Q4 2024 Gulfport Energy Corp Earnings Call
Speaker Change: Greetings and welcome to Gulfport Energy Corporation's 4th Quarter 2024 Earnings Conference Call.
At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.
Speaker Change: Thank you and good morning. Welcome to Gulfport Energy Corporation's fourth quarter and full year 2024 earnings conference call. I am Jessica Antle, Vice President of Investor Relations.
Speaker Change: Speakers on today's call include John Reinhart, President and CEO, and Michael Hodges, Executive Vice President and CFO. In addition, Matthew Rucker, Executive Vice President and Chief Operating Officer, will be available for the Q&A portion of today's call.
Speaker Change: I would like to remind everybody that during this conference call, the participants may make certain forward-looking statements relating to the company's financial conditions, results of operations, plans, objectives, future performance, and business.
Speaker Change: We caution you that the actual results could differ materially from those that are indicated in these four looking statements due to a variety of factors.
Speaker Change: Information concerning these factors can be found in the company's filings with the SEC.
In addition, we may make reference to non-GAP measures.
Speaker Change: Reconciliation to the Comparable Gap Measures will be posted on our website.
Speaker Change: An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to John Reinhart, President and CEO.
Speaker Change: Thank you, Jessica. Good morning, everyone, and thank you for joining us on today's call. On behalf of the Board of Directors and all employees at Gulfport Energy, I would like to congratulate Matthew Rucker on his well-deserved promotion to Executive Vice President and Chief Operating Officer.
Speaker Change: This promotion is a recognition of the leadership Matthew has provided the company over the past couple of years in leading the operations team.
Speaker Change: The successes achieved operationally have been paramount in building a culture of continuous improvement, delivering outstanding execution efficiencies and cost reductions throughout our development program.
Speaker Change: We are looking forward to his future contributions to the company as we continue to strive for best-in-class results for the benefit of all Gulfport Energy stakeholders.
Speaker Change: I will begin my comments discussing the 2025 Development Program we announced yesterday alongside earnings, and then highlight a few points that define our strong 2024 performance.
Thank you.
Speaker Change: Building on our momentum from last year, Gulfport's 2025 Development Program reflects significant efficiency gains and portfolio capital allocation optimizations that will allow us to maintain flat total production and flat total base capital invested.
Speaker Change: while substantially growing the company's expected liquids production by 30% year over year.
Speaker Change: The 2025 program is focused on sustaining the company's exposure to a constructive natural gas environment and delivering enhanced hydrocarbon diversification by targeting the lean condensate Utica and low-cost Marcellus condensate windows.
Speaker Change: All resulting in adjusted free cash flow generation that is estimated at today's commodity prices to be more than double compared to the 2024 results.
Speaker Change: And consistent with last year regarding our adjusted free cash flow allocation framework, we plan to return substantially all 2025 adjusted free cash flow excluding discretionary acreage acquisitions through common stock repurchases.
Speaker Change: Total capital spend for the year is projected to be flat and in the range of $370 million to $395 million, which includes $35 to $40 million of maintenance land and leasehold investment.
Speaker Change: Cost Improvement and Capital Allocation to Inventory Additions over the past two years.
Speaker Change: facilitates a 2025 development program that delivers a reduction of our annual operated drilling and completion capital on a per foot of completed lateral basis by approximately 20% when compared to 2024.
Speaker Change: This substantial efficiency gain is driven by roughly half operational efficiencies and service cost improvements, with the remainder being a function of well-mixed optimization.
Speaker Change: The company's operating teams continue to drive efficiencies up and service costs down.
Speaker Change: When combined with the 2025 portfolio allocation towards Appalachia Liquids, while also maintaining our low decline scoop asset production base, the company is able to accelerate activity on similar total capital spend year-on-year.
Speaker Change: Similar to years past, we currently forecast approximately 75 percent of our drilling and completion capital will be allocated in the first half of 2025 and trend lower in both the third and fourth quarters of the year.
