Q4 2024 Riley Exploration Permian Inc Earnings Call
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Regina: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Riley Exploration Permian Inc. Ford Quarter and Full Year 2024 Earnings Conference Call.
Regina: All lines have been placed on mute to prevent any background noise.
Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Philip Riley, CFO . Please go ahead.
. . . .
John White, John White, John White, John
Speaker Change: Good morning, welcome to our conference call covering 4th quarter 2024 results. I'm Philip Riley, CFO , joining me today are Bobby Riley, Chairman and CEO and John Suter, COO. Yesterday we published a variety of materials which can be found on our website under the Investors section.
Speaker Change: These materials and today's conference call contain certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed were implied in these statements. We'll also reference certain non-GAAP measures . The reconciliations to these appropriate GAAP measures can be found in our supplemental disclosure on our website.
I'll turn the call over to Bobby.
Bobby Riley: Thank you, Philip. Good morning and welcome to our Q4 2024 earnings call.
Bobby Riley: We had an exceptional year by all measures and I am extremely proud of what our team has accomplished.
Bobby Riley: At the start of 2024, we outlined a plan to grow oil production by 10% while reducing capital expenditures by 10%
Bobby Riley: Our actual results significantly exceeded these targets with oil production growing by 15% and total production increasing by 22% while upstream cash capital expenditures declined by 27%.
[inaudible]
Bobby Riley: Our 2024 performance underscores the capital efficiency of our asset base and the results of past infrastructure investments.
Bobby Riley: In 2025, we will shift more development activity to New Mexico where we see significant long-term growth potential.
Unknown Speaker 00.00.00.00
Bobby Riley: Thus we are excited to advance our investment in the New Mexico midstream project.
Bobby Riley: This strategic development will provide greater operational control over our gas gathering and regional transportation, enabling more robust development and access to multiple treating and processing plant networks to optimize our flow assurance.
Bobby Riley: Additionally, we see commercial opportunities with third-party producers that could generate significant incremental revenue.
Bobby Riley: This infrastructure will secure our takeaway needs while accommodating future growth and third-party volumes providing much needed takeaway capacity for the region.
John White, John White,
Speaker Change: Finally, we continue to make progress on our Power Joint Venture, which was initially designed in 2023 to reduce Riley Permian's reliance on an intermittent and less reliable grid.
Speaker Change: We expanded the project Scope in 2024 to include new power generation for the sale of energy into ERCOT, capitalizing on attractive market fundamentals within the Texas power grid.
Speaker Change: As part of our future focus strategy, we will continue to invest strategically while maintaining balance sheet flexibility and preserving access to capital markets should additional actionable opportunities arise.
Speaker Change: Now I'll turn the call over to John Suter, our COO to discuss operational results for the quarter, followed by Philip Riley, our CFO , who will discuss forward guidance.
John Suter: Thank you, Bobby, and good morning. Once again, Riley demonstrated excellence in operations through safe operating practices.
John Suter: The team achieved a total recordable incident rate of zero for 2024.
John Suter: We achieved 90% safe days in the year, a metric requiring no recordable incidents, vehicle accidents or spills over 10 barrels.
John Suter: In 2024, we drilled 30, completed 20, and turned in line 22 gross-operated wells
John Suter: The additional wells turned in line are carried over from Q4 2023 Completion Activity.
John Suter: Our 2024 Drilling and Completion campaign achieved measurable success in both fiscal and operational metrics.
John Suter: At the same time, we also increased our lateral feet drilled per day by 20% since 2023, setting records in Texas for both 1 mile and 1.5 mile laterals.
Unknown.
John Suter: We continue to focus on driving drilling cost reductions through optimized VIT selection, single BHA lateral runs, and minimize steering through better targeting resulting in shorter spread to T.D. times.
Other changes were made to optimize our completions.
such as Increasing Cluster Spacing and Decreasing Sand Loading.
. . . .
John Suter: While equivalent production is up 22 percent from 6.79 to 8.25 million barrels of oil equivalent.
John Suter: Our average daily net production was 15.91 MVO per day, and 25.03 MVOE per day for the quarter of 2024.
John Suter: We continue to work with our midstream partners to maximize gas sales through strategic infrastructure projects and optimizations.
John Suter: Of note, we were able to capture and sell more of our produced gas in Texas.
John Suter: resulting in the same oil production but at a lower percentage of oil in the overall mix.
Jeffrey Robertson, John White, Noel
Speaker Change: The strategy in Texas has allowed us to drive full-field development at a pace controlled by us allowing us to be flexible to market conditions and other industry considerations.
John Suter: We will continue to utilize this approach as we develop our New Mexico assets.
John Suter: This value creation is the main basis for our added focus on infrastructure in 2025.
The production increase was achieved while maintaining low operating costs.
John Suter: Our L.O.E. per V.O.E. for 2024 was $8.66 per equivalent barrel, roughly flat with the 2023 Full-Year Metric.
John Suter: Routine, Clean Out, Workovers have gotten more efficient in our Texas asset as we've continued to refine our operations.
John Suter: These efficiencies, including timing of workovers, optimization of chemical treatments, and tool selection.
John Suter: As a result, our clean outs cost 33% less than they did just two years ago.
and we begin doing them proactively.
Resulting in higher production for longer before intervening .
John Suter: Overall, Texas Workover expenses down 16% year-over-year on a per-BOE basis in 2024.
John White, John White, John White,
John Suter: Also in 2024 we completed our New Mexico Plugging Requirements that came as a part of the 2023 acquisition on schedule and within budget.
John Suter: This will result in a substantially lower spend for ARO in 2025.
Related to the midstream development that Bobby discussed,
John Suter: Commissioning of the compression portion of this project is currently underway with the first high-pressure sales before the end of this month.
John Suter: We will begin the project with roughly 15 million a day compression capacity to our existing gatherer's high pressure system and in the process leaving an additional low pressure capacity to fill in the interim.
[inaudible]
John Suter: Further compression, gathering and transmission, infrastructure will continue to be built out over 2025, increasing our ability to deliver gas consistently and reliably.
John Suter: We continue to utilize our power generation station with a greater percentage of our existing Texas assets.
John Suter: We're currently using roughly 20% more self-generated power than at the end of 2024.
John Suter: This lets us control our Texas development plan without relying on utilities to drive our development timing.
John Suter: We're evaluating the benefits of a similar installation in New Mexico.
Unknown Speaker 05. Unknown Speaker 05.
Speaker Change: In summary for the year, we produced 22% more equivalent production.
Spud 13% More Net Wells .
Speaker Change: Operated with flat L.O.E. per equivalent barrel and spent 19% less DNC capital dollars.
All while delivering stellar safety metrics.
Speaker Change: It was an impressive year for safe, efficient, and technically driven development of our asset base.
. . . .
Philip, I'll turn it over to you.
Philip Riley: Thank you John . I want to address the 2024 financial result as most are straightforward, but I'll add some color on new disclosures and metrics.
Philip Riley: as compared to these newer midstream assets. For most capital intensive businesses, the ability to generate positive free cash flow will be correlated with the maturity of the business, with early stage businesses often having growth capital investments exceeding operating cash flow. To apply the example, we allocated upstream free cash flow in 2024 as follows.
Philip Riley: 38% was allocated to additional growth initiatives, including 15% to an upstream acquisition, 14% to our PowerJV, and 9% to the new midstream project.
Philip Riley: 38% went to debt reduction, lowering debt by $90 million year-to-one-times leverage at the year end with a final 24% to dividends.
Philip Riley: Full-year Operated DNC CAP-X is forecast to increase by about 9%, while non-opspin could be $10 million up from essentially zero last year.
Philip Riley: We're currently seeing well costs maybe 2 to 3% higher than last year, but we're showing full-year upstream CAPEX increasing by higher percentage basis, including higher relative to production volume growth rates, primarily due to development being back end-weighted. So, for measurement purposes, the CAPEX is fully captured in 2025, while a smaller percentage of production is captured within the year. Specifically, 45% of our net operated wells put online are scheduled for the fourth quarter.
Most of which are currently set for New Mexico in the New Mexico.
Philip Riley: There's a scenario where we might accelerate the midstream project, and if it's operational by late in the year, then this might allow us to flow into the new pipe and also collect some midstream revenue. Other aspects of upstream, including infrastructure outside of the GATS midstream project, land and other smaller items, which are mostly in line with spinning levels from 2024 on a cruel basis. Midstream spending ranges shown of $60 to $80 million correspond to what we believe is a reasonable
and Neal Dingmann.
Philip Riley: We're forecasting approximately neutral for the year on debt at about $70 WTI.
Philip Riley: We're fortunate to have our balance sheet in good shape should we choose to increase debt modestly during the build out phase.
Philip Riley: I'll note that we explored the possibility of alternative financing for the midstream project but have currently chosen to keep it simple on balance sheet with our low cost revolver as well with full equity ownership while we can reconsider options as the project develops and as cash will it take shape.
Philip Riley: For power, we show a tighter investing range of $18 to $22 million. Recall this is not capex at the Riley level but rather a contribution to an equity method investment from Riley down to the joint venture after they benefit a project level financing at the JV level and a net to each 50% JV partner. This year's spend is for funding the ERCOT project and the team is making good progress there. We listed several updates on page 11 of our investor presentation. To summarize we're
Philip Riley: Trying to build complimentary assets across upstream, midstream, and power that work well together. And we're trying to turn challenges into opportunities, aiming to create situations that allow for multiple ways to win. For example, if our working interest in operated wells in New Mexico is lower than 100%, then we have a midstream asset to benefit. Note, our average is about 60% working interest. If GORs increase over time on our New Mexico oil wells, then we have a midstream asset to benefit. If GORs increase over time on our New Mexico oil wells, then we have a midstream asset to benefit.
Bobby Riley: Gas basis in the Permian stays materially negative and we have lower cost feed stock for power generation, leading to higher spark spreads for selling to ERCOT. And lastly, just for context, if gas index prices for the years stay somewhat elevated, yet basis remains tough, we still might realize an effective gas price of roughly $1 to $2, which could correspond to $10 to $20 million of revenue compared to negative 1.4 million last year. I'll turn it back to Bobby for closing. Thank you.
Bobby Riley: Thank you, Philip. Once again, we appreciate your time and interest in Riley Permian.
Bobby Riley: While we're pleased with our strong 2020 core results, our focus remains firmly on the future.
Bobby Riley: We are committed to building long-term value through discipline, capital allocation, strategic infrastructure investments, and operational excellence.
Bobby Riley: Our recent initiatives position us for sustained growth and we believe our long-term strategy will continue to drive shareholder value well beyond this upcoming year.
Thank you for your continued support.
Operator, you may now turn the call over for questions.
Speaker Change: At the time, I'd like to remind everyone in order to ask a question, simply press star followed by the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
Take your phone back out.
I don't hear anything.
I don't hear it.
Thank you.
Speaker Change: And once again, that is Star One for any questions and we'll pause for a moment to compile the Q&A roster.
Re-listening here.
Speaker Change: We'll take our first question from the line of Neal Dingmann with truest securities. Please go ahead.
Neal Dingmann: Morning. Thanks for the time. Philip, maybe first one, just on the power side. I'm wondering, you know, you
You continue to ramp up, you've got the ERCOT project.
Neal Dingmann: Coming quite soon I'm just wondering could you tell us maybe on the heels of that what are the things you would consider maybe what type of upside and then maybe just for my second I love the potential for the midstream gas contract and just want to be side the one that you agreed for what other upside do we see there thank you.
Unknown Speaker 0
Neal Dingmann: Yeah, thanks Neal. Good morning. Yeah, power merchant projects going great. Really excited about it. Put some updates there on our slide and the investor deck.
Neal Dingmann: We've got all the thermal generation. It's a tight market out there so we're excited to have procured all of that. We've got our sites for thermal. We've got several interconnection agreements. Those take a while. There's both power and gas or excited to have done that.
Next steps will be construction that'll start in
Neal Dingmann: The following quarter, maybe that last 90 days, gas infrastructure, maybe that's a six to nine month build.
Neal Dingmann: and then we've got some power interconnect there, 30-day, maybe ERCID commissioning. So we still think that's kind of a fourth-quarter deal. It might roll into the first part of next year, depending on how much testing we want to do. So that's kind of the timing.
Neal Dingmann: As we noted, we are assessing battery still. It's been a volatile market, both on economics and then with some, you know, latest.
Tara of Development and such, just a quicks out there.
Neal Dingmann: Battery Price. I guess first battery generation that's been loaded to the grade has been very large. This is a bit like
Neal Dingmann: LED TVs, the pricing, you've got a ton of supply, price has been falling, the the management's been falling as well, and so we're just continuing to assess how much we want to do there.
Neal Dingmann: Overall, project though excited about it. Prices are looking good. We think this could be a nice business for next year. You know on the whole it's relatively small for our total company. We like to think of it as like a hedge for natural gas basis.
Neal Dingmann: Neal, you know, we report this as an equity method investment, so the the financials are down below at the JV. They just trickle up to us in the form of that time.
Neal Dingmann: Equity Method. We've also got a project financing down there, which limits our...
Neal Dingmann: Need to have to invest to capital other than the equity we're showing there So that that's kind of a overview happy to answer some more if I'll pull but I know you asked about midstream I might let Bobby talk about midstream just to give you some exciting outlook there
Yeah, thanks Philip.
Bobby Riley: Now we're excited about as we develop our New Mexico assets to gain control of our
Bobby Riley: Molecule as quickly as we can and make sure that we're not reliant on somebody else's to take away capacity for us to develop so.
Bobby Riley: I think we're putting in a long-term plan to solve for-
Infrastructure in New Mexico that includes gas, water, and power.
Bobby Riley: We're just what we did in Texas initially when we started there and that what led us to the efficiencies that were able to operate in Texas with now.
Bobby Riley: We expect to, you know, after this year of getting all that stuff in place to be able to really see some benefits in the future in New Mexico. So that's just part of part of the business is getting the molecules to market and then we're staying on top of it.
Thank you guys.
Speaker Change: Well, good morning guys, and congrats on the strong end of 2024.
Speaker Change: Thank you. With my first question, I wanted to focus on the New Mexico gas Betrayal Project. I certainly understand the need for the project. Could you perhaps speak to your decision to build it versus seek a solution from an industry operator? [inaudible]
Hi.
Speaker Change: Yeah, let me cut a dig into that because basically we looked at what our development potential would be, you know, with over a hundred net locations and probably the upwards of close to 200 gross locations.
Speaker Change: The choices that we had in the area were somewhat limited. The whole region is suffering from a lack of takeaway capacity.
Speaker Change: Not only us, but some of the other operators in the area.
and basically building a one-off [inaudible]
Speaker Change: Treating plant in New Mexico, a lot of difficult permitting regulations in the state right now and a plant would have to be quite large to actually
Neal Dingmann, Unknown Executive, Philip Riley
Speaker Change: A midstream company for treating and processing that we're looped into about 12 different processing plants so it will really create more efficiency for us with limits that are no downtime.
Speaker Change: So, I think long term, it's kind of a big pill to swallow initially, but I think you're going to see a lot of upside in that, not only from our production, but from other operators in the area.
Speaker Change: Yeah, let me add on one thing there, Derek. Bobby gave you a little nugget for those paying attention. He said, 100 net locations and 200 gross. So what that tells you is are working interest is less than 100 percent. I think it's probably closer to 60, 65 percent than 50 but inherently what that means is you've got
Speaker Change: Even for your operated molecule, you've got a fair amount of...
Speaker Change: Non-owned working interest in there. And so while we're not talking about fees and revenue for this midstream project just yet, know that, you know,
Speaker Change: We're going to charge a market rate and there are other parties than benefiting that. Even if a zero third party producer shows up, we've got a fair amount there of non-owned working interests that can represent true and criminal revenue.
Neal Dingmann: Terrific, great color, and then referencing slide six, and then also thanks for the color and DNC optimization and your preparatory remarks. But maybe referencing slide six, could you speak to how DNC cost per flip progressed throughout 2024, and then what's baked into your 2025 plan from the perspective of location mix, lateral length and cost per flip?
Neal Dingmann: Yeah, so 2024 was an excellent year. Again, we drilled predominantly in our Champions
worked our way into New Mexico.
Completed a couple of those wells.
Neal Dingmann: That we're really excited about, you know, we're probably 20 wells in horizontal wells between us and our predecessor and
It really looks...
Looks just as-
Exciting as our Texas Asset, but from a
From a cost per foot, we did continue to improve.
Neal Dingmann: Like we said, I think we were down 11% if I have that number right around, you've seen the slide. It's around $520 a foot, I think for the 2024.
But
Neal Dingmann: No, we've had to kind of strategically wait till we have our infrastructure fully figured out which plan we were going to go with, that's why again we were kind of heavily in in champions up front.
Neal Dingmann: We're picking our rig back up very soon and starting in champions where we have the infrastructure again we've we've put that money in in prior years which allows us the flexibility to to spend our money there for development.
Neal Dingmann: And again, we'll be doing that same thing in 25 once we get the infrastructure in place.
Neal Dingmann: So we're putting our New Mexico drilling in the in the back half of the year. We'll we'll have all of our compression and some of our short term upgrades to be able to go to our current gather in place. We'll we'll we'll we'll we'll
by the time we complete those wells.
Neal Dingmann: We're also doing some testing as we speak on some completions.
Neal Dingmann: that we drilled late last year there in New Mexico. We think that will give us some technical advantages as we start completing wells in the second half of 25. So that's kind of why we, um,
Neal Dingmann: Start in champions and end in the Mexico for this year.
Speaker Change: And just to clarify on lateral length for 2025, you saw an improvement I think 20% longer in 2024 would you project that to continue to lengthen?
Unknown Speaker 0
You know, I...
Speaker Change: I think we are in champions. We tend to have a setup where mile and a half laterals are very feasible in the Mexico. Much of what we had of the permit wise when we purchased their setup on one mile units.
Speaker Change: But you know, we still think there's other places to save there, where-
Speaker Change: Half of the extra cost of New Mexico versus Texas is in stimulation, you know, as I mentioned we're already playing around with our recipe of
of the increasing stage length and also looking at
Unknown Speaker 06.01.15
Speaker Change: We are fracking with slick water in the Mexico and more of the Gerald Frack in Texas.
We're already, you know, sampling what a...
Speaker Change: Cross-Lank Frack can do in the Mexico which could provide for some upside later as we you know as we see the results of those tests right now will that has potential at least for savings in 2025. We'll see what the test show.
But we're excited about the opportunity that could be significant
All right, great update. Thanks for your time.
John White: Our next question comes from the line of John White with Roth Capital. Please go ahead.
John White: Good morning, and congratulations on the very nice results all the way around, especially your Proo Preserve Report.
Thank you.
Speaker Change: I'm wondering if you could provide or talk about some more detail on your aircraft effort maybe give us an idea how many deals are being worked on and what's the status of those deals and
John White: When you think you might get something executed that you could announce
Yeah, John . Good morning, this Philip.
John White: What I'd say right now, we've got our project that we're deep in the middle of.
The Phase II, the...
John White: You know, the first one of the ARCOT that we're doing, we're...
John White: We like the market response so far. We appreciate people being supportive. We're intrigued about doing more at the same time you see the news and what's happening. Everybody's talking power for data centers and so forth. We're
John White: I tell you we're exploring different ways we can participate in that.
We've got-
John White: Large amount of gas reserves. We're going to have increased control over some of our gas.
So we're intrigued by the opportunity. [inaudible]
John White: Grateful that we had a nice first mover advantage. We do want to see how this this works out. To some degree how we're progressing some of these updates came in just in the last week with some of our interconnection agreement so that's something I'll be frank those can can take a while because it was.
and I've realized these.
John White: Large gas midstream companies have been if you've been listening to their earnings calls, you know you some of them say they got 75 in bounce solicitations and they're working on all of these so it's very topical that's exciting glad our industries being both responsive and you know forward thinking I'd say
John White: Hang tight and let's see how it goes. We'll be back here in two months reporting on first quarter.
John White: Okay, thanks for the update, and I'll turn it back to the operator.
Speaker Change: Our next question will come from the line of Noel Parks with Tui Brothers. Please go ahead.
Good morning.
Speaker Change: Looking into the year, I'm assuming service availability or cost pressure are like not a big concern in terms of the scenarios you've been looking at. Is that fair to say?
Yes, I think...
Speaker Change: I think we're doing really pretty well. The drilling side is neutral to slight improvement. There's been actually a really nice reduction in through consolidation and more of the stimulation services.
Speaker Change: I think what we're experiencing there in New Mexico has been a good availability and we've had some nice savings from say 2023.
Speaker Change: Just to add on to that, Noel, if there's any confusion, I've mentioned in my prepare remarks, we see well costs for the years.
Slightly Up, that's what we're modeling currently.
Speaker Change: Hopefully that's conservative. Some of what that accounts for are some fixed costs like facilities for some of these new areas that we're pushing into for our five well pads. So it's got that fixed facility cost.
Speaker Change: that somewhat offsets the benefits that John's describing on drilling and completion.
Unknown Speaker 05. All right.
Great. Thanks. And um...
Speaker Change: You did mention just the statistic that you were using 20% more self-generated power than a year ago and is that a good sort of plateau for where you think you'll be or is there their upside ahead you anticipate for that?
Yeah, I think we're, um,
Speaker Change: What we were doing is really taking our time to test this to ensure the high run rate and reliability. We're continuing to transfer overload. We've got more to do there. We've got plenty of room. So we're excited to keep doing that.
Speaker Change: and I think you'll see a little bit more there next time we're talking all in all that shouldn't
Speaker Change: Translate to much change and our L.O.E. This is a small part of the overall company but it's nice to say that we're doing that and it's nice to have some ownership then in that joint venture.
Great. Thanks a lot.
Speaker Change: Again for questions, press star one and our next question comes from the line of Jeff Robertson with Water Tower Research. Please go ahead.
Jeff Robertson: Thank you. Good morning. On the midstream projects, can you talk a little bit more about timing of when you think it might come into service and also Philip on the benefits you outlined.
Speaker Change: Will those show up in the financials at separate line items, or would they show up, for example, if you're marketing third-party gas for non-operators, would those be a reduction to your L.O.L.E.?
Speaker Change: Yeah, this is John . I'll take the the timing of the midstream. I think as we see it, it's it's kind of as as early as possibly the end of 2025 and then
Likely the...
Speaker Change: The longer case is somewhere in mid to you know end of
Speaker Change: End of the first half, third quarter. It really comes down to about four different variables.
It's the it's the right away the regulatory approval of the route
Speaker Change: Those are both kind of, I don't know, five to nine month type things. They run in parallel.
Speaker Change: And then afterwards you have a decision to roll the pipe for again the long pipe line that Bobby described and then ultimately it's the execution, the execution of it is the most.
It's a timing-wise, very little extra play there.
Speaker Change: It really is, comes down to the right away and the regulatory approval.
Speaker Change: We think we've got a good jump on those of getting a final route approved, being able to get that little bit earlier order in on the pipe. We're excited about it. We would like to see this go as quick as possible but.
Speaker Change: Right away in regulatory are the cheapest parts of the whole process and so you can see you know what a dilemma that is for us to forecast exactly how that fits into 25 or 26 you know when the bigger expenses of. [inaudible]
Speaker Change: of the pipe and actually the manpower to get it laid so those are kind of some of the key triggers of when that money will be spent.
Jeff Robertson: And then Jeff on the Income Statement Geography, we're still working through it, but I think at a high level, you'll see some midstream revenue, you may see midstream OPEX, and then you'll see an intercompany elimination to adjust out from the gross to the net.
Jeff Robertson: for our own working interest versus the gross that I described before, but a reminder you can...
Jeff Robertson: You can think about it as the growth as it starts. You can jump on and veris and look at how much gas we produce out there on a growth basis and probably do some simple math as to what some market rates could be and think about how that has a potential to grow into the future.
Speaker Change: is the bill. Philip, I think you said that production in the Mexico would be fourth quarter weighted for 2025. Is some of that dependent on progression on the midstream system?
Yeah, absolutely. It is.
you know that that really that
It kind of depends when we get that
Down, whether it's in the-
Speaker Change: I don't even if it's late fourth quarter, I think we'll be lucky to be getting much production through there other than, you know, as it does turn on, there'll be some immediate impact that we'll be able to turn on of existing assets.
but from newly drilled completions.
Speaker Change: That's what those the wells and the second half they'll either come on fourth quarter or are probably first quarter of 2026. And just to add to that I think there's two lenses you can consider is the physical constraint for the flow assurance.
is what John just addressed, gets us higher confidence.
Speaker Change: to produce those if we're going through our own system. But then there's also the opportunity, right, or opportunity cost if you don't put it through your own system. So all I'll sequel if we're going to be doing these would rather put it through our own system and collect some of the the fee revenue.
Speaker Change: Yeah, and there are some other phases of the project where we are laying some gathering system into this Mexico asset, part of what we've already described, but that will bring on some...
Speaker Change: Other production that already exists, again besides just what we'll be drilling.
Well, that's pretty perceptive. It's exactly what we're thinking.
Thank you.
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