Q1 2025 Baytex Energy Corp Earnings Call
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Speaker Change: I would now like to turn the conference over to Brian Ector, Senior Vice President, Capital Markets and Investor Relations. Please go ahead.
Brian Ector: Thank you, Dave. Good morning, ladies and gentlemen. And thank you for joining us to discuss our first quarter 2025 financial and operating results.
Brian Ector: I refer you to the advisories regarding forward-looking statements, oil and gas information, and non-gavel financial and capital management measures in yesterday's press release.
Brian Ector: All dollar amounts for reference in our remarks are in Canadian dollars unless otherwise specified.
Eric: and Bowling are prepared remarks. We will be taking questions from analysts. In addition, if you're listening in today via the webcast, you'll have the opportunity to submit an online question and time permitting, we will strive to answer your question. But that I would now like to turn the call over to Eric.
Eric: Thanks, Brian . Good morning, everyone. Welcome to our first quarter 2025 conference call.
Eric: In the first quarter, we efficiently executed our exploration and development program, delivering results consistent with our full-year plan.
Eric: Despite a challenging macroeconomic environment, we continue to generate free cash flow and deliver returns to shareholders.
The broader operating landscape remains complex.
Eric: As global crude oil markets face macroeconomic uncertainty, concerns over tariffs, global trade tensions and OPEX recent decisions to increase supply.
Eric: Benchmark WTI crisis have also softened recently trading in the US $55 to $60 per barrel range down from a high of $80 in early January .
Eric: In response to these headwinds, we are focused on managing what's in our control.
Eric: This includes focusing on safe and efficient operations and a disciplined approach to capital allocation.
Eric: Yesterday, we outlined adjustments to our 2025 plan to enhance free cash flow and strengthen our balance sheet.
Eric: R 2025 E&D Capital Budget is set at 1.2 to 1.3 billion.
Eric: Dollars, and supports annual production of 148,252,000 BLE per day.
Eric: In light of the current commodity price environment, we anticipate full year capex and production to trend toward the low end of these ranges.
Eric: With these ranges, we expect to generate approximately $200 million of free cash in 2025, assuming $60 per barrel WTI for the balance of the year.
Eric: This represents an improvement over our original plan and highlights the resiliency of our business in this lower price environment.
Eric: In addition, we are refining our shareholder return framework to prioritize the balance sheet.
Eric: In the near term, we plan to allocate 100% of our free cash flow to debt repayment after funding our quarterly dividend.
Eric: Given the volatile pricing environment, we will maintain a prudent approach to shareholder returns which has historically comprised.
a mix of share buybacks and quarterly dividends.
Eric: With that, I'll turn the call over to Chad Kalmakoff to discuss our financial results.
Chad Kalmakoff: Thanks, Eric. In the first quarter, 84% of our production was weighted toward crude oil and liquids. Reaffirming our position as one of the most oil-lovered companies in North American industry sector.
Speaker Change: This leverages evident in our sensitivity to WTI prices, where every $5 per barrel change, the impacts or annual adjusted funds flow by approximately 225 million on an on-page basis.
Speaker Change: In the current pricing environment, our hedging program is proving effective in mitigating revenue volatility caused by fluctuations in commodity prices.
Speaker Change: For the balance of 2025, we have hatched approximately 45% of our net crude oil exposure using two week haulers with an average four price of $60 per barrel.
Speaker Change: Due to the timing of cabal expenditures, our pre-cash flow was typically weighted to the second half of the year.
Speaker Change: We were pleased to generate 53 million and recast one of the first quarter. Of this, we return 30 million to shareholders through the repurchase of 3.7 million common shares and the payment of our quarterly cash dividend of 2.25 cents per share.
Speaker Change: Black comparison, we generated no free cash flow in the first quarter of last year.
Speaker Change: Over the past seven quarters, we have returned a total of 580 million shareholders. We repurchased approximately 11% of our outstanding or shares of standing and pay total dividends of $127 million.
Speaker Change: Strengthening our balance sheet remains a top priority. Our pace of debt repayment reflects both the free cash flow generation and the impact of the Canadian U.S. dollar exchange rate budgetations which affect the translation of a U.S. dollar denominated debt.
Speaker Change: As of March 31st, 2025, our net net was $2.4 billion, representing a 10% reduction over the last 12 months.
Speaker Change: On a US dollar basis, our net debt decreased by approximately 15%.
