Q1 2025 Ovintiv Inc Earnings Call

Operator: Good day, ladies and gentlemen, and thank you for standing by.

Good day, ladies and gentlemen, and thank you for standing by welcome children to 2025 first quarter results Conference call. As a reminder, today's call is being recorded.

Operator: Welcome to Ovintiv's 2025 First Quarter Results Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode.

At this time all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Operator: Following the presentation, we will conduct a question and answer session. Members of the investment community will have the opportunity to ask questions and can join the queue at any time by pressing star 1.

Members of the investment community will have the opportunity to ask questions and can join the queue at any time by pressing star one.

Operator: For members of the media attending in a listen-only mode today, you may quote statements made by any of the Ovintiv representatives. However, members of the media who wish to quote others who are speaking on this call today, we advise you to contact those individuals directly to obtain their consent.

Members of the media attending in a listen only mode. Today, you may quote statements made by any of your bench of Representatives. However members of the media who wish to quote others, who are speaking on this call today, we advise you to contact contact those individuals directly to obtain their consent.

Operator: Please be advised that this conference call may not be recorded or be broadcast without the express consent of Ovintiv.

Please be advised that this conference call may not be recorded or rebroadcast without express consent of Oleds in cats.

Jason Verhaest: I will now like to turn the conference call over to Jason Verhaest from Investor Relations. Please go ahead, Mr. Verhaest.

Speaker Change: I would now like to turn the conference call over to Jason for Hoist from Investor Relations. Please go ahead, Mr for haste.

Jason Verhaest: Thanks, Joanna, and welcome everyone to our first quarter 25 conference call. This call is being webcast and the slides are available on our website at Ovintiv.com. Please take note of the advisory regarding forward-looking statements at the beginning of our slides and in our disclosure documents filed on EDGAR and CDAR Plus.

Speaker Change: Thanks, Joanna and welcome everyone to our first quarter 'twenty five conference call.

Speaker Change: This call is being webcast and the slides are available on our website at <unk> Dot Com. Please take note of the advisory regarding forward looking statements at the beginning of our slides and in our disclosure documents filed on Edgar and SEDAR plus.

Jason Verhaest: Following prepared remarks, we will be available to take your questions.

Speaker Change: Following prepared remarks, we will be available to take your questions I will now turn the call over to our president and CEO Brendan Mccracken. Thanks.

Brendan Mccracken: I will now turn the call over to our President and CEO, Brendan McCracken. Thanks, Jason. Good morning. Good morning, everybody, and thanks for joining us. Before we get into the details of the quarter and our outlook for the rest of the year, I want to start with the current uncertainty in the macro environment and the resulting lower oil prices and how we are positioned to handle it. Our business was built using mid-cycle prices of $55 WTI and $2.75 NIMAX. to discipline and inform our decisions. This was purposeful to ensure we can continue generating solid bottom line corporate returns and free cash flow through the bottom of the cycle.

Speaker Change: Thanks, Jason Good morning, good morning, everybody and thanks for joining us.

Speaker Change: Before we get into deep into the details of the quarter and our outlook for the rest of the year I want to start with the current uncertainty in the macro environment and the resulting lower oil prices and how we are positioned to handle it.

Speaker Change: Our business was built using mid cycle prices of $55 W. T I and $2.75 Nymex to discipline and inform our decisions.

Speaker Change: This was purposeful to ensure we can continue generating solid bottom line corporate returns and free cash flow through the bottom of the cycle.

Brendan Mccracken: with a post-dividend break-even price under $40 WTI. 10 to 20 years of premium drilling inventory in each of our three assets. and our industry-leading capital efficiency, we are positioned to do just that. Our money for UINTA transactions, which both closed in January, have boosted our free cash flow by increasing our average price realizations, lowering our cost structure, and enhancing our capital efficiency. Each of our three assets is expected to generate premium returns at prices even lower than we see today. This return parity across our portfolio is a deliberate design feature of our business. At $50 and $3.75, all three of our assets deliver greater than 35% returns at the well level.

Speaker Change: With a post dividend breakeven price under $40 W. T I.

Speaker Change: 10 to 20 years of premium drilling inventory in each of our three assets.

Speaker Change: And our industry, leading capital efficiency, we are positioned to do just that.

Speaker Change: Our montney for you into transactions with both which both closed in January have boosted our free cash flow by increasing our average price realizations lowering our cost structure and enhancing our capital efficiency.

Speaker Change: Each of our three assets is expected to generate premium returns at prices, even lower than we see today.

Speaker Change: This return parity across our portfolio is it deliberate design feature of our business.

Speaker Change: At $50 and $3 75, all three of our assets deliver greater than 35% returns at the well level.

Brendan Mccracken: This translates into a mid to high teen bottom line corporate return. We started the year expecting to generate about $2.1 billion of free cash flow, assuming full year commodity prices of $70 WTI and $4 NYMEX gas. Now, assuming $60 WTI and $3.75 NYMEX for the rest of the year, we expect to generate $1.5 billion of free cash flow. Even if we assume $50 WTI and $3.75 NYMEX for the rest of the year, we still expect to generate $1 billion of free cash flow. Because of this robust profitability, we are maintaining our original full-year guidance, which reflects a maintenance level of investment.

Speaker Change: This translates into a mid to high teen Bottomline corporate return.

Speaker Change: We started the year expecting to generate about $2 $1 billion of free cash flow, assuming full year commodity prices of $70 W. T I and $4 Nymex gas.

Speaker Change: Now assuming $60 W. T I and $3.75 Nymex for the rest of the year, we expect to generate $1 $5 billion of free cash flow.

Speaker Change: Even if we assume $50 W. T I and $3 75, Nymex for the rest of the year, we still expect to generate $1 billion of free cash flow.

Speaker Change: Because of this robust profitability, we are maintaining our original full year guidance, which reflects a maintenance level of investment.

Brendan Mccracken: Simply put, with the business we have built today, it doesn't make sense for our shareholders to choose to shrink today. That said, we have complete flexibility to pull back activity in our development program with essentially no fees or penalties if we need to take that step. One change from the last couple years, with lower oil prices, any savings from further efficiency gains will flow through to capital savings. whereas previously we'd been keeping activity going and seeing our production levels settle higher. We also have access to $3.5 billion of liquidity, and our leverage remains at 1.2 times.

Speaker Change: Simply put with the business, we have built today it doesn't make sense for our shareholders to two to choose to shrink today.

Speaker Change: That said, we have complete flexibility to pull back activity in our development program with essentially no fees or penalties, if we need to take that step.

Speaker Change: One change from the last couple of years with lower oil prices any savings from further efficiency gains will flow through to capital savings, whereas previously we'd been keeping activity going and seeing our production levels settle higher.

Speaker Change: We also have access to $3 $5 billion of liquidity and our leverage remains at 1.2 times our debt at the end of the first quarter is already about $350 million lower than when we announced the acquisition of the money assets in November.

Brendan Mccracken: Our debt at the end of the first quarter is already about $350 million lower than when we announced the acquisition of the Montney assets in November. We are committed to continuing to reduce debt while also maintaining returns to our shareholders through buybacks. Furthermore, our business is not subject to any material impacts from the tariffs that have been announced to date. We pre-purchased essentially all of the steel and tubular goods needed for our 2025 program and have no other significant supply chain exposure concurrently. All of our Canadian condensate is sold locally in Alberta and is not subject to tariff.

Speaker Change: We are committed to continuing to reduce debt, while also maintaining returns to our shareholders through buybacks.

Speaker Change: Furthermore, our business is not subject to any material impacts from the tariffs that have been announced to date.

Speaker Change: We pre purchased essentially all of the steel and tubular goods needed for our 2025 program.

Speaker Change: And have no other significant supply chain exposure currently.

Speaker Change: All of our Canadian condensate is sold locally in Alberta, and is not subject to tariffs and.

Brendan Mccracken: And our Canadian natural gas that is sold in the U.S. is USMCA compliant and therefore not subject to the 10% tariff on Canadian energy products. We are operating from a position of strength and we can be agile to respond to changing market conditions. Over the past several years, we have high-graded and streamlined our portfolio. And today, we have one of the most valuable premium inventory positions in our industry. Our anchor positions in the Permian and Monty, the two largest remaining oil resources in North America, provide the foundation for a differentiated multi-basin EMP. We have meaningful scale with about 205,000 barrels a day of oil and condensate production.

Speaker Change: In our Canadian natural gas that is sold in the U S is the U S. M C. A compliant and therefore not subject to the 10% tariffs on Canadian energy products.

Speaker Change: We are operating from a position of strength and we can be agile to respond to changing market conditions.

Speaker Change: Over the past several years, we have high graded and streamline our portfolio.

Speaker Change: And today, we have one of the most valuable premium inventory positions in our industry.

Speaker Change: Our anchor positions in the Permian and Montney. The two largest remaining oil resources in North America provide the foundation for a differentiated multi basin E&P.

Speaker Change: We have meaningful scale with about 205000 barrels a day of oil and condensate production.

Brendan Mccracken: and over 1.7 bcf a day of natural gas. That makes us also among the top ten public gas producers in North America. Our work to build inventory depth over the past several years means we have close to 15 years of premium oil inventory in the Permian, close to 20 years of premium oil inventory in the Montany, and over a decade in the Anadarko. Our operational excellence is translating into highly competitive rates of return and our capital discipline is ensuring those returns flow through to the bottom line. We've had a strong start to the year, and our first quarter results continued to build on the track record of consistent execution.

Speaker Change: And over one seven Bcf a day of natural gas that makes US also among the top 10 public gas producers in North America.

