Q1 2025 EON Resources Inc Earnings Call
Good day, everyone and welcome to the E. On Resources, Inc. Announces first quarter 2025 earnings call on Thursday May 20, <unk> 2025.
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Speaker Change: It is now my pleasure to turn the floor over to your host Michael Porter, Sir the floor is yours.
Michael Porter: Thank you Matthew good afternoon, ladies and gentlemen, and welcome to the E on resources first quarter earnings call.
This call comes under the forward looking statements rules of the private Securities Litigation Reform Act of 1995 that involves risks and uncertainties that could cause affect result to differ materially from what is expected words, such as expect believe anticipate et cetera.
Such forward looking statements, but the absence of these words does not mean that a statement is not forward looking such forward looking statements relate to future events or future results.
Michael Porter: It results in changes that are material the company's expectations are disclosed in the company's documents filed from time to time with the Edgar and with the Securities and Exchange Commission and without further Ado I'd like to introduce Don take to you don't pay the floor is yours.
Don: Thank you Mike all of you. Thank you for dialing in and it's a warm day in Houston here in the afternoon I just got my air Conditioner fixed so I'm I'm in a very nice nice way to be speaking with each of you. We just spoke to all of you 30 days ago for our year end financial results.
Don: So the focus of this call is what's happened in Q1.
Don: And I'm going to I'm going to do this as a good bad good sandwich here. So the good of course is we've got this wonderful asset. We we all believe that this management team is committed to making this thing much bigger much more profitable than it is today.
Don: And we've made a lot of progress on the things we mentioned a month ago advancing the financing to retire all of our senior debt and our seller that we'll talk a little bit about that we've made great advances to find a driller that will bring money and drill and we put this out.
Don: On our website 50, San Andres horizontal wells and I was delighted to hear that one of our potential drilling partners at all no. It's not 50, it's 90 and these are big Wells. These are big wells, we're talking about 400 plus barrels a day per well.
Don: So those kind of jumped way up to the top of the list of the good on the bad side in the last quarter oil prices have been down our stock has been down our debt has stayed about the same we continue to pay down our debt, but we still have high debt.
Don: We we don't make money each month, but we've been reducing our costs to cut the amount of loss that we have each month, that's kind of a good good story out of a bad story and we are short of capital we need to invest more money than we are in the field, but right now our priorities just pay our bills.
Don: So a lot of our cash goes to that.
Don: So on to the slide that you have a slide one we're trying to get in the right direction.
Don: If you compare what we did you ran last year to what we did in Q1, we lowered our cost and we lowered our loss per quarter.
Don: I'm figuring in and if you cut through all.
Don: All the I'll say, the accounting rules and get to our cash loss per months, where we're close to probably $400000 right. Now is the run rate that we need to find either through increased production or increased cost.
Don: I mean, sorry reduced cost or increase production there now I got it right and that's that's that's almost twice as good as it was this time last year.
Don: And a lot of these cuts were responding to lower commodity pricing, even though we're hedged we're hedged at 70 plus percent, meaning we get $70 a barrel even if today oil prices are 55, or 60 or 62 or whatever they are we get 70.
Don: The financing to retire our big debt is it worth talking about so that's occupying most of my time and a lot of our team's time.
Don: We met with on stream in Dallas. This past week, we're on track to get the financing needed to retire our senior debt. So we reported that to our bank and the timing to get that all taken care of is ended June middle of July and that's it.
Don: The best forecast I can give for that part of the on stream financing is to also give us nine of half million to do Workovers and I. Previously mentioned, we have 45 Workovers approved it's a mixed bag of injectors and producers we are a waterflood are producing.
Don: Field, which means we need producers that are completed and are in our waterflood zone, which right now seven rivers is our dominant zone at the same time, we need water injectors injecting water in those same zones, so you're going to hear Jesse when he gets all I'm talking about that.
Don: In parallel with that we accelerated our search for a drilling partner and we've got we've got one LOI in hand, and we expect additional wants to come in but the form out of these things is a little bit of a leasehold payment.
Don: A a sharing of production and a sharing of drilling costs and we are looking for an experienced driller familiar with the formation in our area and I'm delighted to report we've got keen interest in that regard and this is where we're going to make the big move to the upside.
Don: I already mentioned the new Mexico's state OCD is approved 45 workovers for us that's a milestone so that gives us a big backlog of work to do once the funding is in place I'm also delighted to report that our asset stimulations of new formulation cooked up by June.
