Earnings Call: Q1 2021

May 31, 2021

Good day, everyone, and thank you for joining the Petrol First Quarter Webcast, where we will provide a brief summary of our Q1, 2021 operational and financial results. If anyone wants further information on the company, Please see our website for additional materials. My name is Manolo Zuniga and I am the President and CEO of PetroTal. And I'm joined by my colleague, Doug Urchin, Executive VP and CFO. You have clicked on the link in last evening's press release. You should hopefully have signed up for the webcast so you may see the slides on your screen. Now you're having issues seeing them, please contact petrotelcellecourt that UK and they will be able to assist you. Before I begin, I need to mention that there are some disclaimers towards the end of the presentation, which I would urge you to read at your own leisure. For those that are new to the story, PetroTal is an onshore Peru focused oil company. As shown in Slide 1. The company is listed on London's AM market and the Toronto Stock Exchange and has a market cap of approximately $170,000,000 We have 100% working interest in the Britannia oil field. Exactly today, 3 years ago, we started producing oil at Britannia just 5 months after taking over the operations. We quickly expanded production to over 10,000 barrels of oil per day by late 2019. And during past months of May, Production average, again, just over 10,000 barrels per day as we have recovered from the pandemic. The Britannia field has 2020 year end 2P reserves of 51,000,000 barrels. By the end of this week, the field will reach its first 5,000,000 barrels of production, showing that it is still early in the early life and with new infrastructure in place to accommodate future growth, Pretania will become a free cash flowing machine for years to come. In short, we have a great asset that will deliver a beautiful combination of growth and yield. And that is resilient down to a Brent price of $27 per barrel. We also have a proven technical team in place with a track record that delivers operational excellence. And as we hope to prove to you from a financial point of view, PetroTal is in many ways ahead of the pack when considering the optionality of 2021 projected cash flow. On Slide 2, we have included our 2021 production guidance, which remains unchanged at this time, highlighting the fact that the company expects to exit 2021 between 18,019,000 barrels of oil per day. We have also updated our 2021 EBITDA forecast to a range of $150,000,000 to $155,000,000 Slide 2 essentially shows that Q1 2021 was an operational preparation quarter. The team planned drilling procedures for the first well of the 2021 drilling campaign, the 7D well, which was a spot on March 29th and completed on April 30th at a final revised cost of $7,600,000 or 17% under the $9,200,000 budget. As previously announced, the new 7D well came in strong with production rates in excess of 4,000 barrels of oil per day during the 1st 4 weeks. Currently, we're drilling our 2nd water disposal well, the 3WD, which we plan to core. The 3WD will be able to dispose of 50,000 barrels of water per day, increasing our existing water disposal capacity so we may meet our requirements for the next 14 months. Additionally, the 3WD core will provide critical information about the Britannia of your reservoir. That should allow us to fine tune our original oil in place estimates and hence reserves potential. From an infrastructure standpoint, we continue to receive, install and commission key areas of the CEPF2 with unchanged completion date in the Q3 of 2021. Current production has averaged $10,220 per day over the past 3 days. This including the robust ratio from the 7D well, though excluding the 2 shutting oil wells as we await the water disposal pump upgrades estimated to be completed by early June or the completion of the 3WD water disposal well. And that have impacted production by approximately $1200 of oil per day. At the request of some investors, in Slide 3 we again show an updated well type performance graph comparing cumulative oil versus days the wells were online. As you can see, the Britannia horizontal wells have produce a normalized 1,000,000 barrels in its first 550 days online, twice as much as the vertical or deviated wells we have drilled and 2 and a half times more than the original horizontal well drilled by the prior operator. In this slide, we have also included a table so investors can have a sense of what this great operational performance by Whale means in terms of financial performance and return profiles going forward as most wells have already paid out to date. The 6H is exception because it was completed at the beginning of the pandemic when oil prices were depressed. Slide 4 highlights that the Britannia field as a considerable reserve base with 2P and 3P reserves at 51,000,000 barrels and 160,000,000 barrels of oil respectively. We anticipate