I think the update here is being received well so I'm going to keep it quick here any early thoughts on 2026 on maybe holding activity here at <unk>. It seems like the industry is falling in a rhythm with demand and that's a really good place to be.
Speaker Change: I'd tell you that if you go back and you look at the first 18 wells ever drilled in the core.
Speaker Change: The Haynesville Bossier, no wait and you compare those to the wells we've drilled to date hires are locked lights out better so.
Speaker Change: Alright, I think thats the key.
Charles Meade: And our next question comes from Charles Meade with Johnson Rice. Your line is open.
Speaker Change: We wanted to make sure that we don't produce too much gas, especially in one region area. So we've been yeah.
Speaker Change: When looking at that we think 70 rigs was always a really good level for the company to kind of maintain I think when we dropped to five rigs you can see the impact of that that's really too low activity level, but it was needed.
Speaker Change: Good morning, Jay Rone, and Dan and I'll add my voice.
Through the course of congratulations not just assembling this position, but also the great progress you've been screaming and yelling for us and you've lost your voice I now understand.
Speaker Change: Balance the market.
Speaker Change: So we're going to get very comfortable with <unk>, we're going to focus on getting our balance sheet.
Speaker Change: That's the least of my problems Jake.
Speaker Change: Jay you already anticipated one of them.
Speaker Change: Yes back to like it was in 2022, that's our biggest goal and I think 26 there'll be a year that will have the level of production in gas prices to drive.
Speaker Change: My first question when you started talking about the Derisking of the position you talked about the.
Speaker Change: Your first wells here.
Speaker Change: Get the balance sheet and perfect day, but.
Speaker Change: Raced along a kind of about 26 mile southwest northeast Axis, if I'm just eyeball on your map there on what is I think it's page 18.
Speaker Change: And I think 25.
Speaker Change: At that level, we're running now we won't we won't add any debt most slowly paced them down, but then next year, we'll be able to really reduce that significantly.
Speaker Change: Yes.
Speaker Change: I would say, that's maybe de risk I don't know, 20%, 30% of your position I was wondering if you could you could give an opinion on that and then maybe also ramp in <unk>.
Speaker Change: And as far as the year end 'twenty six bogey somewhere under a one five times is where the balance sheet would end up.
Speaker Change: As you.
Speaker Change: As you go up dip are you go north.
Speaker Change: Well I think of course, you will see.
Speaker Change: What are the risks as it formation thickness.
Speaker Change: The leverage ratio improve rapidly as we can start to count the 25 results in.
Speaker Change: Or is it just is it porosity that that is the risk that is good.
Speaker Change: And takeoff that results of last year, we had to solo of gas prices.
Speaker Change: Determine exactly how much of this <unk> really works well.
Speaker Change: Yes.
Speaker Change: But yes, we definitely want to get it down as quickly as possible to that one five times leverage area. It's probably that's probably something that we achieve in 2006.
Speaker Change: Well if you noticed on the slide are kind of my introduction I said that.
Speaker Change: This slide on page four it has to scale.
Speaker Change: Sometimes theres trickery, you don't have many acres, which you don't put it to scale new compared to your other acreage and it looks it looks skewed.
Speaker Change: But I think it will be way in the very low.
Speaker Change: Two times leverage numbers as we kind of work our way through 'twenty five.
Speaker Change: So we said we just want to make sure you know, it's not distorted footprint because you would think it could be distorted because theres so much of it.
Speaker Change: So a lot will depend on how strong gas prices are and then we do have to rebuild our production of all that to kind of get.
Speaker Change: As our legacy Haynesville I mean, it's some of the most valuable acreage in North America, we believe because of where it's located and all the locations that we have left to drill in the haynesville as well as only 8% of the Bossier is developed.
Speaker Change: That leverage ratio to its more optimal.
Speaker Change: That's a really good point, though.
Speaker Change: We said this but other than Covid gas price last year was it was the lowest it's been in 30 years. So if you look at that and you look at is getting rid of <unk>. If you look at a 708 Frac holiday.
Speaker Change: So when you when you go back to the beginning.
Speaker Change: In.
Speaker Change: 2020, 'twenty to 'twenty one two you can see we've tried to outline the patients that we had.
Speaker Change: And then you look at it is adding 265000 net acres in the Western Haynesville you can see that we really really monitor our leverage on our balance sheet, we do that even in a very very difficult year and at the same time.
Speaker Change: Why give the dead horse scenario in other words, we're looking to see if this thing works.
Speaker Change: If it doesn't then we're going to get off of it but if it continues to work and quite frankly, Jerry Jones and his family allow us to Derisk. This thing, which is very hard to do it takes months and bad days. Some good days, but you add it all up what we tried to do is we've tried to say.
Speaker Change: Instead of M&A.
Speaker Change: We said, we'd like to see if we can't grow organically.
Speaker Change: And typically that's what these companies used to do and because of the joneses they kind of encompass.
Speaker Change: How many acres do we have that we have to drill wells right now in 2021 22 in order to hold leases that we inherited from acquisitions, that's number one and number two we looked at.
Speaker Change: We could go in and as we.
Speaker Change: We were one of the first of several companies.
Speaker Change: To Derisk and discover the core Haynesville. We just took the same group down to the western Haynesville, knowing what we were looking forward.
Speaker Change: How many how many large do we had penetrated the different thicknesses and the Bossier and the Haynesville then we'd look to see what seismic we owned or what we need to Dubai and then we.
Speaker Change: In its first five years for it to turn out to which turned out right now and it's still preliminary but if we're right that these reserves will be there'll be massive footprint is massive and we are in the exact bright part of North America for all this demand, particularly for LNG, So it's going to be.
Speaker Change: We didn't let the horses run wild.
Speaker Change: We drilled the wells sharply and we pulled the rig back for five months, we'd let the well tell us what to do.
Speaker Change: Really beautiful story.
We did move that rig background, we've kept pretty busy.