Speaker Change: Turning to production, the 2025 plan highlights our transition from delineation to development mode in the Marcellus and includes development targeting the Utica lean condensate acreage recently acquired through our discretionary acreage acquisitions.
Speaker Change: Notably, this is the first year that the company is completing wells in all five major development areas, inclusive of the SCOOP, Utica Dry Gas, Utica Condensate, Utica Lean Condensate, and Marcellus, as noted in the investor deck on slide 11.
Speaker Change: We forecast approximately 50% of the total company turn of lines will be liquids rich weighted during the year.
Speaker Change: Anticipating liquids production defined as combined oil and NGL production will increase over 30% year-on-year based upon the midpoint of our guidance and total in the range of 18.0 to 20.5 thousand barrels per day for the full year.
Speaker Change: In addition, we expect total equivalent production to be relatively flat to full year 2024.
Speaker Change: with an increasing production profile as we progress throughout the year, positioning the company attractively for an improving commodity environment with further potential opportunities for capital and production efficiency improvements in the future years.
Speaker Change: In our investor deck on slide 12, we include a more detailed outlook on our expected 2025 capital and production cadence.
Speaker Change: Shifting to the company's 2024 performance, Golfport achieved strong financial results for the full year highlighted by our high quality resource base, continued focus on operating efficiencies, and attractive adjusted free cash flow generation.
We repurchased approximately 7% of our common shares, outstanding.
Speaker Change: through our ongoing stock repurchase program, while maintaining a strong balance sheet and continuing accretive inventory additions in the Utica Liquids Rich window, adding approximately a year of largely lean condensate inventory.
Speaker Change: After adjusting for free cash flow utilized for discretionary acreage acquisitions, the company allocated substantially all of our adjusted free cash flow to repurchasing our common stock during 2024.
Speaker Change: We're returning 96% of our available adjusted free cash flow to shareholders throughout the year.
Turning to specifics.
full year 2024 capital expenditures, excluding discretionary acreage acquisitions.
Speaker Change: totaled approximately 385 million, and production for the year averaged 1.05 billion cubic feet equivalent per day, both in line with the expectations we set forth with investors at the beginning of the year.
Speaker Change: The company drilled 21 gross wells, which were predominantly focused in the Utica. On the completion side, Gulfport completed and turned to sales 19 gross wells, which included 3 scoop wells, 12 Utica dry gas wells, and 4 Utica condensate wells.
Speaker Change: Alongside yesterday's earnings announcement, we provided longer-dated production history from our four-well condensate pad in Harrison County, Ohio, and we are very pleased with the continuing strong reservoir performance.
Speaker Change: Referring to slide 15 of the investor deck, under our managed pressure approach and following six months or 180 days of production, the late seven wells are exhibiting a relatively flat production profile with minimal daily pressure drawdown.
Speaker Change: As we noted on our third quarter call in November, we elected to increase production rates on two of the four wells to determine the optimal production profile for this pad.
Speaker Change: as well as future nearby development, and concluded additional reservoir productive capacity remains.
Speaker Change: Moving forward, we have the ability to flow at increased initial production rates, preserving long-term well performance, while also maximizing returns.
Speaker Change: We are currently completing our nearby CAGE development and look forward to applying our learnings from the Lake 7 pad to this development, which is expected to come online in late March.
Speaker Change: In addition, on slide 14 of our investor deck, we provided an update on our Utica dry gas well performance with over 12 months production history.
Speaker Change: And as you can see, since we enacted the Managed Pressure Approach in early 2023, the development program has continued to exhibit strong results, yielding higher cumulative recoveries per thousand foot of lateral after an extended production period.
Operationally, we continue to focus on improving efficiency.
Speaker Change: And on the drilling side, we achieved cycle time improvements in total footage drill per day of over 9% year-on-year and over 55% when compared to year-end 2022.