Speaker Change: Our work to build inventory depth over the past several years. It means we have close to 15 years of premium oil inventory in the Permian close to 20 years of premium oil inventory in the montney in over a decade in the Anadarko.

Speaker Change: Our operational excellence is translating into highly competitive rates of return in our capital discipline is ensuring those returns flow through to the bottom line.

Speaker Change: We've had a strong start to the year in our first quarter results continued to build on the track record of consistent execution.

Brendan Mccracken: We delivered cash flow per share of $3.86 and free cash flow of $387 million, both beating consensus estimates. Production during the quarter was within or above our guidance ranges on all products. Oil and condensate volumes averaged 206,000 barrels a day, with total volumes of 588,000 BOEs per day. We also came in below the midpoint on capital and met or beat on all cost guidance items. The oil and condensate beat was driven by the Permian, where we continue to see strong well results and outperformance from our base volume. We are now through the noise associated with the Monteney and the Uinta transaction close timing and we expect our asset level oil and condensate volumes to stabilize through the second quarter with a more consistent profile for the remainder of the year.

Speaker Change: We delivered cash flow per share of $3 86, and free cash flow of $387 million, both beating consensus estimates pre.

Speaker Change: Production during the quarter was within or above our guidance ranges on all products oil and condensate volumes averaged 206000 barrels a day with total volumes of 588000 Boe per day.

Speaker Change: We also came in below the mid point on capital and met or beat on all cost guidance items.

Speaker Change: The oil and condensate beat was driven by the Permian, where we continue to see strong well results in outperformance from our base volumes.

Speaker Change: We are now through the noise associated with the Montney in the Uinta transaction close timing.

Speaker Change: And we expect our asset level oil and condensate volumes to stabilize through the second quarter with a more consistent profile for the remainder of the year.

Corey Code: I'll now turn the call over to Corey. Thanks, Brendan. We remain committed to our capital return framework, and we were pleased to restart share buybacks earlier this quarter. We temporarily paused the buyback program in the fourth quarter of last year to recover the difference between the money acquisition cost and the UINTA divestiture proceeds of $377 million. At the start of the second quarter, only 9 million remained outstanding, and as such, we have resumed buybacks and plan to repurchase approximately $146 million of shares in the second quarter. In April, we repurchased 1.2 million shares for about $40 million.

Corey: Now I'll turn the call over to Corey.

Corey: Thanks, Brendan we remain committed to our capital return framework and we were pleased to restart share buybacks earlier this quarter.

Corey: We temporarily paused the buyback program in the fourth quarter of last year to recover the difference between the Monty acquisition cost and the Uinta divestiture proceeds of $377 million.

Corey: At the start of the second quarter, only 9 million remains outstanding and as such we have resumed buybacks and plan to repurchase approximately $146 million of shares in the second quarter.

Corey: In April we repurchased one 2 million shares for about $40 million.

Corey Code: As a reminder, our framework returns at least 50% of post-base dividend free cash flow to shareholders and allocates the remaining 50% to the balance. Since the inception of the program in the third quarter of 2021, we have repurchased a total of $2 billion worth of shares and distributed approximately $1.1 billion in base dividend payments . for total shareholder returns of more than $3 billion. While debt reduction is a big area of focus for us in the near term, as Brenda mentioned, we can generate significant free cash flow at today's prices, which ensures our shareholder return framework will stay consistent.

Corey: As a reminder, our framework returns at least 50% of post base dividend free cash flow to shareholders and allocates the remaining 50% to the balance sheet.

Corey: Since the inception of the program in the third quarter of 2021, we have repurchased a total of $2 billion worth of shares and distributed approximately $1 1 billion in base dividend payments for total shareholder returns of more than $3 billion.

Corey: Well that reduction is a big area of focus for us in the near term as Brendan mentioned, we can generate significant free cash flow at today's prices, which ensures our shareholder return framework will stay consistent.

Corey Code: We can repurchase attractively priced shares with a 16% free cash flow yield and improve the capital structure with continued debt reduction. Our balance sheet remains strong and is backed by a deep liquidity profile. With just over $5.5 billion of total debt at quarter end, our leverage ratio was 1.2 times. With a $60 and $3.75 NIMAX price deck for the rest of the year, we will still be near our $5 billion of total debt at year-end, as we continue to work towards our $4 billion target, or about one times leverage, assuming mid-cycle prices. We plan to pay our upcoming maturity in May of this year using a combination of cash on hand, commercial paper, and our credit facility.

Corey: We can repurchase attractively priced shares with a 16% free cash flow yield and improve the capital structure with continued debt reduction.

Corey: Our balance sheet remains strong and is backed by a deep liquidity profile with just over $5 5 billion of total debt at quarter end, our leverage ratio was 1.2 times.

Corey: With a 60 dollar and $3 75, Nymex price deck for the rest of the year, we will still be near 5 billion of total debt at year end as we continue to work towards our $4 billion target. We're about one times leverage assuming mid cycle prices.

Corey: We plan to pay or upcoming maturity in may of this year is it a combination of cash on hand, commercial paper and our credit facilities.

Corey Code: Our credit facilities have a total capacity of $3.5 billion. These facilities were renewed near the end of last year and are not subject to any changes through 2029. We do not have a borrowing base or annual redetermination process. Our facilities are unsecured and are not reserved space. We have no cash flow, EBITDA, or leverage covenants. The credit facilities have one financial covenant, which is our debt to adjusted book capitalization must remain below 60%. This calculation includes a $7.7 billion permanent capitalization add-back for legacy non-cash write-downs. At the end of the first quarter, our debt-to-cap ratio is 24%.

Corey: Our credit facilities have a total capacity of $3 5 billion. These facilities were renewed near the end of last year and are not subject to any changes through 2029.

Corey: We do have we do not have a borrowing base or annual redetermination process. Our facilities are unsecured and are not reserve spaced we have no cash flow EBITDA or leverage covenants. The credit facilities have one financial covenant, which is our debt to adjusted book capitalization must remain below 60%.

Corey: This calculation includes a $7 7 billion dollar permanent capitalization add back for legacy noncash write downs at the end of the first quarter, our debt to cap ratio was 24%.

Corey Code: Maintaining our investment grade credit rating remains a key priority and we are currently investment grade rated with a stable or better outlook at all four rating ages.

Corey: Maintaining our investment grade credit rating remains a key priority and we are currently investment grade rated with a stable or better outlook at all four rating agencies. In fact earlier this month Fitch upgraded our outlook to positive from stable.

Corey Code: In fact, earlier this month, Fitch upgraded our outlook to positive from stable.

Greg: I'll now turn the call over to Greg, who will speak to our guidance and operational highlights. Thanks, Corey. As Brendan highlighted, we've been very intentional in building a high quality portfolio with deep inventory in each asset, and we've demonstrated that we are disciplined stewards of our shareholders' capital. Our team is laser-focused on continually improving our capital efficiency, and our outstanding operational performance through the first quarter gives us confidence in what we can achieve through the rest of the year. We expect our second quarter production to average approximately 595,000 barrels of oil equivalent per day, including about 205,000 barrels of oil and condensate per day.

Corey: I will turn the call over to Greg, who will speak to our guidance and operational highlights.

Greg: Thanks Corey.

Greg: As Brendan highlighted we've been very intentional in building a high quality portfolio with deep inventory in each asset and we've demonstrated that we are disciplined stewards of our shareholders' capital.

Greg: Our team is laser focused on continually improving our capital efficiency and our outstanding operational performance through the first quarter gives us confidence so what we can achieve through the rest of the year.

Greg: We expect our second quarter production to average approximately 595000 barrels of oil equivalent per day, including about 205000 barrels of oil and condensate per day.

Greg: Oil and condensate production should remain largely flat through the end of the year. We expect our second half natural gas volumes to be higher than the first half of the year, as gas systems in western Canada are currently full in anticipation of LNG Canada coming online, which is backing out volumes. Our full year gas guidance remains unchanged. As a reminder, all of our capital is directed to oil and condensate development. Our capital spend will come in around $575 million in the second quarter, which reflects an acceleration of activity in the Montany thanks to our efficient integration of the newly acquired assets.

Greg: Oil and condensate production should remain largely flat through the end of the year.

Greg: We expect our second half natural gas volumes to be higher than the first half of the year as gas systems of Western Canada are currently full in anticipation of LNG, Canada coming online, which is backing out volumes are full year gas guidance remains unchanged. As a reminder, all of our capital is directed to oil and condensate development.

Greg: Our capital spend will come in around $575 million in the second quarter, which reflects an acceleration of activity in the montney. Thanks to our efficient integration of the newly acquired assets.

Greg: Although our full year capital plans remain unchanged, we have significant flexibility and can be agile in adjusting activity levels across the program should conditions warrant.

Greg: Are there were although our full year capital plans remain unchanged, we have significant flexibility and can be agile in adjusting activity levels across the program should conditions warrant.

Greg: Let's shift now to the Asset Level Results. Across our acreage footprint, our Permian well performance continues to deliver. On slide 10, the chart on the left shows our 2025 Permian Type Curve, unchanged from last year. Our 2024 performance essentially painted the curve with the results from 145 gross wells, and our early 2025 performance is equally in line. As planned, Q1 was a relatively heavier quarter for bringing new wells on stream, with 53 net turn-in lines, or about 40% of our 2025 program. This combined with a large number of turn-in lines at the end of last year led to a growth in oil and condensate volumes quarter over quarter to 131,000 barrels per day.

Greg: Let's shift now to the asset level results.

