Q4 2024 Tourmaline Oil Corp Earnings Call
Innovation, we will conduct a question and answer session.
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Good morning, My name is constant Gina and I will be your conference operator today.
Great.
This call is being recorded on Thursday March six 2024.
At this time I would like to welcome everyone to the Vermilion energy fourth quarter 2024 conference call.
Speaker Change: I would now like to turn the conference over to Scott Kirker. Please go ahead.
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Scott Kirker: Thank you Peter welcome everyone to our discussion.
After the Speakers' remarks, there will be a question and answer session.
Scott Kirker: Financial operating results for the three months and years ended December 31, 24 at December 31 2003.
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Scott Kirk: My name is Scott Kirk Chief Legal officer, Harry terminally unwell.
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Scott Kirk: Before we get started I refer you to the advisories on forward looking statements contained in the news release as well as the advisory is contained and determining annual information form in our MD&A available on SEDAR and on our website.
Speaker Change: I will now hand, the call over to Mr. Don Hatcher, President and CEO you May now begin your conference.
Thank you Steve.
Don Hatcher: Good morning, ladies and gentlemen, thank you for joining us on Hatcher, President and CEO of Vermilion energy with me today are alerts glimpsed or vice President and CFO Darcy Kermit Vice President International Agency granted Quaid Vice President North America.
Scott Kirk: I also draw your attention to the material factors and assumptions in those advisories.
Speaker Change: Here with my gross <unk>, President and Chief Executive Officer.
Speaker Change: Brian Robinson, our Chief Financial Officer, and Jamie <unk>, <unk>, Vice President of capital markets.
Preston Vice President of Investor Relations will be referencing a powerpoint presentation to discuss our 2020 for full year and Q4 results presentation can be found on our website under invest with us.
Speaker Change: Start by speaking to some of the highlights of the last year.
Speaker Change: After Mike's remarks, we will be open for questions go ahead, Mike.
Mike: Thanks Scott.
Speaker Change: Thanks, everyone for dialing in we're pleased to review our most recent results and provide the latest outlook and answer some questions.
Speaker Change: The presentations please refer to our advisory on forward looking statements at the end of the presentation.
Speaker Change: Scribes and forward looking information non-GAAP measures and oil and gas terms yesterday and it was the risk factors and assumptions relevant to this discussion.
Speaker Change: First a few highlights 2020 by forecast free cash flow is now $1 4 billion.
Speaker Change: Based on current strip pricing and that's up from previous guidance of $1 1 billion full year 2024, net earnings were $1 3 billion or $3 51 per diluted share and that underscores the profitability of the business even in a very weak gas price environment and to that end we delivered strong.
Speaker Change: Yeah.
Speaker Change: But really delivered a strong operational financial results 2024 production averaged 84543 reviews, a day, which was above the midpoint of our original guidance represents annual production per share growth of 4%.
Speaker Change: Our international production increased 12% year over year, reflecting strong operational run types in Australia, and the midyear startup of the gas plant them yesterday 10 block in Croatia.
Speaker Change: <unk> earnings and free cash flow in 2024 during what turned out to be the worst April full year pricing environment in the last 25 years.
Speaker Change: North America production was down 5% year over year. This is reflecting the full year impact from the 5500 Boe's per day divestments.
Speaker Change: We're very pleased to announce a quarterly base dividend increase of 43% to <unk> 50 per share. That's affected Q1 dollars 25, and a special dividend of 35 per share with continued growth in the base business and continued improvements in realized pricing, we are well positioned to increase return.
Speaker Change: So he Saskatchewan that was completed in 2023, Oh that was partially offset by the growth of our Montney asset following the startup of the new battery in Q2.
Speaker Change: We generated $1 2 billion or $7 63 per share a puzzle at 583 million or $3 six nine cents per share of free cash flow, both representing a 9% increase over 2023 on a per share basis.
Speaker Change: Turns to shareholders in 2025% relative to 2024.
Speaker Change: First quarter 'twenty five production range of 630000 to 635000 BOE per day is currently anticipated.
Speaker Change: Successfully executed at 623 million capital program within budget.
Speaker Change: PDP reserves were increased 29% in 2024 after accounting for production and two P reserves were increased 14% to $5 5 billion by the end of 2024.
Speaker Change: Capital program includes significant investments in new growth projects in Germany, Croatia, and the BC, Montney, which will all contribute to strong free cash flow in future years.
Speaker Change: We returned $216 million or approximately 10% of our market cap to our shareholders in 2024 that comprised of 75 million dividends of 141 million of share buybacks.
Speaker Change: A few comments on production.
Speaker Change: Fourth quarter 24 average production was 605000.
Speaker Change: In December we announced an 8% increase to our quarterly dividend effective Q1 2025.
Speaker Change: BOE per day up 9%.
Speaker Change: The corresponding 2023 quarter.
Speaker Change: This represents our fourth consecutive increase since reinstating the dividend net debt decreased by 10% in 2024 to 967 million at the end of the year, representing a net debt to trailing fund flow ratio of one eight times or the lowest ratio in over a decade.
Speaker Change: 24 average liquids production of 138500 barrels per day was up 17% over 2023.
Speaker Change: Condensate and NGL production volumes are expected to increase significantly over the next five years.
Speaker Change: Okay.
Speaker Change: Included in our year end release was an updated reserve estimate for 2024 total proved plus probable reserves increased by 1% from the prior year 435 million Boe's primary due to extensions and improved recovery and to make our montney asset we added 26 million Boe's a PDP reserves.