Speaker Change: On the completion side, we also continue to see efficiency improvements in the frac and drill-out phases of our operations, improving average frac pumping hours per day by 25 percent in 2024 and average plugs drilled per day by 46 percent.
Speaker Change: Our operating team's high level of efficiency and cost reductions translate into realized savings for our 2025 development program.
Speaker Change: And we now expect our 2025 Utica per well cost to be below $900 per foot of lateral, or approximately 10% lower than full year 2024.
Speaker Change: On the discretionary acreage front, the company expanded our acreage footprint by investing $45 million in 2024, largely targeting Utica lean condensate acreage within our Belmont County development footprint.
Speaker Change: With our current drilling pace, we added over a year of core, liquids-rich locations, and when coupled with our 2023 efforts,
Speaker Change: and the de-risking of our Marcellus acreage, we have added over four and a half years of high-margin, liquids-rich inventory through delineation and discretionary acreage acquisition efforts.
Speaker Change: The additional inventory provides durable fundamental value to the company, as well as competitive returns with our existing high-quality inventory, as we highlight on slide 15 of the Investor Day.
Speaker Change: We will continue to monitor opportunities to increase our lethal footprint to enhance resource depth and believe these opportunities rank very high as we evaluate uses of free cash flow in 2025.
Speaker Change: In closing, we are proud of the progress and solid foundation the Gulfport team has built and continues to build upon. The company remains focused on continued operational improvements and optimizing our asset development and portfolio allocation in order to maximize free cash flow generation and value for our investors.
Michael Hodges: Now, I will turn the call over to Michael to discuss our financial results.
Michael Hodges: Thank you, John, and good morning, everyone. I'll start by summarizing the key components of our fourth quarter financial results, which highlights the strong financial position of the company as we closed out the year and hit the ground running in 2025.
Michael Hodges: Net cash provided by operating activities before changes in working capital totaled approximately $185 million during the fourth quarter, more than triple our capital expenditures for the quarter, and allowing us to make significant common share repurchases, all while maintaining our balance sheet strength.
Michael Hodges: We reported adjusted EBITDA of $203 million during the quarter and generated adjusted free cash flow of $125 million for the same period, driven by robust natural gas pricing, strong liquids production, and our operating cost excellence.
Michael Hodges: Said another way, we delivered our best quarter of 2024 from an adjusted free cash flow perspective and utilized the resulting cash to add incremental high-quality inventory while also buying back over 2% of our market capitalization through our share repurchase program. Needless to say, it was an outstanding quarter for Gulfport.
Michael Hodges: Cash operating costs for the fourth quarter totaled $1.19 per million cubic feet equivalent, better than analyst expectations, and within our full year 2024 guidance range.
Michael Hodges: In addition, we are pleased to announce that we reached an agreement in early 2025 with a high-quality midstream provider for the gathering, processing, and fractionation
of our Mercellus development.
Michael Hodges: and we'll have that solution in place for the upcoming four-well Marcellus turn-in line planned for mid-2025, enhancing the development economics by enabling the extraction and sales of our valuable NGLs.
Michael Hodges: The company's focus on more liquids-rich activity and the resulting higher weighting of our liquids in our production mix
Michael Hodges: will lead to a slight increase in our 2025 per unit LOE and midstream expenses.
Michael Hodges: including gathering, processing, transportation, and compression costs over full year 2024. And we currently forecast per unit operating costs will total in the range of $1.20 to $1.29 per MCFE.
Michael Hodges: Despite these slightly elevated costs, it is important to highlight that this increases more than offset by the strong margin performance and value contribution from liquids, leading ultimately to improved cash flows.
Michael Hodges: Our all-in realized price for the fourth quarter was $3.36 per MCFE, including the impact of cash settled derivatives.
Michael Hodges: This realized unit price is a $0.57 premium to NYMEX Henry Hub Index prices, driven by a differentiated 2024 hedge position, diverse marketing portfolio for natural gas, and the pricing uplift from our liquids portfolio in both of our asset areas.
