Good morning and welcome to the Magnolia Oil & Gas Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jim Johnson. Please go ahead..

Thank you, Gary. Good morning, everyone. Welcome to Magnolia Oil & Gas' fourth quarter earnings conference call. Participating on the call today are Chris Stavros Magnolia's President and Chief Executive Officer; and Brian Corales, Senior Vice President and Chief Financial Officer.

As a reminder today's conference call contains certain projections and other forward-looking statements within the meaning of the Federal Securities Laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements.

Additional information on risk factors that could cause results to differ is available in the Company’s Annual Report on Form 10-K filed with the SEC. A full Safe Harbor can be found on Slide 2 of the conference call slide presentation with the supplemental data on our website.

You can download Magnolia’s fourth quarter 2022 earnings press release as well as the conference call slides from the Investors section of the Company’s website at www.magnoliaoilgas.com. I will now turn the call over to Mr. Chris Stavros..

Thanks, Jim and good morning, everyone. Thanks for joining us today. I'll provide some comments on our results and accomplishments during 2022 and will then give an update on our outlook for 2023, and how we plan to allocate our free cash flow during the year.

Brian will then review our fourth quarter and full year 2022 results and provide some additional guidance before we take your questions. As we enter our sixth year as a public company, the core principles of Magnolia's business model established at the beginning are expected to continue.

I've said previously that my plan is not to make significant changes or put my personal stand on Magnolia. Throughout the halls here, in the office and out in the field, every one of our employees is a Magnolia shareholder and is aligned with our investors.

We run Magnolia for our shareholders and my objective will always be to do what is in the best interest of our investors. We plan to maintain our discipline around capital spending while keeping low levels of debt.

And we expect to continue our track record of achieving moderate annual production growth while generating significant amounts of free cash flow with strong operating margins. 2022 was a record year for Magnolia and I want to recognize our team's strong contributions, which helped support Magnolia's exceptional, financial and operational results.

We achieved goals that further solidify the strength of Magnolia's business model and strategy while also marking some important milestones.

Record production in 2022 combined with higher product prices and our team's continued focus on managing costs all contributed to expand our full year pre-tax operating margins to 63% leading to record net income for the company.

Last year, we successfully executed our development program at Giddings and the positive performance of this asset is reflected in our financial results. Giddings now represents more than half of Magnolia's overall production and proved reserves and is a significant contributor to our strong financial performance.

Our Giddings development was responsible for driving overall production – company production growth of more than 14% during 2022, while spending only 34% of our total EBITDAX on D&C and associated facilities capital.

We generated a record $823 million of free cash flow last year and returned 54% of this amount to our shareholders in the form of share repurchases and a regular base dividend which is paid quarterly. We repurchased more than 15 million Magnolia shares during 2022, reducing our diluted share count by 8% compared to 2021 levels.

Our ability to deliver moderate annual production growth in our production volumes and reducing our outstanding shares builds greater dividend per share payout capacity over time and as demonstrated by the recent announcement of a 15% increase to our quarterly base dividend.

The increase to our dividend reflects our strong operating and financial performance achieved during 2022, and demonstrates our ongoing confidence in the outlook of the business.

Inclusive of the cash returned to shareholders and after spending approximately $90 million on some small bolt-on oil and gas property acquisitions during the year, our cash balance nearly doubled during 2022, ending the year at $675 million.

While Magnolia's unhedged business captured the benefit of much higher product prices last year, this year's plan will focus on improving our execution and generating further operating and cost efficiencies, in order to partially offset the impact of higher oilfield service costs.

Operationally, we expect our 2023 plan to be quite similar to last year. We expect to continue to operate a two-rig drilling program, which we estimate should generate full year production growth of approximately, 10%. Our production is expected to steadily climb throughout the year and starting in the first quarter.

As I noted earlier, we will stay disciplined around our D&C capital and limit our spending approximately 55% of EBITDAX, which would provide us with significant free cash flow. We estimate the current year's capital expenditures to be approximately $500 million, with the year's heaviest capital outlays occurring in the earlier part of 2023.

Our supply chain and operations team did a superb job of strengthening the valued partnerships with our key vendors, as well as managing through the inflationary environment of rising oilfield service costs, that occurred throughout 2022.

These efforts have helped to mitigate some of the increased costs, and with recent signs indicating that some of the service cost inflation starting to flatten or even decline modestly in certain products and services.

We plan to continue to allocate a sizable portion of our free cash flow toward enhancing the value of the existing business, and improving our per share metrics. This includes our ongoing share repurchase program, where we expect to repurchase at least 1% of our outstanding shares each quarter.