Speaker Change: With our north Montney West Dole, groundwork sells montney and north of deep basin infrastructure projects.
Speaker Change: These projects will grow both our total volumes and materially improve our realized corporate margins.
Speaker Change: The $25 forecast production range of 635000 to 665000 BOE per day remains unchanged and the company expects to finalize the second half 'twenty five EEP capital program during the second quarter, and we'll see where gas prices are at over the next three.
Speaker Change: $36 two P reserves at an average SG&A costs, including future development costs.
Speaker Change: $22.81 per PDP Boe.
Speaker Change: $15 77.
Speaker Change: For <unk>. This results in a recycle ratio of one six times at a PDP basis at two three times on a two P basis.
Speaker Change: <unk> or so.
Speaker Change: As mentioned first quarter 'twenty five production of $630 to 635000 Boe per day as anticipated we have approximately 51 wells to bring on production in March which is expected to result in first quarter exit volumes well in excess of 640000 Boe per day.
Speaker Change: 2020 for F D and eight figures include significant upfront capital costs associated with the early stage growth projects, such as the Montney infrastructure as well as Germany, and Krish exploration, which limited reserves compared to our internal estimates have been recognized to date.
Speaker Change: Our PDP into part two P Reserve life Index as of December 31, 2024. It was five four and four one years, respectively. Over these are consistent with our long term average.
Some select financial highlights improving strip prices of Inc. Increased full year forecast 25 cash flow to $4 3 billion.
Speaker Change: And as mentioned full year forecast 25 free cash flow is now $1 4 billion.
Speaker Change: The after tax net present value of our PDP reserves discounted at 10% is $2 8 billion.
Full year 2024 cash flow was $3 2 billion and full year 'twenty for free cash flow was $1 billion.
Speaker Change: After tax net present value of our two P reserves discounted at 10% is $5 2 billion that is over $27 per share after deducting year end net debt.
Speaker Change: Okay.
Speaker Change: And as mentioned given the strong growth in the base business over the past three years through a combination of high margin organic growth and accretive acquisitions <unk> Board of directors has elected to increase the base quarterly dividend from 35 per.
Speaker Change: Production for the fourth quarter averaged 83536 views per day, which includes the impact from planned turnaround activity at parcels shut in absolute median gas in response to weak April prices B.
Speaker Change: We generated 263 million that's the polls at $1 70 per share at $62 million of free cash flow of which 36 million was returned to shareholders via the dividend and share buybacks. Indeed capital increased in Q4 relative to Q3 as drilling activity picked up in Germany and Canada.
Speaker Change: A share to <unk> 50 per share up 43% increase and that's effective in the first quarter of 2025. The board also declared a special dividend of <unk> 35 per share to be paid on March 25.
Speaker Change: <unk> to shareholders of record on March 13.
Speaker Change: Did you have any activity included the completion and testing of the successful second well and the commencement of drilling on the third exploration well that was originally scheduled for 2025.
Speaker Change: And we do intend to pay special dividends in all four quarters of this year inclusive of this Q1 special dividend.
Speaker Change: We paid $3 32 per share in combined base and special dividends in 2024, and Thats, a five 3% trailing yield.
Speaker Change: Net debt increased slightly due to the stronger U S dollar and a full repayment montney battery lease this provides immediate lease and interest savings as well as increasing our excess free cash flow that's available for shareholder returns in 2025 and beyond.
Speaker Change: Full year 2000, and for Capex was $1 9 billion and that includes Q4 capex of $460 million exit 24, net debt was $1 7 billion. That's approaching our long term net target of $1 5 billion, which is approximately <unk> three to three five times forecast.
As I mentioned drilling and completion activity picked up in Q4 in Europe. Our primary focus was on the German deep gas exploration program, where we progressed facility construction Italian operations on their author hide well incubated testing operations on the physical horse well, including testing on a second zone subsequent to the quarter.
Speaker Change: Net debt to cash flow and we've always believed maintaining balance sheet strength puts the company in a strong position to deal with any new macro challenges and to take advantage of new opportunities that might arise.
We commenced drilling in the third deep gas exploration well in Germany Bazemore during Q4.
Speaker Change: <unk> drilling it in Q1 I'll provide more detail on the successful German expert.
Speaker Change: On reserves, our year end 'twenty for PDP reserves of $135 billion <unk> were up 29% after accounting for 24 annual production total proved reserves of $2 91 billion were up 19% and <unk> reserves of five five.
Speaker Change: <unk> were up 14%.
So after 16 years of operations terminally now has essentially 25 tcf of economic <unk> natural gas reserves, and 136 billion barrels of <unk> oil condensate and NGL reserves, all of which are pipeline connected to markets across North America and at year end $24 eight.
Percent of the current estimated drilling inventory of over 25000 locations was not booked in the 24 year end Reserve report.
Speaker Change: Year end 'twenty, four oil condensate and NGL <unk> reserves of 136 billion barrels represent the second largest conventional liquids reserve base in Canada based on public disclosure.
Speaker Change: Of particular note given our size, we replaced 330% of 24 annual production of 212 million BOE with two key additions of $700 million Boe.
Speaker Change: Including 24 production.
Speaker Change: Our 2004, our PDP F&D costs were $8 45 per Boe, including changes in FTC and that yielded a PDP reserve recycle ratio of one eight times, which is pretty good for predominantly gas producer in the <unk> 24 gas price environment to PDF DNA costs and 24%.
