Q1 2025 Infinity Natural Resources Inc Earnings Call
Okay.
Operator: Greetings and welcome to Infinity Natural Resources first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the prepared remarks.
Speaker Change: Greetings and welcome to Infinity Natural resources first quarter 2025 earnings conference call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: A brief question and answer session will follow the prepared remarks.
Operator: As a reminder, this conference is being recorded.
Speaker Change: As a reminder, this conference is being recorded.
Gregory Pipkin: It is now my pleasure to introduce your host, Greg Pipkin, Senior Vice President, Corporate Development and Strategy. Greg, please go ahead. Thank you, Operator.
Speaker Change: It is now my pleasure to introduce your host Greg Hopkins Senior Vice President corporate development and strategy. Greg. Please go ahead.
Speaker Change: Thank you operator, good morning, and thank you for joining our first quarter 2025, earning results conference call with me today are Zack Arnold President and Chief Executive Officer, and David <unk>, Executive Vice President and Chief Financial Officer.
Zack Arnold: Good morning, and thank you for joining our first quarter 2025 Earning Results Conference Call.
Zack Arnold: With me today are Zack Arnold, President and Chief Executive Officer, and David Sproule, Executive Vice President and Chief Financial Officer. In a moment, Zack and David will present their prepared remarks with a question and answer session to follow.
Speaker Change: Jack and David will present their prepared remarks, with a question and answer session to follow.
Gregory Pipkin: An updated investor presentation has been posted to the investor relations portion of our website, and we may reference certain slides during today's discussion.
Speaker Change: Updated investor presentation has been posted to the Investor relations portion of our website and we may reference certain slides during today's discussion a replay of today's call will be available on our website beginning this evening.
Gregory Pipkin: A replay of today's call will be available on our website beginning this evening. I'd like to remind you that today's call may contain forward-looking statements. All statements that are not historical facts are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause actual results to materially differ from these forward-looking statements.
Speaker Change: I'd like to remind you that today's call may contain forward looking statements. All statements that are not historical facts are forward looking statements.
Speaker Change: Forward looking statements are subject to a number of risks and uncertainties many of which are beyond our control that could cause actual results to materially differ from these forward looking statements.
Gregory Pipkin: Please review our earnings release and the risk factors discussed in our SEC filing. We will also be referring to certain non-GAAP financial measures. Please refer to our earnings release and investor presentation for important disclosures regarding such measures, including definitions and reconciliations to the most comparable GAAP financial measures.
Speaker Change: Please review our earnings release and the risk factors discussed in our SEC filings. We will also be referring to certain non-GAAP financial measures. Please refer to our earnings release and Investor presentation for important disclosures regarding such measures, including definitions and reconciliations to the most comparable GAAP financial measures.
Zack Arnold: Now over to Zack. Thanks, Greg, and welcome to Infinity Natural Resources first quarter 2025 earnings call. I'm pleased to share our operational and financial results for the quarter, as well as provide an update on our development activities and outcomes. I first want to say how proud I am of my team's execution during the first quarter. Aside from all the work associated with the IPO, the first quarter of 2025 was the most active operational quarter in our history. We executed and we delivered. Moreover, it was the first harsh winter we've experienced in quite some time up here in Appalachia.
Speaker Change: Now I've heard of Zac.
Speaker Change: Thanks, Greg and welcome to the natural resources first quarter 2025 earnings call.
Speaker Change: I'm pleased to share our operational and financial results for the quarter as well as provide an update on our development activities.
Speaker Change: I first want to say how proud I am of my team's execution during the first quarter.
Speaker Change: Aside from all the work associated with the IPO. The first quarter of 2025 was the most active operational quarter in our history.
Speaker Change: We executed and we delivered.
Speaker Change: Moreover, it was the first harsh winter we've experienced in quite some time up here in Appalachia.
Zack Arnold: Being able to drill and complete our projects, as well as maintain uptime on our producing wells in such an environment, is a testament to the capabilities and experience of our highly skilled team. With regards to our first quarter performance, we achieved strong operational execution across our portfolio. As I just noted, the first quarter was our most active quarter to date. We turned into sales six wells during the period, one in the Volta oil window in the Ohio Utica, and five natural gas wells in the Marcellus Shale in Pennsylvania. We continue to increase our production volume.
Speaker Change: Being able to drill and complete our projects as well as maintain uptime on our producing wells in such an environment is a testament to the capabilities and experience of our highly skilled team.
Speaker Change: With regards to our first quarter performance, we achieved strong operational execution across our portfolio.
Speaker Change: As I just noted the first quarter was our most active quarter to date, we turned into sales six wells during the period one in the volatile oil window in the Ohio, Utica and five natural gas wells in the Marcellus shale in Pennsylvania.
Speaker Change: We continued to increase our production volumes are.
Zack Arnold: Our production averaged 26.5 thousand barrels of oil equivalent per day in Cuba, a 13% increase compared to fourth quarter 2024. The five natural gas wells were turned in line only days away from the end of the quarter. As such, our production growth in Q1 was largely attributable to our recent oil-weighted development in Guernsey County, Ohio, where we have added seven long laterals since Thanksgiving 2024, including the one well that we turned into sales in early January. Operationally, we ran two rigs for most of the quarter, drilling eight wells. We TDE'd four of the wells, totaling 62,000 lateral feet during Q1, and finished drilling the remaining four in early Q2.
Speaker Change: Our production averaged 26 5000 barrels of oil equivalent per day in Q1 at 13% increase compared to fourth quarter 2020.
Speaker Change: The <unk> natural gas wells were turned in line only days away from the end of the quarter as such our production growth in Q1 was largely attributable to our recent oil weighted development in Guernsey County, Ohio, where we have added seven long laterals since Thanksgiving 2024, including the one well that we turned into sales in early January.
Speaker Change: Yeah.
Speaker Change: Operationally, we ran two rigs for most of the quarter drilling eight wells be TD four of the wells totaling 62000 lateral feet. During Q1 and finished drilling the remaining four in early Q2.
Zack Arnold: On the completion side, we stimulated seven wells, completing 522 stages while pumping 4.6 million barrels of water. As an aside, most of those barrels were pumped in below freezing temperatures.
Speaker Change: On the completion side, we stimulated seven wells, completing 522 stages or pumping $4 6 million barrels of water.
Speaker Change: As an aside most of those barrels were pumped and below freezing temperatures.
Zack Arnold: further breaking down activity by region. In the Ohio Utica, we drilled four wells during the first quarter. As a result, we have now drilled 34 wells into the volatile oil window, totaling 420,000 lateral feet. We continue to extend our laterals, with our most recent Ohio pad being our longest wells drilled to date, averaging approximately 19,000 feet per well. With the addition of the one well we brought online in Q1, our total operated well count stood at 119 to end the quarter. Further, we exited the quarter with three drilled and completed wells that we have yet to bring online, two ducts, and two whips in Guernsey County.
Speaker Change: Further breaking down activity by region.