Speaker Change: That's right, it's exciting to watch Gabriel I'll see you guys in a couple of weeks.
Speaker Change: Now we were good we were good stewards to the budget and liquidity.
Speaker Change: We look forward to it.
Speaker Change: And our next question will come from birth trend Dons.
Speaker Change: 124, we were going to add a third rig we didn't we kept it at two rigs.
Speaker Change: Your line is now open.
And then Charles what we did we looked at acreage that was expiring we didn't lease hold this acreage in 2021 'twenty two 'twenty three we leased it along the way.
Speaker Change: Hey, good morning team I, just want to follow up on that on that M&A topic, not necessarily on the western side, but with higher gas prices you would think.
Speaker Change: We are full we did a big Cliff, where you had to drill a lot of acres because you've at least at all at the same time. We further did out so that we didn't have the issue and it's the same time, we had several acquisitions that we bought deeper rocks at our HB paid.
Speaker Change: The private owners are probably thinking about potentially selling or maybe does that incentivize you to look more aggressively or are those sellers seeing the strip move up and maybe they are already seeing a $5 price that they want to see or something like that.
Speaker Change: The second part of that would just be.
Speaker Change: So as we look at our drilling program in 2025, 2026, 27, we kind of pair that up with quantum and we say how far are we away from our main critical line, what's the cost structure, what's the gathering cost.
Speaker Change: On the oil side most of these these private equity shops normally ramp up production before a sale do you see that happening or that's not exactly how it would work on the gas side.
Alright.
Speaker Change: Hard to predict how.
Speaker Change: What they're looking at but obviously I think there are.
Speaker Change: Look at that.
Speaker Change: The thickness and you do have different thickness. We've told you on some of the calls we've got maybe.
Speaker Change: Some private companies out in the Haynesville that that.
Speaker Change: <unk> invested a lot of capital and now that youre going to get gas price situation that their business plan is to sell that kind of like the same with the oil.
Speaker Change: 13500 feet of prospective pay in some areas well you look at that that's not true for all of it some of it is going to be the same.
Speaker Change: That product base in the Permian and so we do see a very low level of activity in the haynesville. So we certainly haven't seen any type of effort to ramp up at all from from the public or private operators.
Speaker Change: Our pay thickness that we have in that tier of our of our legacy acreage.
Speaker Change: So.
Speaker Change: Thats 200, 300 feet, whatever but yes.
Speaker Change: We've seen great discipline.
Speaker Change: It expands.
Speaker Change: We did choose to drill the deepest hottest hardest first because that would tell you whether we needed to pursue to spend more money on acreage.
Speaker Change: Yes in the basin and I think I think all of the producers where they want to get very comfortable that that that the gas is really needed and we've seen very very volatile gas prices.
Speaker Change: More money on seismic and to keep the land group leasing that acreage and feathered into the drilling program.
Speaker Change: And so I think everybody is being very cautious to say, hey, we're not going to oversupply the market and maybe we under supply it because were so cautious.
Speaker Change: Beautiful story to right when you see it because of.
Speaker Change: Roland had come over 80% of this is HP.
Speaker Change: And you can even say the first quarter, we gave guidance down.
Speaker Change: I mean, 80% and this is the very first time, we've ever shown it to you and you might say well how come gears somewhat ecru generic well.
Speaker Change: We're not going to overproduce period, and that that guidance is a result of dropping those rigs and we're not.
Speaker Change: Adding the rigs in the western Haynesville to increase production right now, we're adding those rigs because thats the best place for us to drill because we need to we.
Speaker Change: A lot of that acreage, maybe one or two other companies to own and we encourage them to drill wells out there maybe there is some little spotty acreage that we don't want to own.
Speaker Change: We need to drill more wells to HP more of a footprint.
Speaker Change: But we're not afraid to have people come out there and Derisk. This with US that's why we show you. Once we think the land grab is over.
Speaker Change: While we're doing that even we don't see any E&P company out there out of control in their production rates none of them.
Speaker Change: At the end of this quarter I think we will have some more results.
Speaker Change: That's great and I think the market is happy to see that and then my second question.
Speaker Change: But I won't you.
Speaker Change: It's our bank fits our analyst as for equity owners, it's our bondholders that believe in what we're doing I want you to always know what we're doing.
Speaker Change: Several of your peers have started talking about potentially locking in.
Speaker Change: Percentage of their production to contracts, either data center or LNG and it seems like most have fallen and at 10% to 20% of their volumes.
Speaker Change: And our goal in 2025 is two two materially derisk, the whole footprint and see what the thickness results.
Speaker Change: Is that where you guys feel like you'd fall are you potentially have a larger appetite maybe lock up.
Speaker Change: Thanks Charles.
Speaker Change: Acreage dedication in the western haynesville or something like that for us to backfill a demand project. Thanks.
Speaker Change: If you look at it.
Speaker Change: But in our core acreage up some of our best wells are in the areas that are not as the lock up around.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Also when I look at having a portfolio of purchasers for our gas and not putting all our eggs in one basket.
Speaker Change: The Elm Grove area.
Speaker Change: <unk>.
Speaker Change: As far as to speculate if it <unk> perform I don't think theres any correlation there at all really.
Speaker Change: But we see both DNA a major supplier to several of the LNG <unk>.
Speaker Change: Is it really more just gas filled porosity.
Speaker Change: <unk> and potentially.
Speaker Change: Determinant then.
Speaker Change: Thicker obviously more gas in place right thicker raw, but yes definitely that does not correlate to the two.
Speaker Change: Looking at some power generation projects to back too.
Speaker Change: But again I think having a good balance of that activity because their demand comes at different times of the year and so so so but there are good.
Speaker Change: How prolific it'll be we have meaningful bottom hole pressure differences.
Speaker Change: Good opportunities for the gas producers now to start to directly.
Jay Allison: Interesting and then one follow up Jay you already touched on this also I think Dan you touched on this.