Speaker Change: S C Allen our VP of ops has doubled and tripled production now we we've done this before where we did simple asset it doubled and tripled production, but it was short lived so we had to go back to the drawing board to find a better formulation that would hold up so in conclusion I believe all of this hard work.
Don: Work that that hasn't put money in the bank for US yet has positioned us for a launch and as we continue to do these workovers and and refine our our formulas for sand fracs for acid jobs for drilling I believe we're in terrific position to take off.
Speaker Change: In Q3, and Q4 of this year with that for the details I'm going to turn it over first to two Mitch Trotter.
Speaker Change: Thanks, Dante Hello, I'm Betschart is CFO welcome the newcomers and those that we've talked to in the past. We thank you for attending today and this call I'll give you some insight into Q1 results.
Don: Main takeaways from Q1 or two things cost reductions are starting to materialize efforts to clean up the balance sheet continue.
Don: On the cost reduction said.
Don: G&A cost reduction will be discussed on later slide.
Don: The L O.
Don: Lease hold the field expenses have dropped to 683000 per month in Q1. This is down from what we were talking about last year, where it range from 700 to 750 per month averages.
Don: Another area of reduction as interest expenses dropped 165000 for the quarter and that's due to note conversions and our efforts to clean up our balance sheet.
Don: Now when it hit on something else at the income statement you look at it it's all over the place and that's part of what they were saying, it's due to non cash items that don't really reflect the running of the business.
Don: So in past calls we've drilled down to all the puts and takes of these items.
Don: Those items are properly recorded.
Don: But with when we strip them away you can see a little bit more insight into the actual business.
Don: And there to running the business numbers, but it's hard for you to see but I like to see them.
Don: The first one is income from operations, which I've talked to about in the past.
Don: And this is simply the cash.
Don: Cash driven revenues less the field related expenses and this is before G&A and all the other cost.
Don: We continue since day, one to have consistent income from operations in the $1.8 million range per quarter. That's the good news and its still there maybe a slight uptick.
Don: The second is kind of new to this call and I'm, calling it.
Don: The ongoing business income or loss and it is the income from operations less the.
Don: Or just talked about less the G&A, excluding all the noncash equity based type cost.
Don: And less of course interest expense the removed if you remove all the rest of those noncash items too.
Don: Q1 was a loss of 1.2 million after the interest expense.
Don: Last year the loss was running more like 1.4 1.5 million per quarter average across a year. This is a 300 K approved.
Don: And that's driven by cost reductions and you'll hear a little bit more about that in the G&A. So let's get on with it and let's go to the revenue side. Please next slide.
Don: Yeah.
Don: As you can see production remained stable for this quarter again, there was an uptick in oil revenue do the fluctuations in the market price of oil.
Don: They noted.
Don: We know market price for the last couple of months, it's been up and down in an all around good news is set.
Don: 70% of our oil is hedged at $70 a barrel.
Don: This mitigates these market fluctuations and we've got their head positional.
Don: At this level all the way through the end of 2025.
Don: Last item I wanted to note on the revenue slide though is.
Don: The gas revenues are up if it PK for the quarter and that's due to the higher price of gas.
Don: So let's go to the next slide please.
Don: Sure.
Don: Now I showed this slide on production impacts last call.
Don: We're not planning to include it.
Don: But the slide that stimulate a lot of good discussion in the Q&A. So if left of slide in the deck, which shows all I'm sure got from the website and.
Don: For reference to help you understand some of the business better.
Don: And if needed.
Don: We're gonna talk.
Don: If needed in the Q&A I may refer back to it but I'm not going to talk about it at this point in time, we don't want to do is go to like G&A Slide next slide please.
Don: Yeah.
Don: Now we have a plan, we stated to reduce G&A cost across the entire year and some reductions that started in Q1.
Don: The salary and fees decreased by 225000 in Q1.
Don: Over.
Don: Last year or this is approximately a million dollar a year run rate for the year.
Don: Second area Q1 to professional fees legal audit consulting, they're slightly down from last year's average per quarter.
Don: A significant portion of these stem from acquisition.
Don: Acquisition filings complicated instruments balance sheets settlement agreements you know trailing legal matters.
Don: We do expect these to drop off dramatically after Q2.
Don: Third area of cost reduction as the insurance costs are down 25, excuse me 75000 per quarter and that's just due to renewal rates that we've negotiated.
Don: So let's move on to the balance sheet. Please next slide.