Speaker Change: <unk> 728 per Boe.
Speaker Change: Including changes and FTC and that yielded a <unk> recycle ratio of two one times.
Of particular note given our size, we replaced 330% of 24 annual production of 212 million BOE with two key additions of 700 million Boe.
And our <unk> reserve value before taxes equates to $114 per diluted share.
Speaker Change: Revisiting the 25 capital program full year 'twenty five EEP capital budget range remains unchanged at two six to $2 85 billion.
Including 24 production.
Our 2004, our PDP F&D costs were $8 45 per Boe, including changes in FTC and that yielded a PDP reserve recycle ratio of one eight times, which is pretty good for predominantly gas producer in the <unk> 24 gas price environment to PDF DNA costs and 24%.
Speaker Change: The company expect steadily improving natural gas prices in 2025 showed that price recovery materialize later in the year the capital program will be sequenced accordingly.
Speaker Change: Facility and pipeline expenditures of approximately $300 million remain in the total 25 <unk> capital budget.
Were $7 28 per Boe.
Including changes and FTC and that yielded a <unk> recycle ratio of two one times.
Speaker Change: That includes ongoing northeast BC, North Montney phase one infrastructure buildup components electrification pre builds for the 'twenty six 'twenty seven west stolen groundbreaker gas plant projects.
And our <unk> reserve value before taxes equates to $114 per diluted share.
Revisiting the 25 capital program full year 'twenty five EEP capital budget range remains unchanged at two six to 285 billion.
Speaker Change: And certain long lead time facility preorders.
Speaker Change: So the majority of the 2025 growth capital is these facility expenditures they don't create volumes in 2025 as clearly this is a year of transition for gas prices. These volumes materialize in 2026 and 2027 a period when much improved gas prices are widely anticipated.
The company expects steadily improving natural gas prices in 2025 should that price recovery materialize later in the year the capital program will be sequenced accordingly.
Facility and pipeline expenditures of approximately $300 million remain in the total 25 <unk> capital budget.
Speaker Change: <unk>.
Speaker Change: We expect to finalize the sequencing of the entire future northeast BC infrastructure build out.
And that includes ongoing northeast BC, North Montney phase one infrastructure buildup components electrification pre builds for the 'twenty six 'twenty seven west stolen groundbreaker gas plant projects.
Speaker Change: During this year and that will include up to four new gas processing facilities.
Speaker Change: The ground Birch development is now expected to consist of two separate 200 million per day deep cut plants to be installed in the 2007 to 29 timeframe pretty much exactly what we put on the ground at Gundy C 68, some comments on marketing the company's average realized natural gas price in 2020.
And certain long lead time facility preorders.
So the majority of the 2025 growth capital is these facility expenditures they don't create volumes in 2025 as clearly this is a year of transition for gas prices. These volumes materialize in 2026 and 2027 a period went much improved gas prices are widely anticipated.
Speaker Change: <unk> was $3 38 per Mcf Canadian and Thats, a $1 90 per Mcf above the average 24 April <unk> index price of $1 48 per Mcf.
<unk>.
Speaker Change: And our marketing diversification portfolio and strategic hedging program allow us to consistently outperform local hub pricing on a sustained basis.
We expect to finalize the sequencing of the entire future northeast BC infrastructure build out.
During this year and that will include up to four new gas processing facilities.
We expect to exit 2025 with over one three Bcf per day in exports to targeted markets, including 904 million per day delivered to the U S. Gulf J km TTS Western U S markets and Pacific Northwest premium markets. We also secured.
The ground Birch development is now expected to consist of two separate 200 million per day deep cut plants to be installed in the 2007 to 29 timeframe pretty much exactly what we put on the ground at Gundy C 68, some comments on marketing the company's average realized natural gas price in 2020.
Speaker Change: An additional 95 million per day of Anr service to the U S Gulf and we did that during this quarter.
<unk> was $3 38 per Mcf Canadian that's $1 90 per Mcf above the average 24, <unk> <unk> index price of $1 48 per Mcf.
Speaker Change: We have an average of one <unk> six Bcf per day hedged in 2025 at a weighted average fixed price of $5 seven per Mcf.
And our marketing diversification portfolio and strategic hedging program allow us to consistently outperform local hub pricing on a sustained basis.
Speaker Change: We do remain encouraged by the very strong demand driven outlook for North American natural gas prices, which have improved in the majority of the sales hubs.
We expect to exit 2025 with over one three Bcf per day in exports to targeted markets, including 904 million per day delivered to the U S. Gulf J km TTS Western U S markets and Pacific Northwest premium markets. We also secured.
Speaker Change: Access by the company.
Speaker Change: Over Q4, 2020 for Western Canadian gas prices have lagged this risk this recovery despite winter natural gas storage withdrawals.
Speaker Change: Averaging approximately 143 Bcf per day versus a little over seven Bcf per day last winter. So we'll continue to monitor the multiple local natural gas demand catalysts anticipated in 2005, including the startup of LNG, Canada, we will manage our.
An additional 95 million per day of Anr service to the U S Gulf and we did that during this quarter.
We have an average of one point or six Bcf per day hedged in 2025 at a weighted average fixed price of $5 seven per Mcf.
Speaker Change: Unhedged non export or local volumes accordingly, and in the event of very weak spring summer 'twenty five gas prices the company will optimize the pace of well stimulation and production start up activities to shape the production profile to the highest cash flow outcome.