Speaker Change: And the Ohio, Utica, we drilled four wells during the first quarter as a result, we have now drilled 34 wells into the volatile oil window totaling 420000 lateral feet.
Speaker Change: We continue to extend our laterals with our most recent Ohio pad being our longest wells drilled to date, averaging approximately 19000 feet per well.
Speaker Change: With the addition of the one well we brought online in Q1, our total operated well count stood at 119 to end the quarter.
Speaker Change: Further we exited the quarter with three drilled and completed wells that we have yet to bring online two dogs and two whips in Guernsey County.
Zack Arnold: All of these wells brought online or in development in Ohio are well-head. In Pennsylvania, the five natural gas weighted Marcellus wells that we turned to sales totaled 67,000 lateral feet in Indiana and Armstrong County. That project was brought online ahead of schedule and in line with our cost expectations. While we are early in production, we are encouraged by the well results today. Additionally, we opportunistically contracted a second drilling rig in Q1 for our next Marcellus project. The four well project, totaling approximately 54,000 lateral feet, is anticipated to be online this summer. Remember, this pad was a farmer's field back in November 2024.
Speaker Change: All of these wells brought online or in development in Ohio are well hedged.
Speaker Change: And Pennsylvania, five natural gas weighted Marcellus wells that we turned to sales totaled 67000 lateral feet in Indiana and Armstrong counties.
Speaker Change: <unk> was brought online ahead of schedule and in line with our cost expectations well.
Speaker Change: While we are early in production, we are encouraged by the well results to date.
Speaker Change: Additionally, we opportunistically contracted a second drilling rig in Q1 for our next Marcellus project.
Speaker Change: The four wall project totaling approximately 54000 lateral feet is anticipated to be online this summer.
Remember this pad was a farmer's field back in November 2024.
Zack Arnold: We are very proud of our team's ability to accelerate and execute on projects like these. We are continuing to ramp our natural gas assets, delivering growth within cash flow while securing high EROI. All of these projects are well hedged, again, securing the economics we saw at FIT. As a reminder, our hedging program remains a key component of our risk management.
Speaker Change: We are very proud of our team's ability to accelerate and execute on projects like these.
Speaker Change: We're continuing to ramp our natural gas assets delivering growth within cash flow all securing high rois.
All of these projects are well hedged again, securing the economics, we saw RFID.
Speaker Change: Yeah.
Speaker Change: As a reminder, our hedging program remains a key component of our risk management strategy for our near term development projects, we secured hedges covering a substantial portion of anticipated 2025 production.
Zack Arnold: or near-term development. We've secured hedges covering a substantial portion of anticipated 2025 production, providing meaningful downside protection while maintaining upside exposure. This strategy has allowed us to lock in the attractive economics that we see. We expect to continue to maintain a dynamic hedging strategy that locks in returns at key stages of a project cycle. Looking at the second quarter, we're executing as planned and remain on track with the development program embedded in the full year 2025 outlook we provided on our Q4 2024 earnings . This includes reducing our operated rig count to one rig and moving our drilling operations to our next oil-weighted project, a three-well pad in Guernsey County totaling 57,000 lateral feet.
Speaker Change: Biding meaningful downside protection, while maintaining upside exposure.
Speaker Change: This strategy has allowed us to lock in the attractive economics that we saw we.
Speaker Change: We expect to continue to maintain a dynamic hedging strategy that locks in returns at key stages of the project cycle.
Speaker Change: Looking at the second quarter, we're executing as planned and remain on track with the development program embedded in the full year 2025 outlook. We provided on our Q4 2024 earnings call.
Speaker Change: This includes reducing our operated rig count to one rig and moving our drilling operations to our next oil weighted project, a three well pad in Guernsey county, totaling 57000 lateral feet.
Zack Arnold: On the oil and natural gas projects that we drilled in Q1, we are moving ahead with our planned completion activities across those eight wells during Q2 with two frackers.
Speaker Change: On the oil and natural gas projects that we drilled in Q1, we are moving ahead with our planned completion activities across those eight wells during Q2 with two frac crews.
Zack Arnold: Turning now to our full year 2025 development. As you're aware, the macro landscape has shifted since our last update about six weeks Market sentiment remains cautious about the outlook for oil prices in the back half of this year. However, the market remains more constructive regarding natural gas. Our unique asset composition and limited obligations allow us to allocate capital as the mortgage dictator. Optionality to advance gas or oil projects rapidly is necessary today more than in prior periods. In response to the current environment, we have elected to bring forward our next natural gas project. We will be constructing this pad during the second quarter and expect to begin drilling these wells this summer.
Speaker Change: Turning now to our full year 2025 development plan.
Speaker Change: As you are aware the macro landscape has shifted since our last update about six weeks ago.
Speaker Change: Market sentiment remains cautious about the outlook for oil prices in the back half of this year. However, the market remains more constructive regarding natural gas prices.
Speaker Change: Our unique asset composition and limited obligations allow us to allocate capital as the more it dictates.
Speaker Change: Optionality to advanced gas or oil projects rapidly is necessary today more than in prior periods.
Speaker Change: In response to the current environment, we have elected to bring forward our next natural gas project.
Speaker Change: We will be constructing this pad during the second quarter, we expect to begin drilling these wells this summer.
Zack Arnold: Concurrently, we are reviewing our oil-weighted development plans in the second half of the year and will be flexible with our operations depending on estimated project returns as we progress through our one-week schedule. Taking a step back, what we are experiencing today again highlights the value of our differentiated business model. Our strategic positioning in Appalachia with a balanced portfolio across oil-weighted Utica assets in Ohio and natural gas-weighted assets in Pennsylvania provides unique optionality in varying commodity price environments. Our strong balance sheet and development planning have allowed us to quickly pull forward projects, as highlighted previously, that were originally slated for later years.
Speaker Change: Concurrently we are reviewing our oil weighted development plans in the second half of the year and we'll be flexible with our operations depending on estimated project returns as we progress through our one rig schedule.
Speaker Change: Taking a step back while we are experiencing today again highlights the value of our differentiated business model.
Speaker Change: Our strategic positioning in Appalachia.
Speaker Change: <unk> portfolio across oil weighted Utica assets in Ohio, and natural gas weighted assets in Pennsylvania provides unique optionality and varying commodity price environments.
Speaker Change: Our strong balance sheet and development planning have allowed us to quickly pull forward projects as highlighted previously that were originally slated for later years.
Zack Arnold: With approximately 60,000 net horizon acres in Pennsylvania and 63,000 in Ohio, we've built our success on developing long lateral wells, maintaining a deep inventory of high quality locations, and efficiently allocating capital between commodities based on market conditions. Our longstanding relationships with key service providers, combined with the dynamic nature of the Appalachian service market, enable us to optimize costs while maintaining access to high-quality equipment and crews. We continue working closely with our service providers to identify additional efficiency opportunities.
Speaker Change: With approximately 60000 net horizon acres in Pennsylvania, and 63000 in Ohio, We have built our success on developing long lateral wells, maintaining a deep inventory of high quality locations and efficiently allocating capital between commodities based on market conditions.