Don: I'm not going to spend a whole lot of time here, but I do want to mention the company has made and is continuing to make improvements to the balance sheet.
Don: So reported before the F. P. A liability went away in Q4.
Don: Of last year.
Don: Now we will discuss some other Q1 improvements, but I'm going to do that all the equity slot. So let's flip to the debt structure slide.
Don: Yeah, there's really nothing new here.
Don: It's there for your reference I don't want to go ahead and move forward to the equity slide please.
Don: Okay. Now there are a couple of changes in equity as we clean up the balance sheet first there is no more class b common stock. It's all class a common stock so that and that CNS is gone.
Don: The number of warrants outstanding they have dropped a couple of million with our exchanges to long term convertible notes correspondingly. The warrant liability has also dropped by $1.6 million on the balance sheet.
Don: Yeah.
Don: Now next slide please.
Don: Yeah, just like the <unk>.
Don: Production impacts slide I showed on the last call I wasn't going to include it but it did stimulate a lot of good discussions so people wanted to review it.
Don: So I've left it in there for help to help you understand our business better.
Don: And in Q&A I can may refer back to it but it's there in the deck for you to look at.
Don: So for the financial section starting to wrap it up on rupee. We are a key focus on reducing costs, which has started to materialize and efforts to clean up the balance sheet continues and will continue in the future.
Don: So now I want to move and move it onto Jesse for to review operations. Thank you.
Don: Yeah.
Speaker Change: Yes, Thank you Mitch.
Don: Jesse Alan the VP of operations and today I will briefly discuss some of the highlights of 2024.
Don: Some of them are very important and just want to read.
Don: Jog everybody's memory on those but more importantly, I'll talk about what we're doing currently in Q1 of 2025 to increase our production.
Don: So first though I want to start with safety.
Don: For 'twenty 'twenty, four and into our first quarter 2025, we've had no reportable incidents. So our field operating personnel are doing an excellent job of.
Don: Their daily work routine, noting any possible near misses et cetera, and so on so they're doing a great job there.
Don: So for 2024.
Don: When we took over the.
Don: Operations of the Gray bar objection field. The daily production was in a free fall. So we had to stabilize that production and we were able to do that with a well service workover rig that we ran throughout the year and we were able to stabilize production in the 925 to 950 barrels of oil per day range, but.
Don:
Don: And so that was a good thing and and we continue those efforts of course and then in in order to stabilize our production. We did several upgrades throughout the field flow line repairs electrical repairs purchased some key equipment that helped us reduce L O E and so that's a good segue.
Don: <unk> way into the L O U which are both Mitch and Anne downtown you mentioned.
Don: At the beginning of 'twenty 'twenty four we were in the $780000 range $7 50 to 780 slowly we were able to reduce it to $700000 per month for our lease operating expense currently given quarter, one we're at $683000 per month.
Don: So let's move on to the more important stuff. So next slide please.
Don: Yes.
Don: What are we going to do to increase production.
Don: And we've already initiated several programs and and concentrating our effort I'm doing that we did several sanford.
Don: San Frac treatments, using low temperature resin coated sand, which will help keep the sand in place and not caused this operational problems having to pull downhole pumps et cetera. So that's been successful and are the first couple of wells one came in a little over 20 barrels all the day and the other one we're still in the process of testing.
Don: In addition, we've initiated the acid treatment program.
Don: New formulation little bit larger jobs are to sustain the production and as Dante mentioned are.
Don: We basically doubled and tripled production on the first two wells, we did and as a matter of fact, we are doing two additional jobs today and so there'll be some news. The next time that I'm on on those wells that we acidize.
Don: In addition, we always have a continuing effort of bringing down producing wells and down injection wells back online and so that effort continues.
Don: We're contemplating.
Don: Contemplating adding another rig to accelerate that program and then finally, the really big highlight is gonna be our horizontal drilling program in the San Andrus as Dante said, our own analysis, which of course is on our website. We indicated we had a 50 locations, but as a.
Speaker Change: That's one of our partners, who looked over the data they feel like it's more like 90, and that's mainly because of there's additional intervals within the San Andros that had a potential. So there's just different intervals within that San Andros that we're going to be able to exploit thus the reason for.
Don: Increased potential well count of horizontal wells.
Dante: So with that I'll turn it back over to you to Dante for the wrap up.
Don: Yeah.
Don: Okay.
Don: Yeah.
Don: I'm sorry are you there.
Don: All lines I'm here I was trying to do it I apologize I was on sorry about that.
Speaker Change: Guys I'm I'm, given our walk away point, so our takeaway points from this quarter we're.
Speaker Change: We're positioned for big Big time debt reduction.
Speaker Change: This includes the the R B L.
Speaker Change: Landing close to 20 million and also includes a seller note that stands close to 18 19 million, we're going to retire both of those in the next quarter along with the preferred shares. There. There is also standing in our capital stack all three of those we're going to go away.
Speaker Change: We're gonna have Workover Badness next next quarter, because we've already got a solid backlog of approved Workovers. This is going to increase our water injection going to increase our oil production.
Speaker Change: The last quarter of this year, we're gonna have.
Speaker Change: Yeah, I'm, just going to say, we're gonna be gone great guards in drilling preparation not drilling, but drilling preparation Q1 of next year and 26, we should be drilling up to up to six wells three to six wells. We're also gonna be doing some low cost acquisitions, which we can't help ours.
Speaker Change: Sales because of these low oil prices frankly, our phone is ringing so even though our stock is quite low we can do some very very low cost acquisitions, it will be accretive to our stock and where we're in the midst of looking at too.
Speaker Change: So when will the stock ever go up you're going to ask I've got my family and friends in the stock and they're asking me how low can it go and I told them as of today I can't go any lower than 37 cents. So but I believe that the stock is is really attractive I'm in it at a much.
Mike border: Higher price I'm more optimistic now than ever and are with the upside that I just mentioned I just can't help feeling very optimistic on our future with that I'm going to turn it back over to Mike border that are our Q&A. Please.
Speaker Change: Matt would you give them the instructions please.
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Speaker Change: Thank you that concludes our dial and Q&A for those listening on the webcast you can submit a question at this time by clicking on the ask a question button on the left of your screen type your question into the box and hit the send button to submit your question.
Michael Porter: Now I'll turn the call over to Michael Porter for remaining questions.
Michael Porter: Thank you Matt.
Speaker Change: Dice up the first question that came over the Internet just can you give us some color on your gas operations and what you think the future and gas will be for the company.
Speaker Change: Yeah, Let me, let me field that one guys if I could.
Speaker Change: So.
Speaker Change: First off gas prices have behaved much better than oil prices in our gas revenue is up so we're happy about that and it's a it's a very good question because we're looking at gas we're looking at gas opportunities and are you at all just I'll just say, we're looking at gas APA.
Speaker Change: <unk> in the U S and we're also looking at unconventional gas, we we like the specialty gas where the price of gas is much higher than I'll say Permian gas. So you know just as a for example, helium costs are closer to four or 500.
Speaker Change: Dollars per Mcf, if we can pick up a property or a plan that generates a helium.
Speaker Change: Revenue line, we're then tapping into deep I'll call it deep value for our company the gas, we get and sell two kinetics out there that's our midstream provider that bought out Durango, we don't get a whole lot for that gas. So if we can monetize that gas.
Speaker Change: That we produce which is about 900 Mcf per day by either doing a datacenter bitcoin mining or one of those things and we were we're investigating it now, but we don't know how to do it yet. So we're looking at help from others, we'd be very excited to do that but at the moment.
Speaker Change: We are enjoying a little more income because the gas prices were just I'll say methane loaded with a C to C. Three D. C. Four and C. Five is is on the upswing just the opposite of oil and gas let me ask Paul My team if they have anything they want it.
Speaker Change: Add to that.
Speaker Change: Jesse or Mitch and alpine.
Speaker Change: Well, let's see yeah, I'm fine in that regard yep.
Speaker Change: Okay, We'll go back and do the Mike Okay.
Speaker Change: The next question is how is your relationship with Chevron.
Speaker Change: I'll field that one to all of US when we first bought this property wanted to make sure. We had a good relationship with Durango and Chevron there, they're really our client because they buy they buy the gas now kinetics, and and Mitch and I, Oh, sorry, Mitch and I.
Speaker Change: And Jesse all have had chats with chevron as well as with.
Speaker Change: With kinetics and I I'd like to say are our relationship is excellent in the case of Chevron they've said if U quadruple your oil production will take it all so at the moment, we don't see any issues there.
Speaker Change: In the case of kinetics, the Permian is a wash and gas. So we have to be very careful in where were curtailed.
Speaker Change: 20% of our gas production in a rolling curtailments, because the midstream guys have to catch up to what the producers are producing so they have a big gas plant due to come on line.
Speaker Change: I think.