We do remain encouraged by the very strong demand driven outlook for North American natural gas prices, which have improved in the majority of the sales hubs.
Access by the company.
Over Q4, 2020 for Western Canadian gas prices have lagged this risk this recovery despite winter natural gas storage withdrawals.
Speaker Change: Briefly on E&P, we drilled 286 gross wells in 'twenty, four and led the Canadian industry with a total of one four to 5 million meters drilled during the year.
Averaging approximately 143 Bcf per day versus a little over seven Bcf per day last winter. So we'll continue to monitor the multiple local natural gas demand catalysts anticipated in 25, including the startup of LNG, Canada, we will manage our.
Speaker Change: We delivered our best overall well performance in the past five years in the Alberta Deep Basin complex and this outperformance has been across the full suite of deep basin assets.
Speaker Change: We are currently planning to drill up to 365 net wells in 2025.
Unhedged non export or local volumes accordingly, and in the event of very weak spring summer 'twenty five gas prices the company will optimize the pace of well stimulation and production startup activities to shape the production profile to the highest cash flow outcome.
Speaker Change: As of January one 2025, the ongoing new zones, new pool exploration program.
Speaker Change: Has added a little over two Tcf of <unk> reserves of that total of 25, Tcf and 1068 tier one and tier two drilling locations. Since the program was started there are several potential high impact exploration wells in the 2025 programs. So it will be an exciting year on that front.
Recently on E&P, we drilled 286 gross wells in 'twenty, four and led the Canadian industry with a total of one four to 5 million meters drilled during the year.
We delivered our best overall well performance in the past five years in the Alberta Deep Basin complex and this outperformance has been across the full suite of deep basin assets.
Speaker Change: We continue to make select midstream investments to reduce cost and improved realized margins.
Speaker Change: Some material cost reductions realized already in the north Montney and we expect similar improvements in the ex crew ground bridge assets as we execute the infrastructure plan there.
We are currently planning to drill up to 365 net wells in 2025.
As of January one 2025, the ongoing news one new pool exploration program.
Speaker Change: On an epi are.
Speaker Change: Our Cleantech engineering team continues to develop and implement new proprietary emission reduction technologies execute on expanded water management initiatives and explore industry, leading methane mitigation technologies at our <unk> as well as manage related third party environmental research.
Has added a little over two Tcf of <unk> reserves of that total of 25, Tcf and 1068 tier one and tier two drilling locations. Since the program was started there are several potential high impact exploration wells in the 2025 programs. So it will be an exciting year on that front.
Speaker Change: And we've touched on the dividend already so.
We continue to make select midstream investments to reduce costs and improved realized margins.
Speaker Change: We will turn it over for questions.
Speaker Change: <unk>.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your telephone keypad.
Some material cost reductions realized already in the north Montney and we expect similar improvements in the ex crew groundbreaker assets as we execute the infrastructure plan there.
Speaker Change: A prompt that Johanna has been placed and should you wish to cancel your request. Please press star forward it to you.
On an epi or.
Speaker Change: We are using a speaker phone please lift the handset before pressing any Keith one moment. Please for your first question.
Our Cleantech engineering team continues to develop and implement new proprietary emission reduction technologies execute on expanded water management initiatives and explore industry, leading methane mitigation technologies at our <unk> as well as manage related third party environmental research.
Speaker Change: Your first question comes from the line of Aaron Bukovsky from TD Cowen. Please go ahead.
Aaron Bukovsky: Good morning, Thanks for taking my question.
Speaker Change: Start with the tougher ones I think it's one that's on the minds of investors. So just to frame. It if I use mid 2023 is the starting point it appears that production revisions to the five year plan Hasnt quite kept pace with volumes acquired through Bonavist inquiry.
And we've touched on the dividend already so.
We will turn it over for questions.
<unk>.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed they don't want on your telephone keypad.
Speaker Change: While over the same time period organic E&P Capex and the plant has also increased.
A prompt that Johanna Speedway east and should you wish to cancel your request. Please press star forward it to you.
Speaker Change: I guess my question is could you talk a little bit about some of the puts and takes in the five year plan over the past couple of years.
We are using a speaker phone please lift the handset before pressing any Keith one moment. Please for your first question.
Speaker Change: Well some of it is infrastructure buildout. So there was $200 million approximately in 'twenty four and there is the.
Your first question comes from the line of Aaron Bukovsky from TD Cowen. Please go ahead.
Speaker Change: $300 million outlined in 2025, so in aggregate about half a billion dollars.
Good morning, Thanks for taking my question.
Start with the tougher ones I think it's one that's on the minds of investors. So just to frame. It if I use mid 2023 is the starting point it appears that production revisions to the five year plan Hasnt quite kept pace with volumes acquired through Bonavist inquiry. Meanwhile, over the same time period organic E&P capex in the <unk>.
Speaker Change: It is very important to get this.
Speaker Change: Multiple faceted northeast BC infrastructure build out underway, but as mentioned, we don't really see the volume associated with that until 'twenty six.
Speaker Change: And 2027.
Speaker Change: The other thing I'd mention there is obviously when we were acquiring businesses in 2023 and 2022.
<unk> has also increased.
Yes. My question is could you talk a little bit about some of the puts and takes in the five year plan over the past couple of years.