Speaker Change: Our long standing relationships with key service providers combined with the dynamic nature of the Appalachian service market enable us to optimize costs, while maintaining access to high quality equipment and crews.
Speaker Change: We continue working closely with our service providers to identify additional efficiency opportunities.
Zack Arnold: Zooming out even further, our foundation remains strong. With 325 undeveloped locations across both operating areas, we have nearly two decades of high-quality development opportunity. This deep inventory, coupled with our proven operational expertise and successful track record of acquiring and integrating assets, positions us well for sustainable growth. Our financial position further strengthens the outlook for our business. with approximately $7 million in net. and $344 million in liquidity at quarter end, our balance sheet provides significant flexibility to evaluate strategic opportunities, including M&A for both oil and natural gas-weighted deals, while maintaining our commitment to disciplined growth.
Speaker Change: Zooming out even further our foundation remains strong with 325 undeveloped locations across both operating areas. We have nearly two decades of high quality development opportunities.
Speaker Change: This deep inventory, coupled with our proven operational expertise and successful track record of acquiring and integrating assets positions us well for sustainable growth.
Speaker Change: Our financial position further strengthens the outlook for our business.
Speaker Change: With approximately $7 million and net debt of $344 million in liquidity at quarter end, our balance sheet provides significant flexibility to evaluate strategic opportunities, including M&A for both oil and natural gas weighted deals while maintaining our commitment to disciplined group.
David Sproule: With that, I'll turn the call over to David for a more detailed review of our financial resources. Thanks, Zack. And again, hello, Dev. I wanted to start by reiterating some of the themes from Zack's remarks. Our execution in the first quarter was based on a combination of our operational expertise and financial approach. We are prudently developing our asset base out of cash. focusing always on discounted returns on investment and payback. while preserving our balance sheet.
David: With that I'll turn the call over to David for a more detailed review of our financial results.
David: Thanks, Zach and again Hello, everyone.
David: I wanted to start by reiterating some of the themes from Zacks remarks.
David: Our execution in the first quarter was based on a combination of our operational expertise.
David: <unk> approach.
David: We are prudently developing our asset base out of cash flow focusing always on discounted returns on investment and payback periods, while preserving our balance sheet strength.
David Sproule: secure our well's high rates of return through an active hedge program that Zack noted earlier, while allowing our industry-leading growth profile to provide additional commodity exposure and Now, turning to our first quarter 2025 results. We are very proud of our team's performance during. We continue to execute our. We increased our net production 13% from the fourth quarter of 2024 to 26.5 MBOE per day. We increased our adjusted EBITDA to $57 million, representing an $11 million increase compared to the fourth quarter of 2024. Moreover, we further expanded our adjusted epithelial margin to $23.96 per BOE, or $1.73 per BOE increase quarter over quarter.
David: We secure our well high rates of return.
David: We're an active hedge program that fact noted earlier, while allowing our industry leading growth profile to provide additional commodity exposure and upside.
David: Now turning to our first quarter 2025 results.
David: We are very proud of our team's performance. During this period, we continued to execute our plan.
David: We increased our net production, 13% from the fourth quarter 2024 to $26 five and BOE per day.
David: We increased our adjusted EBITDA to $57 million, representing an $11 million increase compared to the fourth quarter 2024.
David: Moreover, we further expanded our adjusted EBITDA margin to $23 96 per Boe.
David: Our $1 73 per Boe increase quarter over quarter.
David Sproule: As we've noted in the past, we believe our Ibiza margin remains the best among our Appalachians. Operating costs on a per-unit basis declined during the first quarter to $8.42 per BOE, compared with $9.41 per BOE in the first quarter of 2024. This decline was largely attributable to a decline in GP&T costs, reflecting a greater weighting towards Guernsey County, Ohio production, where GP&T per unit cost is lower versus Carroll County, Ohio. Moreover, we continue to anticipate further declines in our per unit cost structure as we increase our natural gas production from Pennsylvania during the remainder of the year.
David: As we've noted in the past we believe our EBITDA margin remains the best among our Appalachian peers.
David: Operating costs on a per unit basis declined during the first quarter to $8 42 per Boe compared.
David: Compared with $9 and 41.
David: In the first quarter 2024.
David: This decline was largely attributable to a decline in <unk> costs, reflecting a greater weighting towards currency County, Ohio production.
David: <unk> per unit cost is lower versus Carroll County, Ohio.
David: Moreover, we continue to anticipate further declines in our per unit cost structure as we increase our natural gas production from Pennsylvania during the remainder of the year.
David Sproule: As Zack noted, the first quarter represented one of the most active periods in our company's history. We incurred $78 million in DNC capital expenditures during the first. We anticipate capital spending to remain elevated during the first half of the year before beginning to decline.
Jack: As Jack noted the first quarter represented one of the most active periods in our company's history we.
Jack: We incurred $78 million in D&C capital expenditures during the first quarter we.
Jack: We anticipate capital spending to remain elevated during the first half of the year before beginning to decline.
David Sproule: Turning to the balance sheet, our financial position remains very strong. We have minimal debt outstanding under our credit. which we feel is a significant competitive advantage. We have ample liquidity of $344 million, affording us operational and strategic flexibility. We are developing out of cash. continue to position the company to take advantage of opportunities via acquisitions or asset acceleration as the market develops. Thank you.
Jack: Turning to the balance sheet, our financial position remains very strong.
Jack: With minimal debt outstanding under our credit facility, which we feel is a significant competitive advantage we.
Jack: We have ample liquidity of $344 million affording us operational and strategic flexibility.
Speaker Change: We are developing out of cash flow and will continue to position the company take advantage of opportunities via acquisitions or asset acceleration as the market decades. Thank you I'll now turn it back over to Zac for some closing thoughts back.
Zack Arnold: I'll now turn it back over to Zack for some closing thoughts. Zack? Thank you, David.
Zac: Thank you David in conclusion, I am extremely pleased with our first quarter performance during which we demonstrated exceptional operational execution. Despite one of the most challenging winter seasons, we faced our ability to bring wells online ahead of schedule showcases the strength of our operational capabilities and deep relationships with service providers in Appalachia.
Zack Arnold: In conclusion, I'm extremely pleased with our first quarter performance, during which we demonstrated exceptional operational execution, despite one of the most challenging winter seasons we've faced. Our ability to bring wells online ahead of schedule showcases the strength of our operational capabilities and deep relationships with service providers in Appalachia. What truly sets Infinity Natural Resources apart, and what I'm particularly excited about, is our unique ability to dynamically shift between oil and natural gas development within the same region. This flexibility is proving invaluable in today's volatile commodity price environment. We're actively demonstrating this advantage by maintaining our planned second quarter activities while accelerating our natural gas development plan for the second half of the year.
Zac: What truly sets Canadian natural resources', apart and what I'm, particularly excited about is our unique ability to dynamically shift between oil and natural gas development within the same region.
Zac: This flexibility is proving invaluable in today's volatile commodity price environment.