that under a 3P development plan, the company will maintain production in excess of 10,000 barrels for around 12 years. And the team is committed to extending this plateau above 10,000 barrels of oil per day for as long as possible. This is this will be reflected in future reserve report where I foresee obtaining high recovery factors. As I have explained in the past, high recovery factors are like icing over the cake. As in the future, we will enjoy the benefit of that sweet extra layer of free cash flowing oil. Before I turn over the call to Doug, I would like to take a brief moment in Slide 5 to mention that our 2020 Sustainability report has now been published on our website in both Spanish and English. Slide 5 summarizes some of our key goals and outcomes with additional details found in the report. PetroTal is aware of the changing landscape for oil and gas for users and its strives to be a market leader in this area. Of extremely importance to us is that all the stakeholders benefit from PetroTal, including of course our shareholders as well as the local communities that are represented by indigenous federations with whom we are working very closely to empower them and ensure their future well-being. Also as noted in a recent announcement, Dewey Jones has joined PetroTal as VP of E&P. And like most of our senior technical team, Dewey has also worked for Adoxie as well as other large independents and brings over 35 years of technical experience and expertise in Peruvian and Latin American Basin. Thank you. And I will now turn it over to Doug for a brief financial update. Doug? Thank you, Manolo. I'm Doug Erch, PetroTal's Chief Financial Officer and would like to start off highlighting a few select of financial items from our recent press release on Slide 6. From a balance sheet standpoint, PetroTal shored of its liquidity with the completion of a $100,000,000 bond issue early in the year. The bonds have a coupon of 12%, Our covenant light were issued at a 5% discount to par and are the only material debt of the company. Some of the bond capital was used to all amounts owing to Petro Peru for previous oil price derivative liabilities and repayment of the Peruvian government's pandemic relief program. PetroTel exited the quarter with over CAD 73,000,000 of total cash as summarized on the slide. Q1 2021 was a very pivotal and strategic quarter from liquidity, risk and commercial perspectives. With production averaging At just over 7,330 barrels of oil per day and the Brent oil price averaging near $61 per barrel, PetroTal was able to generate over $32,000,000 in revenue and $20,000,000 of net operating income, which was slightly higher than Q1 of 2020, where production was over 9,600 barrels of oil per day. This speaks to the robust commodity environment we are now experiencing. From an operating cost perspective, the company had total operating costs of $5,500,000 representing $7.17 per barrel, which was slightly lower than Q1 of 2020 at $6,000,000 representing $6.42 per barrel. Total CapEx amounted to $7,100,000 for the quarter, which was on budget and significantly lower than the same period in 2020 of CAD23,800,000 inclusive of infrastructure development and included drilling the 6H well. Financial aid, PetroTal booked $31,000,000 in net income for the quarter versus a net loss of $31,400,000 in Q1 of 2020, driven largely by improved oil prices and a favorable commodity derivative impact. Also of note is PetroTal's strong working capital position with higher receivables and lower payables versus previous quarters and at a $39,000,000 commodity price derivative asset, primarily from expected true up revenue payments to be received in 2021 2022 based on the pace of volumes shipped through the OMP and delivered, now secured by hedges. Our 2021 financial guidance is unchanged from a production standpoint. However, cash flow estimates for 2021 have been increased based on the current Brent strip forecast. The company's EBITDA income, as mentioned by Manolo, is now estimated to range between $150,000,000 to $155,000,000 including $17,400,000 of the $31,000,000 true up revenue, making PetroTal potentially 2021 free cash flow positive after debt service. The highlights above really put PetroTal ahead of the pack in terms of having broad optionality on free cash flow allocation as compared to peers who may be mandated to delever for another 12 to 15 months. With respect to risk management, as announced, PetroTal is now approximately 32% hedged on forecast volumes from April to December of 2021 at prices between $60 $62 per barrel. The slide demonstrates a new commitment to risk management as a strategy, which safeguards our capital program with minimum cash requirements. In total, 1,200,000 barrels are now hedged at the corporate level. From a sales risk standpoint, PetroTal has partnered with Petro Peru to execute hedges for oil that's in the Northern Oil Pipeline. This mitigates