Speaker Change: The end of this year, Jesse you're more familiar with that what one would there next trains come off that would relieve some of this.
Speaker Change: Should be the end of July is what they've indicated but.
Speaker Change: I've taken that with a grain of salt because they keep pushing it but hopefully the end of July.
Speaker Change: Yeah the date slip.
Speaker Change: That's the best answer we can give you there are back to you Mike.
Speaker Change: Okay. Then the next question hanging on it's coming over right now.
Speaker Change: Would the entire deal with Oncor will it close in June or can you do it in pieces.
Speaker Change: It looks like it's gonna be at all all at once and the latest Ive got is we were trying to hold a June 23rd date and it's it's it's complicated because we're involving the bank the seller.
Speaker Change: A a very large investor that has the back or for on stream and I I believe to be say for this audience I I'd say well, we'll get it done by the end of July although we're pushing like Hell to get it done in June that's the best I can guidance I can give.
Speaker Change: It's not that the funding is not there. The funding is there the issue is getting all the paperwork together.
Speaker Change: To everyone's satisfaction, it's a complicated transaction.
Speaker Change: Thank you niche. This question is for you can you explain to me exactly how the French hedging program operates and do you make any money off of it.
Speaker Change: Sure.
Speaker Change: First off the hedging program that we have.
Speaker Change: As our hedges or swaps, where we basically trickle in and in our range is a little over $70 actually there are three or four hedges are blocks that are between $70.10 and $70.50.
Speaker Change: There would ever and their 15000.
Speaker Change: Barrels per month hedged, which is 70% of our production.
Speaker Change: And no matter, what the oil price cells or market as if it's at $60.
Speaker Change: We collect the $10 at the end of the month actually the 20th visits a month.
Speaker Change: And if it's 80, we gotta give the $10 back and the rest of it the other 30% new production floats with market.
Speaker Change: It's a pretty simple we don't have collars and all that and then we may in the future, but a little bit more complicated we actually had that at the beginning of last year colors and stuff, but we're not paying for hedges just to get it to one number where we're locking and hedge price we're not in the business.
Speaker Change: Hedge, but we we are we de risk and mitigate our risk by doing that and it's set up to cover our basic.
Speaker Change: Loan needs in basic operating expenses to.
Mike: Hope that answered the question back to you Mike.
Mike: Thank you Dante are the question is can you give us your thoughts on the oil and gas business in 'twenty five and how do you feel about what's been going on worldwide.
Mike: Wow Yeah.
Mike: The.
Mike: There's there's a lot of opinions on that yeah, you know for us the the mines. They put together the New York strip oil pricing is probably the best collection of mines, but by my own observation that I've been in this field a long time since our since I got out of school and 79.
Mike: The.
Mike: The Permian I do believe has peaked out you're seeing the rig count falling off at these oil prices, we have an unusually good Permian rock I don't believe that we're gonna be phased even if oil prices are in the low sixty's or high fifty's.
Mike: Certainly if we're in the low fifties battle.
Mike: Readjust, our focus to be just workovers, which are lower capital cost and faster payouts, but I think the world.
Mike:
Mike: Can't can't produce 100 million barrels a day incidentally and in the World continues to increase and demand. So my my own belief is we're going to trade in this.
Mike: It's pretty easy to say 60 to 80 range and we're at the bottom of that range and if we go below 60, it won't be for long because you'll see the drilling rigs all dry up and right now more production coming out of the Permian than any other oilfield. So.
Mike: If if the Permian continues to drop.
Mike: And every new well drilled almost everywhere in the world. It's almost like this other than Oh, there's one field.
Mike: Off of.
Mike: Northern South America, that's doing quite well, but other than that every new well does worse than the previous well. So if you drill a new Permian well it does worse than than the older. Good Permian wells, a decade ago or 20 years ago. So we're we're going to fight that we're going to fight that and drill.
Mike: Wells, we're going to have better Workovers and we're gonna enjoy we believe 70 barrel $70, a barrel and as oil goes up and it will go over 70, we'll look to hedge our the 26 production at 70 again. So I think 70 is a fair price it is.
Mike: Gotta go up and down from there, but I think generally it's it's got a it's going to level out around 70 and on bucking the trend with that statement, because New York strip pricing is forecasting low sixties.
Mike: I guess based on that on my own insight on you know people can't easily just turned the spigot shop to make oil come out it just doesn't work like that.