Zac: We're actively demonstrating disadvantage by maintaining our planned second quarter activities, while accelerating our natural gas development plan for the second half of the year.
Zack Arnold: With our robust inventory and strong balance sheet, we have optionality to optimize returns as market conditions evolve.
Zac: With our robust inventory and strong balance sheet, we have optionality to optimize returns as market conditions evolve this strategic positioning in both commodities within Appalachia as a true differentiator for our company and our shareholders.
Operator: The strategic positioning in both commodities within Appalachia is a true differentiator for our company and our shareholders. Operator. We may now begin the Q&A session. Thank you. As a reminder, to ask a question, please press star followed by the number one on your telephone keypad to enter the question. Once again, that is star followed by the number one.
Zac: Operator, we may now begin the Q&A session.
Speaker Change: Thank you as a reminder to ask a question. Please press star followed on number one on your telephone keypad to enter the question queue. Once again that is star followed by the number one.
Scott Hanold: Our first question comes from the line of Scott Hanold with RBC Capital Markets. Your line is open. Thanks. Good morning, all. Just to give a little context around, you know, obviously pulling forward, again, some of your gas-weighted activity. And so it sounds like obviously you'll do some of that, you know, at some point in time, summer or fall this year. Just give us a sense of From your original plan, I'm assuming that's the placing, you know, some Utica activity in. And when do you think that's going to have an impact on the production mix? So is it, you know, more of a 2026, you know, sort of event that, you know, shows up?
Operator: Our first question comes from the line of Scott Hanold with RBC capital markets. Your line is opened.
Speaker Change: Thanks, Good morning all.
Speaker Change: Just give a little context around the obviously pulling forward again some of your gas weighted activity and so it sounds like obviously youll do some of that.
Speaker Change: At some point in time summer fall of this year, just give us a sense of.
Speaker Change: From your original plan.
Speaker Change: Assuming thats the placing you know some some utica activity and when do you think thats going to have an impact on the production mix. So is it more of a 2026 sort of event that.
Speaker Change: It shows up.
Zack Arnold: Yeah, thanks for the question, Scott. So I think you're right in thinking about that timing. As we've done now twice this year, we've taken gas projects that were going to be done later in our development cycle, pulled them forward in response to the commodity environment that we've seen. And I think as you think about production and mix for the first part of this year, it's going to be driven by the projects that we're completing and bringing online, obviously already or in the next quarter.
Speaker Change: Yes. Thanks for the question Scott, So I think youre right and thinking about that timing as we've done now twice. This year, we've taken gas projects that we're going to be done later in our development cycle pulled them forward in response to the commodity environment that we've seen and I think as you think about production.
Speaker Change: And mix for the first part of this year, it's going to be driven by the projects that we're completing and bringing online obviously already or in the next quarter and projects like that that come online at the back of the year, we're going to have more of an impact for for next year than they will this year.
Zack Arnold: And projects like that that come online at the back of the year are going to have more of an impact for next year than they will this year. Okay, thanks for that. And, you know, I guess the other piece of it is obviously, you know, how the first, the Tortola pad, I think it is, was the pad you all put online in the Marcellus in March. You know, can you give us some sense of, like, how those, you know, are performing initially to your expectation? And, you know, is it a read-through of some of the stuff that you plan here, you know, throughout the summer into next year?
Speaker Change: Okay, Thanks for that and.
Speaker Change: I guess the other piece of it is obviously.
Speaker Change: The first is the.
Speaker Change: Third total of pet I think it is the pad you all put them online in the Marcellus in March can.
Speaker Change: Could you give us some sense of like how those are performing initially to your expectation and is it a is it a read through of some of the stuff that you plan here throughout the summer into next year.
Zack Arnold: Sure. So I'll start by saying that Tortola Wells came online ahead of schedule and in line with our budgets, and they're currently meeting our expectations. And I'll also take a second to compliment the work that was done to make that happen. For a well to come online ahead of schedule like it did in late March, that meant that all the completion activities that were occurring in January and February went off without a hitch. So the team did a fantastic job helping us deliver those volumes sooner. As far as production goes, they are meeting our expectations.
Speaker Change: Sure. So I'll start by saying the Portola Wells came online ahead of schedule and in line with our budgets and they're currently meeting our expectations and also take a second to complement the work that was done to make that happen for a well to come online ahead of schedule like it did in late March that meant that all the completion activities that were occurring.
Speaker Change: January and February went off without a hitch so that the team did a fantastic job, helping us deliver those volumes sooner as far as production goes they are meeting our expectations. We're very excited about that.
Zack Arnold: We're very excited about that. And I think that just gives us further confidence in how we view production in that area and would expect future wells to perform similarly. Thank you.
Speaker Change: And I think that just gives us further confidence and how we view production in that area.
Speaker Change: We'd expect future wells to perform some model.
Speaker Change: Thank you.
Speaker Change: Yeah.
Michael Scialla: Our next question comes from the line of Michael Scialla with Stevens, your line is open.
Speaker Change: Our next question comes from the line up Michael Schiavo with Stephens. Your line is opened.
Speaker Change: Okay.
Zack Arnold: Good morning. I wanted to just get your thoughts on how deal flow looks in both your core areas right now. Anything you could say about the acquisition opportunities you're looking at? Sure. So I kind of go back to the roadshow view that we had and think about just being able to deliver growth organically off of our assets for when deals don't come as quickly. So we're really proud of that ability to grow. But we did go public to get that currency to help some deal flow come to us. And we have an incredibly strong balance sheet.
Michael Schiavo: Good morning.
Speaker Change: On this.
Speaker Change: Get your thoughts on how the deal flow looks in both your core areas right now anything you can say about the acquisition opportunities Youre looking at.
Speaker Change: Sure So I can.
Speaker Change: Kind of go back to the.
Speaker Change: The Roadshow view that we have and think about just being able to deliver growth organically of our assets for win deals don't come as quickly. So we are really proud of that ability to grow.
Speaker Change: But we did go public to get that currency to help some deal flow come to us and we have an incredibly strong balance sheet, so where does that put us today that puts us very active in processes, yet the ability to be patient and not do deals that don't make sense for us.
Zack Arnold: So where does that put us today? That puts us very active in processes, yet the ability to be patient and not do deals that don't make sense for us. Our exposure to both oil and gas and our interest in acquiring assets in both of those areas increases our asset opportunities and really lets us continue to be focused on M&A in a time in which commodities are highly variable and that makes occasionally the bid-ask spread tougher on one side or the other. So we remain very excited about the opportunities that are here in the Basin and you're going to see us continue to be involved in any process that we can find our way into.
Speaker Change: Our exposure to both oil and gas and our interest in acquiring assets in both of those areas increases our asset opportunities and really lets us continue to be focused on M&A.
Speaker Change: Time in which commodities are highly variable and that makes the occasionally the bid ask spread tougher on one side or the other so we remain very excited about the opportunities that are here in the basin and youre going to see us continue to be.
Speaker Change: Involved in any process that we can find our way into.
Zack Arnold: Good, thank you. You had some...