We also expect to pursue small accretive bolt-on, oil and gas property acquisitions, in and around our current operating areas. These acquisition opportunities would have characteristics comparable to our existing assets, and match some of the skills and learnings from our experience in Giddings.

As an example in late 2022, we were able to acquire some acreage minerals and additional working interest in Giddings, and primarily outside of our core development area. This further builds on our strong position in the play, and is in line with our strategy of incrementally improving our opportunity set as well as our drilling economics.

Allocating our free cash flow through these actions, is intended to enhance the underlying value of the business, expand our dividend per share payout capacity and strengthen our investment proposition of providing 10% average annual dividend growth over time.

I'll now turn the call over to Brian, who will review our fourth quarter and full year financial results..

Thanks, Chris and good morning, everyone. I will review some items from our fourth quarter and full year results and refer to the presentation slides, found on our website. I also provide some additional guidance for the first quarter of 2023, and remainder of the year, before turning it over for questions. Beginning with Slide 3.

Magnolia continued to execute on our business model, as demonstrated by our fourth quarter and full year 2022, financial and operating results. We established records for many of our key operating and financial metrics during the year including production, free cash flow, net income and most notably operating income margins of 63% during the year.

The overall results for 2022, were supported by very strong product price realizations, our efforts around cost containment and supply chain management and stronger overall production growth. During the fourth quarter, we generated total net income of $255 million, which included a non-cash tax benefit to earnings of $66 million.

Excluding this non-cash tax item, we generated total adjusted net income for the quarter of $189 million or $0.88 per diluted share. Our adjusted EBITDAX for the quarter was $268 million and for the year was $1.3 billion.

Total capital associated with drilling, completions and associated facilities for the fourth quarter was $150 million -- $140 million or 52% of our EBITDAX. D&C capital for the year was $460 million, or just 34% of our EBITDAX. Fourth quarter production volumes grew 6% year-on-year to 73.8000 barrels of oil equivalent per day.

For the year, company production volumes grew 14% to 75.4000 barrels of oil equivalent per day. As Chris noted earlier, we repurchased 15.5 million shares during 2022, reducing our diluted share count by 8% year-over-year. Looking at the 2022 cash flow waterfall chart on Slide 4. We started the year with $367 million of cash.

Cash flow from operations before changes in working capital was $1.25 billion, with working capital changes partially offset by other items, benefiting cash by $54 million. Our D&C capital incurred including land acquisitions, was $465 million and spent $90 million on several small bolt-on oil and gas property acquisitions.

During the year, we allocated $352 million towards share repurchases and paid dividends of $90 million. We ended 2022 with $675 million of cash on our balance sheet, an increase of more than $300 million during the year and after returning approximately 54% of our free cash flow to shareholders in the form of share repurchases and dividends.

Looking at slide 5. This chart illustrates the progress of the reduction in our total outstanding shares since we began our repurchase program in the second half of 2019. Since that time we have reduced our total diluted share count by 52.3 million shares or approximately 20%.

Magnolia's weighted average fully diluted share count declined by 2.4 million shares sequentially averaging 215.4 million during the fourth quarter. We currently have 8.9 million shares remaining on our current repurchase authorization, which is specifically directed toward repurchasing Class A shares in the open market.

Turning to slide 6 and as Chris discussed earlier, we recently announced a 15% increase in our quarterly dividend to $0.115 per share, which is payable on March 1st and providing an annualized dividend payout rate of $0.46 per share.

The increase in our dividend is supported by the 24% year-over-year increase in our production per share that we achieved during 2022.

Our plan for annualized dividend growth of at least 10% is part of Magnolia's investment proposition and supported by our overall strategy of achieving moderate annual production growth and reducing our outstanding shares by at least 1% per quarter.

We plan to examine our dividend payout rate at least annually and after assessing our full year results recast a $55 oil price environment. Magnolia has the benefit of a very strong balance sheet and we ended the quarter with a net cash position of $275 million. Our $400 million of gross debt is reflected in our senior notes.

which do not mature until 2026. Including our fourth quarter ending cash balance of $675 million and our undrawn $450 million revolving credit facility, our total liquidity is more than $1.1 billion. Our condensed balance sheet and liquidity as of December 31st are shown on slides 7 and 8.

Turning to slide 9 and looking at our per unit cash costs and operating income margins. Our total adjusted cash operating costs including G&A was $12.15 per BOE in the fourth quarter of 2022. It's an increase of $0.83 per BOE compared to year ago levels.