Trip from our buoyant terminally and actually took quite a bit of capital out of the plan in 2024 and effectively moved a large large part of our completion activity towards the end of the year and still generated $1 billion of free cash flow in 'twenty four and now we're back on the front foot here in the first quarter with activity again, So I think in these gas price environment youre going to see that plan.
Well some of it is infrastructure buildout, so there was $200 million mm.
Approximately in 'twenty four and there is a three.
$300 million outlined in 2025, so in aggregate about half a billion dollars that it.
Speaker Change: Executed, but we always retain the flexibility to move things around if prices are different.
It's very important to get this.
Multiple faceted northeast BC infrastructure build out underway, but as mentioned, we don't really see the volume associated with that until 2006.
Okay. Thank you.
Speaker Change: Thank you and your next question comes from the line of Kelly <unk> from Bank of America. Please go ahead.
And 2027.
The other thing I would mention there is obviously when we were acquiring businesses in 2023 and 2022.
Speaker Change: Hey, Good morning, guys, Mike Bryan Jamie My first question goes to the crew synergies and I'm going to try to tie together two comments here. So first you signaled wanting to pull forward ground Burch I imagine thats going to lift Capex in 2016 27, but I also think it is going to pull forward. The synergies. So the second comment kind of points to cost reductions.
Stripped from our buoyant terminally and actually took quite a bit of capital out of the plan in 2024 and effectively moved a large large part of our completion activity towards the end of the year and still generated $1 billion of free cash flow in 'twenty four and now we're back on the front foot here in the first quarter with activity again, So I think in these gas price environment youre going to see that plan.
Speaker Change: Crew midstream so can you kind of talk through the capital impact, but also the path to synergy capture what do you need to do and where the synergies are going to show up.
Executed, but we always retain the flexibility to move things around if prices are different.
Speaker Change: Well on the ground birch.
Okay. Thank you.
Speaker Change: <unk> build out when it's completely done we expect.
Thank you and your next question comes from the line of Kelly <unk> from Bank of America. Please go ahead.
Greater than 80% per Boe cost reduction over where we will start from.
Hey, Good morning, guys, Mike Bryan Jamie My first question goes to the crew synergies and im going to try to tie together two comments here. So first you have signaled wanting to pull forward ground Burch I imagine that's going to lift capex in 2016 27, but I also think it is going to pull forward. The synergies. So the second comment kind of points to cost reductions.
Speaker Change: And as I mentioned Thats, the two 200 million a day deep cuts.
Speaker Change: So it will actually be an even bigger margin improvement than what we saw from our gundy and Aitken.
Speaker Change: Infrastructure build outs and margin capture initiatives.
Speaker Change: There is.
Speaker Change: Lots of synergies throughout the EP operations I mean, we can drill and complete the wells are probably 20% to 30% less than what they were doing we will build out the water infrastructure and that ultimately reduce cost and it also includes.
Crew midstream so can you kind of talk through the catheter went back but also the path to synergy capture what do you need to do and where the synergies are going to show up.
Well on the ground birch.
Bill, though when it's.
Speaker Change: Improved your overall environmental performance the crew volumes right now it was between 29% and 30, when we picked it up.
<unk> done we expect.
A greater than 80% per Boe cost reduction over where we will start from.
Speaker Change: BOE a day and we're doing sort of 31% to 32000 and the latest production report over the last few days. So yes, we're super happy with it.
And as I mentioned Thats, the two 200 million a day deep cuts.
So it will actually be an even bigger margin improvement than what we saw from our gundy and Aitken.
Speaker Change: It was a big component of the reserve increase on a <unk> basis.
Infrastructure build outs and margin capture initiatives.
There is.
Speaker Change: We saw in the year end 2024 report.
Lots of synergies throughout the EP operations I mean, we can drill and complete the wells are probably 20% to 30% less than what they were doing we will build out the water infrastructure and that ultimately reduce cost and it also includes.
Speaker Change: Anything else on the synergies Brian on the financial side. So I think I mean, there are cash operating costs were a little bit higher and as we move forward here, we'll be bringing those down as we're controlling more of the liquid barrels.
Speaker Change: As well as getting some of.
Improved your overall environmental performance the crude volumes right now it was between 29% and 30, when we picked it up thousand Boe's, a day and we're doing sort of 31% to 32000 and the latest production report over the last few days. So yes, we're super happy with it.
Speaker Change: Our pipe.
Speaker Change: <unk>.
Speaker Change: Optimize so that we can drive downs.
Speaker Change: <unk> costs as well.
Speaker Change: Flagging that some of the investments, we're making here are going to help us drive higher margins to realization. So getting some of these products to higher premium markets more flexibility for our team, we're taking kind rates and that doesn't really show up on the cost side of the ledger that shows up on the realization side of ledger. So we're really excited about that opportunity as well.
It was a big component of the reserve increase on a <unk> basis.
We saw in the year end 2024 report.
Anything else on the synergies Brian on the financial side, So I think I mean their.
Speaker Change: Thanks for all the detail there my second question goes to the signaling on the buyback.
<unk> cash operating costs were a little bit higher and as we move forward here, we'll be bringing those down as we're controlling more of the liquid barrels.
Speaker Change: On Slide 23, you show that the buyback is growing as a part of your cash allocation.
Speaker Change: What is the significance of the timing.
Speaker Change: How does show a creeping up from what it looks like 2027 and that aligns with the tapering in your production wedge. So why do you think thats, the right kind of pivoted and why not pivot harder into more specials.