price volatility over that 8 to 9 month journey for oil to reach the physical sale point at the Bay of Bar Port. The original 1,800,000 restructured barrels are now hedged at between $60 $62 per barrel and guarantee the company's expected hedge true up revenue position of $31,000,000 On Slide 8, we see sales and marketing updates. Lastly, I want to point out on Slide 8 that during the quarter, PetroTal proved out its expanded oil marketing strategy to route oil sales through Brazil, executing a second export of 225,000 barrels with commercial terms that are competitive with the current pipeline route, which has now been extended for another 2 years. At higher production levels later in 2021, Petro Italia estimates 1 Brazilian export per quarter and has the ability to execute 1 per month if need be. Thank you very much for joining the call. I will pass it back to the host and we can start the question and answer session for the questions that are being sent through. Thank you. Thank you, Manola and Doug. Just a reminder to people, you're able to submit any questions you have via the webcast link now. I'll start with the first question. Was the W-seven well a horizontal well? And are the next oil wells going to be horizontal? Yes, this is Ivanolo. The 7D was actually basically a vertical well. It was initially drilled, deviated until we reached the proper position in the field. And then it went down basically as a vertical well. And encounter as we mentioned in the prior release, very good reservoir sense. All of that is pointing in the right direction for our evaluation of oil in place for the end of the year reserves. The next well, the oil well is going to be the 8H and as the name reflects it will be a horizontal well. This one will also be in the Southern section of the field as we continue developing that area. And then from then on, the last three wells of this year's campaign will be also horizontal and we'll go back to the northern section of the field. And with all of that, we should be able to achieve the 18,000, 19,000 exit rate that we have projected from the beginning of the year. Thank Does the company see any problems regarding who will win the upcoming election? You know what, the company is well known in Peru as a company that in Peru is led and operated by Peruvians. I think that is always very good. We, as I mentioned in my comments, we are establishing a very trust for the relationship with the indigenous federations. Something that I would like to highlight is I'm very impressed as we have seen in the past, how the election process is being conducted. I listened to the debate on Sunday, elections are gonna be this coming Sunday June 6, but everything is well done, well set up and I'm expecting whoever wins will follow the rule of law and that's what is important for us. Thank you. Is the reason for the exceptional earnings because of the buildup or the backlog in the pipeline? Hello, it's Doug here. I'll answer this one. The key reason there is you'll see that we posted a derivative income of about $22,000,000 So that does represent the increased value of the oil that's in the pipeline from where it was at the end of December and of course that's a big change from Q1 of 2020 where it was essentially a large loss. So as a result of this, that has triggered a big chunk of the net income there. Otherwise, it does reflect healthy, robust earnings from our operations. Do you have any plans to start making stock buybacks? We don't have any immediate plans to do that. Once So we have our growth targets have been achieved and free cash flow is being generated, then we'll consider that option. And or people may recall that we did pay a dividend a couple of years ago when we were in that same position. So at this point in time, we feel it's very important to put money into the ground to get our production targets up and generate revenues and income going forward and cash flow. 18 months ago, production was above 10,000 barrels a day. Today, it is on the same level even though Well 70 has come on stream. The only limitation stated has been the 1200 barrels a day due to water disposal wells. What has happened to the other 2,800 barrels a day? This is Manolo. That's actually a very good question. As I mentioned on my comments, the field by the end of this week, we'll have reached 5,000,000 barrels of production. So the wells that are online, the oil production declines. That's why and we're just at the beginning of developing the field, keep in mind that under the 3P case. We hope to end that with a total of 20 oil wells. We only have 8, not even half of what we want to have in the future. That the wells oil production declines and that's what happens. And but as we have seen the new oil wells come very strong. In our presentations. We also highlight that on average, these wells should produce about 3, 3,400,000 barrels per well. So these are very prolific wells, but