Q2 2025 Northern Oil and Gas Inc Earnings Call

Operator: It is second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. As a reminder, this conference is being recorded. It is my pleasure to introduce your host, Evelyn Infurna, Vice President, Investor Relations. Thank you. You may begin.

Cheese second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again, thank you. As a reminder, this conference is being recorded. It's my pleasure to introduce your host Evelyn. Infurna vice president investor relations. Thank you. You may begin.

Evelyn Infurna: Welcome to Northern Oil and Gas Inc.'s second quarter 2025 earnings conference call. Yesterday, after the close, we released our financial results. You can access our earnings release and presentation in the Investor Relations section of our website at noginc.com. We will be filing our June 30 10-Q with the SEC within the next few days. I am joined this morning by our Chief Executive Officer, Nicholas O'Grady, our President, Adam Dirlam, our Chief Financial Officer, Chad Allen, and our Chief Technical Officer, Jim Evans. Our agenda for today's call is as follows. Nick will provide introductory remarks, followed by Adam, who will share an overview of Northern Oil and Gas Inc.'s operations and business development activities, and Chad will review our financial results. After our prepared remarks, the team, including Jim, will be available to answer any questions.

Good morning. Welcome to NOG's second quarter 2025 earnings conference call. Yesterday, after the close, we released our financial results. You can access our earnings release and presentation in the investor relations section of our website at noginc.com. We'll be filing our June 30 10-Q with the SEC within the next few days. I'm joined this morning by our Chief Executive Officer, Nicholas O'Grady; our President, Adam Dirlam; our Chief Financial Officer, Chad Allen; and our Chief Technical Officer, Jim Evans.

Evelyn Infurna: Before we begin, let me remind you of our safe harbor language. Please be advised that our remarks today, including the answers to your questions, may include forward-looking statements within the meaning of the private securities litigation reform act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by our forward-looking statements. Those risks include, among others, matters that have been described in our earnings release, as well as in our filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and free cash flow. Reconciliations of these measures to the closest GAAP measures can be found in our earnings release.

Our agenda, for today's call is as follows. Nick will provide introductory remarks followed by Adam, who will share an overview of energies operations, and Business Development activities, and Chad will review our financial results. After our prepared, remarks, the team including Jim will be available to answer any questions before we begin. Let me remind you of our Safe Harbor language. Please be advised that our remarks today, including the answers to your questions. May include forward-looking statements within the meaning of the private Securities. Litigation Reform Act.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations, contemplated by our forward-looking statements.

Those risks include among others matters that have been described in our earnings release as well, as, in our filings with the SEC, including our annual report on form. 10K and our quarterly reports on form. 10 Q. We disclaim any obligation to update, these forward-looking statements,

Evelyn Infurna: With that, I will turn the call over to Nick.

During today's call, we may discuss certain non-gaap Financial measures including adjusted, evida adjusted, net income, and free cash flow. Reconciliations of these measures to the closest Gap. Measures can be found in our earnings release.

Nick O'Grady: Thanks, Evelyn. Welcome and good morning, everyone, and thank you for your interest in our company. As usual, I will give some highlights on our outlook in five key points. Number one, resiliency. NOG's business model is proving its resiliency every day. We built a solid business that embodies a number of tenets: diversity, scale, and risk optimization that consistently drives results. Our Uinta and Appalachian Basins are and will continue to be strong contributors as the Williston moderates during a period of lower prices. Our commodity mix of oil and natural gas positions us to benefit or offset weakness in either or strengthen both, and our conservative and disciplined approach to investing, as well as downside protection, supports our cash flow in the near term through hedging.

With that, I'll turn the call over to Nick.

Thanks Evelyn. Welcome and good morning everyone and thank you for your interest in our company.

As usual, I'll give some highlights on our Outlook in 5 key points.

Number 1, resiliency.

NG's business model is proving its resiliency every day. We built a solid business that embodies a number of tenants, diversity, scale and risk, optimization that consistently drives results.

Are you into an application based on and will continue to be strong contributors as the Williston moderates during a period of lower prices?

Nick O'Grady: As we look through oil price cycles and take a longer-term risk-managed view as to how and where to deploy our capital, our business activity continues to be solid, with a DNC list building substantially this quarter, as we have seen overall stable drilling activity on our lands. As I have said before, and will reiterate now, our goal is to make money for investors, and we believe that our diverse portfolio of holdings will be a relative outperformer given the number of levers we have at our disposal. Number two, drilling versus acquiring, organic versus inorganic, the how and the why. In a period of flux for oil prices, it is a unique time for our model and the decisions we make. Many companies continue to modestly grow their volumes and continue the march forward, even as price is signaling to do something else.

our commodity mix of oil and gas positions us to benefit or offset weakness in either or strengthen both and our conservative and disciplined approach to investing, as well as downside protection, supports our cash flow in the near term through hedging and as we look through oil price cycles and take a longer term risk managed view as to how and where to deploy our capital

Our business activity continues to be solid with a DNC list. Building substantially this quarter as we have seen overall stable drilling activity on our lands.

As I've said before and will reiterate. Now our goal is to make money for investors. And we believe that our diverse portfolio of Holdings will be a relative. Outperforming when given the number of levers we have at our disposal.

Number 2 drilling, versus acquiring organic versus inorganic, the how and the, why in a period of flux for oil prices. It is a unique time for our model and the decisions we make

Nick O'Grady: I want to be clear that our tactics will likely differ depending on the commodity outlook. We always tell investors that growth is the output of return-based decisions, not a front-end decision for our company. As prices have retracted, our view is that growth capital is better preserved for higher returns in the future at better prices, or if spent today on acquisitions. Upwards of 80% of a well's return is delivered in the first year of its life. An acquisition, on the other hand, typically delivers its return over four to seven years. Drilling, while generally higher return in the short term, is inherently riskier in this volatile price environment. With acquisitions, we benefit in multiple ways: long-term upside convexity and the resiliency to the long-term return profile. This is the driving logic to our reduced near-term spending.

Many companies continue to modestly, grow their volumes, and continue the March forward, even as price is signaling to do something else.

I want to be clear that our tactics will likely differ depending on the commodity Outlook.

We always tell investors that growth is the output of return, based decisions, not a front-end decision for our company.

As prices have retracted. Our view is that growth capital is better. Preserved for higher returns in the future at better prices, or if spent today on acquisitions

upwards of 80% of a Wells, return is delivered in the first year of its life, an acquisition, on the other hand typically delivers its return over 4 to 7 years.

drilling while generally higher return in the short term is inherently riskier in this volatile price environment,

Term upside convexity and the resiliency to the long-term return profile.

Nick O'Grady: To the extent we do spend additional capital, it will be through discretionary capital outlays, through acquiring stable production and inventory. That inventory and production will have the aforementioned convexity of future prices. So we retain the option of ramping activity if the environment changes. Remember, the oil is still there in the ground and will adapt quickly. Number three, whatever the price of oil, cash flow continues. We generated over $126 million in free cash flow this quarter, plus we have another nearly $50 million pending from a recent legal settlement. Our debt balances changed little since last quarter, mostly a function of the closing of our recent Midland acquisition, changes to working capital, and the mechanics of our convert TAC on and simultaneous stock buyback.

This is the driving logic to our reduced near-term spending to the extent. We do spend additional capital. It will be through discretionary capital outlays, acquiring stable production and inventory.

That inventory and production will have the aforementioned convexity to Future prices. So we retain the option of ramping activity. If the environment changes, remember the oil is still there in the ground and will adapt quickly.

Number 3, whatever the price of oil, cash flow continues, we generated over 126 million in free, cash flow this quarter. Plus we have another nearly 50 million pending from a recent legal settlement.

Nick O'Grady: The business itself, through a very weak period of oil prices, continues to shine while production has remained resilient and our careful risk management shines through. This is in spite of a significant amount of price-related shut-ins from price-sensitive operators and other deferments that are typical in a lower price environment. While not always the most popular, these decisions by our operators have proven time and time again to be value-enhancing through patiently waiting out the cycles. With that said, the ground game is providing compelling offset opportunities, which brings me to my next point. Number four, ground game success. As I've mentioned in the past several quarters, the term ground game means many things, from raw, unbound acreage to drill-ready projects, and our competitiveness in all of these categories ebbs and flows at times.

Our debt balance has changed little since the last quarter, mostly a function of the closing of our recent, Midland acquisition changes to working capital in the mechanics of our convert tax on and simultaneously. A stock buyback.

But the business itself through a very weak period of oil, prices continues to shine while production is remained resilient in our careful risk management shines through.

This is in spite of a significant amount of price related shut-ins from Price sensitive operators, and other deferments that are typical in a lower price environment.

Well, not always the most popular, these decisions by our operators have proven time and time again, to be value. Enhancing through patiently, waiting out the cycles.

With that said the ground game is providing compelling offset opportunities, which brings me to my next point.

Number 4. Ground game success.

Nick O'Grady: Our discipline means we evaluate across basins, structures, and commodity type, depending on the returns and opportunity. In the past year, we focused particularly on acreage as it's become a lost art to take longer-dated positions on undeveloped acreage, and the results have been stellar. We've seen large portions of our acreage in the Utica become unitized rapidly, and in short order, we're seeing our concentrated working interest getting well proposals on those lands. In the second quarter, with the weakness in oil, all portions of the ground game saw more success across each of our active basins. If we see further weakness in the oil markets in the later endings of 2025, expect to see even further success for us in this arena, as that's when we tend to have the most traction. Number five, with great power comes great responsibility.