Mike: And that includes Saudi Arabia, the largest oil field the south Guevara field that I worked on is a waterflood and it's a carbonate waterflood died I would trade that carbonate for our carbonate, but it. It. It just reflects that we're dealing with a finite resource and that finite resources going to eventually run out.
Michael Porter: So I'll turn it back over to you Mike.
Speaker Change: Thank you Jessy next to the last question do you see an opportunity for you guys on as far as the rig count going down where you'll be able to get rigs at a cheaper price and would you buy a rig rather than rent it or lease it.
Speaker Change: I assume they're talking about a drilling rig.
Michael Porter: And so.
Michael Porter: So yeah.
Michael Porter: Now typically.
Michael Porter: As an operating company, we don't want to have that additional liability of a drilling rig.
Michael Porter: And so we will but right now it is a good market to go out and get a drilling rig at a fair market value of our favorite market daily rig rate. So I don't anticipate we purchasing our own rig if we ended up doing anything with the rig it'll be a workover rig and a little.
Michael Porter: A little less liability there and so.
Michael Porter: To answer that question I'm, saying rig rates are good right now based on the information talking to consultants and other operators out there and so don't anticipate buying our own drilling rig, but there could be the potential for us to buy a workover rig or two.
Michael Porter: I hope that answers the question.
Speaker Change: Thank you.
Michael Porter: Next the last question good job on cost controls how do you look at 2025, especially with the end industry under pressure and do you think that you can bring your costs down somewhat lower.
Michael Porter: Oh, yes, we certainly are looking at a couple of things obviously Jesse hit on some lease operating expenses field expenses.
Michael Porter: It gets that we're aligned in that will dropped 30000, a month the insurance cost or what they are but we may be able to drive those down.
Michael Porter: The labor and fees you know, we already started and we expect that to be a whole million reduction this.
Michael Porter: This year over last year.
Michael Porter: Uh huh.
Michael Porter: <unk>.
Michael Porter: Legal and professional fees will be dropping and as I said. After Q2, you know we do some of these acquisitions and social are obviously.
Michael Porter: There'll be expenditures, but they may or may not be you know capitalize as far as the acquisition costs and amortized, but so those are the areas of the biggest areas that we have we don't have a whole bunch of buildings and stuff around we have a really nice small engineering.
Michael Porter: Design sooner, but we don't have a lot of we're not into a lot of big excess of stuff. We don't have a whole lot of staff, we outsource it at very good reasonable rate so.
Michael Porter: We're fairly lean and mean as it is in these acquisitions will not.
Michael Porter: Increase are.
Michael Porter: Core base G&A, obviously, you have an acquisition it has its own.
Michael Porter: Insurance cost for that operation Yeah, We may we're.
Michael Porter: Go add you know staff for a whole bunch of stuff, we can leverage our accounting firms or payroll provider or legal firms. So we're not.
Michael Porter: When we're looking to spread the cost of the G&A across multiple growth opportunities. This.
Michael Porter: This year and you said this year, but obviously the future years, that's that's where we're were designed to do.
Michael Porter: So hopefully.
Michael Porter: Hopefully I answered that person's question. So I'll go back to you Mike.
Speaker Change: Thank you if anybody else has any questions. Please feel free to give me a call and I'll arrange for one of the management people to call you Dante that's the end of the questions I'm, turning the meeting back over to you.
Speaker Change: Yeah, I I'm, just going to repeat the takeaways guys. We we put a theme on this discussion that we're we're ready for launch and it really the foundation to take this company to a whole another level and we're talking about achieving what the analysts said that we should be a four or $5 stock.
Speaker Change: To get there we got to get our our balance sheet in order and that's why retiring debt retiring these preferred shares retiring the seller note. That's that's kind of step one step two is we got to get the production way higher than where it is near term, it's gonna be done with workovers longer term, it's gonna be.
Speaker Change: With drilling and then smart hedging, which we're already doing smart cost control, which we're already doing well we're going to continue that focus so that we think that by Q3 and Q4, our shareholders and finally.
Speaker Change: I'll stand up and cheer right now we're just grateful for all of you for sticking it out with us because we know this is painful it's painful for us and the management team to see this stock down at this level and we are doing everything behind the scenes to position. This thing to take off so with that I. Thank all of you for <unk>.
Speaker Change: Again look forward to talking to you again soon and if you have questions. We're very accessible you can reach out to Mike you can call us where we're happy to just tell you everything we're doing so with that I turn it back over to Mike and Matt.
Matt: Matt you can finish off the meeting.
Speaker Change: Certainly everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.