Speaker Change: Lockup with the industrial users.
Jay Allison: A lot of focus on these newest batch of wells and rightfully so but yeah.
Speaker Change: Exporters and I think it's a good time for us to create.
Jay Allison: You continue to watch these other older vintage wells and I'm wondering if you can talk about what you've learned from them whether about.
Speaker Change: Relationships, where we can have more stable prices would also know that we've got good we've got that.
Speaker Change: We balance our production to what we know the market needs.
Jay Allison: The right way to manage the pressure drawdown.
Jay Allison: Landing zones within these formations or the right completion jobs I know there is every day that ticks by you add to the data pile from those older vintage wells. So can you just tell us what you've learned in that respect.
Speaker Change: Particularly probably 90% of our western Haynesville is completely in dedicated.
Speaker Change: So it's free range out there, we can kind of do what we want to do with it.
Speaker Change: Alright, and just wanted to clarify an acreage dedication for.
Jay Allison: I think.
Jay Allison: We obviously have been really laser focused on the cost just the wells down in TD.
Speaker Change: Demand project.
Speaker Change: Is that coming back or are we done with that.
Yes, I'm not sure that acreage dedication is probably.
Jay Allison: The landing zones, I think a lot of these where we where we drill are in the.
Speaker Change: Out there I mean, typically that it kind of comes to backup large amount of infrastructure to make it.
Jay Allison: A relatively thicker part of the play so we haven't we.
Speaker Change: For the infrastructure partner to be comfortable that they can get their capital out but here I think since we're going to own the way we've structured things, we're going to be able to out all of that and so I think it's that we want to kind of look out and say hey, we can we wanted to take up our portfolio of gas, but from the legacy and the western Haynesville.
Jay Allison: We haven't really.
Jay Allison: Got real.
Jay Allison: Specific one.
Jay Allison: Landing zone should be a little higher a little lower.
Jay Allison: We just wanted to get the wells down.
To see these things as fast as we could.
Jay Allison: As far as the drawdown.
Jay Allison: We've been pretty conservative I think we'll probably tweak that a little bit in the future. These last few wells we liked the op.
Speaker Change: And then we want to.
Speaker Change: Fortunate out too.
Speaker Change: These direct contracts as we felt comfortable that it's a good fit and obviously, we're looking for are they.
Speaker Change: Paul I'm, a little bit harder and get the wells clean mature the good claim before we get flow back off of them and then.
Speaker Change: The best deal for Comstock, so who's going to pay the higher premium they all have different needs.
Jay Allison: Pull the rights back and start them.
Speaker Change: Basically on the type curve right and this basically let them go from there.
Speaker Change: So.
Speaker Change: It's a very exciting time to be developing I think apply to like the western Haynesville at the same time, yes, there is a lot of market development opportunities.
Charles Meade: Charles Okay, great added detail, but some of these wells were tube up some we don't it's a big cost variance too. So we figure out what we need to do or not do as well.
Speaker Change: Our gas industry hasn't seen in a long time, so it's a great combination of those two together.
Speaker Change: We drove more of these wells.
Speaker Change: Got it thank you Dan and Jay.
Speaker Change: Alright.
Speaker Change: Thank you.
Speaker Change: Good time to talk about to the reason we were able to look.
Speaker Change: And the next question will come from Kelly <unk> with Bank of America. Your line is now open.
Speaker Change: Go look at the Western Haynesville, just because of the value of our core.
Speaker Change: We don't want anyone to ever overlooked at the 301000 net acres and net inventory with plenty of takeaway there that that gave us the ability to come look at the western Haynesville that along with the operational technical skill that we had.
Hey, good morning, guys Jay Rolling.
Speaker Change: The update here is being received well so I'm going to keep it quick here any early thoughts on 2026 on maybe holding activity here at <unk>. It seems like the industry is following in a rhythm with demand and that's a really good place to be.
Speaker Change: But the value of the legacy allowed us to do the western Haynesville.
Speaker Change: Right now I think Thats. The key thing we wanted to make sure that we don't produce too much gas, especially in one region area. So we've been.
Speaker Change: Perfect. Thanks for the answers guys.
Speaker Change: Thank you.
Speaker Change: When looking at that we think 70 rigs was always a really good level for the company to kind of maintain I think when we dropped to five rigs you can see the impact of that that's really too low activity level, but it was needed to help balance the market.
Speaker Change: And our next question will come from Jacob Roberts with Tpa <unk> Company. Your line is open.
Speaker Change: Good morning.
Speaker Change: Good morning.
Speaker Change: Just.
Speaker Change: I hate to ask you about 2026, plus but thinking about the four three rigs, but as we kind of progressed through 2025 is that a level that can meet any HCP needs any NBC needs with quantum or are you contemplating a.
Speaker Change: So we're going to get very comfortable with <unk>, and we're going to focus on getting our balance sheet.
Speaker Change: Yes back to like it was in 2022, that's our biggest goal and I think 26 there'll be a year that will have the level of production in gas prices to drive.
Speaker Change: 5253.
Speaker Change: Get the balance sheet in perfect shape.
Speaker Change: Wondering what are the commitments as we get into 'twenty six 'twenty seven that we might need to be thinking about.
Speaker Change: And I think 25.
Speaker Change: At that level, we're running now we won't we won't add any debt most slowly paced them down, but then next year, we'll be able to really reduce that significantly.
Speaker Change: Well the real positive the way we've structured things is that.
Speaker Change: We don't even need to maintain that type of activity to kind of meet any npcs or their requirement. So we've been very conservative as you build that out not too over we've got to get over committed so I think it's a very comfortable level that.
Speaker Change: Well as far as the year end 'twenty six bogey somewhere under a one five times and we're at.
Speaker Change: The balance sheet would end up.
Speaker Change: Well I think of course, you will see.
Speaker Change: The leverage ratio would improve rapidly as we can start to count the 25 results in.