Speaker Change: Good thank you.
Speaker Change: You had some.
Michael Scialla: Capital expenditures for land in the quarter.
Speaker Change: Capital expenditures for land in the quarter can you characterize what that was is it mostly just filling into lengthen laterals are.
Zack Arnold: Can you characterize what that was? Was it mostly just filling in to lengthen laterals? Or was that actually adding acreage in new areas? And is that maybe a good run rate for those kind of expenditures for the remainder of the year?
Speaker Change: Was that actually adding acreage in new areas and is that maybe a good run rate for those kind of expenditures for the remainder of the year.
Zack Arnold: That's another great question, Mike. So I think that that's an appropriate number for a company our size and the type of work that we're doing in this quarter. I think that the acres we were adding are always going to be focused on helping us either increase working interest in units, lengthening laterals, or adding new inventory adjacent to the inventory that we're already developing. So I think that helps you kind of get a sense as to what we did and what a burn rate might be, but we're going to continue to look at things that might fall into more of an acquisitions category that we'll talk about when those things happen that might be in excess of a number like that.
Speaker Change: So that's another great question, Mike So I think that that's an appropriate number for a company our size and the type of work that we're doing in this quarter.
Speaker Change: I think that the acres, we were adding are always going to be focused on helping us either increased working interest in units lengthening laterals or adding new inventory adjacent to the inventory that we're already developing so.
So I think that helps you kind of get a sense as to what we did and what our burn rate might be but we're going to continue to look at things that might fall into more of an acquisition's category that we'll talk about when those things happen that might be in excess of a number like that.
Zack Arnold: Understood. Thanks, Zack.
Speaker Change: Understood. Thanks, Ed.
Speaker Change: Yes.
Speaker Change: Okay.
John Freeman: Our next question comes from the line of John Freeman with Raymond James. Your line is open. Good morning, guys.
Speaker Change: Our next question comes from the line of John Freeman with Raymond James Your line is open.
John Freeman: Good morning, guys.
John Freeman: Just to follow up on Scott's earlier question, if I kind of go to the slide four y'all got in your presentation, the original plan was to be kind of a 60-40 split on tills between oil and gas. And I guess I'm just trying to make sure that I understand the moving parts here, where you bring forward the natural gas pad and then you're reviewing your oil activity in the second half of the year. So, like on that slide where it basically just says it's kind of 40-40 and then there's kind of this wedge that's sort of, I guess, not quite firmed up yet.
Speaker Change: Just following up on <unk>.
Speaker Change: Scott's earlier question, if I, if I kind of go to slide four you've got in your presentation.
Speaker Change: The original plan was to be kind of a 60 40 split on tails between oil and gas I guess I'm just trying to make sure that I understand the moving parts here, where you bring forward natural gas.
Speaker Change: And then you're reviewing your oil activity in the second half of the year. So that's on that slide where basically just says it's kind of 40 40, and then there is kind of this wedge that sort of I guess not quite.
Speaker Change: Firmed up yet just maybe how we should think about kind of that mix.
John Freeman: Just maybe how we should think about kind of that mix of tills kind of shaking out on that slide four, if you're able.
Speaker Change: <unk> kind of shaking out on that.
Speaker Change: Slide four if youre able.
David Sproule: Sure, John. This is this is David Sproule. I think First and foremost, every project that we do is based upon our view of this kind of return on investment that we get. We are very well hedged, and as you well know, when we enter into these projects, we lock in and secure those DROIs as we develop our project. You know, when we look at the back half of the year, we are excited by both our oil and gas projects. But as we kind of did in 2024, one commodity was stronger than the other near term.
David: Sure. John This is David sprawl I think.
Speaker Change: First and foremost every project that we do is based upon our view of that.
David: Return on investment that we get.
David: We are very well hedged and as you well know when we enter into these projects we lock in unsecured those the rois as we as we develop our projects.
David: When we look at the back half of the year.
David: We are excited by both our oil and gas projects, but as we kind of did in 2024, one commodity was stronger than the other near term and so we allocated capital accordingly.
David Sproule: And so we allocated capital accordingly. We have elected to pull forward an additional gas pad that would be slated to come on during the fourth quarter or early 2025. It just depends on that execution for us. And that would reflect that change in the sort of 60-40 split, if you will, where we've elected to. to plant one oil project and defer that for later in the development schedule for us.
David: We have elected to pull for additional gas pad that.
David: Would be slated to come on in during the fourth quarter or early 2025, it just depends on that execution for us.
David: And that would reflect that change in that sort of 60 40 split if you will where we've elected to.
David: So plant one oil project and defer that.
David: For later in the development schedule for us.
John Freeman: Okay, and then just, I guess, a follow up on that, because you mentioned, you know, it is, you know, the flexibility y'all got is quite unique. And like you said, last year, when oil was strong and gas was weak, y'all only brought online oil wells and not trying to jump too far ahead to 2026, but just based off of what's on that slide, I mean, it's clear, like, at the strip right now, next year, you know, the gas returns are off the charts good. And would there be anything else that we should be considering that may, either from a delineation perspective of the Utica or something like that, that would potentially cause the mix next year to not be just driven pretty, pretty hard on the gas side, just given where the returns are.
David: Okay, and then just I guess a follow up on that because you mentioned.
David: The flexibility of your guidance is quite unique and like you said last year when oil was strong in gas as we call only brought online oil wells.
David: I'm trying to jump too far ahead to 2020.
David: Based off of what's on that slide it's clear like if the strip right now next year. The gas returns are off the charts good.
David: Would there be anything else that we should be considering.
David: From a delineation perspective in the Utica or something like that that would potentially cause.
David: <unk> shared an outrageous turning pretty pretty hard on the golf side, just given where the returns are there. Some other factor that goes any honest accountable decision process.
David Sproule: Is there some other factor that goes into y'all's kind of decision process? Sure, I think there's a couple things to remember is that, you know, first and foremost, with our oil projects, these are very long projects in terms of the lateral lengths that were developed. A lot of those projects have costs that are already incurred from other projects that were developed in a different period of time, so pad costs and stuff like that is already related to some of those oil projects in particular. It's never as good as you think, and it's never as bad as you think when it comes to commodities, and so you have to maintain the flexibility to move quickly.
Sure I think there's a couple of things to remember is that.
David: First and foremost with our oil projects. These are very long projects in terms of the lateral lengths that were developing.
David: Hi.
David: A lot of those projects had costs that have already occurred from other projects that were developed in a different period of time, so pad costs and stuff like that is already.
David: Related to some of those oil projects in particular, it's never as good as you think and it's never as bad as you think the cost of commodities and so you may have to maintain the flexibility to move quickly.
David Sproule: If commodities are telling us to do natural gas projects, we'll do more of those. Mize are telling us to do, you know, oil, we'll do those. I think we will continue to execute on some of our oil projects into the future because we are seeing discounted returns on investment that are exceeding these because the laterals are longer and the costs are lower. But that doesn't mean that we wouldn't develop natural gas. As you know, John, the natural gas returns that we have are pretty frothy right now with the market that we're seeing. And so you should anticipate us developing additional gas assets into the future.