As I've mentioned in the past several quarters, the term ground game means many things from raw. Unbound. Acreage to drill. Ready projects and our competitiveness. In all of these categories es and flows at times.

Our discipline means we evaluate across basins structures and commodity type depending on the returns and opportunity.

in the past year we focused particularly on acreage as it's become a lost art to take longer dated positions on, on developed acreage and the results have been stellar

We've seen large portions of our acreage in the Utica, become unitized rapidly. And in short order, we're seeing our concentrated working interest getting well proposals on those lands and in the second quarter with the weakness in oil, all portions of the ground game. Saw more success across each of our active basins. If we see further weakness in the oil markets, in the later Innings of 2025 expect to see even further success for us in this Arena as that's when we tend to have the most traction,

Nick O'Grady: As the largest and best-capitalized non-operator, we have found ourselves uniquely situated by being involved in most major M&A processes that are going on in the marketplace today. This is being driven by the breadth of our capabilities, our reputation in the marketplace, and the increasing need for our capital. I mentioned the difference between drilling for returns versus acquiring and our view that ultimately, from a long-term perspective, acquiring today has the best future potential. I am pleased to note that our backlog of potential acquisitions from bolt-ons to truly transformational transactions is at an all-time peak, both in value and, in many cases, impact and quality. These potential transactions cover almost every structure, basin of operation, and variance of scale. Should we be successful on our terms, these opportunities could be highly beneficial to our stakeholders on almost every measure.

Number 5: with great power comes great responsibility.

As the largest and best-capitalized non-operator, we have found ourselves uniquely situated by being involved in most major M&A processes that are going on in the marketplace today.

This is being driven by the breadth of our capabilities, our reputation in the marketplace and the increasing need for our capital.

I mentioned the difference between drilling for Returns versus acquiring and our view that ultimately from a long-term perspective acquiring today has the best future potential

I'm pleased to note that our backlog of potential Acquisitions from bolt-ons to truly transform transformational transactions is at an all-time Peak, both in value. And in many cases, impacting quality

These potential transactions cover almost every structure based of operation and variance of scale.

Nick O'Grady: As I will remind you, every transaction goes through incredible rigor and scrutiny here at Northern Oil and Gas Inc., not to mention our low level of actual conversion success rate. That being said, we are working hard to find value-accretive ways to continue to drive our business forward, and I am highly confident that we will find meaningful ways to do so this year and beyond. Northern Oil and Gas Inc.'s Q2 results highlight the flexibility of the business model and our returns-based philosophy. These factors have translated into significant cash flow generation and excellent capital efficiency over time. While overall growth dynamics have slowed in U.S. Shale, we are hard at work to find accretive opportunities for our stakeholders and believe we can deliver over the long term. Let me be absolutely clear.

Should we be successful on our terms? These opportunities could be highly beneficial to our stakeholders on almost every measure.

As I'll remind you, every transaction goes through incredible rigor and scrutiny here at NG, not to mention our low-level of actual conversion success rate, that being said, we are working hard to find value of creative ways to continue to drive our business forward, and I'm highly confident that we'll find meaningful ways to do so this year and Beyond.

Energy is Q2 results highlight the flexibility of the business model in our returns based philosophy.

These factors have translated into significant cash flow generation and excellent Capital efficiency over time.

While overall growth Dynamics have slowed in US Shale, we are hard at work to find a creative opportunities for our stakeholders and believe we can deliver over the long term.

Nick O'Grady: As it pertains to 2026 and beyond, our goal is to maximize returns for our investors and find the optimal path to differentiated growth and value. We have incredible opportunities to do so beyond just our drilling capital, but we will allocate our capital in the way that creates the most value for our investors. We remain focused on the same simple tenets, which is to grow our profits on a per-share basis and build scale for our investors, all the while focusing on strong returns on capital and keeping a strong balance sheet. I often mention that Northern Oil and Gas Inc. is different. We are different in so many ways, but I think we are most different in that we do things almost exclusively focused on long-term thinking, on long-term value creation through cycle.

Let me be absolutely clear as it pertains to 2026 and beyond our goal is to maximize returns for our investors and find the optimal path to differentiate growth and value. And we have incredible opportunities to do. So beyond just our drilling Capital, but we will allocate our capital in the way that creates the most value for our investors. We remain focused on the same simple tenants, which is to grow our profits on a per share basis and build scale for our investors. All the while focusing on strong Returns on Capital and keeping a strong balance sheet.

Nick O'Grady: Sometimes these measures may differ from our peers, but seizing on market opportunities will ultimately drive more value in the end. Thank you again for listening and your continued interest in our company. Adam.

More value in the end.

Adam Dirlam: Thank you, Nick. Operationally, the second quarter finished as expected, even in the face of continued commodity price volatility. Our operating partners have, for the most part, maintained their development cadence, with the exception of a few operators in the Williston who have pulled back. As a result, we saw one net well deferred and approximately 3,800 barrels per day shut in due to pricing pressure from a single operator. Notwithstanding the deferrals and shut-ins, current Williston results continue to outperform internal estimates, and well productivity is appreciably higher compared to 2024 tills. While we've seen some expected IP dates pushed out as operators take a more cautious stance on bringing wells online, overall activity levels across our core basins remain robust. The Permian held steady while both the Uinta and Appalachia saw the anticipated uptick in drilling activity.

Thank you again for listening and your continued interest in our company. Adam.

Thank you, Nick.

Operationally the second quarter finished as expected, even in the face of continued. Commodity price volatility.

Our operating Partners have for the most part, maintain their development, Cadence, with the exception of a few operators, in the Williston who have pulled back.

As a result we saw 1, net weld deferred in approximately 3800, barrels per day. Shut in due to pricing pressure from a single operator.

Notwithstanding the deferrals and shutdowns current Williston results. Continue to outperform internal estimates and well. Productivity is appreciably higher compared to 2024 tills.

While we've seen some expected IP dates pushed out as operators. Take a more cautious stance on bringing oils. Online overall activity levels across our core basins remained robust

Adam Dirlam: In the Uinta, we spud 4.8 net wells during the quarter, up from 1.4 net wells in Q1. Meanwhile, our joint development program in Appalachia is now in full swing. Wells were spud on time and on budget, and with both programs, wells are performing consistent with internal expectations. We're encouraged by the execution we're seeing across the board. Despite modest deferrals on the till front, drilling and AFE activity remains strong. The Permian, Uinta, and Appalachia now account for 80% of our wells in process, which totaled 53.2 net wells at quarter end. That represents a 70% increase in drilling activity quarter over quarter, with 27.1 net wells added to the DNC list in Q2. This drove a net build of 14.3 net wells, with the Permian contributing roughly half of the total wells in process and 60% of the oil-weighted wells in process.

the Parian held steady while both the Uinta and Appalachia saw the anticipated uptick in drilling activity.

Can you enter? We spud 4.8. Net Wells during the quarter up from 1.4 net wells, in q1.

Meanwhile, our joint development program in Appalachia is now in full swing.

Wells were spot on time, and on budget. And with both programs, Wells are performing consistent with internal expectations.

For the execution, we're seeing across the board.

Despite modest deferrals on the till front drilling, an AFA activity remains strong.

the Parian UA and Appalachia now account for 80% of our wells in process which totaled 53.2, net Wells at quarter end

That represents a 70% increase in drilling activity, quarter over quarter with 27.1 net Wells added to the DNC list in Q2.

This drove a net build of 14.3 net Wells with the Parian contributing roughly half of the total wells in process in 60% of the oil weighted wells in process.

Adam Dirlam: We also see a continued push for improvement in capital efficiency. Normalized well costs on our DNC list are now averaging approximately $800 per lateral foot, and our oil-weighted basins saw costs decline 6% sequentially on a normalized basis. This reflects both longer laterals and exposure to some of the most efficient operators in our basins. Turning to well elections, we've seen a retreat to the core with estimated EURs up quarter over quarter, and as a result, our election percentage has remained elevated at 95% plus. Quarterly net AFE elections also increased sequentially, along with over a 50% increase in activity relative to 2024's quarterly average. As always, we remain highly selective and continue to stress test all elections against conservative price decks to ensure resilience in a lower for longer environment.

We also see a continued push for improvement in capital efficiency.

normalize well costs on our DNC list are now averaging approximately $800 per lateral foot

And our oil weighted basins, saw cost decline 6%, sequentially on a normalized basis.

This reflects both longer laterals and exposure to some of the most efficient operators in our basins.

Turning to well elections. We've seen a retreat to the Core.

With estimated eurs up quarter over quarter. And as a result, our election percentage has remained elevated at 95 plus percent.

Quarterly net AF elections. Also increase sequentially along with over a 50% increase in activity relative to 2024, is quarterly average.

As always, we remain, highly selective, and continue to stress, test all elections against conservative price decks to ensure resilience in a lower for longer environment.

Adam Dirlam: Looking ahead, we expect to see more of the same from our operating partners as we move into the back half of the year. Relative to Q2, we see a slight increase to tills in Q3 before ramping through Q4 as the Permian and Appalachia increase completions compared to the first half of the year. Similar to anticipated tills, we expect the Permian and Appalachia to drive the bulk of our drilling in the back half of the year, while seeing the Williston slow down absent a change in commodity pricing. On the business development front, we are seeing an accelerating number of opportunities and have been able to take advantage of the downward pressure on commodities to capitalize on ground game opportunities across all of our basins. In the second quarter alone, we reviewed over 170 transactions, over a 40% increase relative to the first quarter.