Speaker Change: For the company.
Speaker Change: So it's really going to be like what is the markets, whereas the gas really needed.
Speaker Change: And take off the results of last year, we had to solo of gas prices.
Speaker Change: And I think we will adjust that based on kind of how we see these markets go out, but I think we're very comfortable with the activity level and running and be able to run four rigs in the Haynesville will keep us on track to take.
Speaker Change: Yes.
Speaker Change: But.
Speaker Change: Yes, we definitely want to get it down as quickly as possible to that one five times leverage area. It's probably that's probably something that we achieve in 2006.
Speaker Change: Two.
Speaker Change: And all of our acreage and easily meeting.
Speaker Change: But I think it will be way in the very low.
Speaker Change: And support they need asset.
Speaker Change: The build out of the midstream.
Speaker Change: Two times leverage numbers as we kind of work our way through 'twenty five.
Speaker Change: Okay, Perfect and then maybe just a quick follow up I. Appreciate some of the discussion about your understanding of the broader western Haynesville acreage that you've disclosed can you just frame.
Speaker Change: So a lot will depend on how strong gas prices are and then we do have to rebuild our production of all that to kind of get.
Speaker Change: Debt leverage ratio to its more optimal.
Speaker Change: The amount of seismic the amount of historical work that's been done on this land that helps you understand it the way you do.
Speaker Change: It's a really good point, though.
Speaker Change: We said this but other than COVID-19 gas for US last year was it was the lowest it's been in 30 years. So if you look at that and you look at is getting rid of two rigs. If you look at it as having a frac holiday and then you look at it is adding 265000 net acres in the Western Haynesville you can see that.
Speaker Change: Yes, I'd say, there's been a lot of this is that a lot of three D. Seismic shot across all of this acreage just a lot of different different vintage data.
Speaker Change: Thats out there that can be bought that has been.
Speaker Change: Tremendously.
Speaker Change: Helpful and kind of planning out where we wanted to drill in.
Speaker Change: We really really monitor our leverage on our balance sheet, we do that even in a very very difficult year and at the same time.
We've got we've got some future wells that we're going to be drilling.
Speaker Change: Some pilot holes zone and getting drilled.
Speaker Change: Drilling all the way through the section.
Speaker Change: Through the bottom of the Haynesville for well control purposes, and Geo steering.
Speaker Change: Instead of M&A.
Speaker Change: We said, we'd like to see if we can't grow organically.
Speaker Change: And we've also got some future Corey.
Speaker Change: And typically that's what these companies used to do and because of the joneses they kind of got this.
Speaker Change: Stuff, we're going to do as far as just doing some more sites.
Speaker Change: To get the performance properties on the block.
Speaker Change: We could go in and as we.
Speaker Change: We were one of the first of several companies.
Speaker Change: Excellent I'll echo the sentiment of I appreciate the update guys.
Speaker Change: To derisk and discover the core haynesville.
Speaker Change: Thank you.
Speaker Change: The same group down to the Western Haynesville, knowing what we were looking forward.
Speaker Change: And our next question will come from Gregg Brody with Bank of America. Your line is open.
Speaker Change: And.
Speaker Change: Five years for it to turn out to which turned out right now its still preliminary but if were right. These reserves will be there'll be massive footprint is massive and we are in the exact bright part of North America for all of this demand, particularly for LNG. So it's going to be a really beautiful story.
Speaker Change: Hey, guys just as we think about midstream for next year.
Speaker Change: What type of capital should we should we pencil in and then when do you think you will exhaust the.
Speaker Change: Yes.
Speaker Change: The midstream JV and how do you think about funding it after that.
Speaker Change: Yes, that's a great question.
Speaker Change: That's right, it's exciting to watch Gabriel and I'll see you guys in a couple of weeks.
Speaker Change: Is that with building a new trading play out this is a big capital investment that we started back in in the fourth quarter and through this first half of the year, then we're going to have a lot of treating capacity.
Speaker Change: We look forward to it.
Speaker Change: And our next question will come from <unk>.
Speaker Change: That's going to be available tests starting.
Speaker Change: With <unk> your line is now open.
Speaker Change: In the second quarter and so then we continue to look at our volumes and then decide when we want to add additional trains to either.
Speaker Change: Hey, good morning team I, just wanted to follow up on that on that M&A topic not necessarily on the on the western side, but with higher gas prices you would think.
Speaker Change: Either a new plant or adding to our north or south plants. So we also have some good partners nearby that we've secured additional capacity.
Speaker Change: Most of the private owners are probably thinking about potentially selling or maybe does that incentivize you to to look more aggressively or are those sellers seeing the strip move up and maybe they are already seeing a five dollar price that they want to see or something like that.
Speaker Change: Are there to do that.
Speaker Change: Not have to build everything so we feel really good about where that is.
Speaker Change: The second part of that would just be.
Speaker Change: I think that at.
Speaker Change: On the oil side most of these these private equity shops normally ramp up production before sale do you see that happening or that's not exactly how it would work on the gas side.
Speaker Change: The build out of the midstream is amazingly fit almost perfectly with our five year plan for it so far and so we've been really pleased and I think our partner has been too.
Speaker Change: Well, it's hard to predict.
Speaker Change: And.
Speaker Change: Okay. So so.
Speaker Change: What they are looking at but obviously I think there are.
Speaker Change: I think that eventually as the entity is.
Speaker Change: Some private companies out in the Haynesville that that.
Speaker Change: <unk> now has a lot of volumes and it's going to have a really good year. This year, it's going to be able to maybe.
Speaker Change: <unk> invested a lot of capital and now that youre going to get gas price situation. Their business plan is to sell that kind of like the same with the oil.
Speaker Change: Maybe put it in its own credit structure. There. So we can kind of get less expensive capital that <unk> build out, but that's probably going to be more later in the year. After after it's up and running and generating a very strong EBITDAX, but we're very excited about what <unk> can become and the value it's going to be adding I think you can look down the road.