David: These are telling us do natural gas projects will do more of those into the future commodities are telling us to do oil will do those.
David: I think we will continue to execute on some of our oil projects into the future. Because we are seeing this kind of returns on investment that are exceeding these because the laterals are longer and the costs are lower.
Speaker Change: But that doesn't mean that we wouldn't develop natural gas as you know John the.
Speaker Change: The natural gas returns that we have are pretty frothy right now with the market that we're seeing and so you should anticipate us developing additional gas assets into the future.
John Freeman: God, I appreciate it. Thank you.
Speaker Change: Got it I appreciate it thank you.
Operator: Once again, if you would like to ask a question, please press star followed by the number one on your telephone keypad.
Speaker Change: Once again, if you would like to ask a question. Please press star followed by the number one on your telephone keypad. Our next question comes from the line of <unk>.
Kalei Akamini: Our next question comes from the line of Kalei Akamini with Bank of America. Your line is open. Hey, good morning guys. My first question is on capital as we're kind of heading into, or as we're kind of thinking about 2026 here. So, as you work on kind of reshaping your drilling program in the second half of 25, are you also considering reshaping how you're thinking about the capital levels for 2026? The way that we've seen it kind of come together here is that 25 is kind of a growth year, 26 is kind of a harvest year.
Khameni: Ah Khameni with Bank of America. Your line is opened.
Ah Khameni: Hey, good morning, guys.
Speaker Change: My first question is on capital.
Ah Khameni: We're kind of heading it to.
Ah Khameni: We're kind of thinking about 2026 here. So as you work on kind of reshaping your drilling program in the second half of 'twenty. Five are you also considering reshaping how youre thinking about the capital levels for 2026, the way that we've seen it kind of come together here is that 25 is kind of a growth year, 26% kind of a harvest year.
Zack Arnold: Do you agree with that setup and are you still trackling along that path?
Ah Khameni: Do you agree with that setup and are you still tracking along that path.
Zack Arnold: That's a great question, Kalei. Thanks for asking that. So I think you're spot on with the beginning and that we are maintaining our CAFX guidance for this year. It's important to know that if we transition from one commodity to the other, it doesn't make a material impact on our capital needs because the unit cost and cost per foot, cost to construct pads, et cetera, are very comparable from one to the other. So as we remain flexible there, you don't have to think very hard about what that means to a capital schedule. As far as what does 2026 bring, I think that's something that we're going to constantly evaluate.
Ah Khameni: That's a great question. Thanks for that so I think you're spot on with the beginning and that's that we are maintaining our capex guidance for this year. It's important to know that if we transition from one commodity to the other it doesn't make a material impact on our capital needs because the unit costs and cost per foot cost control.
Ah Khameni: Pads et cetera are very comparable from one to the other so as we remain flexible there you don't have to think very hard about what that means to our to our capital schedule.
Ah Khameni: As far as what does 2026 bring I think that's something that we're going to constantly evaluate I think right. Now we are a growth company and thats going to continue to be a big part of our story I will look at the returns that we're seeing on all of our projects as we continue to get those ready and as we kind of move through the next quarter or two we will get a firm plan together with the board and start.
Zack Arnold: I think right now we are a growth company and that's going to continue to be a big part of our story. We'll look at the returns that we're seeing on all of our projects as we continue to get those ready. And as we kind of move through the next quarter or two, we'll get a firm plan together with the board and start communicating what we think 2026 looks like. But we'd like the projects that we'll have ready. And I think we'll be able to continue to execute on high return projects, like David said, on both sides of our asset base, whether it's gas, as right now looks fantastic, or whether it's oil, as some days looks more exciting than others.
Ah Khameni: <unk>, what we think 2026 looks like but we like the projects that will have ready and.
Speaker Change: And I think we'll be able to continue to execute on high return projects that David said on both sides of our our asset base, whether it's gas.
Speaker Change: Right now looks fantastic or whether it's oil is someday it looks more exciting than others.
Kalei Akamini: I appreciate that.
Speaker Change: I appreciate that my follow up question is a follow up on the M&A question and I'm going to ask it a little bit differently. So over the last six months or so we've seen a handful of assets transacted in northeast kind of around your footprint and you guys have been opening open about your willingness to be acquisitive here.
Zack Arnold: My follow-up question is a follow-up on the M&A question, and I'm going to ask it a little bit differently. So, over the last six months or so, we've seen a handful of assets transacted in the Northeast, kind of around your footprint, and you guys have been open about your willingness to be acquisitive here. What do these deals tell you about the valuations in this market, and do you think that you're well-positioned to create value through M&A with deals in this range?
Speaker Change: What are these deal to tell you about the valuations in this market and do you think that youre well positioned to create value through M&A with deals in this range.
Zack Arnold: Yeah, I'll take the first part of that and talk a little bit about how, what I think this says about the market, and then I'll let David talk about how we're positioned to do some of these things. So, as we approach deals, it keeps going back to where we were on the road back in January and talk about how, as we view and evaluate assets, it's important for us to understand what we're going to be able to do with that asset. Whether that means it has undeveloped locations that we're going to attack or operational improvements that we're going to be able to bring to bear, we get really excited when we think we can put our fingerprints on something that we transact on.
Speaker Change: Yes, I'll take the first part of that and talk a little bit about how what I think this is Marc and then I'll, let David talk about.
Speaker Change: How we are positioned to do some of these things so as we approach deals it keeps going back to where we were on the road back in January and talked about how as we do and evaluate assets. It's important for us to understand what we're going to be able to do with that asset whether that means it has undeveloped locations that we're going to attack or operational improve.
Speaker Change: So we're going to be able to bring to bear we get really excited when we think we can put our finger prints on something that we transact on I think that the assets that have traded give us encouragement that gas assets can move in Appalachia is thats not always been the case as you look back through history. So while we haven't acquired the couple that youre thinking about it gives us.
David Sproule: I think that the assets that have traded give us encouragement that gas assets can move in Appalachia, as that's not always been the case, as you look back through history. So, while we haven't acquired the couple that you're thinking about, it gives us a lot of confidence that there are, you know, the gap between bid and ask is being bridged in the strip environment that we're seeing today. Yeah, I mean, I think in terms of valuations, I think we are uniquely positioned. Obviously, you'd always prefer to acquire things at lower, lower multiples, but even at the multiples of which the transactions that you're kind of noting have traded at, you know, those transactions would have been significantly accretive to us.
Speaker Change: So a lot of confidence that there are.
Speaker Change: The gap between bid and ask is is being bridge.
Speaker Change: The strip environment that we're seeing today.
Speaker Change: In terms of valuations I think we are uniquely positioned obviously, you would always prefer to acquire things at lower lower multiples.
Speaker Change: But even at the multiples of which the transactions that you're kind of noting.
Speaker Change: Traded at.
Speaker Change: Those transactions would have been significantly.
Speaker Change: Significantly accretive to us.