Looking ahead, we expect to see more of the same from our operating Partners as we move into the back half of the year.

Relative to Q2.

We see a slight increase to tills in Q3 before ramping through Q4 as the Parian and Appalachia increased completions compared to the first half of the year.

Similar to anticipated tills. We expect the Parian and Appalachia to drive the bulk of our Drilling in the back. Half of the Year, while seeing the Williston slow, down absent, a change in commodity pricing.

On the business development front, we are seeing an accelerating number of opportunities and have been able to take advantage of the downward pressure on Commodities to capitalize on ground game opportunities across all of our basins.

Adam Dirlam: In addition to closing our previously announced Upton County acquisition, we closed 22 transactions, up from seven deals in the first quarter, for a total of 4.8 net wells and over 2,600 net acres across all of our respective basins. Our approach remains the same, targeting both near-term drilling opportunities as well as long-dated inventory. We are finding creative ways to put things together, whether through smaller joint development agreements in the Permian, acreage trades and farm outs, as well as old-fashioned leasing efforts. Regarding larger scale M&A, there has been an increase in natural gas-related opportunities entering the market, alongside assets that have become available as commodity volatility has decreased. Currently, more than 10 ongoing processes are being assessed, with a combined value exceeding $8 billion, and additional opportunities are anticipated.

In the second quarter alone, we reviewed over 170 transactions over a 40% increase relative to the first quarter.

In addition to closing, our previously announced Upton County acquisition, we closed. 22 transactions up from 7 deals in the first quarter.

for a total of 4.8, net Wells and over 2600 net Acres across all of our respective basins,

For finding creative ways to put things together. Whether through smaller joint development agreements in the puran.

Acreage trades and farm outs as well as old-fashioned leasing efforts.

Regarding larger scale m&a, there has been an increase in gas related opportunities entering the market alongside assets that have become available. As commodity volatility has decreased

Adam Dirlam: As the largest non-operator of scale, we are having more strategic bilateral conversations, and we are optimistic that our flexible model and strong balance sheet position us well to capitalize in this environment. As always, we remain focused on total returns, disciplined capital allocation, and leveraging the advantages of our non-operated model to navigate the current environment. With that, I will turn it over to Chad.

Currently more than 10 ongoing, processes are being assessed with a combined value exceeding, 8 billion dollars and additional opportunities are anticipated.

As the largest non-operator of scale, we are having more strategic bilateral conversations and we're optimistic that our flexible model and strong balance sheet position us well to capitalize on this environment.

As always, we remain focused on total returns disciplined, Capital allocation and leveraging, the advantages of our non-operated model to navigate the current environment.

Chad Allen: Oil and Gas Inc. delivered another solid quarter against a noisy macro backdrop. Second quarter total average daily production was approximately 134,000 BOE per day, up 9% versus Q2 of 2024, and in line on a sequential quarter basis. Oil production was approximately 77,000 barrels of oil per day, up 10.5% from Q2 of 2024, and down 2% sequentially, largely due to lower activity in the Williston. The Uinta turned in another strong contribution with volumes up 18.5% sequentially. Gas production continues to ramp. The first batch of wells from our Appalachian JV are online and started to contribute to volumes in the back half of the quarter. Overall, we had record gas volumes of approximately 343 MMCF per day. Adjusted EBIT on the quarter was $440.4 million, including the impact of a legal settlement of approximately $48.6 million.

With that, I'll turn it over to Chad.

Thanks Adam.

Nog delivered. Another solid quarter, against the noisy, macro backdrop.

Second quarter total average. Daily production was approximately 134,000 Boe per day.

Up 9% versus Q2 of 2024.

and in line on a sequential quarter basis,

oil production was approximately 77,000 barrels of oil per day.

Up 10 and a half percent from Q2 of 2024.

And down, 2% sequentially, largely due to lower activity in the Williston.

The winter turned in another strong contribution with volumes up, 18 and 1.5% sequentially.

Gas production, continues to ramp.

The first batch of Wells from our Appalachian, JV or online. It started to contribute to volumes in the back half of the quarter.

overall, we had record, gas volumes of approximately 343 mmcf per day,

Adjusted, even in the quarter was 440.4 Million.

Chad Allen: Free cash flow, excluding the legal settlement, was approximately $126 million, marking our 22nd consecutive quarter of positive free cash flow, exceeding $1.8 billion over that time period. Oil differentials averaged $5.31 per barrel, excluding certain non-cash revenue adjustments. Year-to-date differentials were $5.50, leading us to adjust our guidance range. Natural gas realizations were 82% of benchmark prices, down from 100% last quarter due to ongoing Waha market weakness, lower NGL prices, and weaker seasonal Appalachian pricing. Lease operating costs per BOE rose 6% to $9.95 due to higher expenses in the Williston due to lower volumes and greater fixed cost absorption, and in the Permian due to increased saltwater disposal costs. To account for higher costs year to date, we revised guidance on LOE. We also revised guidance on production taxes to a lower run rate.

Including the impact of illegal settlement of approximately 48.6 million.

Free cash flow. Excluding the legal settlement was approximately 126 million.

Marking, our 22nd consecutive quarter of positive free cash flow.

Exceeding 1.8 billion over that time period.

Oil differentials. Average. 5.31 cents per barrel.

Excluding certain non-cash Revenue adjustments.

Year to date differentials were 5.50 leading us to adjust our guidance range.

Natural gas realizations. Were 82% of Benchmark prices.

Down from 100% last quarter, due to ongoing waha Market weakness, lower NGL prices and weaker seasonal appellation pricing.

This operating costs per B. Rose 6% to $9.95.

Due to higher expenses. In the Williston due to lower volumes, and greater fixed costs absorption.

and in the Parian due to increased saltwater, disposal costs,

To account for higher costs year to date.

We revised guidance on eloe.

We also revised guidance on production taxes.

Chad Allen: CapEx in the quarter, excluding non-budgeted acquisitions and others, was $210 million, 16% lower sequentially. Overall, the $210 million was allocated with 34% to the Permian, 25% to the Williston, 15% to the Uinta, and 26% in the Appalachian Basin, respectively. Approximately $185 million of total spend in the quarter was allocated to development CapEx. For the remainder of 2025, we are still anticipating a 50/50 split in terms of spend for the third and fourth quarters. Given our outlook on commodity pricing and our anticipation of deceleration in organic growth, we are reducing our 2025 CapEx guidance to a range of $925 million to $1.05 billion, which is a reduction of about $137.5 million at the midpoint.

To a lower run rate.

Capex in the quarter. Excluding non-budgeted Acquisitions and others was 210 million 16% lower sequentially.

Overall, the 210 million was allocated with 34% to the puran.

25% of the Williston.

15% that you went to in 26% in the Appalachian, Basin respectively.

Approximately 185 million of total spend in the quarter was allocated to to development capex.

for the remainder of 2025, we are still anticipating a 50/50 split in terms of spend for the third and fourth quarter,

Given our outlook on commodity pricing and our anticipation of deceleration in organic growth.

We are reducing our 2025 capex, guidance to a range of 925 million to 1.05 billion.

Chad Allen: With the acceleration of potential investment opportunities Adam Dirlam's team is evaluating, we anticipate the growth wedge initially built into our CapEx guidance will be pivoted into discretionary acquisitions from ground game to bolt-ons. At the end of the quarter, we maintained over $1.1 billion in liquidity, consisting of $26 million in cash on hand and $1.1 billion available on a revolving credit facility. Our asset base continues to generate solid cash flow. We expect to grow this over time. As a testament to the confidence of our asset base and credit profile, we were recently upgraded to double B minus by Fitch. In mid-June, we successfully completed a reopening of our 2029 convertible notes, issuing an additional $200 million under the same terms as the original 2022 offering, including a cap call with an effective conversion price exceeding $50 per share.

Which is a reduction of about $137.5 million at the midpoint.

The acceleration of potential investment opportunities Adams, team is evaluating.

We anticipate the growth wedge initially built into our capex. Guidance will be pivoted into discretionary Acquisitions from ground, game to Bolton.

By the end of the quarter, we maintained over 1.1 billion in liquidity.

Consisting of 26 million in cash on hand.

And 1.1 billion available on a revolving credit facility.

Our asset base continues to generate solid cash flow.

As a testament to the confidence of our asset Base and Credit profile where recently upgraded to Double B, minus by Fitch.

In mid June, we successfully completed a reopening of our 2029 convertible notes.

Chad Allen: The proceeds were used to partially repair a revolver, and in conjunction with the offering, we repurchased 1.1 million shares. This opportunistic transaction enabled us to generate incremental annual interest and dividend savings of approximately $5 million. During my prepared remarks, I mentioned changes to guidance on differentials, LOE, production taxes, and CapEx. We also have made changes to our guidance for total annual production and annual oil production that align with our outlook on activity for the remainder of the year. Before moving to Q&A, I'd like to briefly address impairment and cash taxes. Due to lower oil prices in Q2, Northern Oil and Gas Inc. recorded a $115.6 million non-cash impairment charge, leading us to reduce our DD&A guidance per BOE. Regarding cash taxes, based on our current analysis of the One Big Beautiful Bill Act, Northern Oil and Gas Inc.