Greg: Across our acreage footprint, our Permian well performance continues to deliver on.

Greg: On Slide 10, the chart on the left shows our 2025 Permian type curve unchanged from last year, our 2024 performance essentially painted the curve with the results from 145 gross wells and our early 2025 performance is equally in line.

Greg: As planned Q1 was a relatively relatively heavier quarter for bringing new wells on stream with 53 net turn in lines or about 40% of our 2025 program.

Greg: This combined with a large number of turn in lines at the end of last year led to a growth in oil and condensate volumes quarter over quarter to 131000 barrels per day.

Greg: As we return to a more routable level of activity for the remainder of the year, with four rigs and one frack crew, we expect oil and condensate volumes to stabilize at around 120,000 barrels per day from Q2 onward. Our first quarter drilling speed averaged more than 2,000 feet per day, with a pace setter of more than 2,800 feet per day. On completions, our first quarter average completed feet per day was about 3,800 feet. When looking at our trammel fracked wells in isolation, we average 4,400 completed feet per day. These cycle time improvements result in lower costs.

Greg: As we returned to a more ratable level of activity for the remainder of the year with four rigs and one Frac crew, we expect oil and condensate volumes to stabilize at around 120000 barrels per day from Q2 onward.

Greg: Our first quarter drilling speed averaged more than 2000 feet per day with a pace setter of more than 2800 feet per day.

Greg: On completions, our first quarter average completed feet per day was about 3800 feet.

Greg: When looking at our trauma Fracked wells in isolation, we averaged 4400 completed feet per day.

Greg: These cycle time improvements result in lower costs, our pacesetter D&C cost is among the best in the industry at less than $600 per foot.

Greg: Our pace setter DNC cost is among the best in industry at less than $600 per foot.

Greg: Our performance in the play continues to demonstrate the expertise of our team in maximizing value from this incredible resource.

Greg: Our performance in the play continues to demonstrate the expertise of our team in maximizing value from this incredible resource.

Greg: Moving on to the Montany, our team has done a tremendous job integrating the new assets into our portfolio in a safe and efficient manner. Our confidence in the quality of the acquired assets is reflected in the strong initial well results we are seeing on this acreage. Our three most recent pads are tracking 12-month cumulative condensate rates of 16 barrels per foot. These results are consistent with the assumptions in our acquisition case and are a powerful demonstration of the underlying rock quality we've acquired. In fact, the oil productivity of the new assets competes heads up with that of the top counties in the Midland Basin.

Greg: Moving on to the Montney our team has done a tremendous job of integrating the new assets into our portfolio in a safe and efficient manner.

Greg: Our confidence in the quality of the acquired assets is reflected in the strong initial well results. We are seeing on this acreage.

Greg: Our three most recent pads are tracking 12 months cumulative condensate rates of 16 barrels per foot. These.

Greg: These results are consistent with the assumptions in our acquisition case and are a powerful demonstration of the underlying rock quality we've acquired.

Greg: In fact, the oil productivity of the new assets competes heads up with out of the top counties in the Midland Basin. The returns are also highly competitive thanks to lower well cost lower royalties and similar oil price realizations.

Greg: The returns are also highly competitive, thanks to lower well costs, lower royalties, and similar oil price realizations. So far, the wells are performing very well, as expected, and we are looking forward to delivering our first Ovintiv end-to-end designed wells late in the third quarter. We are the second largest condensate producer in the Montany. We are currently producing about 55,000 barrels per day of oil and condensate. We were below that level in the first quarter due to the timing of the acquisition close. But from now through the end of the year, we expect our run rate to remain relatively flat.

Greg: So far the wells are performing very well as expected and we're looking forward to delivering our first opened are India and designed wells late in the third quarter.

Greg: We are the second largest condensate producer in the Montney. We're currently producing about 55000 barrels per day of oil and condensate.

Greg: We were below that level in the first quarter due to the timing of the acquisition close but from now through the end of the year, we expect our run rate to remain relatively flat.

Greg: Condensate is the primary driver of value in the play, and since there is a structural long-term deficit in the Western Canadian market, it should continue to trade tightly to WTI for the foreseeable future. In the first quarter, the average price realization for a Monteney Condensate was 95% of WTI. We've made great progress toward achieving our well-cost savings target, having already realized about $1 million of our $1.5 million target. All of the savings so far have come on the drilling side, as we have just recently started completions operations on the new acreage. We are seeing about a $600,000 per well cost savings from using a more efficient casing design and eliminating intermediate casing.

Greg: Condensate is the primary driver of value in the play and since there is a structural long term deficit in the western Canadian market. It should continue to trade tightly to WTO for the foreseeable future.

Greg: In the first quarter, the average price realization for our Montney condensate was 95% of <unk>.

Greg: We've made great progress toward achieving our well cost savings target, having already realized about $1 million over $1 5 million target.

Greg: All of the savings so far have come on the drilling side as we've just recently started completions operations on the new acreage.

Greg: We're seeing about a $600000 per well cost savings from using a more efficient casing design and eliminating intermediate casing.

Greg: We are seeing another $400,000 savings from optimizing the directional profile of the wells, optimizing workflows, and using a single bit for our lateral run. We've taken about 10 days out of the drilling cycle time in the new assets, with a current average of less than 15 days spud to rig release. We've also fully integrated the acquired wells with our Operations Control Center. This allows us to remotely operate the wells and apply the same digital workflows used in our legacy MOTNE operations to optimize cash flow at the individual well level.

Greg: We are seeing another $400000 savings from optimizing the directional profile of the wells optimizing workflows and using a single bit for a lateral runs.

Greg: We've taken about 10 days out of the drilling cycle time, and the new assets. The current average of less than 15 days spud to rig release.

Greg: We've also fully integrated the acquired wells with our operations control Center.

Greg: This allows us to remotely operate the wells and apply the same digital workflows using our legacy montney operations to optimize cash flow at the individual well level.

Greg: I'm incredibly proud of the team and I'm looking forward to updating the market on our achievements throughout the year.

Greg: I'm incredibly proud of the team and I'm looking forward to updating the market on our achievements throughout the year.

Greg: Yeah.

Greg: In the Anadarko, we continue to benefit from the strong free cash flow generation from the asset, in part due to its exceptionally low base decline rate at about 16% per year. This asset represents about 15% of our total development program. It provides optionality in deploying capital and has minimal stay-flat capital requirements. The team remains on track to deliver average DNC costs of about $550 per foot. A reduction of about $100 per foot year over year. The returns in the play remain strong, with price realizations averaging 102% of WTI and 104% of NYMEX in the first quarter.

Greg: In the Anadarko, we continue to benefit from the strong free cash flow generation from the asset in part due to its exceptionally low base decline rate at about 16% per year.

Greg: This asset represents about 15% of our total development program. It provides optionality in deploying capital and has minimal stay flat capital requirements.

Greg: The team remains on track to deliver average D&C cost of about $550 per foot.

Greg: A reduction of about $100 per foot year over year.

Greg: The returns and the returns into play remains strong with price realizations, averaging 102% of <unk> and 104% of Nymex in the first quarter.

Greg: We plan to run an average of 1.5 rigs in the play this year, delivering a 25-35 well program.

Greg: We plan to run an average of 1.5 rigs in the play this year delivering 25% to 30, delivering a 25% to 35 well program.

Greg: This will grow our oil and condensate volumes to around 30,000 barrels per day, where we plan to maintain it for the remainder of the year.

Greg: We'll grow where oil and condensate volumes to around 30000 barrels per day, where we plan to maintain it for the remainder of the year.

Brendan Mccracken: I'll now turn the call back to Brendan. Thanks Greg, and thanks to our team who safely delivered another strong quarter, meeting or beating all our targets and delivering cash flow per share and free cash flow above consensus estimates. Our focus remains on maximizing efficiencies, generating significant free cash flow, and reducing debt. Our business is resilient thanks to the depth and quality of our inventory, our leading capital efficiency, the flexibility of our 25 program, and the strength of our balance sheet. Our focus on execution excellence, disciplined capital allocation, and driving profitability have put us in a position of strength, both for today's environment and for the future.

Brendan Mccracken: I'll now turn the call back to Brendan.

Brendan Mccracken: Thanks, Craig and thanks to our team has safely delivered another strong quarter meeting or beating all our targets and delivering cash flow per share and free cash flow above consensus consensus estimates.

Brendan Mccracken: Our focus remains on maximizing efficiencies generating significant free cash flow and reducing debt.

Brendan Mccracken: Our business is resilient, thanks to the depth and quality of our inventory, our leading capital efficiency and flexibility of our 25 program and the strength of our balance sheet.

Brendan Mccracken: Our focus on execution excellence disciplined capital allocation and driving profitability have put us in a position of strength both for today's environment and for the future.

Brendan Mccracken: This concludes our prepared remarks.

Brendan Mccracken: This concludes our prepared remarks, operator, we're now ready to open the line for questions.

Operator: Operator, we're now ready to open the line for questions. Thank you. Ladies and gentlemen, as a reminder, you can join the queue to ask a question by pressing star 1.

Brendan Mccracken: Okay.

Thank you.

Brendan Mccracken: Ladies and gentlemen.

Brendan Mccracken: You can join the queue to ask a question by pressing star one.

Operator: We will now begin the question and answer session and go to the first caller.

Brendan Mccracken: We'll now begin the question and answer session and go to the first caller.

Arun Jayaram: First question comes from Arun Jayaram at J.P. Morgan. Please go ahead. Yeah, good morning, gentlemen. I wanted to ask around how you're thinking around full year CapEx.

Evan: First question comes from Evan <unk> with J P. Morgan. Please go ahead.

Evan: Yes, good morning, gentlemen, I wanted to ask around how youre thinking around full year capex.

Brendan Mccracken: If you use the midpoint of the 2Q guide, you know, OVV would have spent, you know, 54% of the total $2.2 billion budget in first half, just confidence on hitting your target because you'd have to downshift capital call to around $500 million a quarter in the back half of the year. Yeah, Arun, thank you for the question and you got the numbers right and full confidence. It's really completely an activity story, so this makes it really easy to follow that path. What you're seeing is a bit of an activity downshift off of the back of integrating the new Montney assets.

Evan: If you use the midpoint of the <unk> guide.

Evan: It will be we would have spent 54% of the total 2.2.

Evan: <unk> billion dollars budget in the first half just confidence on hitting your target because you'd have to downshift capital call to around $500 million a quarter in the back half of the year.

Evan: Yeah Arun. Thank you for the question and you got the numbers right and full confidence it's really completely in activity story. So.

Evan: This makes it really easy to to follow that path, what youre seeing is.

Evan: A bit of an activity downshift off the back of integrating the new Montney assets, we just dropped the rig that we inherited.

Brendan Mccracken: We just dropped the rig that we inherited from the last rig that we inherited from Paramount. We just dropped that, so that's part of the capital deceleration that's happening. We had a little bit of Uinta capital that pre-closed that was in the Q1 number, so obviously that's gone. And then because, as Greg pointed out, we're drilling those Montney wells already 10 days faster than the prior operator, that's meant some activity has pulled forward into Q2 in the Montney in particular, and so it's purely an activity story, so 100% confidence on the capital guide. In fact, what we'll be looking to do in this environment is find savings as we go through the year.

Speaker Change: The last rig that we inherited from Paramount, we just dropped that so that's part of the capital deceleration that's happening we had a little bit of view into capital that pre close that was in the Q1 numbers. So obviously, that's gone and then because as Greg pointed out we are drilling those montney wells already 10 days faster than the prior art.

Speaker Change: <unk> that's meant some activity is pulled forward into Q2 in the Montney in particular and so so it's purely an activity sorry, so 100% confidence on the on the capital Guide in fact, we will be looking to do in this environment is is find savings as we go through the year.

Arun Jayaram: Great.

Speaker Change: Great.

Arun Jayaram: Follow-up is maybe for Greg. Greg, you highlighted your expectations for oil condensate production for each asset caught, 120 in the Permian, 55 in the Montane, and around 30 in the Anadarko.

Speaker Change: Follow up is maybe for Greg Greg you highlighted your expectations for oil condensate production for each asset.

Speaker Change: $1 20 in the Permian 55 in the Montney and around 30 in the Anadarko just maybe a question here you delivered 24, K B D of oil condensate production in the Anadarko Basin was a little bit below what we're modeling and just kind of confidence to bring that up.

Greg: Just maybe a question here. You delivered 24 kBD of oil condensate production in the Anadarko Basin. It was a little bit below what we're modeling, and just kind of confidence to bring that up to 30 over the balance of the year.

Speaker Change: To 30 over the balance of the year.

Greg: Yeah, thanks for the question, Arun. And yeah, your numbers are spot on for the, you know, the Permian and the Montany will be 120,000 barrels a day starting in the second quarter in the Permian. The Montany, we're at 55 today and confident we'll be able to keep that flat. In the Anadarko, if you'll recall, you know, the end of last year, we didn't have any completion activity. So we picked up our completion crews in January, started completing wells and started growing volumes through the quarter. Looking here into the most recent activity in April, we were at 28,000 barrels a day in that asset.

Speaker Change: Yeah. Thanks, Thanks for your question Arun.

Speaker Change: And yes your numbers are spot on for the Permian and the Montney will be 120000 barrels a day starting in the second quarter in the Permian. The Montney. We're at 55 today and confident we'll be able to keep that flat.

Speaker Change: Anadarko, if you'll recall at the end of last year, we didn't have any completion activity. So we picked up our completion crews in January started completing wells and started growing volumes through the quarter.

Speaker Change: Looking here into the most recent activity in April we were at 28000 barrels a day and that asset.

Greg: And so very confident we'll be able to grow that to 30 and keep it at 30 for the rest of the year. So very confident the numbers teams are executing well. It's kind of gone as planned as far as that goes.

Speaker Change: And so very confident we'll be able to grow that to 30 and keep it at 30 for the rest of the year. So very confident in the numbers teams are executing well, it's kind of gone as planned as far as that goes.

Arun Jayaram: Great, thanks a lot.

Speaker Change: Great. Thanks, a lot thanks.

Dan: Thanks, Dan.

Operator: Thank you.

Speaker Change: Thank you next question comes from Gabe Daoud Cowen. Please go ahead.

Gabe Daoud: The next question comes from Gabe Daoud at TD Cowan. Please go ahead. Thanks. Hey, morning, everyone. I appreciate the time.

Thanks, Hey, good morning, everyone I appreciate the time.

Gabe Daoud: Brendan or Greg, maybe, just curious if we could start on the Permian. I guess maybe following up a bit on Arun's question, but you guys have had a pretty good momentum there with volume significantly above what you consider, you know, the run rate of 120,000 barrels a day of oil and condensate. Just curious how you think Permian trends the rest of the year. I know 1Q was pretty heavy from a turn standpoint, but just curious how much conservatism is maybe in that 120,000 barrel a day number. Yeah, I think Gabe, great, great question. And yeah, appreciate the acknowledgement of the strong Permian performance.

Speaker Change: Brendan or Greg maybe just curious if we could start in the Permian I guess, maybe following up a bit on everyones question, but yeah.

Speaker Change: Do you guys have had a.

Speaker Change: Pretty good momentum there with volumes significantly above where you consider.

Speaker Change: The run rate of 120000 barrels a day of oil and condensate just curious how you think Permian trend the rest of the year I know <unk> was pretty heavy for maternal line standpoint, but just curious how much conservatism is maybe in that 120000 barrel a day number.

Speaker Change: Yes, I think Gabe.

Gabe: Great question and I appreciate the acknowledgement of the strong Permian performance, you know really what's been driving that is really strong wells in.

Brendan Mccracken: You know, really, what's been driving that is is really strong wells. And, you know, What we're seeing is exactly what you described, is a bit of an activity cadence story. So, you know, with the 53 turn in lines in Q1, stepping down to sort of more like a 27 rateable over the rest of the year, you know, you just have a little bit of a production push in the first half of the year, and then that'll stabilize out at that 120. I would say, you know, to your question around conservatism, look, the wells have just been really strong.

Gabe: What we're seeing is exactly what you describe as a bit of an activity cadence story. So.

Gabe: With the 53 turn in lines in Q1 stepping down to sort of more like a 27 ratable over the rest of the year.

Gabe: You just have a little bit of a production push in the in the first half of the year and then that'll stabilize out at that 120.

Gabe: I would say to your question around conservatism look the wells have just been really strong and at a time when there's a lot of discussion.

Brendan Mccracken: And at a time when, you know, there's a lot of discussion, even this week, about productivity per foot and how is that going to trend across the Permian, but also the broader North American asset base, you know, we're just thrilled that our team's continuing to find ways to innovate and drive productivity. I think that's very differentiating. You know, broadly speaking, we've been calling it the late middle innings of shale, and where you're seeing the geological degradation and the innovation has kind of been fighting to a draw really back to 2017. And we're just starting to see that the early erosion of type well performance broadly across the industry.

Gabe: Even this week about.

Gabe: Productivity per foot and how is that going to trend across the Permian, but also the broader north American.

Gabe: Asset base.

Gabe: We're just thrilled that our teams continuing to find ways to innovate and drive productivity I think that's very differentiating.

Gabe: You know broadly speaking.

Gabe: We've been calling it the late middle innings of shale and where youre seeing the geological degradation in the innovation has kind of been fighting to a draw really back to 2017, and we're just starting to see that the.

Gabe: The.

Gabe: Early erosion of type well performance broadly across the industry and what we think is happening is the leading operators are able to continue to.

Brendan Mccracken: And what we think is happening is the leading operators are able to continue to use their private data sets, use their cultures and their expertise to drive productivity improvements. And then, you know, perhaps the more tier two, lower sophistication operators are struggling to keep up. And so you're seeing this bifurcation of performance. So I think it is a real differentiation factor for us and something that is very valuable for our investors. Thanks Brendan, that's helpful.

Gabe: To use their private datasets used their cultures and their expertise to drive productivity.

Gabe: Productivity improvements and then.

Gabe: Perhaps the more tier two.

Gabe: Lower sophistication operators are struggling to keep up and so youre seeing this bifurcation of performance and so I think it is a real differentiation factor for us and something that is very.

Gabe: A very valuable for our investors.

Speaker Change: Sure sure Thanks, Brandon Thats helpful.

Gabe Daoud: I guess this follow-up would be a higher-level question, recent Canadian election. Curious if you could maybe give us your thoughts on how that may or may not impact your mining operations. Thanks guys. Yeah, no, appreciate it. Obviously, just had a federal election in Canada, just had the prime minister in DC yesterday. So, watching that closely, I think there's a just a tremendous opportunity for Canada here. You know, Canada finds itself in a real, you know, moment to be able to grow its economy tremendously and energy is going to be a huge foundational part of that.

Gabe: Yes.

Gabe: Follow up.

Gabe: It would be a higher level question recent Canadian election curious if you could maybe give us your thoughts on how that may or may not impact your montney operations. Thanks, guys.