David Sproule: So, from a valuation standpoint. think any of that those values then discourage us in any capacity.
Speaker Change: So from a valuation standpoint.
Speaker Change: I will take any of that those values.
Speaker Change: Hey, Ben discourage us in any capacity I do think also for every one of these deals that you see on the headline kind of number. There is also a plethora of deals that youre not seeing that are smaller in scale and scope that we also.
David Sproule: I do think also for every one of these deals that you see on the headline kind of number there's also a plethora of deals that you're not seeing that are smaller in scale and scope that we also are exploring and evaluating as well. So deals will go up and down in valuation but as Zack is kind of noting it really depends on not just the sort of the initial multiple but what you can do with the asset to generate. We are at a very unique position with our balance sheet.
Speaker Change: Are exploring and evaluating as well.
Speaker Change: So deals will go up and down and evaluation by Zach is kind of noting it really depends on not just the.
Speaker Change: Sort of the initial multiple but what you can do with the asset to generate we are in a very unique position with our balance sheet.
Zack Arnold: Be patient and make sure that the asset that we acquire in addition to our high growth organic story complements what we're doing and allows us to drive the additional shareholder value through what we excel at which is developing and enhancing assets. Got it. Zack, David, I appreciate it. Thanks, guys. Yeah, it works.
Speaker Change: Patient and make sure that the <unk>.
Speaker Change: Asset that we acquire in addition to our high growth organic story complements what we're doing and allows us to drive additional shareholder value.
Speaker Change: With me, what we excel at which is developing and enhancing assets.
David: Got it in fact, David I appreciate it thanks guys.
Speaker Change: Yes.
Scott Hanold: Our next question comes from the line of Scott Hanold with RBC Capital. Hey guys, just had a couple quick follow-ups here. The first is on the Utica deep gas potential in Pennsylvania. Can you give us your thoughts on when you guys think your first well might be drilled in and potentially brought online? And if you've seen anything on the ground in terms of performance of some nearby wells, I'd be glad to hear some of that too.
Our next question comes from the line of Scott Hanold with RBC capital markets. Your line is opened.
Speaker Change: Hey, guys just had a couple of quick follow ups here. The first is on the Utica deep gas potential in.
Speaker Change: In Pennsylvania could you give us your thoughts on when you guys think your first well might be drilled and potentially brought online and if you've seen anything or on the ground in terms of performance of some nearby wells I'd be I'd be glad to hear some of that too.
Zack Arnold: So, great question, Scott. Thank you. So, I'll start maybe with the second part of your question first and say that we're, you know, we are continued to be encouraged and excited by the activity that we see from our offset operators, whether it's CNX, who has really led the way in this play, or Olympus, who's done some fantastic work since their formation and beginning of development activities in this play. So, very encouraged and excited about that. I think the from a macro perspective, we're very excited about what we're seeing surrounding us. And for us, we're incredibly excited and confident in the potential that this is going to open up even more inventory for us to develop.
Speaker Change: So great question Scott. Thank you. So I'll start maybe with the second part of your question first and say that where we are.
Speaker Change: Continue to be encouraged and excited by the activity that we see from our offset operators, whether it's CNS, who has really led the way in display or Olympus who's done some fantastic work.
<unk>.
Speaker Change: They are a formation and beginning of <unk>.
Speaker Change: Government activities and a slight so very encouraged and excited about that I think the Olympus transaction indicates that theres value placed on the dry gas Utica. So from a macro perspective, we're very excited about what we're seeing surrounding us and for US we're incredibly excited and confident in the potential that this is going to open up even more inventory for us.
Speaker Change: Develop.
Zack Arnold: We're actively evaluating where to slot this into our plan. We want to be thoughtful and nimble, so that takes us a little bit of time to make sure we've got it exactly where we want it. I think it's important to know that our pads are constructed and our infrastructure is prepared for this. So, when we pull the trigger and do this, we should be able to control our costs and execute it quite quickly. The rig we have running now, and have had running for about two years now, is capable of drilling these wells. So, while we don't have it, and I can't give any specific guidance as to when we're going to do this, I think you should know that it's something we're incredibly excited about.
Speaker Change: We're actively evaluating where spot this into our plan, we want to be thoughtful and nimble. So that takes us a little bit of time to make sure. We're we've got it exactly where we want it.
Speaker Change: I think it is important to know that our pads are constructed and our infrastructure is prepared for this so when we pulled the trigger and do this we should be able to control our costs and execute it quite quickly.
Speaker Change: We have running now and have had running for about two years now is capable of drilling. These wells. So while we don't have it and I can't give any specific guidance as to when we're going to do this I think you should know that is something we're incredibly excited about we're prepared to execute it when we when we see the right time to drop it into our drilling program.
Zack Arnold: We're prepared to execute it when we see the right time to drop it into our drilling program.
Zack Arnold: So is it more of a sort of a risk sort of assessment you're making right now, like versus, you know, drilling them ourselves? Well, is it just, you just need to get comfortable with the profile and the risk assessment prior to making that decision? I mean, there's risk there, as you know, and opposite operators know. I don't think we're making this decision based on a risk view. I think it's just the plan that we put in place right now has been to drill more cell as well as we're executing on that plan. And we'll remain flexible to to tuck that in here in the in the short to medium term to the future.
Speaker Change: So is it more of a sort of a risk sort of assessments you are making right now like versus drilling the Marcellus wells. It just you just need to get comfortable with the profile and the risk assessment prior to making that decision.
Speaker Change: I mean, there's risk there is.
Speaker Change: Offset operators now I don't think were making this decision based on our risk view I think it's just the plan that we put in place right now has been to drill Marcellus wells, we're executing on that plan and we will remain flexible to talk that in here.
Speaker Change: In the short to medium term to the Fisher, Dan and Scott. This is David I think the other side is remember when we've gone public we are executing on the plan that we put forward in front of us.
David Sproule: And Scott, this is this is David. I think the other side is remember, you know, we've gone public. We are executing on the plan that we put forward in front of, you know, the research community. And it's kind of a trust and verify concept for us. So we've been executing on high DROI projects. We continue to do that. We are actively actively evaluating the Utica well. We are very excited about the prospectivity of it. And it's something that we'll consider in the future. Got it. Thanks for that.
Speaker Change: The research community and it's kind of a trust and verify concept for us. So we've been executing on high ROI projects. We will continue to do that we are actively.
Speaker Change: Actively evaluating the Utica, while we are very excited about the prospects of it.
Speaker Change: And it's something that we'll consider.
Speaker Change: And the future here.
Speaker Change: Got it thanks for that and really quickly David give us a view of like how you think about hedging into 2026, especially with obviously the pivot to more gas like are you.
David Sproule: And really quickly, David, you know, give us a view of like, how you think about hedging into 2026, especially with, you know, obviously, the pivot to more gas, like, are you, you know, looking at, you know, getting a, you know, a little bit more done in 26, and maybe even 27. And, you know, a view on, you know, how you think about hedging oil given the volatility there. And this is more of like forward stuff into like 26 and 27. Sure. I think, you know, with our hedging strategy, we've been very consistent in our approach.