If you need additional 200 million under the same terms, as the original 2022, offering including a cap call with an effective conversion price, exceeding, $50 per share,

The proceeds were used to partially repair revolver.

and in conjunction with the offering we repurchase 1.1 million shares,

This opportunistic transaction enabled us to generate incremental annual interest and dividend savings of approximately $5 million.

During my prepared remarks, I mentioned changes to guidance on differentials, Eloe production taxes, and CAPEX.

We also have made changes to our guidance for total annual production and annual oil production that align with our outlook on activity, for the remainder of the year.

Before moving to Q&A.

I'd like to briefly address impairment and cash taxes.

To do a lower oil prices in the second quarter.

Dog recorded at 115.6, million. Non-cash impairment charge. Leading us to reduce our ddna guidance for Boe.

Regarding cash taxes.

Chad Allen: will not be subject to federal cash taxes in 2025, and we do not anticipate having a federal cash tax liability through 2028 based on our current forecast. With that, I'll turn it back to the operator for Q&A.

Based on our current analysis of the 1, big beautiful, bill act.

Nog will not be subject to Federal cash taxes in 2025.

And we did not anticipate having a federal cash tax liability through 2028 based on our current forecast,

With that, I'll turn it back to the operator for Q&A.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Scott Hennold with RBC Capital Markets.

At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Scott, hannold with RBC Capital markets.

Scott Hennold: Yeah, thanks. I was wondering if you could help me think about the cadence into 2026. It sounds like most of your operators have been drilling more core wells. Results have been good. I know we did take down oil production guidances. Is that really solely related to lower activity in the Williston? What should we expect into 2026 there? As you think about the setup for 2026, you did mention obviously having a very similar till level could do maintenance production. Is that view an organic view, or would that be a combination of organic and inorganic activity?

Yeah, thanks. Um, I I was wondering if you could uh helped me think about the Cadence in the 2026 and it it sounds like most of uh your your operators have been, you know, drilling more core. Wells results have been good. I know we did take down oil production guidances is is that really solely related to, you know, just lower activity in in the Wilston. And and what should we expect in in the 26th there? And as you think about the setup for 26, um, you know, the and you did, you know, mention obviously having

A very similar level could do maintenance production, which is that view in, or, uh, organic view, or would that be a combination of organic and then organic activity?

Nick O'Grady: Okay. I will try to get at all those questions. If I forget one of them, just remind me, Scott. As it pertains to the cadence for 2025, as you noticed, our Q2 spending was materially lower, right? As we have seen a bit lower spending, that will translate into modestly lower volumes in Q3. As our DNC list is building, we should see levels in Q4 similar to where we were in Q2. So we should exit the year pretty similar to where we are today. As we mentioned in our prepared documents, we could certainly spend a level lower than this year in a lower till count, and keep roughly the same as 2025 volumes. If we spend a similar level, that would translate into certain growth. Look, it is July. I think it is a little bit premature.

Okay, um, I'll try to get all those questions. If I forget one of them, I'll just remind me, Scott. Um,

Nick O'Grady: We are a return-driven, the number one factor in which we are compensated on is return on capital employed, and that is what drives our decisions. Growth is the output of those. Our spending will be dictated by the price environment and all of those things. Whether we spend less money or more money next year and whether that translates into growth or a more of a maintenance activity level will be driven by the commodity price environment as we get to the end of the year.

As it pertains to, uh, the Cadence for 25. As you noticed. Our, our our Q2 spending was was was uh, materially lower, right. So, um, as we've seen a bit lower spending that that will translate into, you know, modestly lower volumes and Q3 but as our DNC list is building, um, we should see levels, uh, in Q4 similar to where we were in Q2. So we should exit the year pretty similar to where we are, uh, today. Uh, and as we mentioned in our, um, you know, prepared documents that, um, we could certainly spend a level lower than this year, in a lower till count. Um, so and keep roughly the same as 25 volumes. Um, if we spent a similar level that would translate into certain growth. Look, it's July, I think it's a little bit. Um, premature look, we are a return driven, the number 1 factor in, which, um, you know, we are compensated on is return on

Capital employed and that's what drives our decisions. And so growth is the output of those. And so our spending will be dictated by the price environment and all those things. And so, um, whether we spend less money or more money next year, and whether that translates into, you know, growth or or, or more of a maintenance activity, uh, level will be driven by the the commodity price environment as we get to the end of the year.

Chad Allen: I appreciate that. As my follow-up.

Nick O'Grady: Oh, in terms of the organic or inorganic, we are talking our normal course spending, which would be a combination of acreage replacement in which we embed our ground game capital in there and a typical organic spend.

I appreciate that. Um and and in terms of the the organic or inorganic, we're talking, you know our our normal course spending which would be a combination of um you know, what we would you know, acreage replacement and which we embed our ground game capital in there and a typical organic sector.

Scott Hennold: Okay, thanks. As a quick follow-up, it sounds like your comments allude to the fact that you like some of the return profiles of some of the inorganic type of activity. I do not know, being a little bit more, I will not say predictable, but more controllable. Is that right? I mean, is there a sort of a strategy to look at some of the inorganic pieces a little bit more, and could that become a higher blend, you know, going forward?

Activity is, is I don't know, being a little bit more. I won't say predictable, but more controllable is, is that right? I mean is is there is there sort of a strategy to look at

Nick O'Grady: Yeah, I mean, I think, Scott, I think, look, what I think you should take away from this is, number one, look, our operators are doing what they should be doing, which is, you know, we are going to be governed by not just the price of oil that you see on the screen today, but by the future strip and by a risk factor on that future strip, right? If you look at the fundamentals of oil today, you know, they are in question, right? You have significant volumes coming online. So the risk profile to that strip, you know, of course, it could be better, but it could be worse, and it is somewhat tenuous. So we are seeing many of our operators pull back on activity and defer that activity until the environment is more clear. They want to make money on that inventory.

Some of the inorganic pieces, a little bit more and and could that become a higher blend, you know, going forward.

yeah, I mean I I think Scott like I think look um

What? What? I think you should take away from this is number 1. Look, our operators are doing what they should be doing, which is, you know, we are going to be governed by not just the price of oil that you see on the screen today but by the the future strip and buy a risk factor on that feature strip, right? Um, and if you look at the fundamentals of oil today, um you know they are um they are in question, right? You have significant volumes coming online.

Nick O'Grady: As I said, the oil is still in the ground, so they would rather preserve that until there is a better day. While everybody wants to see, you know, linear growth, the real key is to drill those wells when it is most profitable. When we look at an acquisition, on the other hand, if you think about long-dated inventory and stable long-term production, that is not really just a singular well that is being drilled in that singular period where that return is dependent on that short-dated period. We can allocate that same amount of capital to something that is much more resilient to a longer period of time and provides convexity because we do believe, regardless of what happens in the next 12 months, that the long-term profile for oil, for natural gas, and all of those things is very, very strong.

And so, uh, the risk profile to that strip, you know, of course, it could be better, but it could be worse. Uh, and it is, uh, somewhat tenuous. And so, we're seeing, uh, many of our operators pull back on, oh, activity and defer that activity until the environment is more clear. Uh, and they want to make money on that inventory. And there's, as I said, the oil's still on the ground so they'd rather preserve that until there's a better day. And so while everybody wants to see, you know, linear growth, uh, the real key is to drill those wells when it's most profitable. Um, when we look at an acquisition, on the other hand, if you think about, um, elongated inventory and stable long-term production that isn't really just...

A a singular. Well, that's being drilled in that in that singular period, where that return is dependent on that short, dated period. Um,

Nick O'Grady: So I think as we look at the risk profile for additional capital next year, to the extent that we do spend, you know, as you saw as we came into this year, where we were going to spend up to $1.2 billion, and that would have been almost a similar level next year, whereas at a maintenance level, you are talking about, you know, a $500 million to nearly $600 million difference. That $500 million to $600 million allocated towards acquisitions, ultimately, if you were to spend that same amount of capital, has a much more resilient growth profile should oil prices or natural gas prices collapse in the short term.

We can we can allocate that same amount of capital to something that is much more resilient to a longer period of time and provides convexity because we do believe regardless of what happens in the next 12 months. Um that the long-term profile for for oil for natural gas. And all of those things is very, very strong.

and so I think as we look at the risk profile for additional Capital next year, um to the extent that we do spend, you know our, you know, as you as you saw as we came into this year where we were going to spend up to a an you know, 1.2 billion dollars and that would have been almost a similar level next year whereas at a maintenance level you're talking about you know, 5 to

Nearly $600 million difference. Um, that $500 to $600 million allocated towards, um, acquisitions ultimately, if you were to spend that same amount of capital, has a much more resilient growth profile should oil prices or natural gas prices collapse in the short term.

Operator: Your next question comes from the line of Charles Mead with Johnson Rice.

Your next question comes from the line of Charles Maid with Johnson Rice.

Charles Mead: Good morning, Nick, to you and your whole team there. Nick, I am going to try to go a little bit the same direction as Scott, but perhaps ask it a different way. Can you, earlier in the year, you gave us an estimate for how much of your total capital budget, how much of it was growth CapEx. Can you give us an update on that now? Like how much growth CapEx for 2026 is in your updated 2025 capital budget?