Speaker Change: Private companies in the Permian.
Speaker Change: But we do see a very low level of activity in the Haynesville. So we certainly haven't seen any type of effort to ramp up at all from from the public or private operators.
Speaker Change: We've seen great discipline.
Speaker Change: Is going to be a very very big asset for the company and our structure once we have.
Speaker Change: In the basin and I think I think all of the producers where they want to get very comfortable that that that the gas is really needed and we've seen very very volatile gas prices and so I think everybody is being very cautious to say hey, we're not going to oversupply this market and maybe way under supply it because of our so called.
Speaker Change: We have returned that capital with the preferred return that will revert a 100% accurate 70% back to the company and then we can buy out that minority interest if we like in the future also.
Speaker Change: The goal was we as we were acquiring all of this acreage we wanted to control the midstream.
Speaker Change: Our shows.
Speaker Change: Well and you can even say the first quarter, we gave guidance down and.
Speaker Change: We trusted.
Speaker Change: Quantum as a company and lending money and supporting plays like test really trusted them. We wanted to see if there was something that we were missing someone.
Speaker Change: We're not going to overproduce period, and that that guidance is a result of dropping those rigs and we're not adding the rigs in the western Haynesville to increase production right now, we're adding those rigs because that's the best place for us to drill because we need to we.
Speaker Change: So when quantum came in and look at the acreage look at the well results.
Speaker Change: Which have only gotten better.
Speaker Change: <unk> $300 million, we wanted to make sure that we would control that and it wouldn't be sold to some third party.
Speaker Change: We need to drill more wells to HP more of a footprint.
Speaker Change: While we're doing that even if we don't see any E&P company out there out of control in their production rates none of them.
Speaker Change: Which we didn't control what we'd be doing in the western Haynesville, we didn't want to lose control of that and quantum became the perfect partner.
Speaker Change: That's great I think the market is happy to see that and then for my second question.
Speaker Change: So it's fair to say that between quantum's equity and potential credit facility.
Speaker Change: Several of your peers have started talking about potentially locking in.
Speaker Change: Percentage of their production to contracts, either data center or LNG and it seems like most of them have fallen and at 10% to 20% of their volumes.
Speaker Change: The JV.
Speaker Change: Turning to the self funding for the next several years.
Speaker Change: Right and we would see it hopefully transitioning in an extra gear.
Is that where you guys feel like you would fall or are you potentially have a larger appetite maybe you lock up acreage.
Speaker Change: As you get through 2006, that's probably where it doesn't really need it.
Speaker Change: I'll start to be totally self funding.
Speaker Change: <unk> in the western Haynesville or something like that for us to backfill a demand project. Thanks.
Speaker Change: Okay.
Speaker Change: And we also let's say maybe bringing in some of.
Speaker Change: Yes, that's a good question, we would also want to look at having a portfolio.
Speaker Change: Our nearby operators that could also help accelerate that if we can land some of those customers as we build a system out.
Speaker Change: <unk> for our gas and not putting all our eggs in one basket.
Speaker Change: Yes.
Speaker Change: But we see both DNA a major supplier to several of the LNG.
Speaker Change: Great. Thanks for the time guys.
Speaker Change: And our next question will come from Noel Parks with Tuohy Brothers. Your line is now open.
Speaker Change: Shippers and potentially.
Speaker Change: Looking at some power generation projects to back too.
Speaker Change: Okay.
Speaker Change: But again I think having a good balance of that activity because their demand comes at different times of the year and so.
Noel Parks: Hi, good morning.
Noel Parks: Just thinking about the drilling time improvements you've already been able to achieve I just wonder could you just talk a bit about maybe what assumptions you have going in and your your earliest well.
Speaker Change: So but there are good.
Good opportunities for the gas producers now to start to directly.
Speaker Change: Lockup with the industrial users and the.
Noel Parks: <unk>.
Noel Parks: Whether theres anything different now.
Speaker Change: Exporters and I think it's a good time for us to create.
Noel Parks: That you're this far in sort of like what.
Speaker Change: Relationships, where we could have more stable prices that also now that we've got good we've got that.
Noel Parks: You talked about some of the things.
Noel Parks: So I just wondering.
Speaker Change: What was your starting point, Mike when you are approaching the play.
Speaker Change: We balance out our production to what we know the market needs.
Speaker Change: Interesting question, because when we looked at everything we had done in the legacy.
Particularly probably 90% of our west from the Haynesville is completely in dedicated.
Speaker Change: On our legacy acreage and all of the year as fast.
Speaker Change: Completely so it's free range out there we can kind of do what we want to do with it.
Speaker Change: Kind of just one of the real general things, we had seen was before we ever started in the western Haynesville.
Speaker Change: Alright, and just wanted to clarify an acreage dedication for.
Speaker Change: In general in the core.
Speaker Change: Demand project that is that coming back or are we done with that.
Speaker Change: All the wells.
Speaker Change: We're being drilled twice as long and Youll say five days to 10-K's and.
Speaker Change: Yes, I'm not sure that acreage dedication is probably.
Speaker Change: And at the same time, they will get twice as long they were being drilled in half the time.
Speaker Change: Out there I mean typically at that kind of comes to backup large amount of infrastructure to make it.
Speaker Change: And there were a couple of there was a couple of.
Speaker Change: For the infrastructure partner to be comfortable that they can get their capital out but here I think since we're going to out our the way we structure things, we're going to be able to out all of that and so.
Old wells that had been drilled horizontal wells that have been drilled back in 2010 down here in the western Haynesville kind of provided some of the earliest data.
Speaker Change: To take a look at that we looked at that had a lot of it just.
Speaker Change: So I think instead, we want to kind of look out and say hey, we can we wanted to take up our portfolio of gas from the legacy and the western Haynesville.