production declines. That's the answer. Is the 12% coupon being paid on a full amount or only as cash as it is being used? Yes, Doug here. The interest is paid on the full amount because the Full amount of $100,000,000 has been advanced to the company and hence why you see the cash position, the healthy cash position of over $70,000,000 at the end of the quarter. So the short answer is yes, we're paying interest on the full amount that we've drawn. There is another $25,000,000 available under that credit facility, through the bonds. We are not paying any interest on that and that is some money that we could arrange to use if the company needed it going forward. Why was the 7 d well drilled as a directional well and not a horizontal well? In you know there's a couple of reasons. 1, we have not drilled a well for about a year. We wanted to drill a well that for us was a easy, a good location. If you look at our in corporate presentation, the full corporate presentation that is in our website on Slide 13. You will see that the 7D It's very close to the platform and as such there was not enough distance to set up a horizontal well. So it had to be just As I mentioned initially, you deviate some and then you bring it down vertically and that's why it becomes a vertical well. This well, we were quite sure that it was going to be a very good performer because it was between The original 1 XT well vertical section drilled by the old operator as well as the original vertical water disposal. So sort of in between. We had good reference on that. And of course that water disposal that was drilled in the past is the one that We eventually turn into an oil producer becoming an excellent producer as well. So that's the reason. If you look at at that same slide and you will see where the 8H is located and you will see that there's enough room to deviate the well and take the the horizontal section as well as we go north as well. Didn't the company have the possibility to finance at a lower Well, one needs to look at the 12% cost of debt capital, which is certainly much cheaper than the cost of equity. And the 12% coupon rate really at the time that we did that financing early this year, We were at a time where oil prices were quite a bit lower, so the risk reward was quite a bit different than what you'd be looking at right now. Also it was comparable with the other financings and bond issuances that were done around that same point in time. So ideally, yes, something lower, but that was the best that we could do at that point in time and it has given us the ability to move forward and get drilling again. The share price is held back at the moment As are most oil companies due to ESG and climate change, what are PetroTal doing to address this? And do they see a carbon tax Similar to the ones in Europe. This is Manolo. In the case of the ESG part, we were impacted with the S side, the social side last year as a lot of our investors know. And that's why I make reference to the fact that we are building a very good trustworthy relationship with indigenous federations, one that will allow them to truly become empowered. That's part of the issues in Peru mostly in the mining sector, the local communities are sometimes left behind and that's something that PetroTal and they were to change from the beginning, from day 1. From an environmental governance, we do an outstanding job and I don't think The market should punish us because the company is truly doing an outstanding job on all of those fronts. I don't think that in Peru they will set up a carbon tax. That's I think it's still too far into the future. The focus right now is for us as a company to be carbon equal. And we are working to become as such in the next few years. If you read our sustainability report, you will get a sense of what we're trying to do. For example, in all of the communities in the Punahoua district where we're located, we'll end up having a solar power. And even in the field we're going to also be working on that as well. So that gives you an idea of how we're looking at that. Reforestation is one of the main projects. Of course, we're in the middle of the Amazon jungle. So we have a full effort on that as well. That is mentioned in the release that was published last evening. How many barrels are there per horizontal well in the first 2 years of the world's life. If you could go to Slide 3 of the presentation that we use for this meeting. You will see that the, on a tight well basis, so this is basically the average of the 3 horizontals that we have. And by day 550, it's almost 2 years, you are almost at you are already at 1,000,000 barrels and you see how the trend goes. So 2 years will be about 720, you're going to be like 1,200,000 barrels or something like that. So these are strong wells. No question about that. The production graph Shows approximately 25,000,000 barrels a day in the 3P case from 2023 with already a