Good morning, Nick to you and your whole team there.

uh, Nick, I'm I'm gonna try to, uh, go a little bit, the same direction as Scott, perhaps, uh,

From it, uh, asking a different way. Can you, you know, earlier in the year you gave us an estimate for how much, uh, how much of your total capital budget. Um,

Uh, how much of it was growth capex? Can you give us an update on that now? Like how much growth capex for '26 is in your updated '25?

Capital budget.

Nick O'Grady: I'm not sure. Well, look, if you looked at it, we've cut from peak to trough about $275 million, right? And we'd said about $250 to $300 million of growth capital. So to the extent that we spent the bottom end of our guidance, we would effectively not be spending that. Charles, does that make sense?

uh,

I'm not sure. Well, look, if you looked at it, we've cut from peak to trough about $275 million, right? Right. We said about $250 to $300 million worth of capital. So the extent that we spent the bottom end of our guidance, we would effectively not be spending that.

Charles Mead: That makes sense, and that is what I was looking for. That is the way it looked to me, but I just wanted to know if it looked kind of the same to you. Nick, I want to ask a question about how you are reducing your CapEx. I can think of at least three possibilities. There is one, which is maybe you are non-consenting some wells, or number two, fewer wells are being proposed and you are agreeing with that decision. Or maybe from your more recent JVs where you guys have these, you have those provisions for input. How does the reduction of spending kind of break down on the mechanisms why you are pulling back?

Charles, does that make sense? I that that makes sense. And that, that's what I was looking for. I, that's the way it looked to me, but I just wanted to know if it looked kind of the same to you. Um,

And then Nick oh I want to ask a question about about how the um you know how how you're reducing your capex is this.

Um, yeah, I can think of at least, you know, three possibilities. You know, there's one which is maybe you're non-consenting some wells or number two, you just you're...

Nick O'Grady: will let Adam Dirlam discuss this a little bit further, but it is really a combination. One, the beautiful thing about our business is that the rational, especially I would say from our private operators that are not under the pressure of meeting public estimates and things like that and are more focused on profitability. Our private operators are doing their thing and we are seeing a reduction in activity. That is one of the reasons, for example, we have seen such stellar Williston results is because you are not seeing the marginal wells being drilled. So our consent rate is still very high. That is important because ultimately the non-consent tool is not something you want to be using because obviously we are not foregoing any inventory. Instead, that inventory is being preserved for a better day. So that makes up roughly half of the capital potential capital reduction.

uh, fewer whales are being proposed and you are, you're, you know, you agree with that decision or, or maybe from your more recent, uh, JVS, where you guys have these, uh, you know, you, you you have those Provisions for for input? I mean, how does it? How does the reduction spending kind of break down on on the mechanisms while you're how you're pulling them back?

Nick O'Grady: The other half is really our discretionary spending. Those are projects and other ad hoc spending things that we would otherwise have been spending. We just frankly do not see from a risk-adjusted perspective, we do not see the returns in the forward price environment, right? As we came into 2025 in a $70-plus environment world, that growth is predicated on the fact that that is the right thing to do for your investors and you are generating a strong return. Growth for the, we certainly could do that and spend that money, but ultimately it is about doing the right thing for your investors. So you want to grow, you can grow. The question is, are you actually adding value by doing so?

ER Williston results is because you're not seeing the marginal Wells being drilled. So our consent rate is still very high and that's important because um ultimately the non-consent tool is not something you want to be using because obviously we're not forgoing any inventory. Instead that inventory is being preserved for a better day. Um so that that makes up you know, roughly half of the capital potential, Capital reduction. The other half is really our discretionary spending and those are projects and other um ad hoc spending things that we would otherwise have been spending and we just frankly don't see from a risk adjusted perspective. Um,

Nick O'Grady: I think the answer that we have come to the conclusion is that capital is better preserved for a better day and it can be spent at any point in time.

We don't see the returns uh in the forward price environment, right? You know, the the as we came in to 2025 and at 70 plus environment, world that growth is predicated on the fact that that's the right thing to do for your investors and you're generating a strong return. So growth for that we we certainly could do that and spend that money. But ultimately it's about doing the right thing for your investors. So you want to grow, you can grow. But the question is, are you actually adding value by doing so? And I think our the, the answer that we've come to, to the conclusion, is that capital is better preserved for a better day, and it can be spent at any point in time.

Adam Dirlam: Yeah, I mean, the short answer is we're aligned with our operators. It's activity-based and it's generally driven by the Williston. Everything that we've elected to 95%, 98% effectively in the second quarter is well above our hurdle rates, even in a down price environment. So, you know, going back to Nick O'Grady's comment, it's a matter of what's the discretionary spending and what we're seeing on the ground game front. We're certainly seeing an acceleration and the conversion rate is going higher, booking 22 deals over seven in Q1. That being said, there's certain areas where, you know, people are looking to shed capital and when you start running, you know, expected full cycle rates of return, that's stuff that you're effectively just not going to pursue because the full cycle return isn't there.

Adam. Yeah, I mean the short answer is we're aligned with our operators. It's the activity based and it's generally driven by the Williston uh, everything that we've elected to 95 98%, effectively in the second quarter as well. Above our hurdle rates, even in a down price environment. And so you know, going back to next comment, then it's a matter of what's the discretionary spending and

Adam Dirlam: So it's laser-focused on, you know, the assets and the near-term drilling opportunities as well as the long-dated inventory that's going to generate an acceptable rate of return on a full cycle basis.

What we're seeing on the ground game front. We're certainly seeing an acceleration in the conversion rate is going higher. You know, booking 22 deals over 7 in in q1. That being said, there's certain areas where you know, people are looking to shed capital and when you start running you know, expected full cycle rates or return that stuff that you're effectively. Just not going to pursue because the full cycle return Isn't there? And so it's it's laser focused on you know the assets and the near-term drilling opportunities as well as the long-dated inventory, that's going to generate uh an acceptable rate of return on a full cycle basis.

Operator: Your next question comes from the line of John Freeman with Raymond James.

Your next question comes from the line of John Freeman with Raymond James.

Adam Dirlam: Thanks. Good morning, guys. I am kind of approaching, I guess, a little bit different when I look at the cadence. So I guess if, you know, we are seeing operators start to maybe slow activity some, maybe the privates, especially as you pointed out. I guess what is interesting is, you know, I look over the last, you know, four or five quarters, the AFEs have been really steady right around kind of 2021 through four or five quarters. Your wells in process is basically either at or near like a record level of 53. I go back and look at the last couple of years and there is obviously, as you would imagine, a pretty tight correlation with your wells in process and then what you all till the next quarter.

Thanks. Good morning, guys.

Um, I was gonna, I'm kind of approaching, I guess, a little bit different, uh, when I look at the cadence. So I guess if, uh, you know, we're seeing operators start to maybe soul activity, some, maybe the privates, especially as you pointed out. Um, I guess what's interesting is, you know, I look over the last, you know, four or five quarters, the AFEs have been really steady right around kind of 2021 for four or five quarters. Your wealth and process is basically either at or near like a record level, uh, of 53. Uh, I go back and look at the last couple years.

Adam Dirlam: Every time you all have been around 50, you know, wells in process, the following quarter you are always 26 to 30 tilled. So I guess I am trying to understand kind of the, I do not want to call it a disconnect, but what is sort of different where activity, wells in process still looks really good, but the second half guide of kind of call it 18 tills on average in the second half relative to this really robust work in process number. I guess just try to help me reconcile that. Yeah. I mean, I think what we are seeing from operators here is a conversation that we had in Q1 and it was we are going to maintain the schedule, right? We are going to keep our rigs for the most part, right?

Adam Dirlam: Every operator has a different philosophy, but by and large, they do not want to necessarily lay down a rig so that they have the optionality to the extent that, you know, oil extends to the upside, right? Because it is a lot harder getting that back. So you are seeing a relatively steady cadence of drilling. What we are seeing now are deferrals of some of these tills that were in process, wells that were, you know, tilled prior to liberation day, and then just more of an elongation of the spud to sales timing. So I think that is starting to come into play, especially when you think about cube development, you know, leave no location behind. You have got to come in, drill six, eight wells, whatever it might be.

There's a obviously you would imagine a pretty tight correlation with your wells and process and then what y'all till the next quarter? I mean, every time y'all been around 50, you know, Wells and processed, the following quarter are always 26 to 30 pills. So I guess I'm trying to understand kind of the I don't I don't want to call it a disconnect but what sort of different where activity Wells and process? Still looks really good but the second half guide of kind of call it 18 pills on average in the second half relative to this really robust work in process number like I guess try to help me reconcile that yeah yeah I mean I think what we're seeing from operators here is conversation that we had in q1 and it was we're going to maintain the schedule, right? We're going to keep our rigs for the most part, right? Every operator has a different philosophy but by and large they don't want to necessarily lay down a rigged so that they have the optionality to the extent that, you know, oil.

Extends the upside right? Because it's a lot harder getting that back. And so you're seeing a relatively steady Cadence of drilling what we're seeing now are deferrals of of some of these tills that were in process as well as that were, you know, tilled prior to Liberation day. Uh, and then just more of an elongation of this Budget Sales timing. So I think that's starting to come into play especially when you think about

Adam Dirlam: Now they have got to come back and complete those wells, you know, effectively all at the same time. So I think that is a piece of it as well. So I think it is a combination of, you know, all three of those, you know, different variables.

Nick O'Grady: I would also point out, John, that the till count tends to follow the previous quarter. If we put on a ton of wells in the third quarter, it oftentimes has more of an impact on our fourth quarter volume. So we should see an increase in our Q2. The lower spend in Q2 has more of an impact on Q3 than it does on Q2 because of the time cost averaging. It is all about the time of when those wells come online. As our spending has been decelerating in the first half of the year, that is going to have an impact sort of in the third quarter, but that building in the till count will obviously, actually, our production should increase as we head to the end of the year. So you are not wrong. It is just a matter of time.

Point out that John that that the the till count tends to follow the previous quarter, right? So if we put on a ton of wells in the third quarter, it often times says more of an impact on our fourth quarter volume. So we should see an imp, an increase in our, you know, Q2 the, the lower spend in Q2, has more of an impact on 3Q than it does on 2q. Right, uh, because of the, you know, the the time cost averaging, it's all about the time of when those Wells come on online.

Nick O'Grady: The difference, as you looked at our previous guidance, we had a much larger acceleration of that DNC list that embedded as was our spend in the back half of the year.

And so, as our spending has been decelerating in the first half of the year, that's going to have an impact sort of in the third quarter. But that building in the till count will obviously, actually, our production should increase as we head to the end of the year. So you're not wrong; it's just a matter of timing.

And so the difference is, as you look at our previous guidance, we had a much larger acceleration of that DNC list that embedded as was our spend in the back half of the year.

Adam Dirlam: Yeah, and I guess what Adam Dirlam touched on is, I guess kind of what I was getting at. It seems like it would imply that you would end the year at a more elevated duck level than I think what y'all traditionally have, which is, I guess, what I was kind of, you know, looking at. So that makes sense.

Nick O'Grady: That's right. You don't see the same type of pull forwards that you would have. Ironically, everyone gets mad at us when you see the huge pull forwards in the capital acceleration. They don't love, they don't care about the production benefit you get. Here it's the opposite, right? You can't win.

Yeah. And I guess what, uh, what what Adam touched on is, I guess, kind of was getting that. It seems like it would imply that you would end the year at a more elevated Duck. Level than I think what y'all traditionally have which is, I guess what I was kind of, you know, looking at so that that makes sense. That's right. Um, yeah, you don't see the same type of pull forwards that that you would have that, you know, ironically, everyone, you know, gets mad at us when we see these huge pull forwards in the capital acceleration, but and they don't love, you know, they don't care about that the production,

Adam Dirlam: Right. Right. My other question, this quarter, pretty nice, over 60% of the free cash flow that went to dividends and buybacks. How will you treat that nearly $50 million settlement you are getting in Q3? Does that kind of get put in a different bucket or does that get kind of considered part of the free cash flow in Q3 when you are kind of thinking about the allocation of shareholder returns?

Benefit you get, and then here it's the opposite, right? You know, can't win, right?

Nick O'Grady: I believe it is just working capital. Yes. So it goes into a receivable now. It will not be in the free cash flow.

Right. And then, uh, just my, my other question. Um, you know, the this quarter, you know, pretty pretty nice over 60% of the free cash flow that went to to dividends and BuyBacks. Um, how, how will you treat the uh that nearly fifty million dollar, you know, settlement, you're getting uh, in in 32, does that kind of get put in a different bucket, or does that get kind of considered part of the, the free cash form 32? When you're kind of thinking about the allocation of of uh of shareholder returns? I believe it's just working capital. Yep so it it goes into a receivable. Now it will not be in

Charles Mead: It won't. But as far as what to do with it, John, I think, you know, I think we'll just, we'll roll it into our normal kind of CapEx well and kickstart process.

No it won't. But um as far as what to do with the John, I think. Um, you know, I think we'll just we'll roll it into our our normal kind of capital process.

Operator: Your next question comes from the line of Noah Hungness with Bank of America.

Your next question comes from the line of Noah Hungness with Bank of America.

Noah Hungness: Morning. I wanted to start off here. You guys mentioned that 2025 and 2026 free cash flow should be higher under the revised plan. Could you maybe talk about the use of those funds and just where would you use it? Would it be buybacks? Would it be debt reduction?

Nick O'Grady: Yeah, I mean, I think the default use is obviously we sweep the revolver with every extra fund we get. To the extent we find inorganic opportunities, that is always generally, I don't ever want people to think that, you know, we think our stock is inexpensive. But generally, from a value creation perspective, inorganic opportunities tend to have the highest return. So that would sort of rank as the first other use of proceeds, then followed by a stock buyback. I think we always want to be mindful of our overall leverage. But I do think as we look forward, depending on the price environment, commodity mix, et cetera, we, as I mentioned, and as Adam Dirlam mentioned, the backlog is at record levels. So we would hope to be able to find inorganic opportunities throughout this year and next year.

Morning. Um, I wanted to start off here. Uh, you guys mentioned that uh 25 and 26, 3 cash flow should be higher, um, under the revised plan. Um, could you maybe talk about the use of those funds? Um, and just, where would you where you use it would be BuyBacks, would it be debt reduction?

Nick O'Grady: If the cycle, and I like to use 2020 and 2021 as examples, if the cycle does get nasty, one of the parts of the logic of our recent convert offering is, you know, our liquidity is extremely high. That's purposeful because we are in a situation where in almost virtually any price environment, while our leverage multiple could possibly go up, just because cash flow could go down, our absolute debt levels will keep falling. That means our liquidity will keep growing. That means we will be able to find acquisitions and be able to continue to allocate through cycle. I think our hope would be we can find true long-term value-added things to do because ultimately that's how you create the most value in oil and natural gas.

Yeah, I mean I think the the default you know, the default uses obviously we sweep the revolver with every extra fund we get um to the extent we find in organic opportunities that is always generally. Um I I don't ever want to think people to think that, you know, of our our, we think our stock is inexpensive. But generally, from a value creation perspective in organic opportunities, uh, tend to have the highest return, so that would sort of rank as the first, uh, the first other use of, of proceeds and Then followed by a stock buyback. I think we always want to be mindful of our overall leverage. Um, but I do think, um, as we look forward depending on the price environment. Um, commodity mix Etc. Um, we we, as I mentioned, I mean, the the back and as Adam mentioned, the backlog is at record level. So we would hope to be able to find inorganic opportunities, uh, throughout this year. And next year, um if the cycle, uh, and I I like to use 20 and 21 as examples if the cycle does, um, get nasty.

The, um, you know, one of the parts of the logic of our recent convert offering is, you know, our liquidity is extremely high, uh, and that's purposeful, um, because.

We are in a situation where and almost virtually any price environment. While our leverage multiple could possibly go up just because cash flows would go down. Our absolute devil, debt levels will keep falling, uh, and so that means our liquidity will keep growing uh, and that means we will be able to to, to find Acquisitions and be able to continue to allocate through cycle. And so I think our hope would be, we can find true, long-term value, added things to do. Um, because ultimately, that's how you create the most value in oil and gas.

Noah Hungness: Yeah, no, it sounds like you guys are positioning yourself for a kind of cyclical investment, which, yeah, seems like a good setup. Could you just give any color on the M&A market? I know you touched on it a bit, but how does it compare to a few months ago and why do you think you are seeing such a robust list of assets on the market today?

Nick O'Grady: Yeah, so it is an interesting dynamic. I would color, I do not want to speak for Adam Dirlam or Chad Allen or Jim Evans, but it is color me a little bit surprised that, within oil assets, it has still been fairly robust. I think some of that is a combination of fun life, and frankly, even though prices are weaker, they are not that weak and people are still, in many cases, well in the money on their assets. We have seen everything from royalties on our boat that overlay our own properties to just diversified non-op properties to some of the more partnership and drilling style things that you have seen us do. The natural gas market is obviously very robust just because you have a very strong forward strip. We have frankly seen activity in almost every active basin that we have evaluated.

Yeah, no. It sounds like you guys are positioning yourself for counter cyclical investment, which, um, yeah. Seems like a good setup. Uh, I and then I guess. Could you just give any color on the m&a market? I know you touched on it a bit. But, I mean, how does it compare to, a few months ago and and why do you think you are seeing such a robust list of assets on the market today?

Yeah, so, I mean I I it's an interesting Dynamic. Um,

Nick O'Grady: I do not know if you want to add to it.

Adam Dirlam: The only other thing I would add, I think, is just overall seller expectations coming into the year. You are getting ready to launch a process in Q4 and Q1. And oil and commodities are at one price when you launch it, and then you get the bid date and it is completely reset itself. And so the bid-ask spread there is inherently wide given the volatility. Now that we have seen things settle down a bit more, I think people coming into these processes and being at relatively similar levels in terms of the commodity prices come bid day, you can manage those seller expectations a bit as well. And so hopefully that means that there is something to get done. But obviously, we are going to continue to stick to our hurdle rates and the underwriting that we typically do.