Speaker Change: Just a lot of mechanical issues collapsed casing, and just really was pretty ugly, but.
Speaker Change: And then we want to.
Speaker Change: But we just looked at how many how many days it took them to drill those wells and those worse, but we're essentially five Ks type wells.
Speaker Change: Portion it out too.
These direct contracts as we felt comfortable that it's a good fit and obviously, we're looking for are they.
Speaker Change: What's the best deal for Comstock, so who's going to pay the higher premium they all have different needs.
Speaker Change: And so if you just apply the same industry progressing.
Speaker Change: Twice as long and half the days Thats kind of what we targeted when it was around that 75% to 80, 80 day timeframe and Thats exactly where we landed on average if you take out that sidetrack, we had on our second well we landed at about 80 days.
Speaker Change: So it's a very exciting time to be developing I think apply to like the western Haynesville at the same time, there is a lot of market development opportunities.
Speaker Change: Our gas industry hasn't seen in a long time, so it's a great combination of those two together.
Speaker Change: Now the good thing is is that there is a lot of running room. These wells were.
Speaker Change: Alright, probably a good time to talk about to the reason we were able to.
Speaker Change: Deeper and harder and we just have so much more room to run down here to get better.
Speaker Change: Go look at the Western Haynesville, just because of the value of our core.
Speaker Change: Versus we did up in the core so well and our confidence level grew we were going to drill to 16000 foot vertical then.
Speaker Change: We don't want any one day ever overlooked at the 301000 net acres in that inventory with plenty of takeaway there that gave us the ability to come look at the western Haynesville that along with the operational technical skill that we had.
Speaker Change: Our confidence grew as well after well after well we did go to 19000 feet. So.
Speaker Change: We wouldn't have done that had we not had more confidence into 16000 foot vertical.
Yes.
Speaker Change: But the value of the legacy allowed us to do to western Haynesville.
Speaker Change: Anything you do anywhere you drill the longer if you can just wells are good and you can keep drilling additional wells and you can increase your activity.
Speaker Change: Perfect. Thanks for the answers guys.
Speaker Change: Thank you.
Speaker Change: <unk> practice makes perfect. The more you drilled about youre going to get.
Speaker Change: And our next question will come from Jacob Roberts with Tpa <unk> Company. Your line is open.
Speaker Change: The more of the industry or the industry yet.
Speaker Change: Thats.
Speaker Change: That's what we're seeing.
Speaker Change: Good morning.
Speaker Change: Good morning, good morning.
Speaker Change: Great Thanks and.
Speaker Change: Yes.
Speaker Change: Understandably there has been so much attention to us seeing the the map for the first time and <unk>.
Speaker Change: I hate to ask you about 2026, plus but thinking about the four three rigs split as we kind of progress through 2025 is that a level that can meet any ABP needs any NBC needs with quantum or are you contemplating a.
Speaker Change: The results from the newest slate of well. So I was wondering if you could just talk a little bit about gas macro and looking at your your hedges.
Speaker Change: I was just wondering is there anything particular about the $3 50 Mark.
Speaker Change: $5 two a $5 three.
Speaker Change: Wondering what are the commitments as we get into 'twenty six 'twenty seven that we might need to be thinking about.
Speaker Change: Where you have downside protection is that <unk> been gravitating toward.
Speaker Change: And.
Speaker Change: Well the real positive the way we've structured things is that we don't even need to maintain that type of activity to kind of meet any npcs or their requirements. We've been very conservative as you build that out not too over we've got to get over committed so I think it's a very comfortable level that.
Speaker Change: Also if you had any thoughts about.
Speaker Change: What things are going to look like or might look like.
Speaker Change: The LNG ramp up.
Speaker Change: Teams, along we look today and I would just look this is U S. LNG fleet hit a new record high of.
Speaker Change: <unk> 16 for <unk>.
Speaker Change: We are very very very positive on natural gas in latter part of 'twenty five 'twenty six 'twenty seven.
Speaker Change: For the company and so it's really going to be like what is the markets, whereas the gas really needed.
Speaker Change: When we when we look at the Western Haynesville not the legacy company, we do need to drill the legacy of course.
Speaker Change: And I think we will adjust that based on kind of how we see these markets go out, but I think we're very comfortable with the activity level and running be able to run four rigs in the Haynesville will keep us on track.
Speaker Change: It provides us a very dependable revenue stream.
Speaker Change: But what we wanted to we want to guarantee that we can drill all these wells that we need to drill in 'twenty five 'twenty six.
Speaker Change: Two.
Speaker Change: <unk> in all of our acreage and easily meeting.
Speaker Change: As supporting it asset.
Speaker Change: And still Delever the balance sheet.
Speaker Change: The build out of the midstream.
Speaker Change: Our big land grab enough and a lot of money we spend on that it's over.
Speaker Change: Okay, Perfect and then maybe just a quick follow up I. Appreciate some of the discussion about your understanding of the broader western Haynesville acreage that you've disclosed can you just frame.
Speaker Change: Spent a little bit as we do even in the core cleaning it up all the time, where that'll be perpetual.
Speaker Change: But we don't see any big acreage at their positions that were chasing that we don't have so this is purely it's a protection of the balance sheet to get us back to have a dividend.
Speaker Change: The amount of seismic the amount of historical work that's been done on this land that helps you understand it the way you do.
Speaker Change: Yes, I'd say, there's been a lot of there's been a lot of three D. Seismic shot across all of this acreage just a lot of different different vintage data.
Speaker Change: If we could have a dividend a latter part of 'twenty six great early 'twenty seven whatever but we want to Delever. The company now drill these wells.
Speaker Change: It's out there that can be bought that has been.
Speaker Change: Tremendously.
Speaker Change: Stay true to the midstream partner with quantum and deliver this gas not when it's when it's needed as the beauty of this is nobody tells us wanted to drill it how to drillers are we control it ourself.
Speaker Change: Helpful and kind of planning out where we want to drill in.
Speaker Change: We've got we've got some future wells that we're going to be drilling.
Speaker Change: Some pilot hole zone and getting drilled.
Speaker Change: Drilling all the way through the section.
Speaker Change: Through the bottom of the Haynesville for well control purposes, and Geo steering.
Speaker Change: It's something we control and where it is is perfect you could pick a map if you look at where our pipeline is which we showed that rolling went over it.
Speaker Change: We've also got some future Corey.
Speaker Change: Stuff, we're going to do as far as just doing some more sites.
Speaker Change: Thank you.
Speaker Change: We bought a lot of that pipeline and one of our acquisitions. It is the backbone of where our footprint is you cannot have a better location for that pipeline and its not there by mistake 20 years ago. There was a core of the core of where they were drilling such while that pipeline was there. It just wasn't worth anything when we bought it somewhat.
Speaker Change: Yet the performance properties on the block.
Speaker Change: Excellent I'll echo the sentiment of I appreciate the update guys.
Speaker Change: Thank you.
Speaker Change: And our next question will come from Gregg Brody with Bank of America. Your line is open.
Speaker Change: Hey, guys just.
Speaker Change: Think about midstream for next year.
Speaker Change: It had two we reiterate it and put some gas in it and we're the only ones willing to do it. So it has become a very valuable piece of the company.
Speaker Change: What type of capital should we should we pencil in and then when do you think you will exhaust the.
Speaker Change: Yes, the replacement cost for two.
Speaker Change: The midstream JV and how do you think about funding it after that.
Speaker Change: 204.
Speaker Change: Yes, that's a great question. This is that with building a new trading play out this was a big capital investment that we started making in the fourth quarter and through this first half of the year, then we're going to have a lot of treating capacity.
Speaker Change: <unk> 46 miles of high pressure pipeline.
Speaker Change: Trading in play at.
Speaker Change: Be unbelievable to have to put all of that and from scratch I mean, youre talking about the amount of equity that's already there is pretty phenomenal.
Speaker Change: That's going to be available tests starting.
Speaker Change: Great. Thanks.
Speaker Change: In the second quarter and so.
Speaker Change: Very helpful insight.
Speaker Change: Then we continue to look at our volumes and then decide when we want to add additional trains to either.
Speaker Change: For me.
Speaker Change: This is all the time that we do have for questions I would now like to turn the call back to Jay Allison for closing remarks.
Either a new plant or adding to our north or south plants. So we also have some good partners nearby that we've secured additional capacity.
Speaker Change: I want to thank all of you, it's a much longer call than normal it's almost an hour and a half we knew it would go longer we didn't want to cut anybody off but.
Speaker Change: Order to do that.
Speaker Change: Not have to build everything so we feel really good about where that is.
Speaker Change: Again I want to thank you, there's probably 250, plus men and women, who make up the Comstock team and a lot of them listen to the call I want to thank all of you as well I want to thank our loyal bank somebody the banks I believe Dennis the bondholders have believed Dennis the equity owners I believe since the analyst day, I believe Dennis and I want to say again, especially.
Speaker Change: I think that.
Speaker Change: The build out of that midstream is amazingly fit almost perfectly with our five year plan for it so far and so we've been really pleased and I think our partner has been too.
Speaker Change: So so.
Speaker Change: I think that eventually as the entity.
Speaker Change: Thanks, Jerry Jones, and his family who are the backbone support.
Speaker Change: Dow has a lot of volumes and it's going to have a really good year. This year, it's going to be able to maybe.
Speaker Change: Unlocking the western Haynesville value.
Speaker Change: I gave an old cowboy <unk> give you another one it says if you climb up on the saddle you better be ready to ride with Comstock already and you can take that to the bank.
Speaker Change: Maybe put in its own credit structure. There. So we can kind of get less expensive capital that <unk> build out, but that's probably going to be more later in the year. After after it's up and running and generating a very strong EBITDAX, but we're very excited about what <unk> can become and the value it's going to be adding I think you look down the road.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Going to be a very very big asset for the company and.
Speaker Change: And our structure once we.
Speaker Change: We have returned that capital with the preferred return that will revert a 100% accurate, yes, 70% back to the company and then we can buy out that minority interest if we'd like in the future also.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: The goal was we as we were acquiring all this acreage we wanted to control the midstream.
Speaker Change: Okay.
Okay.
Speaker Change: Trusted quantum as a company.
Speaker Change: Lending money and supporting plays like his really trusted them. We wanted to see if there was something that we were missing.
Speaker Change: So when quantum <unk> look at the acreage Lucas well results.
Speaker Change: Which have only gotten better.
Speaker Change: No <unk> with $300 million, we wanted to make sure that we would control that and it wouldn't be sold to some third party, which we didn't control what we'd be doing in the western Haynesville, we didn't want to lose control of that and quantum became the perfect partner.
Speaker Change: So it's fair to say that between quantum's equity and potential credit facility at.
Speaker Change: The JV.
Speaker Change: The self funding for the next several years.
Right right and we would see it hopefully transitioning in an extra gear I mean really as you get through 2006, that's probably where it doesn't really need.
Speaker Change: It will start to be totally self funding.
Speaker Change: Okay.
Speaker Change: And we also let's say maybe bringing in some of the.
Speaker Change: Our nearby operators that could also help accelerate that if we can land some of those customers as we build a system out.
Speaker Change: Yes.
Speaker Change: Great. Thanks for the time guys.
Speaker Change: And our next question will come from Noel Parks with Tuohy Brothers. Your line is now open.
Speaker Change: Okay.
Noel Parks: Hi, good morning.
Speaker Change: Yeah.
Speaker Change: Just thinking about the drilling time improvements you've already been able to achieve I just wonder could you just talk a bit about maybe what assumptions you have going in and your your earliest well and.
Speaker Change: Whether theres anything different now.
Speaker Change: That you're this far in sort of like what.