material jump in 2022 versus The 2P case, would that suggest we could know if we are on the 3P case rather than the 2P case as early as next year? By the way, it's 25,000 barrels per day, not 25,000,000 just to be sure. We should be able, if you look at Slide 4, in the we are going to be basically done drilling the 2P wells in early next year and then it's gonna, we're gonna be starting drilling the 3P wells. So by the time we publish our next, the 2022 budget, We will have had to define our ability to access that 3P. So it's a matter of from here to the end of the year. And the reason is that because then in the second half of next year, we should start drilling those 3P locations. That's the reason. As you can see here. There's 2 components to the 3P reserves. 1 is additional wells and 2 is assuming that the your typical well will produce a little bit extra oil. So you have sort of like half comes from the additional wells and half from every single well doing better than it was expected for the 2 PKs. That's how Juanillo and Sur does the evaluation reserve, looking on how the wells have been behaving and then of course trying to forecast how they will behave in the future. And they do a 2P curve and a 3P curve, which of course is more optimistic. And again, by year end, we will have also good data on that. I hope that explains the question. Are there plans to make any acquisitions of new producing fields during the year? We have always looked at that possibility, something that is synergistic with the $100,000,000 bonds that we raised early in the year. We allocated 20 to do something like that, but we're not in no rush per se. We want to make sure that it's something that adds value to the company. And that's why the team is doing a good job assessing that. And it has to be something that really is 1 +1 equals 3 or 4 better. If a farm out partner is not found for Block 107, would you drill either or both of the Constitution or To Tucion or Sheke wells on your own and what is the potential timeline for these wells? The costly too soon prospect is like having a small Britannia field next to a brand new road. From a logistics point of view is easy, which then could allow us to drill that initial well, which is like a Britannia oil well, for about the same cost, plus the additional costs for the setting up the site of course, but once you have this set up the site, you can drill a lot of other wells. And because of that, if we don't find a partner, I think we will we could drill constitution ourselves. Assuming we do find oil into institution. The logic will be that partners will come running to us to joint venture with us. And the reason for that is that based on our studies, the generation of crude oil happened on the western flank of the block and he migrated to the East and constitution is in the Eastern most section of the block. So if we find oil there, that means that the other structure or shaky should be also trapped with oil. So there's some logic behind this strategy. So yes, we're pursuing bringing a partner. We cannot I think Constitution is like a Bretano oil well that we've been drilling a lot of them. This initial constitutional well is going to be a vertical well adjacent to a brand new road, easy. So and the expectation will be to find like a sweet crude oil that could be an ideal blend for the Britannia natural gasoline that we use to blend with the EBITDA. Keep in mind that we use about 3.5% per barrel of natural gasoline, which of course is much more expensive than Puroto. When would you expect the 1,200 barrels a day currently offline to come back on to production? The team is trying to get it done by mid June and otherwise It'll be once we complete the 3WD well, that will give us a lot of additional water disposal capacity. And that will be the 1st week of July. So it's between 2 5 weeks, something like that. Given the increased free cash flow outlook for this year, does that provide any upside potential to spending? And what does it mean for next year potentially if oil price strength persists? In Britannia, we only have one rig and there's no room for 2 rigs. I've been asked the question many times, you know, why don't you bring another rig and finish the development as fast as possible, there's no room for another rig at Britannia. And as such we're limited to one well at a time. And that sort of puts a constraint on the amount of CapEx that we can spend in the Itania. CPF-two facilities that and that will be done with facilities in the future mostly will be additional water disposal pumps that will come in. That will be much later. So we're constrained. So the only other place that we could drill wells either is in the constitution prospect where we're getting the environmental permit and that's not going to happen until next year or doing an acquisition that really will add value to our shareholders later this year. Do you foresee that the Bretana field will continue to require oil drilling beyond the 3P development plan in order to continue keeping production flat at 10,000 barrels a day. And hence, will this require more CapEx? Ideally, the The 20 wells that we plan to drill will drain all of the oil. Hopefully, we will see that there is more oil to recover. And if that indicates, it'll be great if we can find sweet spots as they call it in the field that have not yet fully trained oil. Basically we'll have virgin oil and we will then need another one or to wells. That'll be the ideal case. So yes, hopefully we will find other locations. And of course drilling wells will require CapEx, but it will be wells that will produce a lot of oil, very economic wells, very prolific wells. So it's not a negative, it's actually a positive. And even with the results of the 7D, that that was relatively inexpensive wells compared to the horizontals. We already see that we could actually find that similar locations somewhere in the field that was not planned before, but it's still we're still reviewing all of that. And I mentioned that just to show you, as I mentioned in my comments, The team is really striving to make sure that we maintain that plateau above $10,000 for as long as possible. This is free cash flow. You said that the 7 d horizontal well has performed above the reserves budget. Could you please quantify how much better it is versus what the reserves assume? You know, by the way, the 7 d is not a horizontal, is a basically a vertical well. They call it D because it was a deviated well. The H means horizontal. Santo. So this is a deviated well that when it landed into the reservoir, basically landed as a vertical well. And the reason that that we know is doing better is that when we presented this well late last year for the board to approve, We show as well we showed them 3 cases at 1P, 2P, 3P and the initial performance of the well is beyond the 3P. On the 3P case, this well was supposed to average 3,500 barrels of oil per day during the 1st month and it's averaging 4,000. So that's why it's very evident. What does the $19 gap between average Brent price and average realized Price of Britannia mainly consists of? Yes, that's an excellent question. Essentially, Any costs that are deducted from the revenue comes off of that price. So essentially oil that's going through the pipeline, there's pipeline tariff and other fees there. The other difference in this quarter would be the size of the Brazilian shipment. So with respect to our sales to Brazil, it's paid FOB Britannia, So it's one net deduction that comes off of the shipment for all of the transportation aspects and any Brent price differentials. The most recent Brent price differential, I should point out, that was sold through the from the pipeline was only a $2 differential from the Brent price, so reflecting the high quality of our oil. Given high oil prices, when does the company expect number of net operating losses from the previous operator and as we factor that in against our revenue projections, we can see that the taxable portion, we'll utilize those losses and we'll start to pay taxes in 3 to 5 years. Why is the internal management forecast for production levels over the next few years lower than the levels from the NSAI reserve statement? Actually the forecast that we have on Slide 4. It comes from the Nylon Sur report. And so we actually follow that. We work very closely with them. They already for example have the information on the 7 d well. And so we keep them appraised of everything. There was mention that the 7 d well encountered the reservoir at a higher than Whenever you find the top of the reservoir, the top of the Vivian formation higher up, that means that you may have an additional amount of oil in place. That's always very exciting. Of course, you need to keep in mind an oil field, The top is not flat like a roof. You will have variations going up and down. We're always paying attention to that. Even when we drill the 3WD and we reach the top of the BB and that's always a key number because we update all of the models. And you know, so that we are going to see how things shape up as we continue drilling wells this year. But it is a positive. It's definitely a positive. No question about that. Could you please give us your view on the negative working capital of the quarter? Yes. As I look at the working capital on our balance At the end of March, our total current assets are $138,000,000 versus current liabilities of $69,000,000 So essentially, our current assets double the liability total. A big chunk of that represents the cash that we raised $73,000,000 If one looks specifically at the accounts payable there, we have a very good relationship with our suppliers and have deferred payment plans from when the work is done. So that represents about £40,000,000 and I'll point out that's about £10,000,000 less than where we were at year end. So We're on track with the financing terms that are afforded to us by our suppliers. How and where would the oil from a successful Constitution well be refined at? The logical place will be the Iquitos refinery. Nearby about 60 miles north of of constitution. You have the Los Angeles field that is owned by SEBSA that produces 45 API gravity sweet oil. And that goes to Iquitos. Actually those barges just go by our field. They track that oil into the port of Pucallpa and they put it in barges that go by the Britannia field towards the Quito refinery. We will do exactly the same with exception that we will stop, Britannia, blend that light oil with our crude oil and then saying that to Iquitos and to the pipeline and OIBIM also for the exports via Brazil. Keep in mind that when we buy natural gasoline as a steel weight, in the last purchase was at at about $120 a barrel. Then we bend it and we sell it for now at what $70 So it is at the The diluent is a cost for us. If I can produce oil, light oil and use it as a blending agent, it will be win win for us as you can imagine. But that's where you will go. It will go to Iquitos for refining or you will go with our retainer oil mix to the pipeline to go to Talara or via Brazil to the U. S. Rotana daily production reports from Petro Peru typically show varying wide production volumes. Why is that? Yeah, it's actually Peru Petro. Peru Petro is a state agency that fiscalizes oil for royalty payments. Petro Peru is the one that owns the pipelines, very confusing, you know, I don't know why they came up with some similar names. But the reason for that is that the, in the field we have, when we fiscalize oil, We fiscalize, Penu Petro fiscalizes crude oil. And so what they do, they keep track of the oil that is already blended, that goes into the tanks. They keep track of the diluent that we have actually used to blend. And out of that, they do the calculation for how much was actually crude oil that is fiscalized. It's fiscalized by them, by us and by Bureau Veritas as the independent third party. You know, a very formal day fiscalization. And that doesn't happen every day. While we are actually shipping oil almost daily, it doesn't happen every day. That's why you see that there's a few gaps and sometimes we are fiscalizing 15,000 others 8,000 and so on. The key is that at the end of the month it should match throughout, that's the key. And that's the OILO that we use to calculate royalties. Well, with Petro Peru, when we arrive at Santa Muro, for example, We do the same process Petroperu, Petrotal and Bureau Veritas as well, but that's the diluted oil and they we do exactly the same thing. At what point would management consider share buybacks, considering the shares are priced well below their intrinsic value. Also, is there a debt or cash flow or debt to EBITDA target? Yes, it's an excellent question. And we feel it's most important at this point in time to continue to invest our available funds in drilling additional wells and following our development program that we have outlined. That will get us to the point where we have the additional revenues going forward. So no immediate plans for share buybacks at this stage. We need to invest the money in growing the company. Debt cash flow, ideal targets Are still on an ongoing basis, but we keep them at a very low ratio going forward. Ideally, Maybe 1 to 1 would be a very conservative number. And the final question, is there a definitive date for a share consolidation? That is a question that's been Asked of our shareholders over the last few AGMs, we've included it there just in the event that it was sort of pre approved by shareholders. [SPEAKER JEAN FRANCOIS PRUNEAU:] We no longer think that a share consolidation is necessary, so you'll notice in our AGM materials that have been sent out, That's no longer a question that we're asking for our shareholders to approve. So we have no plans for any share consolidation. We believe that our share price should appreciate based on the performance of the company. Manolo, Doug, thank you. That ends the Q and A element of the call. I will now hand back to you for any closing remarks you would like to make. Yes. I would like to thank everyone that participated in this call. The team is extremely excited of what we have ahead of us. They are all eager to go back to drilling these wonderful horizontal wells and continue developing the field from the 2P to the 3P case. And then continue working on our goals on the of sustainability plans that we have and continue engaging the indigenous federations as we have been doing. For example, Elections are next Sunday. I'll be heading to Lima on Wednesday 9th to meet with them and local officials. I don't go sooner than that because I need to vote from Houston where I am registered. Otherwise, I'll be in Lima right now. That gives you an idea how eager we are to get things moving. Thank you so much. Appreciate it.