Yeah No. Appreciate it obviously you just had a federal election in Canada, just had the prime Minister in D. C yesterday so.

Gabe: While watching that closely I think there's just a tremendous opportunity for Canada here.

Gabe: Canada find itself in a real.

Gabe: Moment to be able to to grow its economy tremendously and energy is going to be a huge foundational part of that.

Brendan Mccracken: So, you know, we're watching closely cabinet selections are next week. So, we'll get a chance to see how Prime Minister Carney fills out his leadership team.

Speaker Change: So we're watching closely cabinet selections are next week, so we'll get a chance to see how prime Minister Kearney fills out his leadership team.

Brendan Mccracken: And we just think there's several really key priorities that we'd love to see the Canadian government focus on to achieve that economic growth. You know, the first one is market access. There's obviously tension between Canada and the US today on trade. And Canada has the opportunity to enhance its market access, particularly for its energy products to the world, both gas and oil. And we think that that is a real, should be a real priority for the new government. Regulatory reform and regulatory simplification, obviously a huge opportunity both in the U.S. and Canada, but that's something that Canada really needs to address from a competitiveness perspective that could really help.

Speaker Change: And we just think there are several really key priorities that we'd love to see the Canadian government focus on to.

Speaker Change: To achieve that economic growth.

Speaker Change: First one is market access.

Speaker Change: There's obviously a tension between Canada and the U S. Today on trade.

Speaker Change: Canada has the opportunity to enhance its market access, particularly for its energy products to the world both gas and oil in and we think that that is a real.

Speaker Change: Should be a real priority for the new government.

Speaker Change: Regulatory.

Speaker Change: Reform and regulatory simplification, obviously, a huge opportunity.

Speaker Change: Both in the USA and Canada, but that's something that Canada really needs to to address from from a competitiveness perspective, it could could really help and.

Brendan Mccracken: And then also just generally attracting investment. We obviously see the case and the opportunity for the resource in Canada.

Speaker Change: And then also just generally attracting investment.

Speaker Change: We obviously see the case and the opportunity for the resource in Canada, We made a big investment there earlier this year.

Gabe Daoud: We made a big investment there earlier this year, and we think the new government can do a lot to attract investment to Canada that would be really exciting and really create economic growth for the country going forward. Thanks so much, Brendan. I appreciate your thoughts. Yeah, thanks, Gabe. Appreciate it.

Speaker Change: And we think the new government can can do a lot to attract investment to Canada that would be really exciting and really create economic growth for the country going forward.

Speaker Change: Thanks, so much farther I appreciate your thoughts yes.

Speaker Change: Yes, Thanks, Gabe I appreciate it.

Doug Leggate: Thank you next question comes from Doug Leggate at Wolfe Research. Please go ahead.

Doug Leggate: Next question comes from Doug Leggate at Wolf Research. Please go ahead. Good morning, guys. I appreciate the opportunity to get on. Brendan, I wonder if I could ask you about the relative outlook for oil and gas in terms of how it plays into your capital allocation. You walked through the inventory depth earlier, but if I put it to you that obviously, we've got a lot of uncertainty around oil, depending whether or not Saudi has a bad day or not. But there is a constructive outlook for gas. How do you think then about relative capital allocation, particularly to the Anadarko?

Speaker Change: Okay.

Doug Leggate: Good morning, guys I appreciate the opportunity to get on.

Doug Leggate: Brendan I Wonder if I could ask you about the relative outlook for oil and gas in terms of how it plays into your capital allocation you walked through the inventory depth earlier, but.

Speaker Change: If I put it to you that.

Doug Leggate: Obviously, we've got a lot of uncertainty around the oil, depending whether or not Saudi has a bad day or not.

Doug Leggate: There is a constructive outlook for gas.

Doug Leggate: How do you think then about relative capital allocation, particularly to the Anadarko.

Brendan Mccracken: And if I can elaborate just a little bit on my question. If the gas price outlook is better, how does that change your view of a decade of inventory? Does that number get higher if you had a different view on the gas price?

Doug Leggate: And if I can elaborate just a little bit in my question.

Doug Leggate: If the gas price outlook is better how does that change your view of a decade of inventory does that number get higher.

Doug Leggate: If you had a different view on the gas price and I've got a quick follow up for.

Speaker Change: On the balance sheet.

Brendan Mccracken: Yeah, yeah, maybe just take that last part first, Doug. Obviously, if we slowed oil, I think what your question was, if we slowed oil-directed drilling and shifted capital more towards gas, that would increase the oil duration, just the algebra of it. I think as far as how do we think about the capital allocation between gas and oil today, it still, for us, comes down to a fundamental question around growth first. And why I say that is, you know, we've been talking for a while now about the role of capital allocation and how we think about creating value for our shareholders.

Doug Leggate: Yes, maybe just take that last part first Doug.

Obviously, if we slowed oil I think what your question was if we slowed oil directed drilling and shifted capital more towards gas that would increase the oil duration, just just the algebra of it.

Doug Leggate: I think as far as how do we think about capital allocation between gas and oil today.

Doug Leggate: It's still for us comes down to a fundamental question around growth first.

Doug Leggate: While I say that is.

Doug Leggate: We've been talking for a while now about.

Doug Leggate: The the role of capital allocation and how we think about creating value for our shareholders.

Brendan Mccracken: And if we choose to put that capital towards an incremental rig line, whether it's oil or gas, we have to weigh that against the other option, which is to either reduce debt or buy shares back. And where we've been left and where we continue are today is that it's a better cash flow per share outcome with less risk from a commodity perspective, as well as the execution risk, to just buy the shares back. And so that's a function of how we're valued today. And so we continue to see the right thing to do for our business to stay in maintenance mode on both gas and oil.

Doug Leggate: If we choose to put that capital towards an incremental rig line, whether it's oil or gas.

Doug Leggate: We have to weigh that against the other option, which is tied to reduce debt or.

Doug Leggate: Buy shares back and where we've been left and where we continue our today is that it's a better cash flow per share outcome with with less risk from a commodity perspective as well as the execution risk.

Doug Leggate: To just buy the shares back.

Doug Leggate: So that's a function of how we're valued today.

Doug Leggate: And so we continue to see the right thing to do to just for our business to stay in maintenance mode on both gas and oil.

Brendan Mccracken: Should that evolve and change in the case for growth to open up, for that gate to open up, then absolutely the optionality we have in their portfolio would be very valuable to choose between either gas or oil. And in particular, on the Anadarko side, one of the things you like about our Anadarko asset is it's NYMEX effectively. I think the numbers were 102% of NYMEX realization in the quarter. So you get that torque to NYMEX pricing there.

Doug Leggate: Should that evolve and change and in the case for growth two to open up for that gate to open up then absolutely to the Optionality. We have in their portfolio would be very valuable to choose between either gas or oil and in particular on the Anadarko side.

Doug Leggate: One of the things you like about our Anadarko asset is it's Nymex effectively I think I think the numbers were 102% of Nymex realization in the quarter. So so you get that torque to Nymex pricing there.

Doug Leggate: I guess I don't want to hog the call here, but I guess I was thinking more that if the gas price outlook is better than your base case, does the inventory depth defined at 10 years get bigger? On oil or gas, Doug? On gas.

Speaker Change: I guess I don't know.

Speaker Change: Hold the call here, but I guess I was thinking more of that if the gas price outlook is better than your base case does the inventory depth defined at 10 years get bigger.

Doug Leggate: But on oil or gas Doug on gas on gas.

Brendan Mccracken: Well, our gas inventory is, like, 20-plus years. I'll take it offline, I'm in the economics of the Anadarko, but we can come back to that.

Speaker Change: While our gas inventories like 20 plus years.

Speaker Change: So, yes, sorry, I'll take it offline I meant the economics of the Anadarko, but we can come back to that.

Speaker Change: Yeah.

Corey Code: My follow-up is for Corey, and Corey, forgive me for this one, because the question we get a lot is that your free cash flow outlook, we look at you on a DCF basis, so we kind of agree that there's no question your stock is undervalued. Question is, what do you do with that? What can you do about it?

Speaker Change: My follow up is for Korea, and Korea forgive me for this one because.

Speaker Change: The question, we get a lot is.

Speaker Change: Your free cash flow outlook, we look at you on a DCF basis. So we kind of agree that there is no question your stock is undervalued.

Speaker Change: Question is what do you do with that and what can you do about it.

Corey Code: And when I hear CFOs talk about their balance sheet, they often talk about credit metrics, credit quality, debt to EBITDA. Very seldom do you talk about capital structure. And what I mean is your equity value is $8.5 billion, your debt's $5.5 billion, and the implied volatility of your equity as a consequence of that is arguably amplified, especially in a volatile commodity market.

Speaker Change: And when I hear CFO talk about.

Speaker Change: Their balance sheet, they often talk about credit metrics credit quality debt to EBITDA very seldom do you talk about capital structure and what I mean is your equity values eight 5 billion.

Speaker Change: Our debt is five 5 billion on the implied volatility of your equity as a consequence of that.

Speaker Change: Is arguably.

Speaker Change: <unk>, especially in a volatile commodity market.

Corey Code: So my question is, why buy back stock and not reset the capital structure towards equity, reduce the equity volatility and re-rate the stock rather than using buybacks as a somewhat, I'd say, flawed perception of exploiting a dislocation in value. Yeah, I mean, your, your observations are correct. I mean, some of the metrics that we tend to point to are, you know, intend to be a little bit simpler, kind of backward looking, you know, third party, it's, it's really just to simplify the conversation on a conference call, it's obviously much more nuanced than that, as you're pointing out.

Speaker Change: My question is why buyback stock.

Speaker Change: Not reset the capital structure towards equity reduced the equity volatility and re rate the stock rather than using buybacks.

Speaker Change: Somewhat I'd say, Florida perception of.

Speaker Change: Exploiting a dislocation in value.

Speaker Change: Yes, I mean, your your observations are correct I mean, some of the metrics that we tend to point to our.

Speaker Change: Men tend to be a little bit simpler kind of backward looking third parties. It's really just to simplify the conversation on a conference call. It's obviously much more nuanced than that as you're pointing out is.

Corey Code: You know, as we think about and Brendan kind of alluded to this in the capital allocation conversation, look, we think there's room for both. You know, our, our position on our capital structure is, yeah, we'd like to have less debt in there, we think our equity will, will accrete that value from debt reduction. So I agree with you. But I also think at this level of free cash flow yield and relative value in our stock, we have enough free cash flow to do both. And so, you know, we often get the question on the debate on is 50-50 the right, the right place to be.

Brendan Mccracken: As we think about and Brendan kind of alluded to this in the capital allocation conversation look we think there's room for both.

Brendan Mccracken: Our our position on our capital structure is yet we'd like to have less debt in there we think our equity.

Brendan Mccracken: It will accrete that value from debt reduction so I agree with you, but I also think at this level of free cash flow yield and the relative value in our stock we have enough free cash flow to do both and so we often get the question on the debate on is 50 50, the right the right place to be and we talk about it all the <unk>.

Corey Code: And we talk about it all the time. And we think that's a good spot to be because we're going to make progress on debt reduction, which I think Brendan highlighted the progress we made even from before the acquisition to today. So, you know, I think you're right, it's probably just a little bit more simple as we described it on a conference call and a little bit more nuanced as you have that debate every day.

Brendan Mccracken: And we think that's a good spot to be because we're going to make progress on debt reduction, which I think Brendan highlighted.

Brendan Mccracken: The progress we made even from before the acquisition to today. So you know.

Brendan Mccracken: I think you're right, it's probably just a little bit more simple as we describe it on a conference call in a little bit more nuanced as you have that debate every day.

Corey Code: I appreciate you taking the question guys, thank you. Thank you.

Brendan Mccracken: I appreciate you taking the question guys. Thank you.

Doug Leggate: Thanks, Doug.

Speaker Change: Thank you. Our next question comes from Josh Silverstein at UBS. Please go ahead.

Josh Silverstein: Next question comes from Josh Silverstein at UBS. Please go ahead. Yeah, good morning, guys. Maybe just following up on the question before about kind of pausing activity. Given the operational efficiency gains that you guys have developed in the Permian via Trimal Crack, would pausing any portion of this kind of cause a bigger disruption? Meaning, like, does it not even make sense to stop just because of how much infrastructure you guys have there and kind of the flywheel stopping that or a portion of that would hurt the rest of the program? Yeah, Josh, I don't, I don't think it's so much the flywheel from You know, in efficiency or innovation perspective, it's more the free cash flow flywheel that's, that's, you know, telling us, hey, don't preemptively shrink the business.

Doug Leggate: Okay.

Josh Silverstein: Yes. Good morning, guys, maybe just to follow up my question before about kind of.

Doug Leggate: Housing activity.

Doug Leggate: Given the operational efficiency gains that you guys have developed in the Permian via trauma Frac.

Doug Leggate: Pausing any portion of this kind of cause a bigger to disruption, meaning like does that even make sense to stop just because of how much infrastructure you guys have there and kind of the flywheel stopping that or a portion of that would hurt the rest of the program.

Josh Silverstein: Yes, Josh I don't I don't think its so much the <unk>.

Speaker Change: Flywheel from.

Doug Leggate: Inefficiency or AR.

Doug Leggate: Innovation perspective, it's more of the free cash flow a flywheel that's.

Doug Leggate: Telling us Hey don't preemptively.

Brendan Mccracken: Because, you know, we could cut capital this year and not have a huge outsized effect on this year's free on this year's production. So we could maximize free cash flow in 2025. But then we'd have, you know, hole to fill in 2026. So our judgment is when we're earning, you know, really strong corporate rates of return on our investment today at these prices, when we're generating free cash flow, that'll let us both reduce debt and buy shares back. It doesn't make sense to preemptively shrink the business at this at this commodity environment.

Doug Leggate: Shrink the business.

Doug Leggate: We could cut capital this year and not have a huge outsized effect on this year's free on this year's production. So we could maximize free cash flow in 2025, but then we'd have a hole to fill in 2026. So our judgment is when we're earning you know really strong corporate rates of return on our investment today at these.

Doug Leggate: Prices when we're generating free cash flow that will let us both reduce debt and buy shares back it.

Doug Leggate: It doesn't make sense to preemptively shrink the business at this at this commodity environment, but we've got the ability to take that decision if we need to.

Brendan Mccracken: But, you know, we've got the ability to take that decision if we need In the money, can you talk through some of the long-term solutions you guys might be thinking on on the gas side? Obviously you have a good amount of capacity to get out But you know, do you just kind of see some of these bottlenecks coming every once a year or every other year? Something you have to deal with or are there other solutions in place that you guys could work with? No, I think this one's a very unique one because of the startup of the LNG.

Doug Leggate: Got it and then.

Doug Leggate: And the money can you talk through some of the long term solutions you guys might be thinking on on the gas side. Obviously, you have a good amount of capacity to get out but.

Doug Leggate: Do you just kind of see some of these bottlenecks coming every once a year every other year.

Doug Leggate: I mean, you have to deal with or are there other solutions in place that you guys can work with.

Doug Leggate: No I think this one is a very unique one because of the startup of the LNG.

Brendan Mccracken: You know, this is the first LNG exports coming out of Canada. So lots of excitement, lots of producer activity drilling into it and preparing for it. So I think this one is kind of a unique event as opposed to a recurrent recurrent event.

Doug Leggate: This is the first LNG exports coming out of Canada, So lots of excitement lots of producer activity drilling into it and preparing for it so.

Doug Leggate: This one is kind of a unique event as opposed to a recurrent recurrent event.

Doug Leggate: Thanks, guys.

Josh Silverstein: Yeah, thanks, Josh.

Josh Silverstein: Yeah. Thanks, Josh.

Speaker Change: Thank you next question comes from Phillips Johnston of capital one. Please go ahead.

Phillips Johnston: Next question comes from Phillips Johnston at Capital One. Please go ahead. Hey, thanks for the call. Appreciate the comments about the very low free cash flow breakeven oil price and the strong returns at 50.

Josh Silverstein: Hey, thanks for the call.

Speaker Change: Appreciate the comments about the very low free cash flow breakeven oil price.

Josh Silverstein: Strong returns at 50.

Phillips Johnston: In a scenario where the macro does get worse and oil prices decline further, What price or what set of circumstances would in fact trigger a reduction in activity and which area or areas would you look to cut first? Yeah, thanks, Phillips. The, you know, the decision here is going to be based on the returns and free cash that is going to drive that decision. And so with today's setup, you know, we're still delivering strong returns and free cash down to $50 WTI. So looking out, if we saw the market drop below that 50 level, and it was likely to stay there for some time, you know, more than a day or something, then, you know, that's when we'd be driven to drop capital below that maintenance level.

Josh Silverstein: In a scenario, where the macro does get worse in oil prices decline further.

Josh Silverstein: What price or what set of circumstances would in fact trigger.

Josh Silverstein: A reduction in activity in which area or areas would you look to cut first.

Phillips: Yes. Thanks Phillips. The you know the decision here is going to be based on the returns and free cash that's going to drive that decision and so with today's setup.

We're still delivering strong returns and free cash down to $50 W.

Phillips: <unk>.

Phillips: So looking out if we saw the market drop below that 50 level on it was likely to stay there for some time.

Phillips: More than a day or something then.

Phillips: That's when we be driven to drop capital below that maintenance level.

Phillips Johnston: Okay, perfect.

Phillips: Okay, Perfect and then just looking at the <unk>.

Brendan Mccracken: And then just looking at the Canadian gas volumes that are exposed to ACO, obviously, that percentage steps up next year to around 40% or so. What's your outlook on the ACO market over the next several years as LNG exports start to ramp up? Yeah, you know, where we've been on this one is, you know, we feel like both Waha and AECO are fundamentally export markets. And so Canada's got the benefit of the LNG startup, which we think could have, you know, some tightening effect, but likely production just grows back into that new, new takeaway level.

Phillips: Canadian gas volumes that are exposed to eco obviously that percentage steps up next year to around 40% or so.

Phillips: What's your outlook on the acre market just over the next several years as LNG exports start to ramp up.

Phillips: Yes, where we are.

Ben: Ben on this one is.

Ben: We feel like both Baja and <unk> are fundamentally export markets and so.

Ben: Canada has got the benefit of.

Ben: The LNG startup, which we think could have some tightening effect, but likely production just grows back into that new new takeaway level.

Brendan Mccracken: And so our view has been to continue to diversify our market access away from ACO. And that's what you'll see us continue to do over time. So our, our team's been very busy at, you know, working on a variety of different options for us to do that. Everything from, you know, some international gas pricing exposure, more gas into the, the West Coast in Chicago and Don markets that we already do, to some of the emergent opportunities for behind meter projects and pet chem projects locally in Western Canada. So I think what you should expect from us over time is a, is sort of a basket of diversification.

Ben: And so our view has been to continue to diversify our market access away.

Ben: <unk> and Thats, what Youll see us continue to do over time.

Ben: Our team has been very busy yet.

Ben: Looking on a variety of different options for us to do that.

Ben: <unk> from.

Ben: Some international gas pricing exposure more gas into the.

Ben: West Coast, and Chicago, and Dawn markets that we already due to some of the emerging opportunities for it behind meter projects in pet Chem projects locally in Western Canada. So I think what you should expect from US over time is sort of a basket of diversification and.

Brendan Mccracken: And, you know, we think that's the right strategy for our, for our ACO exposure.

Ben: <unk>.

Ben: We think thats the right strategy for our for our <unk> exposure.

Phillips Johnston: Sounds good, thank you. Yeah, thanks, Phil.

Speaker Change: Sounds good thank you.

Alex: Yes, Thanks, Alex.

Operator: Thank you.

Speaker Change: Thank you next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: Next question comes from Neil Mehta at Goldman Sachs. Please go ahead. Yeah, thanks, Brendan and team. Just to build on those comments about local gas price, just talk about how you're thinking about AECO and WAHA pricing from here, you know, as you show on slide 24, the business does have a lot of torque to gas prices and doesn't always get credit for it.

Speaker Change: Yes, Thanks, Brendan and team. Thank you.

Speaker Change: Just to build on those comments about local gas price can you just talk about how youre thinking about.

Speaker Change: <unk> and Oaxaca pricing from here as you show on Slide 24, the business does have a lot of torque to gas prices and it doesn't always get credit for it but I think one of the challenges synthesis local prices. So just how you're thinking about.

Brendan Mccracken: But I think one of the challenges, some of those local prices, so just how you're thinking about those specific markers would be Yeah, Neil, I think, you know, our view is to produce gas in those places and not sell gas in those places. And so I think our 1Q realization was 87% in IMEX. So I think that shows up in that in that outcome. And so the plan go forward is to continue to expose our investors to Nimex or even greater than Nimex prices and not leave them, you know, selling our gas at AECO and WAHA.

Speaker Change: Specific markers that would be helpful.

Speaker Change: Yes, Neil I think.

Speaker Change: Our view is to produce gas in those places and not sell gas in those places and so.

Speaker Change: Our <unk> realization was with 87% of Nymex. So I think that shows up in that in that outcome.

Speaker Change: And so the.

Speaker Change: The plan go forward is to continue to to <unk>.

Speaker Change: Expose our investors to nymex or even greater than Nymex prices.

Speaker Change: And not leave them selling our gas at <unk>.

Brendan Mccracken: Yeah, makes sense.

Speaker Change: Yes.

Brendan Mccracken: And then royalties, obviously, on the way up, was a huge topic of conversation, but on the way down, it can cushion some of the volatility. So can you just talk about how the market should be thinking about the sensitivity north of the border? Yeah, no, absolutely. And we do have a really good sensitivity slide in the appendix that it'll kind of help you do the math, but you've got it captured. So as condensate prices come down, that lowers our condensate royalties and helps, you know, cushion that cash flow effect of the lower prices on the Canadian business.

Speaker Change: Yeah makes sense and then royalties obviously on the way up.

Speaker Change: With.

Speaker Change: Each topic of conversation, but on the way down.

Speaker Change: Hey, Ken.

Speaker Change: Cushion some of the VA.

Speaker Change: Volatility. So can you just talk about how the market should be thinking about that.

Speaker Change: Sensitivity.

Speaker Change: North of the border.

Speaker Change: Yeah, no absolutely and we do have a really good sensitivity slide in the appendix that kind.

Speaker Change: Kind of help you do the math, but you've got it captured so as as condensate prices come down that lowers our condensate royalties and helps.

Speaker Change: Cushing that cash flow effect of the lower prices on the Canadian business. So it is a nice.

Brendan Mccracken: So it is a nice kind of risk feature on the way down. All right, thanks, Brendan. Yeah, thanks. Thank you.

Speaker Change: Kind of a risked risked feature on the way down.

Speaker Change: Alright, Thanks, Brandon yes.

Speaker Change: Yes, thanks Neil.

Speaker Change: Thank you next question comes from Kevin Mccarty Pickering Energy. Please go ahead.

Kevin McCurdy: Next question comes from Kevin McCurdy at Pickering Energy. Please go ahead. Hey, good morning. Over the past few years, you've mostly emphasized your liquids-rich window, Vermotni. Just, you know, given the changing pricing dynamics, is there a reasonable scenario where you would change that? Or have you seen anything that would indicate your peers are pulling back in the liquids-rich area? Yeah, I think there's some signs of activity shift happening in Western Canada from the oilier parts, whether it's the oilier parts of the Montigny or some of the other conventional oil plays in Western Canada, there's some signs that that activity is shifting down just like it's shifting down in the Permian.

Kevin Mccarty: Hey, good morning.

Kevin Mccarty: Over the past few years, you've mostly emphasize your liquids rich window of the Montney just given the changing pricing dynamics is there a reasonable scenario, where you would change that.

Or have you seen anything that would indicate your peers are pulling back in the liquids rich area.

Kevin Mccarty: Yes, I think there is some signs.

Kevin Mccarty: Of activity shift happening in Western Canada from the oily or parts, whether it's the oily parts of the Montney or are the some of the other conventional oil plays in Western Canada. There are some signs that that activity is shifting down just like its shifting down in the Permian.

Brendan Mccracken: You know, I think what we're seeing is actually a relatively ordered behavior here where Companies that were pursuing growth investments are pulling that capital back to maintenance. Companies that have got higher breakeven Prices in their assets are maybe even pulling back below maintenance level, and then, you know, for us, we were already at the maintenance level, and so it makes sense for us to just kind of grind away on efficiency gains and use that to bolster free cash. So I think we're seeing some of that shift away.

Kevin Mccarty: I think what we're seeing is is actually a relatively ordered.

Kevin Mccarty: Behavior here, where.

Kevin Mccarty: Companies that we're pursuing growth investments are pulling that capital back to maintenance.

Kevin Mccarty: Companies that have got higher breakeven.

Kevin Mccarty: Prices in their assets or maybe even pulling back below maintenance level and then for US we were already at the maintenance level and so it makes sense for us to just kind of grind away on efficiency gains and use that to bolster free cash. So so I think we're seeing some of that shift away.

Brendan Mccracken: Obviously, we're big believers in a multi-product portfolio. Looking back, it's clearly been a decade plus for oil. And we've had the view looking forward, it's much less clear. Is this going to be a better decade to be in oil or a better decade to be in gas? It's a little less fundamentally clear to us. And so I think the right strategy, the best strategy for an EMP company is to have very low break-even options in both. Thank you. Very good explanation.

Kevin Mccarty: Obviously, we're big believers in a multi product portfolio looking back it's clearly been a decade plus for oil and we've had the view looking forward, it's much less clear.

Kevin Mccarty: Is this going to be a better decade to be an oil or a better decade to be in gas.

Kevin Mccarty: Little less fundamentally clear to us.

Kevin Mccarty: And so the.

Kevin Mccarty: I think the right strategy the best strategy for an E&P company has to have.

Kevin Mccarty: Very low breakeven auctions in both.

Kevin Mccarty: Got it thank you very good explanation.

Brendan Mccracken: And as a follow-up, just on the shareholder returns and the buybacks, would anything, you know, in commodity prices or in your share price, get you to move off that 50-50 split, you know, for instance, you know, leaning into more into the buybacks if your shares got really disconnected from mid-cycle valuation Yeah, I think, you know, look, I think there's a there's a natural synergy between the two. And, you know, Doug was asking this earlier is the the when you want to do buybacks is when the shares are low, and that happens to be when commodity typically when commodity prices are lower.

Speaker Change: And as a follow up just on the shareholder returns on the buybacks.

Kevin Mccarty: Would anything.

Kevin Mccarty: Commodity prices are in your share price get you to move off that 50 50 split for instance, leaning into more into the buybacks. If your shares got really disconnected from mid cycle valuations.

Kevin Mccarty: Yes, I think.

Kevin Mccarty: Look I think there is.

Kevin Mccarty: There is a natural.

Speaker Change: The synergy between the two and Doug was asking this earlier is the when you wanted to do buybacks. When the shares are low and that happens to be when commodity typically when commodity prices are lower and so.

Brendan Mccracken: And so we do think the balanced allocation today makes sense. Obviously, in in a future scenario, we we continue to take a look at that and we're not, you know, ideologically stuck in that spot. But today, it continues to be the right allocation choice for our shareholders. Thank you. Yeah. Thank you.

Speaker Change: We do think the balanced allocation today makes sense, obviously in a future scenario, we continue to take a look at that and we're not.

Speaker Change: Ideologically stuck in that spot, but today, it's continues to be the right.

Speaker Change: Allocation choice for our shareholders.

Speaker Change: Thank you.

Speaker Change: Yes. Thank you.

Kelly: Thank you next question comes from Kelly <unk> of Bank of America. Please go ahead.

Kaleinoheaokealaula Akamine: Next question comes from Kali Akamine at Bank of America. Please go ahead. Hey, good morning, guys. I've got two here on the matinee. I guess first one, some operators have highlighted higher steel prices due to tariffs, and you're kind of in the unique position of having operations both inside the U.S. and in Canada.

Speaker Change: Hey, good morning, guys I've got two here on the Montney I.

Speaker Change: I guess first one some operators have highlighted higher steel prices due to tariffs and youre kind of in the unique position of having operations both inside the U S and in Canada can you talk to the lower well costs in the Paramount assets and address whether that could have some downside from lower steel prices.

Brendan Mccracken: Can you talk to the lower well cost on the Paramount assets and address whether that could have some downside from lower steel prices? Yeah, hey, Clay, you know, great, great point. You know, all the steel that we're buying and using in the US is domestically sourced in the US. That is You know, a good thing from a tariff perspective, but of course, there's going to be some bleed through on domestic pricing. And so that's why we went ahead and pre-purchased that steel out through 25. So we don't have that tariff exposure pressure on us today.

Speaker Change: Yes, Hey, quake, great Great point.

Speaker Change: All the steel that we're buying and using in the U S is domestically so first in the U S.

Speaker Change: That is.

Speaker Change: Good thing from a tariff perspective, but of course, there's going to be some bleed through on domestic pricing and so that's why we went ahead and pre purchased that CLO through 25. So we don't have that tariff exposure.

Speaker Change: Pressure on us today.

Brendan Mccracken: And then on the Canadian side, of course, you know, that's an opportunity because Canada hasn't got those tariffs on global steel imports. So absolutely, that's a that's a possible tailwind differentially. But. Got it.

Speaker Change: And then on the Canadian side of course.

Speaker Change: That's an opportunity because Canada hasnt got those tariffs on global steel imports so.

Speaker Change: Absolutely that's a that's a possible tailwind differentially between the two.

Got it.

Brendan Mccracken: Second, I think you're importing U.S. style completions into Canada, and therefore, your well should be better than the previous operator. When do you think we'll start seeing your well design start to impact production? And when you roll this program into 2026, do you think the capital program will be at a similar level? Yeah, I think as we've mapped the timeline out, we'll see the first tills that are tip to tail, Ovintiv, drill and complete, they'll kind of start to hit at the end of the third quarter. So that's probably something we'll talk about on our third quarter call.

Speaker Change: You were importing U S now completions into Canada, and therefore, your well it should be better than the previous operator.

Speaker Change: When do you think we'll start seeing your well design start to impact production and when you rolled. This program. The 2026 do you think the capital program will be at a similar level.

Speaker Change: Yes, I think as we've mapped the timeline out we will see the first tells better tip to tail over into drilling complete, though they will kind of start to hit at the end of the third quarter. So that's probably something we'll talk about on our third quarter call.

Brendan Mccracken: So we're excited to do that. And, you know, I would say What, how we do it is, is best ideas and best innovations win. We don't really care which side of the border they come from. And so, you know, we've got knowledge sharing and data and innovation happening on both sides and back and forth. And that lets us be on the leading edge on completion design, both in. Permian, and the Anadarko, but also in the Montanese, certainly.

Speaker Change: So we're excited to do that and I would say.

Speaker Change: How we do it as best ideas and best innovations, when we don't really care, which side of the border they come from and so we've got knowledge sharing and data and innovation happening on both sides and back and forth and that lets us be on the leading edge on completion design, both in the Permian and the Anadarko, but.

Speaker Change: Also also in the Montney certainly.

Brendan Mccracken: Got it.

Brian: Got it thanks, Brian Yes.

Brendan Mccracken: Thanks, Brendan. Yeah, thanks, Clay. Thank you.

Glenn: Yes, thanks Glenn.

Speaker Change: Thank you next question comes from John Daniel Daniel <unk> Partners. Please go ahead.

John Daniel: Next question comes from John Daniel at Daniel Energy Partners. Please go ahead. Hey, guys. Thanks for including me.

John Daniel: Hey, guys, thanks for including me.

Greg: I got questions for you, Greg, on the Permian. The slide deck references the possibility of a spot crew. And I'm just curious, when you bring those spot crews in, do you deploy them on simulfrac and trimulfrac work, and if so, how does that performance typically track relative to the dedicated crew you guys have?

John Daniel: I got a question for you Greg on the Permian slide deck references.

Speaker Change: The possibility of a spot crew.

John Daniel: And I'm just curious when you bring that spot crews and are you do you deploy.

John Daniel: Deploy them on simultaneously Trammell Frac work and if so how does that performance typically track relative to the dedicated crew you guys have.

Greg: Yeah, thanks for the question, John. And, you know, we've had a long history of SimulFrac and TrimulFrac in the Permian with a number of operators. We've successfully performed both with, gosh, three or four different service providers. And so when we do get to tight spots in the schedule where we need to bring someone else in, we really don't see a significant change in our productivity. We're able to quickly shift over and SimulFrac or TrimulFrac with a third party provider. That being said, we're continually working with our Zeus fleet to try to reduce cycle time there and make that as efficient as possible so that we don't need spot crews.

John Daniel: Yes, Thanks for the question John and.

John Daniel: We've had a long history of Simon Frac and triangle Frac in the Permian with a number of operators.

John Daniel: Access really performed both with gosh, three or four different service providers and so when we do get to tight spots in the schedule, where we need to bring someone else and we really don't see a significant change in our productivity, we're able to quickly shift over and some will frac or travel frac with a third party provider.

John Daniel: That being said we are continually working with our Zeus fleet to try to reduce cycle time, there and make that as efficient as possible. So that we don't need spot crews. We ideally now that we've worked through the backlog of docs would like to get to a point where were four rigs one trauma frac crew year round, which we think is a good combination so but.

Greg: Ideally, now that we've worked through the backlog of ducks, we'd like to get to a point where we're four rigs, one TrimulFrac crew year-round, which we think is a good combination. But no real change when we're shifting to other service providers. There's still a lot of good, high-quality service providers we can use out there in the Permian.

John Daniel: No no real change when were shifting to other service providers are still a lot of good high quality service providers, we can use out there in the Permian.

Fair enough. Thank you for that and then just one follow up just looking at the Permian efficiency metrics in Q1.

Greg: Thank you for that.

Greg: And then just one follow-up, just looking at the Permian efficiency metrics in Q1, I don't know if you guys are willing to provide forward guidance on this, but how do you expect them to evolve over the course of this year? Can you remind me what they were back half of last year? And that's it for me.

Speaker Change: I don't know if you guys are willing to provide forward guidance on this but how do you expect them to evolve over the course of this year.

John Daniel: Can you remind me what they were back half of last year.

Greg: Thank you. Yeah, I think, you know, if you're just talking the pure cost efficiency, John, like, I think you've seen us come down over $50 a foot there, year over year. So, you know, pretty, pretty significant improvements. And I know, you know, lots of discussion around like, how much more can that come? And, you know, clearly, you know, these, these don't get easier with time. But I think what we're seeing is the, the opportunity really accruing to the to the sophisticated operators that have built the culture and the expertise to drive innovation, but then have also built the private data sets to work off of, you know, if you think about, you know, anything digital today is, is working off of a private data set.

John Daniel: Is it for me thank you.

Speaker Change: Yeah, I think if you just talk in a pure cost efficiency, John like I think you've seen has come down over $50 a foot there year over year, so pretty pretty significant improvements and I know.

Speaker Change: Lots of discussion around like how much more can that come in.

Speaker Change: Clearly.

Speaker Change: These don't get easier with time, but I think what we're seeing is that.

Speaker Change: The opportunity really accruing to the to the sophisticated operators that are built.

Speaker Change: The culture and the expertise to drive innovation, but then <unk> also built the private datasets to work off of.

Speaker Change: About.

Speaker Change: Anything digital today is working off of a private dataset and we've really focused on building a unique and deep private data set that helps us drive some of these efficiencies I think some of the decisions that we've been making around how to capture resource at the right price.

Brendan Mccracken: And, and we've really focused on building a unique and deep private data set that helps us drive some of these efficiencies. I think some of the decisions that we've been making around how to capture resource at the right price, how to, you know, not destroy the premium resource by cherry picking it, or upspacing it, you know, we've been in cube development mode for a long time. And then some of the things we've been doing on the innovation side, like trimal frack, and then some things we're doing to drive, you know, single bit runs, and, and, you know, really the fastest drilling pace in industry.

Speaker Change: Not destroy the premium resource by Cherry picking it.

Speaker Change: Our up spacing it we've been in cube development mode for a long time.

Speaker Change: And then some of the things we've been doing on the innovation side like triangle Frac and then some things we're doing to drive.

Speaker Change: Single bit runs in and really the fastest drilling pace.

Speaker Change: Industry.

Brendan Mccracken: Those are all representative or examples, I guess, of that overall approach. So I land in the spot of optimism on further efficiency gains, I think. You know, maybe it's not quite the same pace as the last five years, but but I don't think we're done. Okay.

Speaker Change: Those are all represented over examples I guess of that overall approach so.

Speaker Change: I land in the spot of optimism on further efficiency gains I think.

Speaker Change: Maybe it's not quite the same pace as the last five years, but I don't think we're done.

Operator: Well, I appreciate you guys giving me a chance to ask a question. Yeah. Thanks.

Speaker Change: Okay.

Speaker Change: I appreciate you guys give me a chance to ask a question.

Speaker Change: Yes, Thanks, Sean.

Operator: Thank you.

Speaker Change: Thank you at this time, we have completed the question and answer session and we'll turn the call back over to Mr for hoist.

Jason Verhaest: At this time, we have completed the question and answer session and will turn the call back over to Mr. Verhaest. Thanks, Joanna, and thank you, everyone, for joining us today.

Joanna: Thanks, Joanna and thank you everyone for joining us today, our call is now complete.

Operator: Our call is now complete.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect.

Joanna: Ladies and gentlemen, this concludes your conference call for today, we thank you.

Joanna: All participating and we ask that you. Please disconnect your lines.