As well as <unk>.
Getting some of.
Our pipe.
Optimize so that we can drive down the midstream costs as well.
Speaker Change: Well, it's partly a function of exactly how much free cash flow we have.
Flagging that some of the investments, we're making here are going to help us drive higher margins through realization. So getting some of these products to higher premium markets more flexibility for our team, we're taking kind rates and that doesn't really show up on the cost side of the ledger that shows up on the realization side of ledger. So we're really excited about that opportunity as well.
Speaker Change: Every year.
Speaker Change: It up a little bit our plan is to maintain that double digit shareholder return.
Speaker Change: And the composition of that return will change over time.
Speaker Change: We are entering four to five year period of growth that we'd always time to the start up of LNG, Canada, which we believe will be very positive for local hub pricing ego and station to fill.
Thanks for all the detail there my second question goes to the signaling on the buyback. So on slide 23, you show that the buyback is growing as a part of your cash allocation. What is the significance of the timing because you kind of show it creeping up from what it looks like 2027 and that aligns with the tapering in your production wedge. So why do you think that's the right.
Speaker Change: So there'll be five plus percent per share growth.
Speaker Change: So be a production over the next four to five years, and we'll maintain that 5% to 6% dividend yield to gross up to over 10% as we.
Pivoted and why not pivot harder into more specials.
Well, it's partly a function of exactly how much free cash flow we have.
Speaker Change: Get to the end of that Buildout will be 750000, Boe's, a day, plus it'll be harder to grow at 5% to 6% per annum.
Every year.
Back it up a little bit our plan is to maintain that double digit shareholder return.
And the composition of that return will change over time, we are entering four to five year period of growth that we'd always time to the startup of LNG, Canada, which we believe will be very positive for local hub pricing ego and station too.
Speaker Change: So we see the production growth tapering down to call it 2% and we think thats the approach appropriate time to bring in a material structural buyback. So that the per share growth is maintained at 5% and then by then we would expect a 6% plus yield so that the total shareholder.
So there'll be five plus percent per share growth.
Speaker Change: Our return.
Speaker Change: Maintains in that double digit range. So that's the thinking it is a bit diagrammatic on that slide and I wouldn't say that the timeframes are absolutely.
B our production over the next four to five years, and we will maintain that 5% to 6% dividend yield to grow up to over 10% as we.
Speaker Change: Iron clad, but we do have a significant growth period ahead of us that we're super excited about.
Get to the end of that Buildout will be 750000, Boe's, a day, plus it'll be harder to grow at 5% to 6% per annum. So.
Speaker Change: Thanks, guys good update.
So we see the production growth tapering down to call it 2% and we think thats the approach appropriate time to bring in a material structural buyback. So that the per share growth is maintained at 5% and then by then we would expect a 6% plus yield so that the total shareholder.
Speaker Change: Thank you once again should you have a question. Please press star followed by the one on your telephone Keypad. Your next question comes from the line of Jamie Kubik from CIBC. Please go ahead.
Jamie Kubik: Yes, good morning, I've got two questions for you guys here. So first one your press release indicates delays in acquiring new surface disturbance permits.
Return.
Maintains in that double digit range. So that's the thinking it is a bit diagrammatic on that slide and I wouldn't say that the timeframes are absolutely.
Jamie Kubik: HB one areas in northeast B C that limited the ability to drill delineation pads and booked <unk> reserves could you talk about the changes that we will see this improve in 2025.
Iron clad, but we do have a significant growth period ahead of us that we're super excited about.
Jamie Kubik: Yes, its been steadily improving over the past two years and I think we secure the most drilling permits or actually any operator in northeast BC Theyre, just not always exactly where we want them.
Thanks, guys good update.
Thank you once again should you have a question. Please press star followed by the one on your telephone Keypad. Your next question comes from the line of Jamie Kubik from CIBC. Please go ahead.
Jamie Kubik: And I think the.
Jamie Kubik: Granting of permits in the finalizing of that process.
Jamie Kubik: <unk> <unk> and the BC government is scheduled to happen in 2025, so that we will get more permits in those HB one.
Yes, good morning, I've got two questions for you guys here. So first one your press release indicates delays in acquiring new surface disturbance permits.
Jamie Kubik: Area so.
HB one areas in northeast B C that limited the ability to drill delineation pads and booked <unk> reserves could you talk about the changes that we will see this improve in 2025.
Jamie Kubik: I think Scott anything you want to add to that.
Jamie Kubik: <unk> plans approved and Thats moving forward I think we will see we will see real evidence of that here in the near future.
Jamie Kubik: Okay. Thank you.
Yes, its been steadily improving over the past two years and I think we secure the most drilling permits or actually any operator in northeast BC Theyre, just not always exactly where we want them.
Speaker Change: Then second question and recognize that we're in the early days of U S and Canada tariffs happening and this might be a bit of a longer term question, but.
Speaker Change: I'm wondering if you've seen any positive discussions emerging as it relates to additional LNG projects, taking flight hour pipeline construction or even project expansions NBC in particular to.
And I think.
The granting of permits in the finalizing of that process.
The <unk> and the BC government is scheduled to happen in 2025, so that we will get more permits in those HB one.
Speaker Change: To start here so.
Sure.
Speaker Change: I would say there have been positive discussions nothing concrete yet.
Area so.
I think Scott anything you wanted to add to that.