Speaker Change: We have significant financial flexibility supported by both substantial credit capacity and strong long-term note maturity schedule. Our credit facilities total US 1.1 billion, approximately 1.5 blank Canadian, and are less than 20% drawn and mature in May of 2028.
Speaker Change: Importantly, these are not worry-based facilities that do not require annual or semi-annual reviews. Additionally, our earliest no maturity is until April 2013.
Speaker Change: Let me now turn the call over to Chad Lundberg to discuss our operating results.
Speaker Change: Thanks, Chad. We're pleased with the results of our first quarter program, delivering production of 144,200 BoE per day, which is a 2% increase in production per share compared to the Q1 2024.
Speaker Change: Well, first quarter production was slightly lower year over year due to weather-related disruptions and the corroborate thermal disposition. We remain on track with our full-year plan.
Speaker Change: Exploration and Development expenditures totaled $405 million, consistent with guidance, and we brought 96 wells on stream.
Speaker Change: In the Eagle Ford, our development program largely focused on the black oil to condensate windows of our acreage, where we brought 16 wells on stream, including 12 operated.
Speaker Change: For 2025, we are targeting a 7% improvement in operated drilling and completion costs per completed lateral foot compared to 2024.
Speaker Change: in our Canadian Light Oil Business Unit. We are excited about our Pemana du Rene development.
Speaker Change: Two of the three pads have been drilled, totaling six wells, including our longest wells in the play at more than 24,000 feet, total measured depth.
and 13,500 feet of lateral length.
Speaker Change: Completion Operations, Commence, mid-April, and we expect to bring these wells on stream during the second and third quarters.
Speaker Change: in the Viking 42 Wells were brought on stream in the first quarter.
Speaker Change: and our heavy oil business unit, Peevine, continued to deliver top well results.
Speaker Change: We brought on stream 12 Clearwater Wells at Pevine, 4 Wells at Peace River, and 12 Wells across the broader, Madville Group in Lloyd Minster.
Speaker Change: As we progress to the year, our operating teams will continue to focus on safe and efficient development across our portfolio.
Eric: With that, I will turn the call back to Eric for his closing remarks.
Thanks, Chad.
Eric: Despite ongoing market volatility and uncertainty, our business remained resilient. We have a strong portfolio of assets in the Eagleford and in Western Canada, supported by robust financial flexibility and well-structured debt maturity profile.
Eric: At yesterday's annual general meeting, we were encouraged by the strong shareholder support. However, despite solid operating performance, we recognize that this is not reflected in the value of our stock.
Eric: We are not satisfied, and addressing this fact remains a key priority.
Eric: The steps outlined today, reducing capital spending, enhancing pre-cash flow, and accelerating debt repayment, help demonstrate our commitment to creating long-term value.
Eric: Looking ahead, we remain focused on disciplined execution and ensuring that Baytex is well positioned to navigate current challenges while delivering sustainable returns over the
Dave were ready to open the call for analyst questions.
We will now begin the analyst question and answer session.
Eric: To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request to submit your question and writing, please use the form in the lower right section of the webcast frame.
Eric: If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question, please press star and then two. Our first question comes from Menno Hulshof with TD Cowan. Please go ahead.
Menno Holshoff: Good morning everyone and thanks for taking my question. I'll start with the obvious one related to CapExif. If oil were to to fall to $50 how much could you realistically?
Menno Holshoff: Pull from the $1.2 billion budget before production declines start to set in and which assets would be that the first to have capital pulled and I suppose on a on a related note, what is your current corporate decline rate. Thank you.
Speaker Change: Okay, so Menno, I'm going to take the CapEx question first.
Speaker Change: You know, in light of WTI trading, you know, in this kind of mid-50s range recently.
Speaker Change: We flexed our capital program to low low, and it's all very fresh, like this oil price were along with some of the macroeconomic tensions are all pretty fresh, and so...
Speaker Change: We're monitoring the situation, but we have lots of flex in our capital.
Um...
Speaker Change: You know, some of which we have exercised with this kind of move to the low-end to capital guidance, which will result in a move to the low-end to production guidance.
Speaker Change: But much of which we still have a lot of flexibility.
Speaker Change: Let me give you an example and purely an example because it's not in our plan.
Speaker Change: But we're in the process now of drilling our third three well pad in Duvernay and we're in the process of completing the first pad in Duvernay and as an example of the kind of flex.
Speaker Change: We could duct those DuVernay Wells and carry them later into the year, or even out of the year as duct inventory for a future opportunity. That's the nature of it, but those sorts of things exist.
Speaker Change: across our eagle bird as well. And so, you know, I think the flex and the capex remains. We've talked about this in the past.
Hatchbook through 2025 also continues to support the business.
and you know, I would say just as a as a corollary to this.
Speaker Change: Particular line, I would point out that the CAPEX we removed so far from the program.
Speaker Change: has come primarily out of the Eagle Fert a couple pads out of the Eagle Fert and then five wells out of the biking.
Speaker Change: Let me kick it back to you, Menno, to see if that closes out the question. I think you had a question around decline rate as well, corporate decline rate.
Mano: Yeah, last I out, last we chatted, I think it was in the low 30s.
because that's sound about right still.
Yeah, the corporate decline rate sits right at about 35 [inaudible]
Okay.
Speaker Change: Terrific. And then since you touched on the on the duver name, maybe maybe I'll take my next question there it sounds like everything is moving in the right direction in terms of drilling activity well results as you indicated there's there's quite a bit of flex in that program but can you maybe just speak to where things generally stand in terms of the build out of. [inaudible]
Speaker Change: Infrastructure, Egress, Water Licensing, all of those sorts of things to support your growth plan. I mean, it's a volatile market as you talked about, Eric, maybe we're back to $65 next week, who knows. But maybe you could just kind of walk us through the broader plan there. Thank you.
Sure. Sure. Thanks, Mano. We are building...
You know
Speaker Change: Central Production Facility approach, so kind of think Hobben spoke approach, so the Central Production Facilities
Speaker Change: You know, we'll we'll be built out through the development program early on and then as we continue to develop around those CPS they'll just those incremental paths will be tied into the central production facilities.
Speaker Change: So the later wells will benefit from taking advantage of available capacity in the CVS as that capacity comes.
Facilities in conjunction with the three, three-well pads.
Speaker Change: They told built-in that the facilities, the incremental facilities capitals all built into the current plan.
Speaker Change: and it's really the kind of pace that allows us to invest in the facilities, capital, tie-ins and additional infrastructure along the way together with our new partnership with Gibson, which we announced a quarter or so ago.
Terrific. Thanks, Eric. I will turn it back.
Thanks, Menno.
Speaker Change: And the next question comes from Dennis Fong with CIDC World Markets. Please go ahead.
Dennis Fong: Hi, good morning, and thanks for taking my questions. My first one maybe draws off of a little of that discussion around the hedging program.
Dennis Fong: I understand that you're about 45% hedged at least for portion of the majority of 2025.
Dennis Fong: Can you talk towards some of your end goals around your commodity risk management program? What are you specifically targeting around sustainability? Would you be interested in hedging more? Do you feel comfortable about today's level? And I've got a second question as well.
Speaker Change: Okay, yeah, let me take that one first so I don't cut off your opportunity to ask the second dentist. The hedging has always been structured to be anchored to the balance sheet and the asset bank, so the portfolio.
Speaker Change: and what I mean when I say that is the $60 floor that we put in a simple two-way collar structure is meant to kick in and begin contributing hedge benefits.
when we began to consider cutting capital from...
Speaker Change: You know the projects that would have been funded at a higher price so really to do exactly what we're demonstrating now in this price environment in the 50s we have you know hedge revenues. Thank you.
Speaker Change: and those give us time and blunt or mitigate the sharpest impacts of the falling price file, give us time to make the capex changes necessary while the portfolio is still strong and so
Speaker Change: The 45% is anchored to the balance sheet, essentially what we said was, you know, as long as leverage remains above one turn, we will maintain kind of 40 to 50% leverage on or sorry 40 to 50% hedging on our net crew.
Speaker Change: Total, you know, total accurate production. We also have gas edges and basis edges and things like that that are available for review, but for the sake of illustration, the point is we stay at 45%.
Speaker Change: through 2025 and that protects us at 60. So it's both anchored to the balance sheet and anchored to the quality of the assets.
Speaker Change: In terms of going out in 2026 or hedging at higher floors, we would like to do both.
Speaker Change: The difficulty is always, when you take a higher floor, you have to accept a lower ceiling in this two-way collars structure that's fundamental, of course. The other problem is because TI has been drifting down into the right for a period of time.
Speaker Change: and a lot of the price action when it hasn't been drifting down has been in the very short period of contract.
Speaker Change: There hasn't been a very good opportunity for us to extend this $60 floor out into 2026. We get an opportunity, we'll absolutely take it, according to our hedge structure.
Speaker Change: Great. Great. Appreciate that color and context there. My second question is just really around, I guess around the balance sheet. And from your prepared remarks, we frankly agree on
Speaker Change: Not really having any concerns around debt maturity, but can you talk about, like, an understanding that one of the inputs is obviously commodity price, but can you talk towards the inputs around your decision to shift?
Speaker Change: 100% of accessory cash flow after the dividend towards debt repayment. Is this purely commodity driven? Is there like a debt level that you're focused on before you kind of re kind of think about shifting back towards share by back and repurchases?
Yeah, thank you.
Speaker Change: We consider the cherry purchasing plan more of a discretionary plan and when prices fall and appear to be, appear to be weak, you know, in the near term forward.
price structure.
It seems like that discretionary shift away from share buybacks.
Speaker Change: and in favor of continued debt reduction and, of course, funding the dividend.
Speaker Change: seemed like the prudent thing for us to do, so while that repayment is our near-term priority, our shareholder return framework continues to include the dividends and when it's appropriate share buybacks, we just thought at this moment in time.
Speaker Change: It was more appropriate to focus on funding the dividend and focusing on debt reduction. So, we'll continue to carefully monitor the market conditions and provide updates along the way. But we wanted to focus on...
Speaker Change: You know, on, on de-laboring for long-term shareholder value creation, staying disciplined on how we allocate which I've talked about a little bit earlier.
Speaker Change: We do point out in parts of our investor debt that, you know, we're sort of differentiating between kind of near-term and long-term. In the long-term plan, we absolutely believe that share buybacks have a place.
Speaker Change: In a short run in the near term, we think this is the most prudent use.
Speaker Change: Thanks, Eric. I really appreciate that that color as well. I'll turn it back.
Speaker Change: Appreciate it, Dennis. Thank you. And the next question comes from Greg Pardy with RBC Capital Markets. Please go ahead. Yeah, thanks. Good morning. Maybe to build off that a little bit.
Greg Party: Eric, could you speak to just what the quarterly cadence looks like in terms of CapEx and maybe the equivalent production over the year or the balance of the year?
Yeah, good morning, Greg.
Greg Party: We're looking at, so let's just, let's just anchor on Q1, it's in the rear of your mirror, but let's start with that on CapEx 405 million Q2, we're, we're looking at about 375 million and Q2, Q3 is a little lighter at 275 million and then the balance comes in at Q4.
Greg Party: And that should result in a production profile that's about 147 in Q2,000 BOE a day.
Greg Party: Q3 would be off from there around 151,000 BOE a day and then Q4 drifting down just a little bit to 150,000 BOE a day. Of course, there are air bars on all of these, Greg, but that's kind of the way we're thinking about the current capex and production profiles.
Speaker Change: Okay, thanks, and maybe related, I know that the thinking is, you know, second half is where more of the de-leveraging occurs. Perhaps a question for Chad, but, you know, what are your expectations maybe if you run it futures now or whatever your internal best estimates are, in terms of where you think your net debt level would land towards the end of the year like this roughly.
Uh, yeah, thanks for your good. I think.
Speaker Change: You know, he said $60 for the rest of the year, that's around $200 million per cash total.
Speaker Change: The other fact is he actually runs forward on the FX, which is the $1 astringent relative to the US dollar, on a $0.80 basis that will impact that at the end of the year, but that's the top one to predict.
Speaker Change: You know, 50 million free cash, Q1, another 150 at 60. We'll fund the dividend after that, which is another 50. So what 100 million off the debt? Perfection further for the balance of the income. Okay, thank you so much. Thank you very much.
Speaker Change: This concludes the question and answer session from the phone lines. I'd like to turn the conference back to Brian Ector for any questions received online.
Brian Ector: All right. Thanks. See if I have had a number of questions come in. A number are related to the shareholder return framework, the debt reduction plan, and a couple of comments on just shared price performance. I'm going to summarize a few for the team here. And I've been Chad Kalmakoff or CFO . I'm going to ask you this first question.
Brian Ector: as part of the debt reduction plan, a couple of people here on the webcast have noted that where are bonds are trading in the open market, maybe even probably in context of where they are trading in, and would have purchased in the bonds be part of a debt reduction
Speaker Change: Yeah, thanks, Brian . I think I don't know where the bonds are trading today. I think they definitely have traded down here below par over the last. [inaudible]
Speaker Change: You know, a few weeks here with the Cmody Praise Weekness.
Speaker Change: As we talked about in the prepare remarks, we have ample equity on the credit facility over a billion dollars here at quarter end.
Speaker Change: You know, so I think we always want to try to balance between prepable debt and fixed term debt. I think the prepable debt is for sure a lower point cycle here, so I think.
Speaker Change: You know, repurchasing the bonds over time was always part of the plan. I think it is, you know, today may present more of an opportunity than it had in the past as well. So I definitely something more considerate. Okay. Thanks, Chad. Eric. The.
Speaker Change: We've talked a little bit on this with the prepared remarks and with the analysts but with the current weakness in WTI and we've no to words trading.
What are the additional levers that Baytex can pull?
Thanks, Brian .
Speaker Change: You know, the business is designed to weather periods of low oil prices. We talked about the hedge book, we talked about the liquidity and the strong duration of both the term notes but also the 2028 facility and access of a billion dollars of liquidity.
Speaker Change: and we're designed to stay resilient even when the macroeconomic environment is challenging as it is today.
Speaker Change: and so we remain committed to maintaining shareholder returns. We're focused on balancing capital allocation, which we've discussed, and we're focused on long-term sustainability.
Speaker Change: The Levers, Enhancing Operational Flexibility and Focusing on Things We Control I mentioned before. This is this is key to operators.
Speaker Change: Maintaining Capital Discipline Prioritizing Our Highest Returning Projects Across Our Portfolio. And we've demonstrated, you know, I mentioned where the 50 million came out between the midpoint of our prior guidance and the current bottom end guidance.
Speaker Change: Given the current commodity price environment, we expect full-year capital expenditures to come in at the low end, and that reflects.
Speaker Change: The Discipline Capital Allocation, and where we're born now. Suspending the buyback to preserve cash and prioritized that repayment, again, a lever.
and the hedge program, which
Speaker Change: You know, now with the backwardation taken out of the forward structure.
Speaker Change: Hopefully, price improvements may give us an opportunity to extend that. We'll be watching and I described our thinking we want to be reasonably transparent about that thinking and what we want to do to continue to extend that that floor forward in time. So...
Long Duration [inaudible]
Speaker Change: You know, liquidity in the credit facility, those give us a lot of defensiveness and a lot of opportunity over time.
Speaker Change: We have a lot of flexibility in our plans in both sides of the border and in all plays, and we are not at all afraid to exercise.
Speaker Change: That flexibility when the adjustments become necessary and we'll tell you as soon as we're prepared to make those changes.
Eric: Eric, another question coming in about your return, that relates to the dividend.
Eric: Some comments around which increase the dividend to reward sure all those others around in this pricey environment would you consider cutting the dividend?
Eric: What are your thoughts around the dividend? Yeah, I mentioned earlier just how important the dividend is to our shareholders and we remain committed to maintaining the quarterly dividend.
Eric: That said, it's a complex and challenging environment. The board and management, we talk all the time, we're continuously evaluating the options.
Eric: and we are committed to making the right decisions for the long-term.
Eric: So debt repayment has been near term priority, buybacks have been suspended in the near term.
Eric: The dividend is very important to us and we remain focused on ensuring that it is funded.
and our focus remains on on de-laboring so
Speaker Change: I think that covers it. I might have repeated myself in that answer from an earlier commentary, but I think it's worth reiterating. Okay, thanks Eric. I want to shift a little bit. We have one operational related question coming in on the webcast. And this would be for Chad Lundberg or Chief Operating Officer. We had talked.
Several quarters ago about some more clear water discoveries.
Speaker Change: that notably the morning bill, just north of Edmonton, as well as we'll be up at T-Mine. And so Chad, maybe can you just provide an update on on this development plan, what we've done today to and what we'll receive with the results.
Speaker Change: in your career, paying out in certain oil price environments in weeks, you know, today in months, so we continue to run two to raise up in the p-vine.
Speaker Change: As you know, late last year we made a swap into incremental lands just on the north side of our position. So we're pretty excited about that and thinking about how we start to capitalize it. We also have the WESKET off assets that we picked up last year.
Speaker Change: We developed another four wells in the play are excited about the results we're seeing but more particularly we put
Speaker Change: A program of Stratwell's into the property through Q1 and there's nothing really to say about it yet, they take time.
Speaker Change: to really piece through and understand what they're telling us, but we really do see those as key along with the production results to unlocking the value there. And then I think Brian Yasuo, the Rex or the PV down in the Mooreville area.
Speaker Change: We brought another five wells on stream this year. Some of those were drilled in Q4, the forget bulk of them were.
Speaker Change: Continuing to see strong results there, as per the current capital plan.
Speaker Change: We don't go back until likely next year in the 2026 of course pending oil prices based on the economics though if we were to catch a tailwind on oil it's hard to think about about that right now in the current environment.
Speaker Change: It would certainly be a spot that we could think about capitalizing sooner than next year.
Speaker Change: So, Brian , you know, the other one I didn't touch on is just the Waseka. Half the point out, you know, we're continuing to develop some of the farm and acreage that we've entered into the last couple of years.
Speaker Change: and, again, 2025 is more of a focused development program with 24 really setting the table for how we're developing up in that Northeast portion of Alberta right now.
Speaker Change: Perfect, thanks Chad. And one more little question to the operations and this ties back to the Eagle Ferd being a comment or quite an update on sort of refract initiatives and opportunities that we're seeing down in Eagle Ferd.
Yeah, I mean, Reeve for Oxford continued to be excited about.
Speaker Change: As we've talked in the past, we've put two into the ground over the past two years now with strong results.
Speaker Change: Two more are being executed on now. Actually we just finished fracking one through Q1. It's on stream looking strong. Too early to really talk results. It's been a matter of days.
Speaker Change: and then the second one actually right now as we speak is the fracked pumps are just schooling up to start fracking it.
Speaker Change: They continue to be a strong part of we think the future opportunity and then of course when we took over the property it was something we committed to
Speaker Change: Allocating Capital II to just really further delineate and understand it. So I guess, you know, to wrap that up, hoping in the next quarter results to be able to maybe talk a little bit more about these two refracts we've put online.
Hey, thanks Chad.
Speaker Change: One relate to asset sales, which would Baytex or asset sales, let's put it this way, our asset sales on the table is part of our strategy to deliver or improve share price performance. Thanks, Brian .
Speaker Change: We regularly review the Portfolio and we ensure in these reviews that we're focusing on the assets that deliver the most value.
Speaker Change: The reviews include evaluating our capital structure, optimizing capital allocation, efficiency opportunities that we may not have seen or may not have yet capitalized on.
Speaker Change: and so while we're not in a position to comment on the plans specifically,
Speaker Change: The Decision will be guided by discipline-dallabate valuation, as I mentioned earlier, and...
Speaker Change: All the auctions are intended to ensure alignment with strategic priorities and will keep this conversation alive.
Speaker Change: as it's focused on our long-term goals. So continue to listen.
Speaker Change: continue to focus on long-term shareholder value creation and any decisions that were made with regard to this will be focused on delivering sustainable long-term value shareholders.
Speaker Change: Thanks Eric. And the last question, there were a couple of come in just around the share price performance, the market not recognizing the value that we believe the company has in the share price Eric.
Speaker Change: What steps are you taking to address your underperformance of the shares, say, for over the, you know, what we've seen over the last year?
Speaker Change: Yeah, thanks, Brian . We share the frustration regarding the share price performance, and we don't think, and I've said this before but I'll just reiterate it, we do not believe it's an accurate reflection of the quality of the business.
Speaker Change: and we don't think it's an accurate reflection of the long-term value creation potential of business. So we're taking thoughtful and proactive measures I spoke about the evaluations earlier to address this.
Speaker Change: Including guiding our capital program to the low end of the range. We think that's prudent. It's very early in this kind of ensuing price war, but we made that step and also made the return of capital step regarding spending in the near term our thereby backs. [inaudible]
Speaker Change: So we're focusing on prioritizing pre-cash flow or prioritizing debt repayment.
Speaker Change: and we're prioritizing strengthening the current financial position of the business, which...
Speaker Change: In terms of liquidity and duration is already quite strong. We have a lot of flexibility in our capital plans. We've been structured to weather these.
Speaker Change: and we're ready to make further adjustments in capital allocation and we're appropriate. So we're focused on remaining, you know, focused on managing the remaining factors that we can control and delivering long-term value.
That's great. Thank you, Eric.
Speaker Change: and that does, I think, wrap up the webcast portion of the Q&A today. So I think as we reach the end of today's call, I would like to thank everyone for participating. And with that, thank you, operator, and thanks to everyone for participating in the first quarter conference call. Have a great day.
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