The year-over-year increase was primarily due to higher production taxes due to higher product prices and higher LOE as a result of increased oilfield service costs and higher workover related activity. Including our DD&A rate of about $9.40 per BOE, our operating income margin for the fourth quarter was $29.16 per BOE or 57% of our total revenue.

Magnolia had a very successful organic drilling program during last year. Our 2022 proved reserves increased 16% to 157 million barrels of oil equivalent and we replaced 179% of our 2022 production. Magnolia books only one year of proved undeveloped reserves. And as a result, 80% of our 2022 proved reserves were developed.

The proved undeveloped reserves represent what we plan to convert to proved developed during 2023. Turning to guidance for the first quarter and for the remainder of 2023, we are currently operating two drilling rigs and plan to continue this level of activity through the end of the year.

One rig will continue to drill multi-well development pads in our Giddings asset. The second rig will drill a mix of wells in both Karnes and Giddings areas, including some appraisal wells in Giddings.

We continue to improve our operating efficiencies in the Giddings field and are seeing signs that cost inflation is flattening for some of our drilling and completion materials compared to last year's steep increases.

We estimate our D&C capital to be between $490 million and $520 million for the full year 2023, which includes some non-operated capital that is expected to be similar to 2022 levels.

At this level of spending and activity, we expect to deliver full year production growth of approximately 10% with most of the growth expected to come from our development program at Giddings. For the full year 2023, we expect our effective tax rate to be approximately 21% with most of this being deferred.

Our cash tax rate is expected to be 6% to 9% for 2023. Looking at the first quarter of 2023, we expect total production volumes to be between 80,000 boe per day and 82,000 boe per day. And our D&C capital is estimated to be in the range of $140 million and $150 million.

We expect our first quarter capital expenditures to be at the highest quarterly level for the year, with modest reductions in spending in subsequent quarters. Our price differentials are anticipated to be a $3 per barrel discount to MEH.

Our fully diluted share count for the first quarter is estimated to be approximately 214 million shares, which is 6% below year ago levels. We're now ready to take your questions..

We will now begin the question-and-answer session. [Operator Instructions] At this time, we will pause momentarily to assemble our roster. Our first question comes from Leo Mariani with ROTH MKM. Please go ahead..

Hi. I was hoping you could talk a little bit more about some of the acquisitions in the fourth quarter. You said that it sounds like the preponderance of the stuff was outside the core in Giddings. I guess that certainly implies some confidence in the appraisal program.

So maybe you could just talk a little bit more about, how the appraisal program went in 2022? And are you seeing more of these bolt-on opportunities of late than maybe you had say a year ago?.

Sure. Yeah. Good morning, Leo. Thanks for the question. We did have a pretty active appraisal program last year and things went fairly well. We expect that to continue somewhat into this year to remember there's sort of a large swath of acreage in Giddings that we have our hands on more than 600,000 gross acres. So there's a lot to go through.

And we've been doing that gradually. This has really led to us identifying several new and frankly promising areas in Giddings. We plan to continue with some of that appraisal work in and around our acreage over time and clearly to improve our understanding.

Frankly, it's some of that appraisal work and activity that that provided us with a lot more confidence and which led to one of our larger recent acreage acquisitions. So yeah, we'll continue to be doing more of that. It may lead to some infill acreage acquisitions over time.

It may add to other learnings that could sort of steer us in a little bit of an adjacent direction maybe, is the best way to say it, but I think it will supplement -- it's going to continue to supplement some of what we do around propping up are extending and sustaining Giddings even further and utilizing some of the learnings that we've had over the last several years.

So it continues to go well. We'll see what sort of actual amount of money we allocate to this. It will depend. But I think it's -- frankly on the mineral side, yeah, so if you know where you're going to drill that -- that's obviously a huge help there. And we have a good feeling around that. So appraisal helps.

And that's a boost to our economics, better than sitting on the money earning 3%, 4% even though that's not so bad these days, but it's better than that clearly..

Okay. Very thorough answer, I appreciate that. Could you provide a little bit more details around the performance of the 8-well Giddings pad? I know you guys said it was sort of better than expected.

Can we get maybe a little more color around that? Was that all in the core? And are there any other plans maybe for large pads of that nature here in 2023?.

Yeah. This is -- we tried to be as upfront about it as possible back early in the year, when we had frankly experienced a couple of things that offset the expectations around our volumes for the fourth quarter which were weather-related items and certainly the large 8-well pad that was delayed a little bit. And I mean a little bit.

You're talking about number of days that you can count on one hand.

But when you're banking on one 8-well pad for the bulk of by and large, large proportion of most of your activity in a particular period and especially late in that period, things slip a little bit and namely because you hadn't done it before, not because of any other particular reason it stands out and that was really the issue.

So, we had greater reliance on this one pad and that really made the difference. The pad has been online now since December and is actually performing better than our expectations. So, no issues around that. Will we be doing any more eight-well pads here anytime soon? We're not planning on it.

I was joking the other day and I said if we had a chainsaw and had an eight-well pad, we just cut it in half maybe. But I just -- I don't think so. We -- this is sort of a more unique circumstance, nothing beyond that..

Okay. Thanks guys..

Your next question is from Geoff Jay with Daniel Energy Partners. Please go ahead..

Good morning guys..

Good morning Jeff..

Hi Jeff..

So, just simply for me looking at Q4 D&C annualizing that it looks like a 10% reduction in your guide for 2023.

Just wondering kind of what the sort of components of that are and really trying to get to sort of see where you see sort of the greatest I guess either sort of flattening or actually deflation in your service costs, where are you seeing pricing and where is it getting lose it?.

Yes, what you're seeing for fourth quarter and you'll see it in the first quarter as well which we talked about and we talked about just in terms of the guidance, the capital that we're forecasting or viewing right now is going to be more heavily weighted in the back end of last year and the front end of this year.

And that's really just the plan of our scheduling. And so it's really somewhat front-end loaded this year and that you'll see that develop and evolve in some of the volumes and production in the first half of the year. So, you'll see some growth clearly stem from that. And then the capital will start to decline as we move into 2Q, 3Q, 4Q.

So, it will come down a bit. So, annualizing either -- frankly either one of those numbers is probably not the best way to sort of view the overall outcome for 2023. As far as where the cost inflation is showing up or maybe not showing up or seeing some flattening out, you're seeing some decline maybe or softening.

Softening is probably a better way to put it, flattening in steel maybe some OCTG items, clearly fuel, maybe drilling fluids. That's sort of what you're seeing. I think rigs are still well-supported.

But frankly given where we've come in terms of product prices here in the last three months to six months and especially around natural gas, I would think that there's a bit of a disconnect in current costs for some services and materials relative to where we are in the cycle. This is as well as I do. This is sort of a lag event.

And the folks are going to try to take it out of our highs as best they can and they'll do that for a bit and then things will soften up I think. .

Yes, that's super helpful. And then thinking about the current pricing environment and it's obviously a little soft.

Will that have any impact on your ability to kind of get some of the bolt-on deals you guys may be looking at now or interested in going forward?.

I don't think so. I don't see that at all. I'm not sure why it would. Nothing that I can see frankly..

All right. Well, thanks for that guys. Appreciate it..

Yes, sure. See you soon..

The next question is from Nicholas Pope with Seaport Research. Please go ahead..

Good morning guys..

Hi Nick..

Hey Nick..

I was hoping you guys could talk a little bit about the Karnes asset. It's obviously a little further along in development.

Maybe if you could provide a little context on kind of inventory there and how you're thinking about kind of what you have available on the operated side versus the non-operated side and the Karnes side of things?.

Yes, sure. I mean look at the pace that we're going and like we said we're utilizing one sort of devoted rig in Giddings and the second rig floats around Giddings and a little bit of Karnes and -- so I mean on --proportionately on that basis, I mean there's more for us to do.

It's a simple sort of decision on our part, frankly around some of the returns and some of the ultimate performance that we're seeing out of the Giddings wells, that has clearly led us or steered us more to allocating capital a little bit away from Karnes as opposed to sort of just -- yes, if we wanted to drill a little bit more in Karnes, I suppose we could, but it's -- it tends to be a little bit -- a lot of flush IPs and sharp production initially and then it declines more rapidly typically than Giddings.

And so typically, you're just seeing longer productivity and some more efficiency out of the Giddings program, and that's really why we're doing it..

Got it. That's helpful. And then just as a follow-up on the cost discussion.

I'm kind of curious how do you all think about the -- I guess, the timing of kind of rig contracts and some of these consumables that you mentioned kind of moderate a little bit in costs, like what is the timing? How long out do you kind of set up some of those contracts and some of that planning?.

Yes. Without -- I mean, without getting into too many specifics, I mean you're looking at chunky periods of time of three to six months, let's call it. So, there's not much more that we can do in this environment around that. So I think it -- it's just -- it's fine for the service providers, it's okay with us.

We -- what we plan to do as always, and we've done this as part of our -- just trying to be efficient in supply chain and making sure we don't run into any problems or issues as far as getting things. We talk to the vendors and we keep in touch with them all the time. We're very much in their face as far as scheduling, planning, working with them.

We provide them with schedules. They also -- they're confident in knowing that we're going to be there next week, next month, three months from now, we're not going to sort of pull the rug out from under them. And so that -- that's very useful in developing a relationship and it really cuts both ways..

Got it. That's helpful. That's all I got. I appreciate the time. Thanks, Chris..

Sure..

The next question is from Tim Rezvan with KeyBanc. Please go ahead..

Hey good morning guys. Thanks for taking my question. I want to start on the repurchase front. You've been very steady on that. Brian had mentioned 8.9 million shares left on our authorization.

So Chris, if you could put your director hat on, should we just assume that, that would probably be kind of extended or increased the authorization program since you could run through that 3Q or 4Q this year?.

Yes. As Brian said, the share repurchase authorization that's approved by the Board really is related only to the Class A shares that trade on the market.

Remember, a private equity owner owns some small amount of A shares and some larger amount of Class B shares, and so the share repurchase program, the 8.9 million shares of the authorization is not related to the Bs. Putting my director hat on, I mean, look, that it's not my -- from my point of view, this is not an issue.

If we want to authorize or try to get the Board to authorize additional shares for repurchase to the Board and they'll do that. I fully anticipate that. I don't see why they wouldn't. I mean this has been part of the investment proposition for Magnolia from the beginning.

And as I said, and I really try to double down on this, we're trying to create this dividend per share payout capacity enhancement. And so by continually repurchasing our shares that, we think are at a good value we just enhance that capability over time..

Okay. Thanks.

Just wanted to make sure that that would be part of the medium long-term plan it sounds like it is?.

Yeah that will be..

Okay. Great. Great. And then on the acquisitions front a big number in 4Q, $78 million. So kind of two questions related to that. First, was there a production that came with those acquisitions? And then secondly, as you look forward kind of what – you're sitting on a lot of cash here.

How big could that be opportunistically? Would you go $200 million, $300 million, $400 million for the right opportunities this year? Just trying to understand kind of what your appetite is or how big you could get on that front? Thanks..

Yeah. Sure. I mean, the $78 million in the quarter or the $90 million for the year, I mean, frankly, I don't view that as a large number. It's just larger than maybe some things that we've done fairly recently. And so anything of any size is probably going to stand out.

We did all this and we sort of walked you through and we ended with $700 million or thereabouts of cash.

And so having a little bit more cash right now probably not such a terrible thing, especially given some of the uncertainty around the economy at least we're getting a little bit more interest and offsetting almost all of the cash interest expense.

Having said that, we're not Bank of America, the goal of the money is to find a better use for it and it generates stronger returns and helps the business over time. So we'll continue to execute on our – on the model with a moderate growth that we talk about and frankly we've over-shopped that.

And we'll continue to repurchase shares and continue to pay a safe and growing dividend. As you know, we have this sizable private equity owner, continue to accommodate their sales process over time. I can't say – I can say, if but I can't say when that will happen, but we'll be very supportive through our own purchases around that to help them.

The M&A, as I said this included a mix of acreage and working interest in minerals could we go larger, if we found the right opportunity, yeah sure we could do that. We don't need – the business doesn't need a lot of money to sort of continue to run well and do what we need to do execution-wise.

We found that out the hard way during COVID, but where we really didn't burn much cash at all. And so if we only spend 55% of our gross cash flow you sort of generate free cash flow year in year out. So we're pretty focused around that and compensated around that.

So if you find the right deal we'll find the right opportunity that improves the business and enhances sustainability of the business provides us more running room, yeah. But we're not – I would tell you, we're not looking to do a deal where we would require any additional outside financing.

So it's sort of limited to our capabilities around what we have on hand in terms of cash and also around our skill set. .

Okay. Thanks for that detail.

And just close the loop, can you disclose any production that came with the acquisitions in the fourth quarter?.

So, yeah. No. So it was very small. I mean, not a consequential amount a material amount of production volumes..

Okay. All right. Thanks so much..

[Operator Instructions] The next question is from Noel Parks with Tuohy. Please go ahead..

Good morning..

Good morning..

So just a couple of things. You talked about expecting to see some efficiencies this year that could help offset some of the service cost inflation. And I wonder, if you could just talk a little bit about it? Most operations are working on different efficiency projects kind of all the time.

I was just wondering, are there any particular resource shifts? I mean, more staff or shifting staff around various functions to tackle any particular types of projects in the field that you haven't before?.

No, I wouldn't say we're shifting any staff or generating new staff to work on this especially. I would tell you with Giddings, remember I said we're entering our sixth year as a public company now, and so, if you skip over the COVID gap, we really just got at this maybe in late-2020, more so 2021.

And so, we're in the earlier middle innings of what is the evolution of trying to get at Giddings and understand it better. And so there's more to I think, be squeezed out of it.

So the usual operational efficiencies that most talk to or speak to in terms of improving our drilling feet per day and -- or reducing our drilling days and frac stages per day improving. We recently set a new record on a pad in terms of the completion time. So, there's still some of that to be done and captured this year.

And so I think we'll see some benefit of that..

Great. And did I -- I noticed it looked like there was a sequential decline in cash G&A between first quarter and I think from third quarter to fourth quarter, certainly not complaining, always good to see that direction on cost.

But I was wondering, was there anything in particular one-time involved in that that made for the difference?.

Yes. The cash G&A is a pretty small number for us. And so there's always more commonly can be some one-off items that pop up period-to-period, it could be an insurance item that comes up payment or it could be bonuses for the executives or whatnot whatever it is. I mean it's hard to sort of predict evenly or with a lot of precision quarter-to-quarter.

So, it's -- I wouldn't make anything of it. It's nothing that jumps out in my mind. I mean there's some things even associated with some -- and or the share sales, some costs associated with that. So, a very small items generally..

Got you. And I was just wondering one thing about reserves.

Did you see any tight curve of improvements or upward revisions in reserves this year with the engineers?.

We did. We did. And you'll be able to see that more specifically once we put out the 10-K, which will be here soon very shortly. So we did speak to directly there in terms of some performance -- positive performance revisions..

Terrific. That’s all for me..

Thanks..

The next question is from Neal Dingmann with Truist. Please go ahead..

Good morning. Chris, I think I always had to answer this for you or Brian.

But just -- could you just talk about just on capital allocation? When you guys think about buybacks versus divs these days, anything that caused you to change that plan?.

Yes. I mean the share repurchases, I mean we talk about doing this 1% at least regularly every quarter and there's nothing changing around that. But if you look at the last two years we've probably done double that rate. And that's largely been to help out EnerVest as they've sold down. So we've purchased a lot of shares from them.

As that peels off or starts to go away here, you could see -- we're committing to the 1%, but you could see some of that excess cash that's been allocated to share repurchases move a little bit more towards dividends and that's sort of my thought. But on the dividend, again, I've said this repeatedly you want to prudently grow into it.

You don't want to rush to grow out of it. And so you just want to be steady and maintain the safety and security of that dividend. And so, I wouldn't see us sort of leaning in on some sort of variable dividend process. We just want to grow that dividend steadily. And that's what good dividend growth companies actually do..

I was wondering if you can bring up that your wife like dividends like your great leader once said but….

I always consult with her before, yes..

And with that can I just have a follow-up on that with the immense amount of cash you all have, is that out there just in case that with the EnerVest, or could you talk about that cash that you have on the books very significant?.

Yes it is. I mean, we'll see how things go with EnerVest, and we'll see how things go with some M&A opportunities or bolt-ons that we can look at. I don't have anything in mind that's imminent right now. And so like I said, it's okay to have a little bit of extra money in this sloppy environment.

It's obviously not a great day to report results here with the [indiscernible] up here today where the day ends. But it's always not a it's not a bad thing to have a little bit more cash on hand given some of the general macro uncertainty and variability, volatility in the market these days. So we feel very safe secure.

But again, the point is that it's just -- it's not doing a lot for us just to sit there and look at it may make you feel better or someone feel better, but you'd actually want to put it to work to improve the business..

Great point. And then one last one if I could just on the development program over in Giddings.

Will that remain largely on that 70,000 or will there be -- are you adding more acres to that piece?.

Well, we did. We -- that's what we did in the fourth quarter.

And so where we can maybe through some appraisal work or activities around that or just things that may come up in terms of bolt-ons, we will look at expanding that footprint within Giddings not just on our existing acreage, but over time it will -- some of the things that we already have may be filled in that allow us to be active outside of that core development area.

Core development area is great, but just sort of want to continue on that path of looking at other options..

Great point. Thanks guys. Great quarter. .

Thanks. .

All right. Thanks Neal..

This concludes our question-and-answer session and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect..