CHRD - NASDAQ

Good morning, and welcome to the Chord Energy First Quarter 2023 Earnings Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Michael Lou, Chief Financial Officer. Please go ahead.

Thank you, Danielle. Good morning, everyone. Today, we are reporting our first quarter 2023 financial and operational results. We're delighted to have you on our call. I'm joined today by Danny Brown, Chip Rimer, Richard Robuck, and other members of the team. Please be advised that our remarks, including the answers to your questions, include statements that we believe to be 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 those currently disclosed in our earnings releases and conference calls. Those risks include, among others, matters that we have described in our earnings releases as well as in our filings with the Securities and Exchange Commission, 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 this conference call, we will make reference to non-GAAP measures, and reconciliations to the applicable GAAP measures can be found in our earnings releases and on our website. We may also reference our current investor presentation, which you can find on our website. With that, I'll turn the call over to our CEO, Danny Brown.

Thanks, Michael. Good morning, everyone, and thanks for joining our call. Last evening, Chord reported our first quarter 2023 results and updated full year outlook. As you know, last year was a pivotal year for the organization as we announced the merger of equals transaction between Whiting and Oasis Petroleum, laid the groundwork for the integration and established how we would operate as a new organization. In 2023, we are focused on operational execution and driving the synergies from the merger. And as you read in our press release last night, we had a strong start to the year. In the first quarter, oil volumes were significantly above expectations due to continued strong well performance and a modest acceleration of activity. As we discussed last call, January performance was negatively impacted by severe weather in late December. However, the team did a fantastic job restoring production and ramping up our drilling and completions activity quickly. We turned in line 15 wells in the quarter, which was at the upper end of our 11% to 15% range, with about half of those wells being 3-mile laterals. With the additional activity, capital was towards the high end of our range, but overall free cash generation exceeded expectations. Turning to return of capital. For the quarter, we declared a variable dividend of $1.97 per share with a base dividend, which remains unchanged at $1.25 per share. The aggregate variable payment of approximately $82 million is the difference between 75% of the $199 million of adjusted free cash flow generated in the first quarter minus the base dividend of about $52 million, minus $15 million of share repurchases. As a reminder, the variable dividend is intended to make up any difference between our targeted free cash flow payout in the amount distributed through base dividends and share repurchases. Our capital return program is peer-leading and demonstrates our commitment to capital discipline and shareholder returns. Since we closed the merger last year and underpinned through strong operational performance, Chord has returned a significant amount of capital to shareholders through a mix of dividends and share repurchases. However, as with all aspects of our business, we are constantly seeking to improve. As we reflect on our shareholder return over the past 2 quarters, we recognize that the amount of share repurchases is lighter than we might desire, particularly considering our view on the intrinsic value of our equity when compared to market value. Accordingly, as we look forward, we will continue to be opportunistic with share repurchases, but intend to be more balanced between dividends and buybacks in the future. Now turning to operations. We continue to be pleased with our underlying well performance, and as can be seen on Slide 10 of our updated investor presentation, our development program continues to deliver above expectations. This is partially attributed to our practice of wider well spacing, which we believe improves per well recoveries and reduces variability of performance across the asset and to our move to more 3-mile laterals. Chord began to bring on its first 3-mile laterals toward the end of 2022, and these are expected to comprise about 50% of the 2023 program. 3-mile laterals will be a key part of the go-forward program and are expected to deliver 50% -- 40% to 50% more EUR for about 20% more D&C costs. Just a quick note on the production profile of these wells. Part of the capital savings reflects similarly sized facilities versus a standard 2-mile pad. The result is 3-mile wells typically have similar IPs to 2-miles, but stay flat longer with shallower declines. Said another way, as 3-mile laterals become a larger share of wedge wells, very early time well production per lateral foot becomes less relevant and longer-dated cumulative production versus capital cost is a more appropriate performance metric. After the first quarter, Chord announced the sale of certain non-core properties outside the Williston Basin from the legacy Whiting Trust assets for proceeds of approximately $35 million. The specific divested assets consisted of multiple packages in various parts of the U.S. with total volumes of approximately 1,100 barrels of oil equivalent per day and oil volumes of roughly 900 barrels per day. We expect all divestitures to close during the second quarter, and our guidance has been updated to reflect the sales. The divestitures decreased oil volumes by about 600 barrels of oil per day for the full year but Chord expects to replace all 600 barrels of oil per day given strong well performance and a modest acceleration of activity in the first quarter. Said another way, Chord is keeping its February full year oil guidance unchanged at 96,500 barrels of oil per day despite selling these non-core volumes. Gas and NGL volumes and realizations were also adjusted to reflect higher levels of ethane rejection and recent benchmark pricing. Finally, an update on ESG. Chord is still on track to resume publishing a full sustainability report in 2023, which will include robust disclosure on performance through 2022. Chord continues to work towards improving disclosure and performance for its ESG initiatives. To sum things up, we're off to a very strong start, and most material integration projects are complete. We've created a better company with a strong financial outlook capable of supporting high levels of sustainable free cash flow at prices much lower than current market benchmarks. With that, I'll turn it over to Michael for some additional updates.

Thanks, Danny. I'll highlight a handful of key operating and financial items for the first quarter and discuss our updated 2023 guidance. As Danny mentioned, oil volumes were strong in the first quarter, about 2.3% over midpoint guidance. Total volumes also exceeded expectations with natural gas volumes above guidance and NGLs below. During the first quarter, Chord experienced higher levels of ethane rejection, which lowered NGL volumes, but increased natural gas volumes and realizations. Natural gas realizations also benefited by colder weather in January and February. Importantly, the net impact to revenue was favorable. Combined natural gas and NGL revenue totaled $115.2 million, which exceeded revenue implied by midpoint volume and differential guidance using actual first quarter '23 benchmark pricing. Our 2023 guidance has been updated to assume ethane rejection continues through the remainder of the year. Additionally, we lowered our Henry Hub assumption from $3.50 to $2.75 per MMBtu. Bakken crude pricing closely tracked WTI over the quarter and we expect to realize slight premiums to WTI through the remainder of the year. Our 2023 activity remains -- schedule remains essentially unchanged from February. Completion activity remains concentrated in May and June and throughout third quarter of '23 and oil production after adjusting for divestitures is expected to increase sequentially each quarter, with the fourth quarter of '23 volumes, the highest of the year. Fourth quarter volumes stand to benefit from third quarter TILs as fourth quarter TILs will drop off considerably. As Danny mentioned earlier, our full year oil production guidance has increased when adjusted for asset sales due to the strong performance of the asset base and the strong performance of our team. Turning to cash costs. LOE and GPT on a per unit basis were slightly above midpoint guidance driven by lower NGL volumes at certain midstream processors began rejecting ethane and left it in the residue stream. Otherwise, the total dollar spent was in line with expectations. We made some adjustments to the outlook to reflect the volume impact of the ethane rejection and of the divestitures. On an aggregate dollar basis, guidance is essentially unchanged for the Williston business. Production taxes were approximately 7.9% of oil and gas revenue, in line with guidance. We now expect this to increase slightly over the course of 2023, which reflects lower natural gas prices. Said another way, oil is becoming a larger percentage of the revenue mix and is taxed at a higher rate than gas. Chord cash G&A expense was $18.2 million in the first quarter, which was in line with guidance and excludes $2.8 million of merger-related costs. Our 2023 cash G&A guidance remains unchanged at to $73 million. Chord paid no cash taxes during the first quarter and does not expect to make a payment in the second quarter either. In the second half of the year, Chord expects cash taxes to approximate 2% to 10% of second half EBITDA at oil prices between $70 and $90 per barrel. Our full year capital budget guidance remains unchanged at $825 million to $865 million. As a reminder, we set our 2023 budget assuming year-end '22 pricing levels holding flat through 2023. While equipment utilizations remain high, pricing has generally plateaued and remains around year-end '22 levels. All this has led to a great quarter and significant free cash flow of $199 million. This, paired with our return of capital framework, results in another quarter of significant return to shareholders. Turning to liquidity. Chord recently redetermined its borrowing base, which was reduced from $2.75 billion to $2.5 billion due to lower bank commodity pricing assumptions. Elected commitments remained at $1 billion with nothing drawn as of March 31. Cash was approximately $592 million as of March 31 as well. In closing, the Chord team continues to execute well and drive strong returns, which supports our sustainable free cash flow profile as well as our peer-leading return of capital program. We are incredibly proud to be a safe and responsible low-cost provider of energy, which fuels a better world. We're also proud of the entire Chord team, which continues to show care for each other and for our communities and the courage to always do what is right. With that, I'll hand the call over to Danielle for questions.

[Operator Instructions]. The first question comes from Phillips Johnston of Capital One.

Maybe just first, just a generic question on what you're seeing in the M&A arena these days and what kind of appetite the company has for acquisitions in the near to intermediate term?

Thanks, Phil. This is Danny. I think the M&A market, it's interesting. We've got -- clearly, there's been some volatility in the commodity and my general thought is volatility in the commodity typically makes M&A a little bit more difficult because it can create some bid-ask dynamics between buyers and sellers. But more broadly, for ourselves and how we think about M&A. We've mentioned many times that consolidation thematically is something that we're very, very supportive of. We produce a commodity. And generally speaking, larger organizations are going to be better positioned to be low-cost producers of a commodity. And so consolidation is something that we believe in and we're committed and so that will entail some M&A for us. And we've said many times that we are going to be looking to be part of a larger equity story, and that can involve us consolidate and they could also involve us being consolidated. But being part of a larger equity story is something that's important to us. And so we are constantly on the lookout for assets that fit us well. We'll be disciplined as we go through that. We think bigger only makes sense if you -- it also makes you better. And so we'll be very disciplined in how we look at it. But being a larger -- being part of a larger organization is something that makes a lot of sense to us.

Okay. Great. And just a question maybe for Michael. Gas realizations as a percentage of NYMEX obviously are running stronger than expected. And it seems like that's mostly a function of the increased ethane rejection. I think you mentioned the effects of cold weather for Q1, but as far as your improved guidance for the rest of the year, just wondering if ethane rejection is the sole factor? Or are you just -- are you seeing better realizations on an apples-to-apples basis than you originally anticipated?

Yes. We're seeing generally things in line with what we anticipated. But the ethane rejection, obviously, because that stays in the stream improves those realizations overall. So that's where the change has been is we think it's going to be left in the stream. It may not be, but that's how we're guiding going forward. So it's in line with what we saw in the first quarter.

The next question comes from Derrick Whitfield of Stifel.

Congrats on a strong start to the year.

Thanks, Derrick.

Perhaps for Danny or Mike, dividends have accounted for heavier allocation of your return of capital program to date, as you noted in your prepared remarks. As you think about program with a heavier buyback focus, could you comment on your framework for share repurchases and your sense on investor preferences between buybacks and dividends?

Sure. Thanks, Derrick. I'll start off and then maybe ask Michael to weigh in. As we've come out, one, I'd say we're committed to having a strong return of capital program as an organization. We think that's important to instill capital discipline within the organization and also to provide shareholder returns. And so it's a pretty key tenet of our strategy. Along with that, as we've gone through this program, the overall return of capital has been very, very robust, and we've continued to engage with investors all along the way about form of capital return, and that's a subject that we've talked a lot about internally, and we've certainly sought out and gotten input from investors as well. I think, generally speaking, the preference is to have a bit more of a balanced program than what we've demonstrated certainly over the last 2 quarters. And so as we think about the framework moving forward We've mentioned previously that the framework is something that looks at intrinsic value and relative trading performance. As we look at relative trading performance, I think our view on that has been pretty narrow and widening up our view on relative performance will put us in a position to execute some more buybacks as we move forward. So the discount to intrinsic value has kind of remained with the equity. And so we think it's a great opportunity for return of capital just with the discount from intrinsic value versus how our equity trades in the market. So it's a compelling opportunity for us, and I think you'll see us do a little more as we move forward. Anything to add, Michael?

Yes. The only thing I would add to that, Derrick, is I think that as we engage shareholders, I think that, one, they're almost all very appreciative of our return to capital framework and kind of leading on that side and what we're doing on the 75% return at current kind of leverage levels. And then two, as we talk about kind of that mix I think every investor has a slightly different view, and we have a pretty good balance of those that prefer variables, preferred buybacks. And so we're going to match that with being just a little bit more balanced in the program.

Terrific. And for my follow-up, I wanted to focus on the output from your case study on Page 7. I was certainly positively surprised by the $40 million increase in your NPV per DSU and your ability to achieve a similar recovery with 50% less wells. Any former approach, so 2015 and before, do you have a sense on when the wells begin to communicate with one another? And separately, were the D&C designs similar from a proppant intensity perspective?

Yes, this is Chip Rimer. Thanks for the question. Yes, when they started communicating probably a good question. I think what we've done -- identified as we're going through the process of understanding returns and getting the best rate of return, we understand we weren't getting what we thought out of the DSU at actually was costing us more to get what we thought we could out of it. And so as we went in and we started looking at up-spacing, we identified that we could literally impact these wells with similar fracs. We fine-tuned the fracs now. We're down into that 1,000 to 1,100 pounds per foot and 20 to 25 barrels per foot. I think we fine-tuned the fracs. We're able to now communicate across -- staying above 1,000 foot between the wells, be able to stimulate all that rock and get way better production. So over this period of time, I think it's a fine tuning of completions after you realize maybe we overspent money in some of those DSUs, and at this point, the way we're running our business is very efficient. If you look at capital efficiency and the value, you saw the $40 million in value that we're bringing out DSU, just minimize the cost that's going in there, but you are getting the same recoveries or very close to the same recoveries.

And Chip, maybe just to clarify, it seems that the biggest change was really with the Three Forks and the intensity that you guys are approaching with that. And the perspective was that you would be fracking up and recovering more within that unit. But seemingly, that's where you were seeing the communication between the Middle Bakken and the Three Forks when you guys are fracking up.

Yes, yes. We're in the process of -- majority of our wells in the future here are all in Bakken, good point.

The next question comes from Scott Hanold of RBC Capital Markets.

You all have obviously have a nice cash balance and it does provide you some optionality if something on the M&A side comes in front of you. But can you give us a sense of the strategy with that going forward, how long are you going to wait if something doesn't come up on the M&A side to hold that cash and what optimally then would be the best strategy to kind of return that to shareholders? Do you -- would it be kind of a balance of the type of shareholder returns? Would it be like a just a big special? Like, what are your thoughts on that?

Sure. I'll start off, Scott. This is Danny. So I think we don't have a specific time frame with which we're looking at potential M&A activity or potential acquisitions. To your point, one; we do have a nice cash balance. And one of the reasons we have that is because we do want to be front-footed and opportunistic if we see meaningful and additive and accretive M&A in front of us. And I think we'll see that. And so we don't have a specific time line. But clearly, a negative net debt capital structure over the long term probably isn't a really sensible capital structure for the organization. And so we wouldn't look to have that over the long term, but I don't know that there's a specific target on a specific date. My anticipation is that we will be -- because we are looking to be opportunistic and front footed on an M&A front that we will be successful in finding some opportunities to make some sensible acquisitions. And so I think that will probably be the first utilization of that capital. But to your point, if it doesn't materialize over time, it's not a really sensible capital structure for us long term.

Okay. I appreciate that. And just to clarify, too, when you talk about M&A, you all plan -- still are planning to stay focused in the Williston or have you started to kind of think other opportunities outside the basin?

I think the Williston clearly, there's a lower bar for us within the Williston relative to other basins. And so never say never in other areas, but we bring a lot of synergies, a lot of knowledge to bear within the Williston Basin. And so I think moving outside the basin for the right opportunity is something that we would look at. But clearly, sort of industrial logic and synergies we can bring for in-basin acquisitions makes a ton of sense.

Next question comes from Bertrand Donnes of Truist.

On the well results, your Indian Hills results are looking pretty encouraging. It seems you've been getting a little bit better over time. Was that what you were expecting internally? And then kind of secondly, you note 55% to 60% of your inventory, it can be amenable to that 3-mile lateral program. Could you maybe break out what you're seeing this year and next year? And maybe if that has any impact on cost savings?

Yes. I appreciate the question, Bertrand. Yes, we -- where we were expecting, our teams really fine-tune this and try to understand what the spacing was going back to the prior question. And seeing these uplifts are exciting to us. I would say it's probably what in the range of what we thought. The avenue we thought it was going to be, continues to improve. We're seeing additional improvement on the base and the wedge. And so I'm really excited about where we're going. On the 3-miles, we're going to scatter across the basin here. We've expanded historically been in Sanish, although we've done a little FBIR. We are looking in Indian Hills, as you're aware, and some other places. But on the one page there, I think, where we're showing across the board, we're going to be doing this and expanding this to the West. Really excited about where that's going on the 3-miles and the value it's going to create. When you look at your take on the well cost from $860, $870 a foot down to $670, $660 a foot. You're making a huge impact, as Danny had indicated on some of the values that we're going forward. So excited about where that's going to go to improve some of our well results.

And then if I could try to marry two of the comments you made so far. One was kind of that, hey, you are in the market. You're happy to look at consolidation that's part of your day to day. And then also that it seems like investors are very receptive of a more balanced buyback program. That shareholder returns are still on the forefront how do you look about -- look at your formula that could maybe dip down into a lower free cash flow payout if you buy some assets. Does that stop you from looking at certain packages that would require you to dip above the 0.5 leverage? Or do you think maybe with the right deal, the market would accept it?

Well, I think with the -- obviously, the return of impact to our return of capital program is a consideration we would take in as we were looking at any potential acquisition. And so it's something that would be sort of worked into the calculus as we evaluated a deal. I would say that if we found an asset that we thought was compelling and made us a better organization. It's one of the reasons we laid the framework out there to be transparent to investors that if we did something and our leverage went above 0.5, then we might ratchet back the return of capital because maintaining a strong balance sheet is very important to us. And so we would do that if we thought that the deal was compelling, very accretive, and we would obviously have a pathway to get back down to lower absolute debt and relative debt levels over time with the free cash generation of the asset. So it's something we would take into account. Could we -- would we move above 0.5? I would say we would move above 0.5 if it was the right deal, but we would think that deal was ultimately delivering the most value to shareholders. But it's one of the reasons why we put the framework out there in the first place to be very transparent about how we're thinking about it.

That's good. And then just for housekeeping. It's not a big deal that you sold, but are there any other non-Williston assets that you have or just maybe non-core? Just how much is left in the ? And that's all I got there.

Yes. So we've got a small amount, and we'll see that are non-core and probably don't probably make more sense. They're nice assets, but probably make more sense than someone else's hands than in our own. And so we'll look at that as we move forward and communicate it if we're successful on anything there, but small in nature, small in volume.

The next question comes from Oliver Huang of Tudor, Pickering, Holt.

Just a couple on the op side of things. Certainly appreciate the longer-dated results that you all shown in your presentation and can certainly understand we're still in the early days. But just kind of given the '23 program is a bit more spread out across the Williston from an aerial perspective. was hoping to see if there was any color that you all are able to provide for initial observations for conservatively spaced wells outside of the Indian Hills area. Really just trying to get a sense for confidence or anything you all have seen to date to support a similar percentage uplift for less heavily developed areas like Red Bank, Foreman Butte and Painted Woods.

Yes. Oliver, thanks for the question. This is Chip Rimer. Yes, it's early stages. If you think about it for Chord. I think we're 19, 20 wells right now at 3-miles since our conception in July. And so as we expand that and see more, I'm very hopeful and positive that we're going to see some of the results, but you have to give us a little time down the road to be able to see those results as we go into some of these other areas that we're planning to go into for this year.

Okay. Fair enough. And specific to Sanish, just kind of given the area is a bit more developed and understand infills, do sometimes make their way into the program. Wondering if there is any way to speak to how spacing for the 2023 program and Sanish compares to 2022? And if there is any expectation for year-over-year uplift in well productivity out of that region as a result.

Sanish is the field that keeps on giving when it's all said and done. And we're focused on some 3-milers in that area. We've seen some impact on 3-milers and depends where we're looking for the right spacing and those kind of things. So last year, we were very heavy in that area. I think over 50% of our wells are in that area. We're not nearly that percentage this year, but we're going to pick and choose where we want to go and look for the best productivity areas with -- that we think there's still value to be had of Sanish, but it is one field that keeps giving.

[Operator Instructions]. The next question comes from John Abbott of Bank of America.

Really, First question, these are more sort of guidance related items. So we've seen one operator this morning, modestly reduced their full year CapEx budget as they have potential line of sight on lower steel costs in the second half of the year. Could you just give us an update on how you're thinking about your CapEx guidance range this year as you sort of look at potential cost improvements?

Yes. This is Danny. I think we've got our CapEx range we're reaffirming our CapEx range right now relative to our guidance we put out earlier in the year. As we put the program together, I think we've seen -- we kind of anticipated that cost at the end of 2022 would sort of maintain through the course of 2023. And generally speaking, that's what we've seen. We've seen looks like we could see steel come down in the back half of the year, a little too early to see that fully roll through, but some early evidence that could happen. We've got some areas that are up modestly, some areas that are down modestly. But generally speaking, the services has remained costing like they plateaued. I would say that generally speaking, with clearly a lot of volatility in the commodity and the commodity and service costs normally follow each other, although it's not -- there is a lag between the two. And so we'll have to monitor where the commodity goes over time because of lower commodity could lead to some downward pressure on service costs as we move forward as people think about their overall activity. But for right now, I think we feel good about where our capital is. and are just reaffirming what we put out earlier in the year.

Appreciate that, Danny. And then another -- yes?

If I would add a couple of other things. The other thing is we're focused on is our synergies. And so if you look at the one page where we're showing cost per foot come down, we're doing the 3-milers versus the 2-milers we have focused -- you can see the days per drilling. It wasn't too long ago, we were in that 17% range with everybody else, and we save 20%. So the synergies we're seeing with the 2 combined companies are coming to fruition. We're seeing huge value on the drilling side. We're putting facilities together that was -- it used to take us maybe 16 weeks or down to 10 weeks because they're modular. So these different ideas combined, we're able to manage some of that cost because of the synergies.

John, as I've said here, I'll make one other comment. This is Danny again. The cadence of our capital spend is one thing to note, well, most of our -- we picked up a second completion crew about midway through the first quarter, and we're going to run that up to about the end of the third quarter. And as you know, the completions is where so much of the capital spend is associated. So really quarters 2 and 3 will be the big capital spend quarters for the organization in the fourth quarter as we dropped that last -- that second crew, toward the end of the third quarter, really, the capital spend in Q4 will be pretty significantly below the other quarters just because of the nature of how we've done the program. And one of the reasons we've done that is to try and have a -- it's nice for us to have 2 crews working during the sort of best weather months within North Dakota. So we'll drop that second crew as we -- right before we go into the fourth quarter, so our capital spend in the fourth quarter will probably be our lowest of the year. So anyway, just a little on if we're linear extrapolation of capital spend, probably lead you down a bad path because that's not how the program is actually set up.

Appreciate that color. For the second question, I really enjoyed the discussion on longer laterals and water spacing. And again, this is maybe a bit more in the weeds. So you modestly raised your oil guidance whether your up post the asset sale. So when you gave -- provided that oil guidance and when you thought about your move with your move with wider spacing and also longer laterals, how have you risked that production guidance? In other words, is there a possibility we could see higher output than you're currently guiding to this year could you were conservatively modeling the impact of longer laterals?

One of the things, if you think about John, we don't up our facility side. And so we're limiting that. So what you're going to see is maybe longer -- flatter for longer is what you're going to see. So that kind of -- that may be part of it, what you're seeing. So there could be some upside. But I think we're pretty fair where we are right now and how we've got it modeled. But we're not changing the facility side. We're not adding a whole bunch of additional costs, and we're keeping those 3-miles flatter for a period of time.

And John, one thing, this is Danny. One thing is as we put our type curves together for the 3-mile laterals, we generally don't take 100% credit for that last mile. And so if you look at the EURs we generate out of the wells, we only take a fraction of that last mile, assuming that there will be some degradation. And what we've seen is maybe we're getting a little more contribution there than how we put the type curves together, and so it's probably attributing some a little bit to the oil outperformance we've seen. And so I think from our perspective, we'll probably being slightly conservative, probably not a bad thing on this as we underwrite programs, and we'll probably continue that stance. And if we see a little more come through, so much the better.

This concludes our question-and-answer session. I would like to turn the conference back over to Danny Brown, Chief Executive Officer, for closing remarks.

All right. Thanks, Danielle. Well, to close out, I just want to thank all of the employees at Chord who through their commitment and dedication have put the company in a great position to succeed and to deliver value for our shareholders through disciplined capital allocation, efficient operations and maintaining a strong balance sheet while remaining committed to responsible operations. Thank you for joining our call.