Speaker Change: You talked about some of the things you've tweaked, but I just wondering.
Speaker Change: Kind of what was your starting point, Mike when you are approaching the play.
Speaker Change: Interesting question, because when we we looked at everything we had done in the legacy.
Speaker Change: Our legacy acreage and all of the year as fast.
Speaker Change: Kind of just one of a real general things we had seen was before we ever started in the western Haynesville.
Speaker Change: In general in the core.
Speaker Change: All the wells.
Speaker Change: We're being drilled twice as long and Youll say five days to 10-K's.
Speaker Change: And at the same time, they will get twice as long.
Speaker Change: Being drilled in half the time.
Speaker Change: And there were a couple of there was a couple of.
Speaker Change: Old wells that had been drilled horizontal wells that have been drilled back in 2010 down here in the western Haynesville that was kind of provided some of the earliest data to.
Speaker Change: To take a look at that we looked at that had a lot of just.
Speaker Change: Just a lot of mechanical issues collapsed casing, and just really was pretty ugly, but.
Speaker Change: But we just looked at how many how many days it took them to drill those wells and those were essentially <unk> type wells.
Speaker Change: So if you just apply the same industry progression.
Speaker Change: Twice as long and half the days Thats kind of what we targeted when it was around that 75% to 80, 80 day timeframe and Thats exactly where we landed on average if you take out that sidetrack, we had on our second well we landed at about 80 days.
Speaker Change: Starting out and the good thing is is that there's a lot of running room. These wells were.
Speaker Change: Deeper and harder and we just have so much more room to run down here to get better.
Speaker Change: Versus we did up in the core so our confidence level group, we were going to drill to 16000 foot vertical then.
Speaker Change: As our confidence grew was well after well after well we did go to 19000 feet. So.
Speaker Change: We wouldn't have done that had we not had more confidence into 16000 foot vertical.
Speaker Change: On anything you did anywhere you drill the longer if you can just wells are good and you can keep drilling additional wells and you can increase your activity.
Speaker Change: If we all practice makes perfect. The more you drilled about youre going to get.
Speaker Change: The more of the industry the industry gets.
Speaker Change: That's what we're seeing.
Speaker Change: Great Thanks and.
Speaker Change: Understandably there has been so much attention to us seeing the map for the first time and <unk>.
Speaker Change: The results from the newest slate of well. So I was wondering if you could just talk a little bit about gas macro and looking at your hedges.
Speaker Change: I was just wondering is there anything particular about $3 50 Mark.
Speaker Change: Where you have downside protection is that <unk> been gravitating toward.
Speaker Change: And.
Also if you had any thoughts about.
Speaker Change: What things are going to look like or might look like.
Speaker Change: The LNG ramp up.
Speaker Change: <unk>, along we look today and I would just look this is U S. LNG fleet hit a new record high of.
Speaker Change: $16 $4 <unk>.
We are very very very positive on natural gas in latter part of 'twenty five 'twenty 627.
Speaker Change: When we when we look at the Western Haynesville not the legacy I mean, we do need to drill the legacy of course.
It provides us a very dependable revenue stream.
Speaker Change: But what we wanted to we want to guarantee that we can drill all these wells that we need to drill in 'twenty five 'twenty six.
Speaker Change: And still Delever the balance sheet.
Speaker Change: Our big land grab enough and a lot of money we spend on that it's over.
Speaker Change: I'll spend a little bit as we do even in the core cleaning it up all the time, where that'll be perpetual.
Speaker Change: But we don't see any big acreage at their positions that were chasing that we don't have so this is purely it's a protection of our balance sheet to get us back to have a dividend.
Speaker Change: It could have a dividend in latter part of 'twenty six great early 'twenty seven whatever but we want to Delever. The company now drilled these wells.
Speaker Change: Stay true to the midstream partner with quantum and deliver this gas not when it's when it's needed as the beauty of this is nobody sales just wanted to drill it how to drill those or we control it ourself.
Speaker Change: <unk>.
Speaker Change: It's something we control and where it is is perfect you could pick a map. If you would look at where our pipeline is which we showed that roller went over it.
Speaker Change: Boy, a lot of that pipeline and one of our acquisitions. It is the backbone of <unk>.
Speaker Change: Where our footprint is you cannot have a better location for that pipeline and is not there by mistake 20 years ago. There was a core of the core of where they were drilling such while that pipeline was there. It just wasn't worth anything when we bought it somebody had two we reiterate it and put some gas in it and we're the only ones willing to do it.
Speaker Change: So it has become a very valuable piece of the company.
Speaker Change: Yes, the replacement cost for.
Speaker Change: 200 and in <unk>.
Speaker Change: <unk> 46 miles of high pressure pipeline.
Speaker Change: Yes.
Speaker Change: Trading plant.
Speaker Change: Be unbelievable to have to put all of that and from scratch I mean, youre talking about the amount of equity that's already there is pretty phenomenal.
Speaker Change: Great. Thanks, Pat.
Speaker Change: Really helpful insight.
Speaker Change: For me.
Speaker Change: This is all the time that we do have for questions I would now like to turn the call back to Jay Allison for closing remarks.
Jay Allison: I want to thank all of you, it's a much longer call than normal it's almost an hour and a half we knew it would go longer we didn't want to cut anybody off but.
Speaker Change: Again I want to thank you, there's probably 250, plus men and women, who make up the Comstock team and a lot of them listen to the call I want to thank all of you as well I want to thank our loyal banks the banks I believe Dennis the bondholders have believed in us the equity owners I believe since the analyst I believe Dennis and I want to say again, especially.
Jay Allison: Thanks, Jerry Jones, and his family who are the backbone support.
Speaker Change: Unlocking the western Haynesville value.
Speaker Change: I gave an old cowboy sphere I'll give you. Another one it says if you climb up onto the saddle you better be ready to ride with Comstock already and you can take that to the bank.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.