Michael Hodges: We realized a cash hedging gain of approximately $42 million for the quarter, demonstrating the value of our 2024 hedge book and its effectiveness in bolstering our cash flows.
Michael Hodges: With respect to our current hedge position, we have downside protection covering roughly 50% of our 2025 natural gas production at an average floor price of $3.62 per MMBTU, securing a baseline amount of our forecasted free cash flow generation.
Michael Hodges: That said, we remain constructive on gas prices in 2025 and 2026, carefully choosing to maintain significant upside by utilizing collar structures on nearly half of those downside hedges in 2025 that allow us to participate in prices above $4.00 per mm BTU.
Michael Hodges: We have strategically positioned our hedge book in both 2025 and 2026 with less overall production hedged, and with a significant portion of collars in our overall hedge book, as we have been believers in an improving gas macro for 2025 and beyond for some time now.
Michael Hodges: On the basis front, we continue to lock in our natural gas basis exposure, providing pricing security at our largest sales points, in addition to the risk mitigation our diverse portfolio of firm transportation offers.
Michael Hodges: We provide further details of our full derivative position on slide 22 of our investor presentation and later today when we expect to file our 10-K.
Michael Hodges: Turning to the balance sheet, our financial position remains very strong, with trailing 12-month net leverage ending the year below one times.
Michael Hodges: As of December 31st, 2024, our liquidity totaled $900 million, comprised of $1.5 million of cash plus $898.2 million of borrowing-based availability.
Michael Hodges: Our liquidity today is more than sufficient to fund any development needs we might have for the foreseeable future and provides tremendous flexibility from a financial perspective going forward.
Michael Hodges: With respect to EBITDA and adjusted free cash flow generation, the recent rise in natural gas prices, along with our continuous operational improvements and more efficient capital program, position 2025 to be a transformative year for Gulfport from a cash flow perspective.
Thank you.
Michael Hodges: During the fourth quarter, we repurchased approximately 491,000 shares of Common Stock for about $80 million, which includes direct repurchases of Common Stock from our largest shareholder, totaling approximately 230,000 shares.
Michael Hodges: which allowed us to capture larger blocks of unrecognized equity value at a discount to market prices without impacting our public flow.
Michael Hodges: As of February 20th and since the inception of the program, we have repurchased approximately 5.6 million shares of common stock at an average price of $105.57.
Michael Hodges: lowering our share count by 17% at a weighted average price nearly 41% below today's opening share price.
Michael Hodges: We currently have approximately $407 million available under the $1.0 billion share repurchase program and remain steadfast in our free cash allocation.
Michael Hodges: Free Cash Flow Allocation Framework to continue to return substantially all of our adjusted free cash flow, excluding discretionary acreage acquisitions, to our shareholders through common stock repurchases.
Michael Hodges: Turning to our year-end reserves, while the lower commodity price environment impacted our overall SEC reserve volumes,
Michael Hodges: The company's approved reserve base increased by approximately 6% when excluding the impact of pricing revisions through the addition of new reserves, positive performance revisions, increases in working interest as a result of our successful leasing efforts, and continued efficiencies in our operations.
Michael Hodges: Utilizing our 2024 reserve report at a flat $3.50 per MMBTU and $70 per barrel of oil case, and keeping in mind that the reserve report is limited to five years of development.
Michael Hodges: Our PV-10 value totals approximately $3.8 billion dollars, a significant uplift from the SEC pricing case that is run at $2.13 per MMBTU and $76.32 per barrel of oil.
Michael Hodges: In addition, the PB10 value of the 2024 year-end proved reserve represents an increase to the PB10 value of the 2023 proved reserves at the same flat price case, which is a reflection of the high-quality inventory additions and the significant operational improvements we have made over the last 12 months.
Michael Hodges: Similar to the third quarter of 2024, under the full cost method of accounting for oil and gas properties, we were required to record a non-cash impairment during the fourth quarter based upon the future value of our reserves, utilizing the low SEC natural gas price I mentioned previously.