Speaker Change: I think it is pretty clear that Canada needs to look after itself and one of our best opportunities.
<unk> been approved and it's moving forward I think we will see we will see real evidence of that here in the near future.
Speaker Change: Is growing oil and gas volumes and diversifying our markets I think.
Okay. Thank you.
And then second question and recognize that we're in.
Speaker Change: Something like 75% of Canadian support building more pipeline so.
Early days of U S and Canada tariffs happening and this might be a bit of a longer term question, but I'm wondering if you're seeing any positive discussions emerging as it relates to additional LNG projects taking flights.
Speaker Change: This is the right time.
Speaker Change: Our federal and provincial governments need to move quickly to improve and support these new eat growth egress projects I think they are in the national interest.
Our pipeline construction.
Speaker Change: And the Canadian producers.
Or even project expansions NBC in particular.
Speaker Change: Are amongst the.
To start here so.
Speaker Change: The most environmentally responsible producing group in the world and we continue to improve our emission performance. So yes.
Sure.
I would say there have been positive discussions nothing concrete yet.
Speaker Change: Yes, youre right in this more insular and competitive world that we apparently have entered into we need to take advantage of the extensive resources, we're blessed with.
I think it is pretty clear that Canada needs to look after itself and one of our best opportunities.
We believe on the gas side.
Is growing oil and gas volumes and diversifying our markets I think.
Speaker Change: If you include LNG, Canada phase, one and phase two because it's not quite on stream yet.
Something like 75% of Canadian support building more pipeline so.
Speaker Change: And build one additional pipeline a little optimizing on existing pipelines, we can grow our overall industry natural gas production, Canada by 50% by 2030.
This is the right time.
Our federal and provincial governments need to move quickly to approve and support these new <unk> gross egress projects I think they are in the national interest.
And the Canadian producers.
Speaker Change: That doesn't include a whole bunch of other growth projects that you can dream about so we're advocating on our front.
Are amongst the.
The most environmentally responsible producing group in the world and we continue to improve our emission performance. So yes.
Speaker Change: For build out on the natural gas side and long and short of it.
Yes, youre right in this more insular and competitive world that we apparently have entered into we need to take advantage of the extensive resources, we're blessed with.
Speaker Change: It's apparent we need to look after ourselves and we have la.
Speaker Change: Lots of ways to do it.
Speaker Change: Okay. Good thank you.
We believe on the gas side.
If you include LNG, Canada phase, one and phase two because it's not quite on stream yet.
Speaker Change: Thank you and your next question comes from the line of Josh Josh Silverstein from UBS. Please go ahead.
And build one additional pipeline a little optimizing on existing pipelines, we can grow our overall industry natural gas production in Canada by 50% by 2030.
Josh Silverstein: Yeah. Thanks, good morning, guys.
Josh Silverstein: Just looking at the balance sheet and thinking about the return on capital profile for this year do you plan to use $200 million of free cash flow to get to the $1 $5 billion net debt target or will 100% of the free cash flow to go back to shareholders in the form of the special dividends.
That doesn't include a whole bunch of other growth projects that you can dream about so we're advocating on our front.
For build out on the natural gas side and long and short of it.
Josh Silverstein: I mean, I think the answer is we'll slowly bring our debt down in small increments over the next 12 to 18 months to that $1 $5 billion level some of that might come about through a little bit stronger product prices, but India, we're still committed to the SaaS.
It's apparent we need to look after ourselves and we are.
Lots of ways to do it.
Okay. Good answer.
You kind of back.
Thank you and your next question comes from the line of Josh Josh Silverstein from UBS. Please go ahead.
Josh Silverstein: Majority of our free cash flow being distributed back to our shareholders.
Yeah. Thanks, good morning, guys.
Josh Silverstein: The good news is it looks like we have quite a bit more of a free cash flow.
Just looking at the balance sheet and thinking about the return on capital profile for this year do you plan to use $200 million of free cash flow to get to the $1 $5 billion net debt target or will 100% of the free cash flow to go back to shareholders in the form of the special dividends.
Josh Silverstein: And 25, then 24, and we will see where that goes and we just need to get these last two hubs.
Josh Silverstein: Doing a little better on the pricing front and we're still optimistic that that's going to occur over the balance of 2025, So we'll see where it goes the other point I would add.
I mean, I think the answer is we'll slowly bring our debt down in small increments over the next 12 to 18 months to that $1 $5 billion level some of that might come about through a little bit stronger product prices, but India, we're still committed to the SaaS.
Josh Silverstein: Year over year, our Terminalling net debt has actually come down. So we have been trending in the exact right direction and I think you can expect a similar cadence going forward.
Speaker Change: Got it thanks for that.
Majority of our free cash flow being distributed back to our shareholders.
Speaker Change: And then maybe just following up on your comment there on the hubs in pricing last year, you guys ramped the rig activity. I think you are at 18 now is the gameplan to stay at 18, and then basically just adjust ducks till timing or are you actually planning to add rigs. This year is any more color there would be great. Thanks.
And the good news is it looks like we have quite a bit more of a free cash flow.
And 25, then 24, and we will see where that goes and we just need to get these last two hubs.
Doing a little better on the pricing front and we're still optimistic that that's going to occur over the balance of 2025, So we'll see where it goes the other point I would add too.
Speaker Change: We're not going to add any more rigs and where we are now one of the decisions we will make during Q2 during breakup.
Speaker Change: We certainly pair down operational activity as do we stay at 17 or 18, and yes, you hit on it.
Yes.
Year over year, our Terminalling net debt has actually come down. So we have been trending in the exact right direction and I think you can expect a similar cadence going forward.
Speaker Change: If prices are slow to respond.
Speaker Change: Then we have the ability to delay fracking.
Speaker Change: You know the the bank.
Got it thanks for that.
Speaker Change: Bath on it 80% of the time to drill.
And then maybe just following up on your comment there on the hubs in pricing last year, you guys ramped the rig activity. I think you are at 18 now is the game plan to stay at 18, and then basically just adjust ducks till timing or are you actually planning to add rigs. This year. So any more color there would be great. Thanks.
Speaker Change: Let's pick on North Montney pad, 80% of the time required is drilling, but 60% of the cost is completions, but we can turn to Pat around in two weeks. So we can.
Speaker Change: Really match the production growth profile to the shape of the pricing curve.
Speaker Change: We're not going to add any more rigs and where we are now one of the decisions. We will make during Q2 during breakup when we certainly pair down operational activity as do we stay at 17 or 18, and yes, you hit on it that if prices are slow to respond.
Speaker Change: And that's what we're going to do.
Speaker Change: Thanks.
Speaker Change: Thank you and your next question comes from the line of fairly Adam Brown. Please go ahead.
Speaker Change: Hi, Mike It I'm.
Speaker Change: Then we have the ability to delay fracking I think you know the the bank.
Speaker Change: I'm just wondering what these tariffs it sounds like there could be more tomorrow, but who knows.
Speaker Change: Bath on it 80% of the time to drill.
But assuming the camera thats still in place.
Speaker Change: Let's pick on North Montney pad, 80% of the time required is drilling, but 60% of the cost is completions, but we can turn to Pat around in two weeks. So we can.
Speaker Change: Do you have to do anything on your hedges or contract for.
Speaker Change: How does it mechanically how does the tariff.
Speaker Change: How are you effective harder or are you affected at all.
Don Hatcher: Really match the production growth profile to the shape of the pricing curve and that's what we're going to do.
Speaker Change: While we are affected it's manageable.
Speaker Change: But it's not nothing and it happens when our gas volumes cross the border and then I guess, the our Ngls in some places across the border as well as you know five we have a mix.
Don Hatcher: Thanks.
Speaker Change: Thank you and your next question comes from the line of fairly Adam Brown. Please go ahead.
Speaker Change: On the NGL side some goes.
Speaker Change: Hi, Mike It I.
Speaker Change: Via Rip it.
Speaker Change: I was just wondering if these tariffs it sounds like there could be more tomorrow, but who knows.
Speaker Change: And gets to the far East Asia Index price, so that's unaffected, but some of our volumes on the NGL side do head. So so I think we're all going to figure out the mechanics of how this works we've done all of our financial analysis and as you said, it's it's manageable at 10%, but we prefer to not have any tariffs.
Speaker Change: But assuming the camera thats still in place.
Speaker Change: Do you have to do anything on your hedges or contract for.
Speaker Change: How does it mechanically how does the tariff.
Speaker Change: How are you affected by it or are you affected at all.
Speaker Change: Okay.
Speaker Change: While we are affected it's manageable.
Speaker Change: Okay fair enough. Thank you.
Speaker Change: There are a couple of indirect impact.
But it's not nothing and it happens when our gas volumes cross the border and then I guess, our Ngls in some places across the border as well as you know five we have a mix.
Speaker Change: That we can't really quantify but certainly currency could work in our favor here that would mitigate some of that also just to amplify a little more on mikes point, although we do have a large export flip.
Speaker Change: On the NGL side some goes.
Speaker Change: Via Rip it and gets to the far East Asia Index price. So that's unaffected, but some of our volumes on the NGL side do head. So so I think we're all going to figure out the mechanics of how this works we've done all of our financial analysis and as you said, it's it's manageable at 10%, but wheat pre.
Speaker Change: <unk> footprint the vast majority of those volumes are going into markets, where there are absolutely no other.
Speaker Change: Available supply sources for those customers. So over time, one would think.
Speaker Change: The pricing would pass through to the consumer.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: <unk> did not have any tariffs.
Speaker Change: Okay.
Speaker Change: Okay fair enough. Thank you.
Speaker Change: Thank you there are no further question at this time I will now hand, the call back to Mr. Scott Griffin for any closing remarks.
Speaker Change: There are a couple of indirect impact.
Speaker Change: That we can't really quantify but certainly currency could work in our favor here that would mitigate some of that also just to amplify a little more on mikes point, although we do have a large export flip.
Speaker Change: Thanks, everyone for attending and we look forward to talk to you.
Speaker Change: Okay.
Speaker Change: Thank you and this concludes today's call. Thank you for participating you may all disconnect.
Speaker Change: <unk> footprint the vast majority of those volumes are going into markets, where there are absolutely no other.
Speaker Change: Available supply sources for those customers. So over time, one would think.
Speaker Change: The pricing would pass through to the consumer.
Speaker Change: Okay.
Speaker Change: I understand thank you.
Speaker Change: Okay.
Speaker Change: Thank you there are no further question at this time I will now hand, the call back to Mr. Scott Griffin for any closing remarks.
Thanks, everyone for attending and we look forward to talking to you.
Speaker Change: Thank you and this concludes today's call. Thank you for participating you may all disconnect.
Speaker Change: Okay.