Q4 2024 Infinity Natural Resources Inc Earnings Call
Greetings and welcome to Infinity Natural Resources Fort Quarter in full year 2024 earnings conference call. At this time, all participants are in lesson only mode.
Speaker Change: A brief question and answer session will follow up the prepared remarks. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greg Pipin, Senior Vice President, Corporate Development and Strategy. Sir, you may begin.
Thank you, operator.
Speaker Change: Good morning and thank you for joining our fourth quarter and year-end 2024 earning your results conference call. With me today, our Zach Arnold, President and Chief Executive Officer, and David Sproul, Executive Vice President and Chief Financial Officer.
Speaker Change: In a moment, Zach and David will present their prepared remarks with a question and answer session to follow.
Speaker Change: An updated investor presentation has been posted to the investor relations portion of our website and we will reference certain slides during today's discussion. A reply of today's call will be available on our website beginning this evening.
Speaker Change: I'd like to remind you that today's call may contain forward-looking statements.
All statements that are not historical facts are forward-looking statements.
Speaker Change: Form-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause actual results to materially differ from these form-looking statements.
Speaker Change: Please review our earnings release and the risk factors discussed in our SEC filings.
Speaker Change: We will also be referring to certain non-GAB financial measures. Please refer to our earnings release and investor presentation for important disclosures regarding such measures, including definitions and reconciliation to the most comparable GAB financial measures. With that, I'll turn the call over to Zach.
Thanks Greg, and good day to everyone.
Zach Arnold: We appreciate you joining us for Infinity Natural Resources' first ever learnings call.
Zach Arnold: We are delighted to discuss our fourth quarter and full year 2024 financial and operational performance as well as to provide an outlook for the upcoming calendar year.
Zach Arnold: Before we dive in, I'm excited to share our journey with you and provide a brief overview of our company for those of you who are new to our story.
Zach Arnold: Infinity is a leading exploration and production company focused in the Appalachian Basins. Our journey began with the vision to harness the region's potential, and today we stand as a testament to that vision.
Zach Arnold: Like many of our employees, I was born and raised in Appalachia. I grew up about five miles from an area we operate in Ohio.
Being local is an integral part of our company's DNA.
Zach Arnold: The majority of our nearly 90 employees live, work, and call Appalachia home.
Zach Arnold: Living and working in this area virtually our entire careers provides us with a competitive advantage whether it's managing vendor relationships, securing lease hold, or acquiring and developing assets.
Zach Arnold: Our team's vast experience and strong local presence allow us to focus on true corporate drivers over individual departmental goals.
Zach Arnold: Our team has worked together for the better part of 15 years.
Zach Arnold: Our CFO , David Sproleti, have worked together for over a decade.
Zach Arnold: Our team's continuity and familiarity with each other not only allows us to enhance our operational financial performance.
Zach Arnold: It helps us to establish a strong collaborative culture that emanates across our organization.
Zach Arnold: This past February , we closed our IPO on the New York Stock Exchange.
Zach Arnold: which was a significant milestone for our company. We would like to thank our financial sponsors, Herald Energy and NGP for their instrumental role in our success.
Zach Arnold: We share a common alignment focused on relative value asset capture and delivering incremental value through the drill fit.
Zach Arnold: Our partnerships have been a cornerstone of our group and operational excellence.
Zach Arnold: We appreciate their support and leadership as we embark on the next phase of our corporate vision.
Zach Arnold: This is a starting line for Infinity and we are excited about our ability to draft future values for all our shareholder.
That's our background. Now let's turn to our business.
Zach Arnold: Balance, Optionality, and Discipline Growth are the key attributes of our company.
Zach Arnold: We are uniquely positioned in Appalachia, operating in two distinct areas that provide exposure to either oil or natural gas.
Zach Arnold: The proximity of these fields to each other, comparable well-toss and similar drilling equipment requirements provide us with the ability to allocate capital quickly across our portfolio to maximize returns in the ever-changing commodity environment.
Zach Arnold: We have a high quality inventory base characterized by long-laterals averaging roughly 14,000 feet across both of our areas of operations that enable us to develop our resources while maintaining leading drilling costs and capital efficiency metrics.
Zach Arnold: In Pennsylvania, we have approximately 60,000 net horizon acres in the dry gas marcellus and deep dry gas eucachials, providing 179 undeveloped locations that you're in, and representing approximately a decade of drilling in the
Zach Arnold: Additionally, we own and operate our own gathering system which further enhances our margins of providing operational and developmental flexibility.
Zach Arnold: In Ohio, we have approximately 63,000 net acres in the Utica Shales Volta Oil window with a 154 undeveloped location that you're at.
Zach Arnold: Since our arrival to this area in the spring of 2021, we have been a leader in the development of this high-quality, oil-weighted resource play in Eastern Ohio.
Zach Arnold: We have drilled 34 wells and operate 118 wells as of year-end 2020-24.
Zach Arnold: Our exposure to the well data across the play along with our operational activities provide us with unique insight into the development of this emerging resource play.
Zach Arnold: We are a leader in this play, whether by operational performance or continued activity, and we intend to remain such through our active development.
Again, balance and optionality.
Zach Arnold: The deep inventory of long-laterals across both plays is unique to any company, but particularly to those who operate in Appalachia.
Zach Arnold: Between our two areas, we have a deep inventory of 333 undeveloped locations a year in representing 4.6 million in lateral feed for approximately 19 years of inventory.
Zach Arnold: And remember, the proximity of our assets and development flexibility allows us to allocate capital quickly based on the commodity environment.
Zach Arnold: Let me take a minute to talk about our recent natural gas project to give you a sense of the speed of our cycle times.
Zach Arnold: Based on improving gas backdrop, we made a decision in early November to develop an additional natural gas project in Pennsylvania.
Zach Arnold: We leveraged the preparation of our land and operations teams to take what was a farmer's dealer and construct our path in six weeks.
Zach Arnold: We brought this spot rig onto location in early January and expect the wealth to be online by mid-year.
Zach Arnold: This is a very quick cycle time and it's something that can only be done if you prepare to maintain for development optionality.
Zach Arnold: As you can see on page 6, we have targeted development based on the current commodity environment.
Zach Arnold: In 2024, we allocated more capital towards oil-weighted projects because it made sense to do so.
Zach Arnold: In 2024, we executed our plan and delivered significant production growth, while maintaining a strong balance sheet and financial metrics.
Zach Arnold: Our production averaged 24 Boe per day comprised of 27% oil, 53% natural gas and 20% Ngls for.
Zach Arnold: For 2024 net represented a production growth of approximately 28% overall.
Zach Arnold: Of note, we grew our oil production by 97% year over year.
Zach Arnold: All of our drilling and completion Capex was funded through cash flow, while we pursued strategic bolt on acquisitions to expand our acreage footprint.
Zach Arnold: And within the volatile oil window.
Zach Arnold: For 2024, we acquired over 11000 net acres in the volatile oil window in close proximity to our operational focus areas, adding multiple years of inventory to our program.
Zach Arnold: We drilled 19 wells five.
Zach Arnold: Five in Pennsylvania in 2014, and Ohio, totaling roughly 254000 lateral feet and completed 14 oil weighted wells in Ohio, representing 181000 lateral feet.
Zach Arnold: We elected to defer the completion activities of our natural gas weighted wells until Q1 of 2025.
Zach Arnold: We've put into production six oil weighted wells totaling 82000 lateral feet in late Q4 2024.
Zach Arnold: We exited 2024 with seven Ducks and two <unk> wells.
Since year end 2024, we have turned one of those PDP wells into sales in early January and finished completing all seven ducks.
Zach Arnold: As we made the decision to develop those wells, we utilized a disciplined hedging program to lock in our high project <unk> lives.
David Sproul: David will touch on hedging more a bit later.
David Sproul: Building on our momentum from fiscal year 2020 for Infinity is 2025 development program as disclosed in our earnings materials released yesterday reflects our continued focus on balancing capital allocation across both natural gas weighted and oil weighted opportunities.
David Sproul: We intend to grow our production by approximately 40% year over year based on the midpoint of our guidance and anticipated funding our development entirely out of free cash flow.
David Sproul: In 2025 development program is focused on maintaining a balance between our operational areas.
David Sproul: We'll continue to develop our high quality oil assets in Ohio, as volatile oil window of the Utica shale, while increasing our activity in our natural gas weighted region, Pennsylvania.
David Sproul: Our D&C capital budget for the year is $240 million to $280 million.
David Sproul: We intend to maintain a single rig for the entirety of 2025 other than using a second rig with a four well pad development in the Marcellus dry gas that I mentioned earlier.
David Sproul: Turning to our production.
David Sproul: Our 2025 plan highlights a transition towards a greater balance between natural gas and oil weighted wells.
David Sproul: We continue to ramp and anticipated turning into sales more wells in 2025, and any other year in our history and.
David Sproul: In 2025, we anticipate that our natural gas weighted wells will represent more than 35% of all wells put into production during the year.
David Sproul: Regarding our oil weighted assets, we intend to turn into sales more oil weighted wells than we did in 2024.
David Sproul: In short we remain incredibly excited about the opportunity set ahead and are confident that we will be able to achieve our goals for 2025.
Speaker Change: Before turning the call over to David to elaborate on our results and our outlook I would like to congratulate Greg Pipkin on his well deserved promotion to senior Vice President of corporate development and strategy. His contributions to the company. Since his arrival have greatly assisted us in our success and we thank him tremendously for that.
David Sproul: David the Mic is yours.
David Sproul: Thanks, Jack and good morning, everyone.
David Sproul: <unk> Zacks excitement about our achievements in the promising future ahead.
David Sproul: I also want to congratulate Greg on his promotion.
David Sproul: To reiterate and expand upon some of the themes from Zacks remarks at Infinity, we emphasize a disciplined approach to growth by developing high return drilling inventory and optimizing return on capital with an industry, leading cycle times and payback periods.
David Sproul: Our expansive portfolio of low risk high return oil and natural gas assets allows us to strategically capitalized on asset development, while maintaining balance sheet strength.
David Sproul: Superior capital efficiency supports production growth and generate attractive free cash flow positioning us for sustained success.
David Sproul: Our strong organic cash flow is safeguarded through an active hedging strategy. This approach has enabled us to secure attractive discounted return on investments as we develop our projects.
David Sproul: On the back of this we are proud to complete our successful IPO in early February.
David Sproul: And raised $286 5 million in net proceeds we issued 15 2 million shares via the offering and have an outstanding share count.
David Sproul: $3 9 million.
David Sproul: As of today.
David Sproul: With that said, let me now expand upon our quarterly and full year results.
David Sproul: We reported an adjusted EBITDA of $46 2 million and $195 7 million for the fourth quarter and year end 2024, respectively.
David Sproul: Our adjusted EBITDA margin for calendar year, 2024 increased to journey to dollars in 'twenty.
David Sproul: Per barrel of oil equivalent representing a $3 87 per Boe increase over 2023.
David Sproul: We believe our EBITDA margin to be the best among our Appalachian peers.
David Sproul: Operating costs for the fourth quarter and full year 2024 totalled $8 72.
David Sproul: And $8 84 per barrel of oil equivalent respectively.
David Sproul: The company's focus on oil weighted activity and a greater weighting of liquids in our production mix led to an increase in both our 2024 per unit LOE.
David Sproul: And our 2024 per unit gathering processing transportation and compression costs relative to prior year periods for.
David Sproul: For 2025, we anticipate these operational costs to decline on a per unit basis due to increased natural gas production in Pennsylvania, where we operate our wholly owned midstream system.
David Sproul: Despite the elevated operational cost experienced in 2024. It is important to highlight that this increase was more than offset by the improved margin performance from our oil weighted inventory.
David Sproul: Our all in realized price for the fourth quarter and full year 2024 was $32 12.
David Sproul: And $29 22 per Boe, respectively.
David Sproul: Excluding the impact of cash settled derivatives.
David Sproul: This represented a year over year increase of $4 25 per Boe and.
David Sproul: $6 11.
David Sproul: Per Boe increased for the fourth quarter and full year 2024, respectively.
David Sproul: Despite a 20% reduction in natural gas prices during 2024 relative to 2023.
David Sproul: We realized the cash hedging gain of approximately $28 4 million for the year, while incurring an unrealized loss of $54 million.
David Sproul: We anticipate remaining active with our hedge program throughout the calendar year.
David Sproul: With respect to our current hedge position for 2025, we have hedges covering roughly 36 Bcf of natural gas at an average price of $3 58.
David Sproul: For Btu.
David Sproul: Additionally, we had $2 2 million barrels of oil production covered at an average price of $71 65 per barrel.
David Sproul: With over 19 years of high return development inventory evenly split across oil and natural gas opportunities, we have significant upside exposure and operational flexibility to quickly adapt to changes in the commodity environment.
David Sproul: We provide further details on our full derivative position on slides 15, and 16 of the earnings presentation and in our 10-K, which will be filed soon.
David Sproul: During the past year infinity incurred approximately $281 million and capital expenditures of which $165 8 million was allocated to drilling and completion activities.
David Sproul: Due to our operational performance and the high quality of our assets. We're developing infinity was able to generate all an F&D costs inclusive of the revision of $7 30.
David Sproul: For Boe for 2024.
Over the past three years are all in F&D costs was approximately $6 three.
David Sproul: Bowie a.
David Sproul: A statistic I am very proud to report.
Speaker Change: Our continued strength in F&B highlights the leading capabilities of our land and operational teams.
Speaker Change: When considered in relation to our adjusted EBITDA margin.
Speaker Change: Infinity once again delivered leading capital efficiency metrics of approximately 3.0 times in 2024, which we believe to be the.
Speaker Change: The best among our Appalachian peers.
Speaker Change: Turning to the balance sheet, our financial position remains very strong with.
Speaker Change: With trailing 12 month net leverage ending the year at one three times.
Speaker Change: We used the net proceeds from our IPO in February to repay outstanding debt under our credit facility.
Speaker Change: When adjusting for the IPO, our pro forma leverage as of December 31, 2024 was zero.
Speaker Change: And our liquidity totaled approximately $354 million comprised of approximately $29 million in cash plus $325 million.
Speaker Change: Borrowing base availability.
Speaker Change: On 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.
Zac Arnold: Thank you I'll now turn it back over to Zac, some closing thoughts.
Speaker Change: Yeah.
David Sproul: Thank you David.
David Sproul: Conclusion Infinity natural resources is well positioned to capitalize on the opportunities in the Appalachian Basin.
David Sproul: Our balanced exposure to both oil and natural gas within the same basin in the U S is a key strength.
David Sproul: The Utica shales volatile oil window in Ohio is the fastest growing we'll stay in the lower 48, while our Marcellus and Utica shale gas assets in Pennsylvania maintained low breakeven prices and are well positioned for increased LNG and AI demand.
David Sproul: Our strong local presence experienced team and balanced asset portfolio provide a competitive advantage that will drive our success.
David Sproul: On behalf of the whole team we thank you for your support and confidence in our company.
David Sproul: We look forward to sharing our progress with you in the coming quarters.
Speaker Change: Operator, you may start our Q&A session.
Speaker Change: We will now begin the question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: I'd like to withdraw your question Press Star one again, thank you.
Speaker Change: And your first question comes from the line of John Freeman with Raymond James John. Please go ahead.
Good morning, guys.
Speaker Change: Hey, Good morning, John The first question. The first question I had.
Speaker Change: <unk> Capex came in on the D&C side piece, a bit lower than we were expecting.
Speaker Change: And then you all mentioned that you've got the seven ducks that you entered the year at.
Speaker Change: Looking for any sort of help or color on sort of the capex cadence realm.
Speaker Change: Relative to full year budget, it looks like it's going to be fairly front half weighted on the spending we just wanted to verify that with you all.
David Sproul: Sure Hey, John This is David sprawl I'll take the first half of your question there on the fourth quarter.
Speaker Change: We had a really successful quarter and are frankly really pleased with our results there.
Speaker Change: We were actually more active in the fourth quarter than what May have been previously modeled in terms of completing two additional wells then.
Speaker Change: May have been in some or some of the research analysts models they're in.
Speaker Change: So I think from our standpoint, the activity just again highlight the operational capabilities of the team here has and our execution they are in.
Speaker Change: Yes, John this is <unk> and I'll talk a little bit about the cadence of the wells and the capital spend for 2025. So we're currently running two drilling rigs, we have a rig in Ohio, and a rig in Pennsylvania and as such we will have a higher capital burn through the first three quarters proportionately than what we will at the end of the year as we continue to work through the the drilling and the completion of the.
Speaker Change: Of those projects and then fall back down to the one rig capex burn at the back of this year.
Speaker Change: Got it that's Super helpful. And then just my one follow up question.
Speaker Change: One of the real uniqueness of your story that you all highlighted on slide five of your presentation, just the real flexibility all have to be able to toggle between the oil and the gas assets.
Speaker Change: These type of returns that you all lay out on that slide I mean, obviously at the current gas strip. Your returns are extremely strong and I'm just.
Speaker Change: <unk> on kind of how you are thinking about it the strip for both oil and gas kind of stays where it's at sort of the ability or willingness to maybe even lean more into the gas assets than is currently planned.
Speaker Change: That's a great question. John This is Jack again, so I think our success in capturing projects like we are currently doing where we have our spot rig running in our Pennsylvania gas assets demonstrates that we will always be evaluating both opportunities to accelerate or or move projects around but.
Speaker Change: We really want to give a shot out to our land and operational teams that are have kept a deep bench of projects ready and both areas. So we'll continue to drill through our program with that same balanced thought and the same capital allocation thought process that we've outlined on slide five as you mentioned.
Great. Thanks, guys appreciate it.
Speaker Change: Okay. Thank you Jonathan.
Speaker Change: And your next question comes from the line of Brian <unk> with <unk> Securities. Please go ahead.
Brian: Hey, good morning team just wanted to start off maybe if you could talk about the impact that maybe the recent volatility in gas prices have had on M&A efforts, maybe how that varies between the Ohio side or the Pennsylvania side, or maybe how that varies between smaller or larger assets.
Speaker Change: So thanks for the question Bert This is <unk> I'll respond so what I think we're really excited about is our team is we've been here in this space and operating for a long time, we have comfort and familiarity operating in the oil window and the gas window. So it gives us a broad scope of M&A opportunities that we can pursue where.
Also have been very successful doing small deals large deals things that have production, where things that are greenfield. So while strip movement might sometimes make bid ask spreads spread a little bit we've been excited that we can deliver great growth on our organic assets and then we can wash deals of all sizes and all windows come to us and we can execute what fits right with our plan.
Speaker Change: Got it so it sounds like the markets are still kind of moving around that that's good and then maybe the second question could you update us on the timing of your deep Utica wells.
Speaker Change: Just given the strength of the offsetting E&P results.
Speaker Change: Maybe where your permits it maybe when you think you would get to drilling them and then maybe like a turn in line estimate or something like that and maybe does that lead to more than 2006 or are you just trying to do maybe one or two a year, but just any thoughts there. Thanks.
Speaker Change: No. Thanks for the question.
Speaker Change: Question again this is al ill respond also.
Speaker Change: As we think about our Utica projects, we're really excited about the work and the delineation that we have seen from our peers around our area. So we have our Utica permit in hand, and we will evaluate the right time to execute that project will be excited for when it happens.
Speaker Change: Got you. Thank you very much.
Your next question comes from the line of Dam reservoir with Keybanc capital markets. Please go ahead.
Speaker Change: Hey, good morning, guys and thank you for taking my questions first as we look at.
Speaker Change: The 2025 production outlook.
Speaker Change: <unk> total production guidance I didn't see a mix in there.
Speaker Change: On top of that I noticed.
Speaker Change: Fourth quarter 2024 came in a little more liquids rich than anticipated. So can you give some parameters on the maybe the breakout of the oil NGL gas mix in 2025.
David Sproul: Well I think you can kind of see the turn in lines that we had in the presentation Im sorry, Tim. This is this is David sprawl.
David Sproul: So you can see that those turn in lines again in the presentation that we have and we have recently turned into sales five wells in Q1 that our natural gas weighted I think it's important to understand that in 2024, we didnt, we elected to not turning any natural gas wells and obviously the natural gas environment is.
David Sproul: It's much stronger today than it was in 2024, we are actively developing a project in southwest, Pennsylvania on our yields van Dijk pad and we anticipate that coming on during the summer of this year.
David Sproul: So collectively those projects Thats about nine gas wells that we anticipate turning into sales during this year.
Exactly had mentioned during during the call that we will be more active in both our gas and our oil assets. So.
David Sproul: You should anticipate us turning into sales more wells this year than we've done previously in our history.
David Sproul: It's also important to understand that as we turn in gas wells in Pennsylvania.
David Sproul: It will impact our mix and so we would anticipate that our <unk>.
David Sproul: Oil as a percent of our production mix to decline.
David Sproul: During the course of 2025.
David Sproul: But that would be somewhere in the neighborhood of less than 5%.
David Sproul: On a decline relative to the prior year.
David Sproul: Okay. Okay I appreciate the context, and then mid all this volatility in commodity prices and the lead times that you all have with your extended laterals and multi well pads at what point in this year are you going to have to really sort of lock in the 2026 program I know you have.
David Sproul: Some flexibility on gas because sometimes we're drilling off existing pads, but just trying to understand as we look to 2026.
David Sproul: When do you need to kind of set set youre of course between oil and gas and then the specific pads. Thank you.
David Sproul: Thank you for that question this is zach.
David Sproul: We think about those things every single day, that's part of the analysis that our team does routinely so just a little bit of insight into how we approach. These things we're preparing projects in both windows at all times, but we talked about this a lot and we talk about how we can make those changes relatively quickly the same drilling rig it's the same casing.
David Sproul: It's the same frac crews, we can make these capital allocation decisions.
David Sproul: Very close to decision points, and we will be able to step through this development thought process and presented to our board here over the next couple of quarters the opportunities to where we should allocate capital I think are the balance that we've shown in the slide that we have in our deck demonstrates how we think about that capital allocation. So we'll continue to make sure that we have.
David Sproul: Projects ready in both areas, we'll watch the strip develop and as we wrap up this year, we'll be talking about how we're allocating capital into next year.
Speaker Change: Okay alright, thank you.
Speaker Change: Your next question comes from the line of Michael shallow with Stevens, Inc. Michael. Please go ahead.
Michael shallow: Hi, Good morning, everybody I was just looking for a little bit of help on the production cadence for the year, you've obviously got a lot of growth.
Speaker Change: 40% you've talked about.
Speaker Change: <unk>.
Speaker Change: It looks like the wells.
Speaker Change: On the Marcellus pad came online.
Speaker Change: You said in March so I'm thinking of production for.
Speaker Change: For first quarter, maybe up just slightly from fourth quarter and the new.
Speaker Change: Grow from there but.
Speaker Change: Just looking for any more detail you can help with.
Speaker Change: Now the production cadence to look this year.
Eric: Alright, Thanks, Michael This is Eric.
Eric: So first of all kind of go back to late last year and pointed out that in late Q4 basically after Thanksgiving we brought on six oil wells here in the first part of this year. We've now brought on six additional wells one was an oil well and then five where gas wells and how should complement the operations team. It doesn't look that difficult to beat our projected.
Eric: Turn in line on a gas project by a couple of weeks like we've done we thought that that might come in in April. It's now come in in March it looks pretty easy when its spring time, but what you have to know is that that meant they had to execute throughout the entire winter. Despite the challenges that a vertical winter brought they were able to maintain and accelerate our cycle times and I want to talk about that cycle times, because I think thats important.
Eric: As you think about how these wells are come on coming online. So historically, we've been 6% to seven month cycle times, we typically are running three to five well deployments with the rig. So currently conducting two drilling programs one in the gas window and one in the oil window. So as those wrap up you should sort of expect that standard cadence for.
Eric: Are those to be coming online throughout the year.
Eric: Okay.
Eric: That does that translate to.
Eric: Straight line production growth.
Eric: It was.
Eric: We often tweaking that production kind of.
Eric: Slow growth in the first quarter and then ramping from there.
Eric: Yeah. Michael. This is this is David <unk> I think it's always difficult when you think about quarter to quarter comparisons on growth aspects there I.
Eric: I think we.
Eric: We would.
Zach Arnold: Zach was mentioning with the cycle times, we anticipate on wells coming on.
Continuously during the course of this year.
Zach Arnold: I wouldn't necessarily say that its a straight linear line.
But.
Zach Arnold: You see our guidance for the end of the year and you see the cadence that we should bring these things on these wells on with regards to the cycle times at CIT. Zach just mentioned so as these wells come online whether gas or oil you should see a period of jump for those.
Zach Arnold: As we as we execute on our development plans.
Zach Arnold: Okay fair enough.
Zach Arnold: And.
Zach Arnold: On the Marcellus pad I know, it's early days, but those five wells, but anything you can say as to how those are performing so far.
Zach Arnold: Yes. This is <unk> again, thank you.
Zach Arnold: I think we're very excited about the results. We're seeing it's early days so plenty of time to continue to.
Zach Arnold: Firm up our views on the wells, but the fact that they've come in line and they are producing as anticipated. This early on and they're ahead of schedule is always very exciting to us so our views on all of our new performing wells.
Zach Arnold: The wells, we brought on in Q4 as well as these are reflected in our production guidance.
Speaker Change: Okay, and then I think you had said that those are capable of possibly like 100 billion cubic feet a day that pad is that still.
Zach Arnold: Within the <unk>.
Zach Arnold: And the range.
Speaker Change: Yes, we're really excited about the wells early time performance and that's probably all I'm going to say.
Zach Arnold: Okay.
Zach Arnold: Thanks, guys.
Speaker Change: Your next question comes from the lineup Noah hung US with Bank of America <unk>. Please go ahead.
Noah: Good morning, INR team for my first question, David I was hoping that maybe you could give us a little bit of additional color on the per unit operating expense and <unk>. You mentioned, it was going lower and 25% versus 24, but could you help us kind of quantify what that looks like.
Speaker Change: Yes.
Speaker Change: I think the easiest way to think about that.
No.
Speaker Change: <unk>.
Speaker Change: It's really just focusing on what is our operating costs.
Speaker Change: For our for our wells in southwest, Pennsylvania, we wholly own that gathering processing and transportation.
Speaker Change: System that we have there and so the cost for those wells.
Speaker Change: Is exceedingly low.
Speaker Change: Relatively speaking.
Speaker Change: Moreover, our volumes from a gas side are.
Speaker Change: Obviously much stronger so as you blend those components and I.
Speaker Change: When you look at it on an aggregated basis, while our oil production our liquids production in our gas in Ohio will continue to increase on a blended basis as I move more natural gas into that equation from southwest, Pennsylvania, our per unit costs will decline on that in terms of the actual numbers.
Speaker Change: I think we're going to.
Speaker Change: Hold that back at this stage for us today.
Speaker Change: Our cost structure again in southwest, Pennsylvania.
Speaker Change: Is exceedingly low with regards to the the <unk> aspect.
Speaker Change: Got you I appreciate the additional color there and then for my second question I wanted to ask on me here guys is capex budget.
Speaker Change: Is the midstream capex only other component of the Capex budget last year, you spent a little over $100 million in land I guess, how can we be thinking how can we be thinking about land spend in 2025.
Speaker Change: Thanks. This is <unk> I'll take a response here. So first of all we have limited need for maintenance land spend for our 2025 budget program. So I think that's that's why we're not giving a number there but I'll also talk about the broader.
Speaker Change: Capex guidance that we've given I think it's important to note first of all we have no debt and our land group has been very successful both historically and recently, adding working interest into our units and lengthening laterals and those deals are always screened very very well and we look at those deals the way we look at every other capital allocation decision. It's on a PV analysis.
Speaker Change: With a view towards long term value creation. So when you factor all of those things and that we wanted that.
Speaker Change: Room in our Capex guidance, there and none of that was the result of changes in D&C cost expectations as those are in line with our view, but.
Speaker Change: But that's how we've approached capex.
Speaker Change: Great guys. Thanks, so much.
Speaker Change: And your last question comes from the line of Paul Diamond with Citi. Paul. Please go ahead.
Paul Diamond: Thank you good morning, and thanks for taking the call.
Paul Diamond: Just a quick one I wanted to touch based on the midstream Capex, how should we think about as you shift more activity towards southwest Ta and away from Utica, How should we think about the kind of correlation between the wider.
Paul Diamond: Activity or the order activity in that spend over time should it be somewhat correlated or is that more of a mobile spend does remain more veneer regardless of activity.
Paul Diamond: Yeah.
Paul Diamond: Yes, I think near term on Paul This is David for all I think near term.
Paul Diamond: We look to add on.
Paul Diamond: Pad sites and expand our system there.
Paul Diamond: <unk> be anticipating.
Paul Diamond: We will incur additional capex.
Paul Diamond: I think this year, we're obviously tying in.
Paul Diamond: Two.
Paul Diamond: Two pad locations to that.
Paul Diamond: I would caution you, though to think about corn.
Paul Diamond: It too active well development in south in our South Bend field in particular, because this is our first time through those pads and the way we have set up these pad locations affords us the flexibility and optionality to return to pad development.
Paul Diamond: And so again I would I would tie your development in view of long term midstream capex too.
Paul Diamond: The tying in of additional pad locations versus the actual well totals.
Paul Diamond: Okay.
Paul Diamond: Understood appreciate the clarity and just one quick follow up you talked a bit about the.
Paul Diamond: China.
Paul Diamond: Landscape has shifted just wanted to see if that.
Paul Diamond: Given the current environment kind of lend itself towards those smaller bolt on deals or something larger I guess, how youre seeing the landscape really played out with the recent volatility.
Paul Diamond: Okay.
Paul Diamond: No. Thanks, I think the way we viewed it as been consistent with how we have historically so we're very excited to have skill at executing both small and large deals both gas and oil weighted deals both PDP and greenfield deals so even as commodities move around and we've been able to be very involved in and.
Paul Diamond: Looking at all sorts of different asset packages that would augment our positions in both areas.
Paul Diamond: Okay.
Paul Diamond: Understood appreciate the time when we are there.
Paul Diamond: Thanks, Paul.
Speaker Change: There are no further questions at this time I will now turn the conference back over to Zach Arnell for closing remarks.
Speaker Change: Thank you all for your time and joining us today I appreciate the thoughtful questions and we look forward to continuing to share more information throughout the year.
Speaker Change: Hope everyone has a great weekend. Thank you.
Speaker Change: That concludes the conference call you may now disconnect.
Speaker Change:
Speaker Change: [noise].