Michael Hodges: However, the underlying value of our assets remains strong, as evidenced by the PV10 value of the reserve report at the flat price case I just mentioned, and we remain confident in the long-term quality of our assets.
Michael Hodges: In summary, 2024 was a strong year for Gulfport and our results reflect a consistent theme that we continue to reiterate. The team's exceptional operational performance continues to deliver superior results while maintaining a healthy financial position.
Michael Hodges: As we look ahead to 2025, and as John already mentioned,
John Reinhart: the combination of our optimized development program and the improving commodity price environment.
John Reinhart: provides Guilford with the ability to deliver meaningful growth in free cash flow generation, and as shown on slide 6 of our investor presentation, we continue to generate premium free cash flow yields relative to our peers with the five-year free cash flow capacity capable of retiring our market cap at its current level.
John Reinhart: With that, I will turn the call back over to the operator to open up the call for questions.
John Reinhart: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
John Reinhart: You may press star 2 if you would like to remove your questions from the queue.
John Reinhart: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys.
One moment please while we poll for questions.
John Reinhart: The first question comes from the line of birth donors with two securities. Please go ahead.
Speaker Change: Hi, good morning, guys. The new liquids volume that you outlined, full year 25, looks fairly strong, certainly versus us in the street.
Speaker Change: So could you maybe talk about if that's a peak level, or can you hold it flat, or maybe even grow it with your current assets?
Speaker Change: And then to make it simple on the operator, I'm going to bundle my second question into this. Does the liquids growth and focus change the way you're looking at potential bolt-ons on a gas versus liquids basis? And does it make more sense to focus on PDP-heavy or undeveloped assets? Thanks.
Michael Hodges: Yeah, hey Bert, this is Michael. I'll take the first part and then I think John can handle the second part of that question. I think the liquids growth, the 30% that we talked about is
Michael Hodges: of our production profile for the year. I think the liquids will generally follow that same shape.
Michael Hodges: Because of the timing of the turn in lines, we may be a little bit oilier early in the year. With that liquids production, we may be a little bit more NGL heavy later in the year. But as we look out into the future, we certainly have a lot of development this year in the liquids windows and expect that going forward, we have the option again to continue to allocate towards those areas and deliver more liquids should we choose to do that. But the nice thing that we've talked about over and over again is we have that flexibility to move between windows and this year is going to be a bit liquids rich, but we'll monitor
Michael Hodges: on the gas side as well. And we can certainly pivot there. So I'll let John take the second part of that question.
John Reinhart: The philosophy is somewhat attractive. What would really be attractive to the company is a sizable, undeveloped portion of any kind of bolt-on opportunity that may present itself. And it's the same philosophy as we allocate capital towards the discretionary acreage. It's really just using the prowess of the team to extract value from that.
So hopefully that answers your question and certainly appreciate it.
Certainly does. Thanks, team.
Yep, bundled them both in there, thank you.
Thank you.
Speaker Change: Next question comes from the line of Tim Rizwin with KeyBank Capital Markets. Please go ahead.
Speaker Change: Hi, this is John for Tim. Thanks for taking our questions.
on.
Speaker Change: It looks like you'll be turning in line around 30% more lateral footage on just 6% higher GNC costs this year, this is on top of what looks like shorter laterals for some of the tills this year. We're wondering, do you see this front-loaded CapEx program as conducive to driving these capital efficiencies further, and do you see it as the norm in the years ahead?
Speaker Change: Yeah, I think I appreciate the question John and You know the team has been very focused and we remain very focused on capital efficiency It's it's you know the return on the cash employed. It's been a kind of mainstay tenant for the company this week
Speaker Change: assess various development options. So, front-loaded capital programs certainly deliver that. And I'll tell you that a lot of care and time goes into, whenever we plan out and develop these, the timing of the turn-in line, specifically what window of maturity you turn in line at what time, to maximize the value of the company for the cash flows throughout the year. So, yes, I think whenever you look at things from a capital efficiency perspective, that front-loaded capital program, generally speaking we've been consistent with that through the last couple of years.