At color. I I don't want to speak for Adam or Chad or Jim, but it's calling me a little bit, surprised that, you know, within oil assets. It's still been fairly robust. Um, and I think some of that is a combination of fun life. And, you know, frankly, uh, even though prices are weaker, they are not that weak. And, uh, people are still, you know, in many cases, well, in the money on their assets, and we've seen everything from royalties on our that overlay, our own properties to just diversify non-op properties to, you know, the tip to some of the more partnership and drilling style, um, things that you've seen us do, um, the natural gas market is obviously very robust just because you have a very strong, uh, forward strip. And we frankly seen, um, activity in, almost every active Basin that we have evaluated. I don't know if you want to add to it. Yeah, the only other thing I would add, I think it's just overall seller expectations coming into the year. You're, you know, getting ready to launch a process in Q4 and q1 and, you know, oil and commodities are at 1 price when you

launch it and then you get, you know, the bid dates and it's completely reset itself. And so the bid ass spread there is inherently wide given the, the volatility now that we've seen things, you know, settle down a bit more. I think people coming into, uh, these processes and, and, and being at relatively similar levels in terms of the commodity prices come come bit day, you know, you can manage those, those seller, expectations, uh, a bit, as well. And so,

You know, hopefully that means that there's something to get done, but obviously, we're going to continue to stick to our hurdle rates and the underwriting that we typically do.

Operator: Your next question comes from the line of Phillips Johnston with Capital One.

Your next question comes from the line of Philips Johnston with a capital 1.

Phillips Johnston: Hey, thanks for the time. Sorry to ask another question on quarterly cadence, but I just wanted to clarify Nick's earlier comments on production cadence for the remainder of the year. It sounds like you're expecting Q4 volumes will look something like what you just printed for Q2. If that's the case, it seems like that would imply that Q3 volumes will be down fairly significantly from Q2 levels. But I think you alluded to a slight decline in Q3 from Q2. So I just wanted to reconcile that.

Hey, thanks for the time. Uh, sorry to ask another question, on coraly Cadence, but uh, I just wanted to clarify next earlier comments on production, Cadence, for the remainder of the year, it sounds like, you're expecting fourth quarter volume, looks something like what you just printed for Q2, you know, if that's the case.

Nick O'Grady: Yeah, I mean, I think, Phil, it really depends. When I say similar, it really is going to depend. As you know, for us, the cadence can vary widely, right? So it could be a situation where Q3 is modest and Q4's increase is more modest, or it could be where Q3 is a little bit deeper and Q4 is more significant. It really just depends on the timing of those completions. The earlier the completions come online, it's just going to be, and frankly, if we can, if prices remain stronger, we may then see Q1 activity pull forward and Q4 may stay more robust, and that would ultimately drive upward pressure to our overall guidance. I think it's not necessarily all bad.

It seems like that would imply that Q3 volumes will be down fairly significantly from Q2 levels. But I think you alluded to a slight decline in Q3 from Q2, so I just wanted to reconcile that.

Yeah. I mean I think Philips it really depends when when a you know when I say similar it really is going to depend as you know for us the the the tail Cadence can vary widely, right? So it could be a, it could be a situation where Q3 is modest and Q4 is increased is more modest or it could be where Q3 is a little bit deeper and Q4 is more significant so it really just depends on the timing of those completions. So the earlier the completions come online. Um, the the, you know, it's just going to be and frankly if we can, you know. So prices remain stronger. Uh, we may then see q1 activity pulled forward in Q4. May stay more.

Nick O'Grady: I think, as always, there's a little bit of fog of war in terms of how ours goes, but what I will tell you is that just a function of the lower overall completion count in Q2, you will see a modest dip in Q3. The question is, how? I don't think it will be, I would say, we look at it, mid-single digits is something that looks more realistic than something, if that makes sense.

Robust. And that would ultimately, uh, drive upward pressure to our overall guidance. So I think, uh, it's not necessarily all bad. Um, I think, as always, there's a little bit of fog of war in terms of how ours goes. But what I will tell you is that, just a function of the lower overall,

Adam Dirlam: Throw in curtailments that we are seeing from some of our private operators, and that is effectively getting managed on a month-to-month basis. That would be the other variable to consider.

Nick O'Grady: If prices are stronger, we could see those come off, but we've made the assumption that those will continue.

Completion count in Q2, we will see a modest dip in Q3. The question is, you know, how how I mean, I don't think it will be, you know, I would say. Um, you know, we look at it, you know, uh, mid single digits is is something that looks more realistic than some but uh, if that makes sense and then thorough and curtailment, right? That we're seeing from some of our private operators and that's effectively getting managed on a month-to-month basis. So it would be the other variable to consider so prices are stronger. We could see those

Adam Dirlam: Okay, that makes sense. Just some clarification on some of your comments on 2026. If you guys did determine that it is prudent to operate in a maintenance mode, would you look to maintain oil volumes pretty flat with the 2025 average of around 75,000 a day or second half levels that are closer to 72,000 a day?

Come off. Uh, but we we made the assumption that those will continue.

Okay, that makes sense. Um, and then, just some clarification on some of your comments on 26. If you guys did determine that, it's prudent to sort of operate in a,

Nick O'Grady: Well, I mean, I think the answer is, when we talked about maintenance, we mean maintenance. So we mean versus our annual guidance. However, what I would say is that from a capital allocation perspective, if oil prices are $50 and natural gas prices are $4.50, we might allocate more money to natural gas, right? So I mean, I think we will do what is right for the business. But when we talk about a spend level today on a generic basis, and we are talking about that, it would be versus the annual 2025 guide, not versus where, you know, versus that lower level.

Maintenance mode. Um, would you look to kind of maintain oil volumes pretty flat with the the 25 average of, you know, around 75,000 a day or sort of second half levels that are closer to, you know, 72,000 a day

But well, I mean, I think the answer is when we talked about maintenance, we mean maintenance and we, so we mean versus our annual guidance. However, what I would say is that from a capital allocation perspective, um, if oil prices are $50 and gas prices are 450, we might allocate more money to gas, right? So, I mean, I think we'll do what's right for the business. Um, but when, when we talk about a spend level today on a generic basis, and we're talking about that, it wouldn't be versus the annual, 25 guy, not versus um,

Adam Dirlam: Okay, sounds good, Nick. Thank you.

Not 'not' versus 'where,' you know, versus that lower level.

Nick O'Grady: Yeah.

Okay, sounds good. Nick. Thank you.

Yeah.

Operator: Your next question comes from the line of Paul Diamond with Citi.

Your next question comes from the line of Paul diamond with City.

Noah Hungness: Thank you. Good morning, all. Thanks for taking the call. I just wanted to touch quickly on kind of the cost structure. You mentioned that absolute AFE costs were down 5% sequentially, somewhat split between oil and natural gas. But I guess how much, do you guys see any further runway with that, you know, downward pressure, or is pretty much everything baked in at this point?

Nick O'Grady: Yeah, so I mean, Paul, I would rather let Jim or Adam Dirlam talk about this, but the one thing I would say is that, you know, we are, we have obviously seen a pretty material reduction in the rate count. You know, I got asked last question about, you know, the last quarter about steel costs and tariffs and stuff like that. I said I have never seen an environment where oil costs went down and, you know, well costs did not. So far it has been proven right. I think that where we are now, we are starting to see for the first time frac spreads usage come down materially. We have seen a lot of consolidation in that sector. So prices, that is the biggest cost, right? Rig rates are not the biggest driver of that anymore.

Uh, thank you. Good morning, all thanks for taking the call. I just want to touch quickly on kind of the cost structure. You mentioned that absolute afd costs were down 5% sequentially. Um, someone split between oil and gas, but I guess how much uh, you guys see any further Runway would that, you know, downward pressure or is pretty much already been baked in at this point.

Yeah, so, I mean, uh, Paul, I'd rather let Jim or Adam talk about this. But the one thing I'd say is that, you know, we have obviously seen a pretty material reduction in the rate count. You know, I got asked last question about, you know, the last quarter, about steel costs and tariffs and stuff like that, and I said I've never seen an environment where oil costs went down and, you know, well costs didn't. And so far, I've been proven right? Um, and, um,

Nick O'Grady: I think to see material cost reductions now, you would have to see the frac spread count contract materially. I think if that happened, you might see margins there really collapse. Then you could see material relief. Otherwise, I think most of it has been small and incremental, either through modest deficiencies or through slight costs here and there. I do not know, Adam Dirlam, if you want to.

And I think that where we are now is as if we were starting to see for the first time frac spreads, uh, usage come down materially. Um, and we've seen a lot of consolidation in that sector, and so prices... that's the biggest cost, right? Rig rates are not the big driver of that anymore. Um, I think...

Adam Dirlam: Yeah, the conversations that we've been having with a handful of our JV partners, they are certainly seeing that downward pressure. That being said, we are a relatively conservative shop, right? So it is going to be a show me and it is going to come through the actuals when we start truing up our accrual. So we will continue to accrue based on the AFEs that we get in the door. But anecdotally, I think, we could potentially see something like that. That is probably something more of a 2026 kind of realization to the extent that we see it continue in the direction that operators are guiding us.

To see material cost reductions. Now, you'd have to see the fra spread count contract materially. And I think if that happened, you might see margins there. Um, really collapse. And then you could see material relief. Otherwise, I think most of it has been small and incremental either through modest, deficiencies, or through slight costs here and there, I don't know, I don't know if you want to. Yeah, the conversations that we've been having with, you know, a handful of our JV Partners. They're, they're certainly seeing that downward pressure. That being said, you know,

we're relatively conservative shop, right? So it's going to be a show me and it's going to come through the actuals. Um, when we start chewing up our crew. So uh, we'll continue to our crew based on afes that we get in the door. Uh, but anecdotally I think, you know, we could potentially see some something like that. That's probably something more of a, a 26, kind of realization to the extent that we see it. You know, continue in the direction that operators are guiding us.