Speaker Change: Looking at getting.
Speaker Change: <unk>.
Speaker Change: A little bit more done in 'twenty, six and maybe even 27 and a view on how you think about hedging oil given the volatility there.
Speaker Change: And this is more stuff.
Speaker Change: Up until like 26 and 27.
Speaker Change: Sure.
Speaker Change: With our hedging strategy we have.
Speaker Change: Been very consistent in our approach.
David Sproule: We'll continue to be such, you know, the projects that we have, speaking on the oil side in particular. We will hedge those projects as we, you know, bring the rig in and stimulate activities and then bring it online. I think we have demonstrated that we have approached that and it's been a rewarding experience for us to lock in those DROIs and mitigate that commodity exposure on volatility. I think we'll, again, continue to do that on the natural gas side. Our approach is very similar as well, that we're looking at those projects and locking them in.
Speaker Change: We will continue to be such.
Speaker Change: Projects that we have speaking on the oil side in particular.
Speaker Change: We will hedge those projects as we.
Speaker Change: Bring the rig in and stimulate activities and then bring it online I think we have demonstrated that we have.
Speaker Change: Approach that and it's been a rewarding experience for us to lock in those rois and mitigate that commodity exposure on.
Speaker Change: Volatility.
Speaker Change: I think we will again continue to do that again on the natural gas side. Our approach is very similar as well that we're looking at those projects and market demand.
David Sproule: We are excited about where the natural gas prices have moved to, but we're also cognizant of the history that we've seen in both commodities over time. And so our strategy has always been and will remain to be to secure our DROIs, our high DROIs, and allow us and our investors the exposure to commodity upside through additional development. Got it. Thank you.
Speaker Change: We are excited about where natural gas prices have moved too, but we're also cognizant of the history that we've seen in both commodities over time.
Speaker Change: And so our strategy has always been and will remain to be.
Speaker Change: To secure our Rois are high Rois and allow us.
Speaker Change: And our investors the exposure to commodity upside through additional development.
Speaker Change: Got it thank you.
Michael Scialla: Our next question comes from the line of Michael Scialla with. Thanks, just had a couple follow ups. I wanted to see if I could get a handle on your activity level. So, I think you said you're at two rigs now, and is the plan to let that second rig go after you're done drilling this? Pennsylvania Marcellus pad, I think it's the Jos Van Dyke pad, and then you said you're at two frat crews, is the plan there to let that second crew go after you're done with sometime in the second quarters that run through the third quarter as well.
Speaker Change: Our next question comes from the wind up Michael CLO with Stephens. Your line is open.
Michael CLO: Thanks, just had a couple of follow ups I wanted to see if I can get a handle on your activity level. So I think you said youre at two rigs now and is the plan to let that second rig go after you're done drilling this.
Speaker Change: The Pennsylvania Marcellus pad.
Speaker Change: Jos Van Dijk pad and then you said you were at two Frac crews.
Speaker Change: Is the plan there to let that second.
Speaker Change: Crew go after you're done with.
Speaker Change: Sometime in the second quarter or is that the.
Speaker Change: Run through the third quarter as well.
Zack Arnold: That's a great question, Mike, and I appreciate the opportunity to sort of make sure that everybody understands our capital pace here. So, first and foremost, I think falling back to that we are maintaining FX guidance for the year, I think is important to know. Q1 was our most active quarter in company history as we ran two rigs and a frat crew and brought a number of wells online. Q2 is going to be comparable and look similar as we drop one rig, and that rig has now been released. So, we're down to one rig, as we said, we would be back in Q1, but we're picking up a second frat group to sort of follow up on the completion activities that that that second regenerated.
Speaker Change: Now Thats a great question, Mike and I appreciate the opportunity to sort of make sure that everybody understands our capital pace here. So.
Speaker Change: So first and foremost I think following back to that we are maintaining capex guidance for the year. I think is important to know Q1 was our most active quarter in company history. As we ran two rigs and our Frac crew in and brought a number of wells online Q2 is going to be comparable and look similar as we dropped one rig and that rig has now been really.
Speaker Change: So we're down to one rig as we said we would be back in Q1, but we're picking up a second frac crew to sort of follow up on the completion activities that that.
Speaker Change: That second regenerated, so that's going to lead to Capex.
Zack Arnold: So, that's going to lead to a capex that's elevated compared to what we're going to see in the back half of the year. And just to clarify the remainder of our year's cadence, we'll have one rig and a related frack crew taking us through the end of the year. I appreciate the clarification.
Speaker Change: Capex is elevated compared to what we're going to see in the back half of this year.
Speaker Change: And just to clarify the remainder of our year's cadence, we'll have one rig and a related frac crew, taking us through the end of the year.
Speaker Change: I appreciate the clarification.
Zack Arnold: Zack, you said that, though, well costs have been coming in relative, in line with expectations. Are you seeing any changes in service costs or service availability in Appalachia at this point? That's another great question. So, for us, I think it's important to know that our wells work really well in today's service cost environment. So, so we're not relying on any cost improvements to help us juice returns. This is a gas heavy basin, and we're even getting a little bit gasser this year, as we talked about. So, as such, we're not really seeing an activity sort of slumping in the basin.
Speaker Change: <unk> said that well cost have been coming in relative.
Speaker Change: And in line with expectations are you seeing any changes in service costs or service availability in Appalachia at this point.
Speaker Change: Another good question so.
Speaker Change: For Us I think is important to note that our wells worked really well in today's service cost environment. So so we're not relying on any cost improvements.
Speaker Change: Help us juice returns.
Speaker Change: This is a gas heavy basin and we're even getting a little bit gas here. This year as we've talked about so as such we're not really seeing an activity sort of slumping in the basin. So we're not.
Zack Arnold: So, we're not, we're not really focused on commodity driven capital improvements here. We're going to work with our ops team. We're going to work with our service providers to continue to seek efficiencies. We think that's where we've got the best gains that we can make in this year. Does that make sense? Thanks.
Speaker Change: We're not really focused on commodity driven capital.
Speaker Change: Movements here, we're going to work with our ops team, we're going to work with our service providers to continue to seek efficiencies. We think that's where we've got the best gains that we can make it in this year.
Speaker Change: That makes sense. Thanks.
Speaker Change: Okay.
Speaker Change: Okay.
Operator: And there are no further questions at this time. I would like to hand things back over to Zack Arnold. Oh, great. Thank you very much, guys. I appreciate you joining us again today, and we look forward to another successful quarter. So we'll talk to you all again soon. And this concludes today's conference call. You may now disconnect.
Speaker Change: And there are no further questions at this time I would like to hand things back over to Zach Arnaud for some closing remarks.
Zach Arnaud: Great. Thank you very much guys I appreciate you joining us again today and we look forward to another successful quarter. So we'll talk to you all again soon.
Speaker Change: And this concludes today's conference call you may now disconnect.
Zach Arnaud: Okay.
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