Speaker Change: and I would envision us being consistent with that for the foreseeable future.
Thank you. Thank you.
Speaker Change: Are you comfortable with just returning the majority of this cash as repurchases?
Speaker Change: Hey, this is Michael. I'll take the question. Thanks, John. I think our framework has been really effective for us. I think we meet with our board and continuously assess all the options for our free cash flow and look at those on a rate of return basis and discuss which ones we think actually deliver the best result for our shareholders. And over the last couple of years,
Speaker Change: adding to the inventory of the company and buying the shares has both been extremely successful. And so I think that's front and center for us.
Speaker Change: That said, we always assess opportunities. There's packages around in the market that are small, medium-sized, large. They have PDP components. They have undeveloped components, as John talked about on the last question. And so we take a look at those. But I think, again, with where we feel like our equity trades and the value that we think is still unrecognized, along with the opportunity organically to go out and add locations, those are high bars to clear. So, you know, we'll continue to assess those things. I think there's always those other options out there, and if the right thing comes along, then certainly look at it.
Speaker Change: I feel like what we've done so far is making a lot of sense for us and likely to continue that as we go forward.
Thank you.
That makes sense. Appreciate the time.
Speaker Change: Thank you. Next question comes from the line of Carlos Escalante with Wolf Research. Please go ahead.
Carlos Escalante: Hey, good morning guys. How are you guys doing? Congratulations, Matt, first of all. I'm starting there purposely because my question is to you, part of the job. If I take the Lake Seven pad as a proxy, guys, and I see how you opened the tabs on day 120,
Carlos Escalante: and all that it means regarding the pressure drawdown and productivity.
Carlos Escalante: Does that say anything or does that invite you to perhaps how you frame your Utica development moving forward? Versus what you did with the late seven pads specifically
Carlos Escalante: Yeah, thanks Carlos appreciate that It certainly does I think it's something that
Carlos Escalante: You know, we've talked about a long time on the choke maintenance program and the Utica dry gas, certainly something we have believed in.
Carlos Escalante: and the liquids window, tested that out on the lake. As you noted, after 120 days, started to increase those rates a little bit more. I think it's well known in the public space that there's other piers out there that open them a lot more aggressively. So for us, it was an ideal time to test.
Carlos Escalante: Incrementally higher rates to understand what that drawdown looks like and understand
Carlos Escalante: how that condensate yield reacts. I think we were very encouraged by the results of that over the last several months and have currently opened up a few other wells on that pad as well. So I fully would expect us to, you know, slightly tweak, I would say, expectations moving forward on new development in that area, probably somewhere in between, but certainly...
Carlos Escalante: For us, something that we'll lean into a little bit more on the tight curve shape.
Speaker Change: Wonderful, thank you Matt. My second question is regarding your cadence on your allocation to your
Carlos Escalante: different five operational areas. So you're very specific, obviously, in how you intend to allocate your capital this year.
Carlos Escalante: And it comes to attention that you're signaling on the Marcello specifically is for 8 drilled wells and you're only turning in line 4. However, when you signal to the market your aggregated inventory depth for Marcello's, you... ... ... ... ... ... ... ... ...
You mentioned incremental two years.
and that's based on a cadence of...
Carlos Escalante: 25, 20 wells, right? So I wonder why you've decided to take the approach of signaling
Carlos Escalante: them ourselves specifically this way, when in reality, if I take 2025 as a proxy, your turning line numbers is presumably less, and if so, is there a change in 2026 that we could expect to see, knowing that obviously you're monitoring the macro at all times?
Carlos Escalante: course we've got you know those guys have to lay lines to our pads and we've got to develop in a responsible and prudent way and and so in any given area we're going to be developing at a different pace and so rather than constantly talk about inventory and different windows and different manners we just talk about it in terms of corporate inventory but the reality is we'll be developing that Marcellus asset over the next call it five to six to seven years.
Carlos Escalante: utilizing those locations that I just laid out. So two and a half years I'd call it a corporate inventory, but yes certainly going to be in that area for longer than that.
Wonderful. Thank you guys.
Speaker Change: Thank you. Next question comes from the line of Brian Velie with Capital One Securities. Please go ahead.
Speaker Change: that oil kind of starts to pick up really in earnest in the second quarter. NGLs follow more in the third quarter.
Speaker Change: Tell us, come online on the dry gas side, because it feels like there would be quite a bit of pent-up production on the gas side heading into pretty early 26. Is that something that, you know, not to get too far ahead of ourselves to 26 talk, but something that we should kind of think about heading into 26? Or are those kind of in your hip pocket?
426 to determine how you want to bring those on.
Speaker Change: We try to optimize the timing of those to impact production. So you're going to necessarily see Q2, Q3, to your point, and even Q4, lead into a little bit stronger production profiles for those quarters, generally speaking. This particular year, the function of our Q1 volumes was simply just natural decline, quarter on quarter primarily, and then you'll see the cadence of that production tick up as you move throughout the year.
Speaker Change: So, you know, I wouldn't really want to comment on 26 yet simply because there's still a lot of optimization for the program to do yet. But you're absolutely correct that we're positioning the company very well towards Q3, Q4 in a very constructive commodity environment for production levels.
Speaker Change: Okay, thanks. And I guess with that lever to grow there, the implications for capital efficiency that you picked up in 25, do you still see any remaining low-hanging fruit? I mean, you can only complete for so many hours in a 24-hour day and you're pretty close to the cap, but is there anything else that maybe we could look forward to or hear more about as the year progresses?
Speaker Change: technologies available, and just getting better at what we do on the ground. So, I believe there's fundamentally always opportunity for efficiencies to grow, but having said that, we're very proud of the accomplishments with the well cost and the efficiency reductions over the past couple years, because it's really added tremendous value to the fundamental, you know, core business.
Speaker Change: So, I suspect there's more to come, probably more moderate gains versus these 10 and 20 percenters that we're talking about, but these guys out in the field never cease to surprise me with some upside there. So certainly appreciate the question, and Matt's got his work cut out for him to continuously improve on this performance.
Speaker Change: Got it. Thank you very much for the call, John. We appreciate it.
Thanks a lot, Brian. Thanks, Brad.
Speaker Change: Thank you. Next question comes from the line of Noah Hungness, with the Bank of America. Please go ahead.
Speaker Change: Morning, everyone. I was just hoping for my first question, you guys could kind of walk me through slide six. I think the main thing that really sticks out to us here is your ability to maintain your natural gas leverage to a constructive macro outlook while increasing liquids production. Are we kind of thinking about that the right way?
for joining us today.
Speaker Change: We think a pretty compelling indication at what we're capable of.
Speaker Change: Great to hear. And then for my second question, I was just kind of hoping you guys could talk about what's underwriting your change in your NGL realizations. I saw it got bumped up quite a bit here. Is that just because of the wells that you're turning in line this year?
Speaker Change: to WTI, that certainly pulls up on that percent of WTI realization. And then lastly, we announced this morning our new Marcellus Agreement, and so we've been able to negotiate some favorable terms there as well, which again, relate to ethane and will allow us to continue to have what we think is a differentiated NGL barrel versus what a typical Bellevue barrel looks like. So just a function of our marketing team's negotiations and some really good outcomes that we've seen in those areas.
Great. Thanks so much.
Thank you.
Speaker Change: Thank you. As there are no further questions, ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to John Reinhart for closing comments.
Speaker Change: Yep, thank you for taking the time to join our call today. Should you have any questions, please don't hesitate to reach out to our investor relations team. We hope you have a great day. This concludes our call.
[music]