Noah Hungness: Got it. Makes perfect sense. Just one quick one on the M&A market again. You all mentioned that there were 10 ongoing processes worth $8 billion, give or take. Is there any concentration of the structure of those larger deals? Are they more non-op? Are they more joint development, co-bids, et cetera?

Adam Dirlam: Honestly, it is across the board. We are seeing a number of different non-op packages. We are also seeing a number of different kind of co-buying and minority interest buy downs. I do not think it is necessarily concentrated to any given basin or any given structure at this point. We have got a buffet of options.

Got. It makes perfect sense. And then, uh, there's 1 kind of quick 1 on the m&a market. Again, you all mentioned that there were, you know, 10 ongoing processes, where it's 8 billion dollars, give or take. Uh, is there any concentration of the structure of those larger deals? A more de a more joint development, coid, Etc.

Honestly it's it's across the board. We're seeing a number of different non-op packages. Uh we're also seeing the number of different kind of co- buying and minority interest buy down. So I don't think it's necessarily concentrated to Any Given Basin or any given structure at this point.

Nick O'Grady: Yeah, I mean, I think the one thing I would highlight, and whether we are successful at all or on one or any of these processes, is always a total crapshoot for us. But what I would say is that, you know, I get feedback from investors just because we have had more success on the co-bid over the last few years, like that, you know, oh, where are the traditional non-op assets? Actually, we have seen, and we even have several that are coming to market, some of the largest, you know, just standard non-op assets we have seen in maybe ever. So some of the biggest just regular way non-op assets we have ever seen come to market.

So we've got a buffet of options. Yeah, I mean, I think the 1 thing I would I would highlight and and we really

Whether we're successful at all or on 1 or over. Any of these processes is always a total crapshoot for us but what I would say is that um you know I get feedback from investors just because we've had more success on the co over the last few years like that. You know, uh, you know oh well you know where are the traditional non-op assets? That's actually we've seen and we even have several that are coming to Market some of the largest

Nick O'Grady: So whether or not, you know, the efficacy of those transactions still needs to be tested, but it does tell you that, as the natural consolidator, some of these assets we view ourselves as uniquely situated that, you know, if there was to be a buyer, we could be potentially one of a handful of people who could do it.

You know, just standard non-op assets. We've seen in, in maybe ever. Um, so some of the biggest just regular way, non-op assets. We've we've ever seen come to Market and so, um, whether or not, we, you know, they're the efficacy of those transactions, still needs to be tested, but um, it does, it does tell you that that that, you know, as the natural consolidator, um, you know, some of these assets, we view ourselves as as uniquely situated that, you know, if, if there was to be a buyer, we could be potentially 1 of a handful of people who could do it.

Operator: Your final question comes from the line of Noel Parks with Tuohy Brothers.

Your final question comes from the line of Noel Parks with Tony Brothers.

Noel Parks: Morning, Noah.

Paul Diamond: Hi, good morning.

Noel Parks: How are you doing?

Morning. Hi. Good morning.

How you doing?

Nick O'Grady: Doing good, Jimmy.

Living in a Dream.

Paul Diamond: So, just a lot of interesting topics and questions have come up. I guess, would you say that you are at a juncture where sort of specific, post-deal related divestments are sort of receding as a driver of assets coming to market? We certainly have some very large acquisitions, I think especially in the Permian, that have now been digested and could conceivably be at the point where they are now looking at non-op stuff they could spin off. I just wonder if it has been such an unusual first half.

um so um just a lot of interesting um topics and questions have come up, I guess, um,

Operator: of the year if that's figuring in at all or whether the, you know, those dynamics aren't really affecting what you see.

Operator 2: I don't think so. You might have seen that there was just a big ConocoPhillips mid-con package. That's a perfect example of a kind of post-merger that was sort of their Marathon post-merger.

Off. Um, but I just wonder if it's, it's been such an unusual, first half of the year. If, um, uh, if if that's figuring in at all or or whether the, you know, those Dynamics aren't aren't really affecting what you see.

Operator: Yeah, I mean, I think the way that we think about it is you have got to merge, right? Then you have got to wrap your head around the assets, and then only then can you bring a lot of these assets to market. So, yes, you have seen to Nick's point, some of these packages come out, and fully marketed. A lot of other operators are taking a different tack, whether it is through the non-op market, where 20% of these portfolios are all made up of non-operated properties. They are also doing it in a way where they are selling down a minority interest on a unit-by-unit basis, but still retaining operatorship. So I think operators are getting creative and not necessarily just throwing a massive asset package out into the market.

I don't think so. You might have seen that the there was just a big kico Phillips midcon package. That's a perfect example of a kind of post merger that was sort of their Marathon post merger, huh? Yeah I mean I think so the way that we think about it is you you've got to merge right, then you've got to wrap your head around the assets and then only then, can you bring a lot of these assets to Market? And so, yes, you've seen to Nick's Point some of these packages come out, um, and, and fully marketed a lot of other operators are taking a different tact. Whether it's, you know, through, you know, the non-op market, um, where 20% of these portfolios are all made up of non-operative properties. They're also, you know, doing it in a way where they're selling down a minority interest on a unit-by-unit basis, um, but still retaining, operator ship. And so I think operators are getting creative and and not necessarily just throwing a massive

Operator: So we are seeing that all of the above in terms of kind of the different structures as to how a lot of these operators are socializing their assets post-merger.

Asset package out into the market. And so we're seeing it, you know, all of the above, in terms of kind of the different structures as to how

Operator 2: Got it. I have been thinking about a lot of scrutiny I hear from the gas side, the pure play gas producers of associated gas in the Permian and what, you know, weaker oil might do there as far as activity. I know in the past you guys have talked about being pretty mindful of what the gas takeaway looks like when you are looking at Permian assets. Is that correlating at all with what might be happening in Appalachia with, you know, in basin power and so forth? Just wondering if those sort of concern about the ongoing concern about Permian gas and pricing, versus, you know, the maybe new opportunities that we are seeing in Appalachia. Is that playing out in the deals you see coming to market or in price expectations?

How a lot of these operators are socializing. Their assets post merger,

Got it. And I've been thinking about um uh a lot of scrutiny. I hear from the gas side. The the Pure Play Gas producers of um, Associated gas in the Permian, and what um, you know, weaker oil might might do there as far as activity. And, um, I I, I know in the past you, you guys have talked about being pretty mindful of, um, what the gas takeaway looks like when uh, you're looking at Permian assets. Um, is that

Correlating at all with what, um, might be happening in Appalachia with, you know, in Basin power and so forth. Just wondering if those, um,

uh, sort of, uh,

Operator: I don't think that people, you know, ultimately know. I think they can only price based on, you know, where the differentials, if it was priced into the Ford differential strip in some form or fashion, I think then they can make an economic bet on it, or if they had a direct contract. So perhaps there are certain scenarios where people can buy an asset because they might have some direct link. That's more of an operator game than it would be for us. Ultimately, unless we see something that's actually impacting those future prices directly, I don't think we're going to be able to see that. I don't know if you have any concept.

Concerned about the ongoing concern about Permian gas and pricing. Uh, versus you know, the maybe new opportunities that we're seeing in Appalachia is that playing out in in the deals you see coming to Market or in price expectations

I don't think that people, you know, ultimately know. I think they can only price based on, you know, where the differentials... you know, if it was priced into the four different strips in some form or fashion, I think then they can make an economic decision on it. Um,

Or if they had a direct contract. So perhaps there are certain scenarios where people can buy an asset because they might have some.

Direct link. That's more of an operator game than it would be for us. Ultimately, you know, unless we see something that's actually,

Operator 2: Yeah, that's right.

Operator: I mean, I do think, look, as you have what you would call like stranded natural gas from a regional basis that cannot really get, you know, hub-related prices or may not have access to LNG. I think given the AI and data center boom, it does not surprise me that people are going to try to take advantage of that cheap, that source. And so it would not surprise me if you start to see a lot of this building, you know, next thing you know, Midland might be the center of a huge data center boom, because they will want to use that natural gas. You are seeing that obviously there has been a lot of hullabaloo going on in Appalachia about just that.

Impacting those future prices, um, directly. I don't think we're going to be able to, to see that. Um, I don't know if you have any, right? I mean I I do think look as

As you have what you would call like stranded gas and from a regional basis that can't really get, you know, Hub related prices or may not have access to LNG. Um I think

Given the AI and data center boom, it does not surprise me that people are going to try to take advantage of that cheaply.

That cheap source. And so,

Operator: And so I do think that over time that can narrow those fans, but it has not been enough to have some, and remember that the time to build these things is super long and things like that. I mean, and so it has not been enough to actually impact those markets of any significance at this point.

It would not surprise me if you start to see a lot of this building, you know. Next thing you know, Midland might be the center of a huge data center boom because they'll want to use that gas. You're seeing that, obviously, there's been a lot of help going on in application about just that.

um, and so I do think that over time that can narrow those bands, but it has not been enough to have some, and remember that the time to build these things is

Super long and things like that. I mean um and so it has not been enough to actually impact those markets of any significance at this point.

Operator 3: I will now turn the call back over to Nick for closing remarks.

I will now turn the call back over to Nick for closing remarks.

Operator 2: Thank you all for joining us today. We look forward to talking to you in the coming weeks. Again, thanks for your interest in our company.

Thank you all for joining us today. Uh, we look forward to talking to you in the coming weeks. Uh, and again, thanks for your interest in our company.

Operator 3: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect