Greetings, and welcome to the Gulfport Energy Corporation Second Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms.
Jessica Antal, Director of Investor Relations. Thank you. You may begin.
Thank you, and good morning. Welcome to Gulfport Energy Corporation's Q2 of 2019 earnings conference call. I am Jessica Antal, Director of Investor Relations. Speakers on today's call include David Wood, Chief Executive Officer and President and Keri Kroll, Chief Financial Officer. In addition, with me today available for the question and answer portion of the call are Donnie Moore, Chief Operating Officer and Paul Hegerwagen, Senior Vice President of Corporate Development and Strategy.
I would like to remind everybody that during this conference call, the participants may make certain forward looking statements related to the company's financial condition, results of operations, plans, objectives, future performance and business. We caution you that the results could differ materially from those that are indicated in these forward looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we may make reference to non GAAP measures. If this occurs, the appropriate reconciliations to the GAAP measures will be posted on our website.
Yesterday afternoon, Gulfport reported 2nd quarter 2019 net income of $235,000,000 or $1.47 per diluted share. These results contain several non cash items, including an aggregate non cash derivative gain of 147,800,000 a gain of $83,000 attributable to net insurance proceeds in connection with a legacy environmental litigation settlement, an impairment loss of $125,600,000 in connection with Gulfport's interest in certain other equity investments. Comparable to analyst estimates, our adjusted net income for the Q2 of 2019, which excludes all the previously mentioned items, was $33,300,000 or $0.21 per diluted share. An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. Please review at your leisure.
At this time, I would like to turn the call over to David Wood, CEO of Gulfport Energy.
Thank you, Jessica, and thank you all for joining us on this morning's call. This was a successful quarter for Gulfport as we delivered results in line with expectations, highlighted by another active 3 months in both our Utica Shale and SCOOP asset areas, delivering high single digit production growth compared to the Q1 of 2019. As announced yesterday evening, for the Q2 of 2019, we reported approximately $33,300,000 of adjusted net income on $311,200,000 of adjusted oil and natural gas revenues and generated $194,500,000 of adjusted EBITDA. Production for the quarter averaged 1.36 1,000,000,000 cubic feet of gas equivalent per day, coming in as expected and increasing 8% compared to the Q1 of 2019. Our results were driven by production growth in the Utica Shale, turning on line 25 gross dry gas wells throughout the quarter and solid well performance out of the SCOOP with 6 gross Woodford wet gas wells turning to sales in the quarter.
We continue to see efficiencies across all our operations, which I will touch on further shortly. And our active start to the year has positioned us for a strong Q3 of 2019, both operationally and financially. We remain on track to deliver on our 2019 production guidance of 1.36 to 1.4 Bcf equivalent per day, while adhering to our previously provided capital budget and are on the cusp of significant free cash flow generation beginning here in the Q3. As planned, the 2019 capital program was heavily weighted to the first half of the year and during the 1st 6 months of 2019, Gulfport invested $368,000,000 in operated D and C capital and $68,000,000 in non operated D and C capital. In addition, land expenditures totaled approximately $23,000,000 during the 1st 6 months of the year.
On the operated front, our capital spend has been on target with expectations, and our operated activity is in line with our original budget during the 1st 6 months of 2019. With respect to non operated activity, we have seen cost overruns in the Utica and the capital incurred to date has resulted in larger than anticipated spend this year. We are actively working to recover a portion of these costs through trades and the monetization of certain non operated interests we hold today. We expect to recover a significant portion of the non operated capital invested to date during 2019 and we remain fully committed to spending within the range of our total budget and have reaffirmed our 2019 capital guidance. We expect total capital spend will decrease significantly in the 3rd and 4th quarters of 2019, and as a result, provide meaningful free cash flow generation, which we continue to estimate in excess of $100,000,000 for 2019.
Since our call in May, we have continued to make progress on our strategic goals set at the beginning of the year, announcing several non core asset divestitures yesterday evening. Gulfport recently closed the sale of our Southern Louisiana assets for a total consideration of approximately $54,100,000 which includes cash, value associated with retained overriding royalty interest and incremental commodity price earnings should oil prices exceed certain thresholds through 2021. In addition, this transaction reduces our total company ARO liability by approximately 1 third and will improve our per unit LOE metrics by eliminating over $1,500,000 per month of fixed lease operating expense. At the end of the Q2 of 2019, Southern Louisiana accounted for less than 1% of our daily production was approximately 0.3% of our total reserve base. In addition to the Southern Louisiana transaction during the Q2 of 2019, Gulfport monetized its remaining interest in a non core equity investment, which held interest in Thailand for approximately $1,900,000 in cash.
We are pleased to execute both of these transactions divesting of non core assets not contemplated within our current development plan and allowing us to strategically reinvest this capital elsewhere in our business. As we discussed in May, during the Q2, we launched a process to divest of certain water infrastructure assets Gulfport holds across our SCOOP position, including water handling and water recycling facility. This process is currently ongoing and as expected we have had a lot of interest. We are through the 1st round with a number of competitive bidders in the process leaving us very comfortable with a minimum value of what we expect to realize on that transaction. Taking this into consideration, and as we mentioned we would do in May, during July we repurchased and retired approximately $105,000,000 principal amount of senior notes for a total cash spend of $80,000,000 and expect to continue reducing a portion of our outstanding debt.
To remind everyone, Gulfport does not have any maturities on our senior notes until 2023, but at the levels at which the bonds are trading recently, we are taking advantage of an attractive opportunity to retire senior debt at a meaningful discount ultimately realizing interest savings and increasing cash margins. As we evaluate the reinvestment of cash flows, we always consider all of our options, including strengthening the balance sheet and returning it to our shareholders. In balancing these objectives to maximize value and considering the current markets for our bonds, we felt it was prudent to put this capital towards repurchasing a portion of our outstanding debt. As we look towards the remainder of 2019, we will remain disciplined in our allocation of capital, both committed to maintaining a strong balance sheet and enhancing shareholder value. Our previously announced stock repurchase program remains active and is authorized to be executed over the 24 month period following the announcement in January.
As you recall, our intent was to repurchase roughly 30% of our shares outstanding, utilizing free cash flow from our 2019 program and certain non core asset monetization. As we forecast today, our plan to retire approximately 30% of our shares outstanding continues to be very achievable and within a clear line of sight. This is all being accomplished alongside our ongoing repurchase of senior notes, which as we discussed in May is utilizing expected proceeds from the sale of assets, which were not identified as a requirement of the non core assets to fund our share repurchase program. Turning to our specific core areas, we have had a solid 6 months on track with both the operational and capital budget and doing so while continuing an unwavering commitment to efficient and safe operations. In the Utica during the 1st 6 months of of 10,900 feet, an increase of 6% over 2018.
And when normalizing to an 8,000 foot lateral, we averaged a spud to rig release of just 17.9 days, down 8% over the full year 2018 results and highlighting the consistency of the drilling phase in our Utica operations. And as we've said before, shifting to taking minutes no longer days out of each activity. We are currently running 1 drilling rig in the Utica Shale and as planned in the original budget provided earlier this year, we will release this rig in the coming weeks and complete our 2019 drilling program in the Utica Shale during the Q3 of 2019. Turning to completions in the Utica Shale, we were very active in the first half of the year, turning to sales 31 gross wells with an average stimulated lateral length of 8,800 feet. This level of activity led to a strong quarter on the production front, averaging 1,050,000,000 cubic feet equivalent per day during the 2nd quarter, an increase of 6% over the Q1 of 2019.
In terms of activity, we ran an average 2.3 completion crews during the 1st 6 months of the year and completed approximately 5.7 stages per day. As a result, as of June 30, we had completed a total of 1881 stages during 2019, representing substantially all of our 2019 completion activity. We currently anticipate to turn in line additional wells throughout the remainder of 20 19. However, the large majority of the capital spending associated with these forecasted turn in lines took place during the first half of the year. In the SCOOP, we had a solid 6 months at the drill bit with an average drill days remaining consistently below 50 days for all Woodford wells released to date during 2019.
During the 1st 6 months of 2019, we spud 7 gross wells, including 6 Woodford Wet Gas wells and 1 Lower Sycamore well, utilizing roughly 1.9 operated rigs. The wells released had an average lateral length of 9,300 feet and when normalized to a 7,500 foot lateral, the wells averaged a spud to rig release of 52.1 days during the 1st 6 months of the year, a decrease of 17% when compared to our 2018 program average. When isolating the well set to just the Woodford formation, the average spud to rig release totaled 46 days during the 1st 6 months of 2019, a 27% improvement to our full year 2018 program average. These results demonstrate our focus on identifying areas of improvements, and I am proud of the Gulfport team's commitment to delivering consistent repeatable results out of this play. We currently have 1 rig running the SCOOP and plan to deliver an additional 2 to 3 gross wells during 2019.
On the completion front, during the 1st 6 months of 2019, we turned to sales 9 gross wells with an average stimulated lateral length of 7,100 feet. While running one completion crew during the first half of twenty nineteen, we averaged 3 point 6 stages per day and completed 2 80 stages in total, representing over 50% of our anticipated completion schedule for 2019. Production during the Q2 averaged 298,300,000 cubic feet equivalent per day, a 15% increase sequentially and 21% year over year as well as marking a record level of net production for this asset. In summary, we had an active start to the year and our operated activity remains on track and on budget with our previously provided 2019 program. The team has done an exceptional job highlighted through our continued strong well performance, discipline to our capital budget and the numerous operational efficiencies demonstrated across the assets.
Our performance to date has set the stage for delivering on our 2019 capital budget and solidifying our production target set for the full year. With that, I will turn the call over to Keri for her comments.
Thank you, Dave, and good morning, all. As announced in the earnings release yesterday evening, we reaffirm our full year 2019 capital budget and forecast to invest $565,000,000 to $600,000,000 across our assets, funded entirely within cash flow and bolstered by our hedged revenue stream. 2nd quarter production averaged 1,360,000,000 cubic feet of gas equivalent per day composed of 90% natural gas, 7% natural gas liquids and 3% oil. And as Dave mentioned, we continue to forecast our full year 2019 average daily production to be in the range of 1.36 to 1,400,000,000 cubic feet per day. In addition, we forecast our activity during the 1st 6 months of 2019 will lead to another heavy quarter of turn in lines.
And similar to the second quarter, we expect strong single digit production growth for the Q3 over the Q2 of 2019. On the realizations front, during the 1st 6 months of 2019, our realized natural gas price before the effect of hedges and including transportation costs sold approximately $0.54 per Mcf below the average NYMEX price. Based upon our current firm portfolio, including both Utica and Soups and utilizing current strip prices and basis marks for end markets reach, we reiterate our expectation for basis differentials to range from $0.49 to $0.66 per Mcf of NYMEX monthly settled price for natural gas during 2019. During the 1st 6 months of the year, before the effective hedges, our realized oil price came in at $2.34 off WTI. With the recent sale of our Southern Louisiana assets, we do anticipate our oil differential to average in the range of $4 to $5 off WTI for the remainder of the year.
However, on an annual basis, we expect to be within the previous provided guidance range and we reiterate our expectation to realize approximately $3,000,000 to $3.50 of WTI for oil for full year 2019. Turning to NGL, before the effect of hedges, our realized NGL price came in approximately 37% of WTI. And based upon these results and recent strip pricing, we expect pre hedge NGL pricing to average 40% to 45% of WTI for 2019. As many of our peers have mentioned, we have witnessed a challenging environment for NGL prices recently. And while the strip pricing has been volatile, we have protected a portion of the downside through our 2019 hedge position.
Gulfport has roughly 75% of its propane exposure secured at $0.69 per barrel and a base load for ethane and pentane well above current strip pricing today. Taking all of these into account, our NGL hedge position secures pricing for approximately 50% expected production for the remainder of 2019. Including the cash settlement of our hedges, during the 1st 6 months of 2019, our realized NGL price came in approximately 40% of WTI. When taking this across all our products, our hedge position provides a high degree of certainty surrounding the cash flow profile for the 2019 program and during the Q2 of 2019, realized a settlement gain of $0.19 per Mcfe or $23,300,000 Our 2019 natural gas production is fully hedged at 2.83 19 natural gas production is fully hedged at $2.83 per MMBtu and as I just mentioned, we also have a large baseload covering our NGL exposure and our expected oil production at $60 per barrel. Maintaining a strong strategic hedging program is an important element to supporting the long term development of our assets and we will continue to layer on additional hedges and basis swaps to provide line of sight to our realizations and cash flows.
For the 1st 6 months of 2019, our realized prices and hedge position resulted in adjusted oil and gas revenues of $627,000,000 which is composed of approximately 79 percent natural gas revenues and 21% liquids, including 11% oil and 10% natural gas liquids. In terms of cash operating expenses, our per unit operating expense, which includes LOE, production tax, midstream gathering and processing and G and A totaled $0.95 per Mcfe during the 1st 6 months of 2019, in line with our 2018 full year average and down 3% from the Q1 of 2019. Moving on to the balance sheet, Gulfport completed its spring borrowing base redetermination in late May and taking into account the reserves added at the drill bit since last fall as well as strip pricing at that time, Gulfport's lenders reaffirmed the company's borrowing base of $1,400,000,000 with elected commitments under the facility remaining at $1,000,000,000 In addition, Gulfport recently completed internal mid year 2019 reserve report and taking into account the reserves added since the beginning of 2019 and current strip pricing, we estimate the company's mid year 2019 proved reserve value to total approximately $2,700,000,000 which does not account for the additional inventory in our Utica Shale and SCOOP assets that remains beyond the SEC 5 year rule for proved undeveloped reserves.
I will now turn the call back over to Dave for closing remarks.
Thank you, Carrie. In closing, we continue to show consistency in our ability to execute by delivering on our targets and plans, while holding to our 2019 capital budget. With the near term environment for natural gas, I will reiterate our comments from the beginning of the year that our focus on capital discipline and cash flow generation goes beyond this calendar year and we are committed to running this business with an emphasis on returns going forward. As we look towards 2020, our message remains consistent, prioritizing margin maximization over production growth and generating free cash flow with an unwavering commitment to capital discipline. This concludes our prepared remarks.
Thank you again for joining us for our call today and we look forward to answering your questions. Operator, please open up the phone lines for questions from the participants.
Thank you. At this time, we will be conducting a question and answer session. Our first question is coming from Neal Dingmann of SunTrust Robinson Humphrey. Please go ahead.
Good morning all. My first question, David, thanks for you. Could you just talk or speak to what your ultimate targets are regarding leverage and total share repurchase, given how low your stock and bonds continue to trade and really how these targets might impact next year's planned activity?
Yes. So I think that's a very fair question. I'm actually not sure what next year's gas price is going to be. And as we've talked about since the beginning of this year, it's really going to take us until probably the end of Q3 to get a good sense where gas prices are. So that's kind of how we look forward.
In terms of specific targets, in terms of share price, I think that's a very difficult thing to know. We have an active share repurchase program ongoing as I look at it. We set out at the beginning of the year to buy back 30% of our outstanding shares. We have, as I mentioned in my prepared remarks, a clear line of sight to be able to do that at around $150,000,000 So, I feel very good about that. As we also said in the remarks, we recognized we're starting really about in May where industry was starting to be impacted on the debt side and we were no different there.
We said when we announced our water asset sale, we take a portion of those proceeds. We're now much more comfortable as to where the likely outcome price for that is, very happy with that And we've taken a larger chunk of that and have been in the market and made some very good returns on purchasing some debt. That is also an and one now addressing the debt side of our business. So, I think we have 2 programs, one associated with enhancing shareholder returns and one now addressing the debt side of our business. So I think that's a comfortable place for us to be.
And as the market moves, then we'll react accordingly.
Okay. And then maybe tying into this, one last question for you. Could you speak to the non core asset sales besides the water you described? And what I'm the next year or 2 given the 1 to 2 rigs right now planned for the play and then how much of that would you consider selling?
Yes, I don't have any plans for selling any Utica acreage. I mean the normal way we run our business is if there's acreage that adds to the units that we're going to drill in the development plan we have, we'll do that. If there's pieces of land, small pieces of land that are not part of that, we'll look at those. But overall, I'd say we're in pretty good shape as far as that goes. In terms of non core asset sales, very happy to announce the Louisiana and the Thailand.
We still have a number of things as we scrub through our business that we're working. And so as we go through the remainder of this year and into the beginning of next year, hopefully we'll have some things that we can talk about and talk about the types of proceeds that we have. So constantly looking at the business, constantly scrubbing through it and things that aren't related directly to our 2 core areas and those assets are available for us to move out and bring that capital back into our business. So that's the overall game plan.
Very good. Thanks for
all the details.
Yes. Appreciate it.
Thank you. Our next question is coming from Ron Mills of Johnson Rice. Please go ahead.
Good morning, David. Maybe just one quick follow-up on Neil's question. In terms of you think about allocation of debt repurchases versus stock repurchases, how do you weigh the costs and benefits between those 2? Should we think about just free cash flow for equity or and sales proceeds for debt or is it more fungible in your mind and how do you make decide between the 2?
Yes. So, I think having both is great from our perspective. We do have a number of things as I mentioned in the prior question and answer to be able to bring to the table in terms of capital for us to be able to move to 1 or the other. I would reiterate my comment about this 30% share repurchase. I think making returns to our shareholders is very important to us.
And like I said, I have clear line of sight to accomplish what we set out to do at the beginning of the year. And as we look into next year, the big question is where will prices be set for us in terms of our hedge levels and from that be able to determine what we're going to use it for. Been very pleased with our ability to go to the market and repurchase face value debt at a discount with a very attractive return. As I mentioned that program is active. We'll still keep doing that as we go forward.
So really it's a balance there as you would expect to be responsive to conditions that change.
Great. And then one question just in terms of CapEx and production. You clearly spent a lot of money in the first half of the year with production coming on in the second. When we look at the remaining wells for the year in your areas, are they more weighted to the Q3 versus the Q4 and we think about CapEx versus production growth in terms of tenure in Q3 versus Q4, just a little bit more color on how the rest of the year looks? Thank you.
Yes, the rest
of the year looks good for us. Clearly, the capital spend predominantly done so far. We still have a large number of turn in lines to take place. So that'll be the driver of our production growth going forward. Very nice single digit quarter on quarter announced.
Expect that to keep going here. The one thing that we've highlighted this time is our non operated piece. Very pleased with how we conduct our operated business, quite disappointed with what has happened in our non operated year on year here. In prior years, we've been able to readdress those outspends. We'll do the same again this year for the non operated.
I'm very happy to say that the operator of the non operator has recognized that they need to change and has actually changed their complete management now and is dedicated to improving their operating capability. So I'm really pleased about that. And so I think the solution for us this year, we won't be talking about that as a solution next year, But that's really the non operated piece and the impact on that.
Mr. Mills, do you have additional questions?
No, I'm sorry. Thank you.
Thanks, Ron.
Our next question is coming from Jane Grogsengel of Stifel. Please go ahead.
Good morning. I have a question regarding SCOOP gas marketing. I just wanted to confirm that once Mitsub project is online that all SCOOP gas is going to be shipped to the Perryville hub?
Yes, Jane, this is Paul. Generically speaking, yes, gas is moving in that direction. Specifically, where that lands, we will have exposure in that Louisiana market and beyond down into Southeast. The marketing team has done a great job of pathing us beyond that period of point.
Okay, got it. And then the second question is on 2020 program. I just wanted to confirm that 2020 program is going to be similar to 2019 program in terms of CapEx spend and production growth, which is 0% to 3% year over year for 2019?
Yes. So it's a little early for me to get too focused on 2020 because I'm not sure where gas prices are going to be. I think if you look backwards the last 10 years, you've seen gas curve generally in backwardation stepping down on 3 year cycles $5 to $4 to $3 In between those times, there's been very short gaps where it's fallen to something $250,000,000 a little less. We're in one of those small gaps that generally lasts 6 to 9 months. So my belief is that next year the range will be somewhere in the 260 to 290.
And as we've seen this week from Permian operators that we're providing a lot of the excess gas, I think about a B. And a half Now having to look at their well spacing and their production, I feel much more comfortable that the 260, 290 range that I have in my head is probably what next year is going to look like. And so if it's that way and we can get to the end of this Q3 and look into 2020 and hedge within that range, then you could say that if you could get gas prices very similar to where we're hedged today, then we should look very similar. But it's all dependent upon what the gas price is going to be. And I don't think we're smart enough yet to actually pick where it's going to be within that $2.60 to $2.90 range.
So that's kind of how my view is of next year.
Got it. And if I could ask the last question. If you could remind us how much of your Utica and SCOOP acreage is held by production?
Yes. Jane, this is Donnie. About 65 plus or minus percent of the Utica's held by production and over 85%, 86% of SCOOP.
So where I'm getting at is actually land CapEx next year, if you have any thoughts how it can shake out?
Yes. If you look
at the last few years, we've spent a lot of land up in the Northeast on renewals. So that's kind of occurred this year. Our land dropped significantly from last year down in the $40,000,000 range. So you'll see that continue to drop over the next few years as we've renewed all those leases and most of them are 5 year term. So we've got plenty of time.
Got it. Thanks so
much. Thank you.
Thank you. Our next question is coming from Jason Wangler of Imperial Capital. Please go ahead.
Good morning. Maybe dovetailing on the program for next year and understanding gas prices are going to play into it, but the last couple of years obviously been a bit front end loaded. Do you see a more balanced program as
you look at next year?
I know weather kind of impacts the beginning of the year, but how do you think as you kind of think the go forward, the CapEx spend would look on a quarter to quarter basis in 2020?
Yes, Jason, I think that's a great question. If I had my brothers, I'd love to have a capital program that was a lot more evenly paced through the year because I think that would help us drive operational efficiency even more keeping rigs and completion crews active through the year. Having said that, I think we are heavily weighted as are many, many, many of our peers to the front end. And so I think if we look over time, we will get better balanced. But it's an incremental gain not an absolute step change gain would be the way I would look at it.
Okay. That's helpful. And then on the bond repurchases, can you I know it's an active program, but can you just talk about kind of your thoughts on which ones you target? Is it the nearest maturity? Is it the one with the biggest discount?
Or what's available? Or just kind of how you guys think about that as you go into the market?
Yes, Jason, that's a great question. We touched them all, and we were really focused on maximizing the returns that we got. So that was really kind of the over arch on it, but we did touch them all.
Okay. I appreciate the color. Thank you.
Yes. Thank you.
Thank you. Our next question is coming from Jeffrey Campbell of Tuohy Brothers. Please go ahead.
Good morning.
Good morning.
I was looking at Slide 7 and you mentioned the your unhappiness with your non op partner who I think we all know who that is. And so referring to that non op overspend, are the trades or the non op sales referred to on the slide, are they required to stay within your overall spending guidance of $565,000,000 to $600,000,000
Yes. We've had this exact same issue in years past. So it's nothing new. And we have a solution that allows us to get back aligned with where we are, which is why we said that we're comfortable with our budget. And so this isn't a one occurrence sort of thing is the way I would kind of target you.
And it is one person, it is one operator. And as I say, I think their commitment to being better at solving this sort of thing is comforting to me. So I just think the solution will be this 1 year thing. But we've done it before in past years do exactly the same again.
So just to ask the question again, the whatever you're going to sell to compensate for this overspend, you feel good about it and that's contained in the guidance, the $565,000,000 to $600,000,000 staying within guidance?
Yes, yes, that is absolutely correct.
Okay, perfect. I appreciate it. And my other question was, I just wondered right now, do you intend to hold on to the ORRI that you got in South Louisiana or could that eventually be another asset for sale at the right price?
That's very insightful. We just look at those like we look at a whole bunch of other stuff, but it was nice value part of that deal. So I think that's very insightful, Joe.
Okay, great. Thank you, David.
Thank you.
Thank you. Our next question is coming from Kashy Harrison of Simmons Piper Jaffray. Please go ahead.
Good morning and thank you for taking my question. So I was just wondering if you could if you all could share some color on what you're seeing on the A and D front in the scuba. A peer of yours just recently announced the bolt on acquisition. I was just trying to get a sense of just some color on what you're seeing in the base and bid ask spreads, whether they're narrowing, just any color would be great.
Yes. Kashy, it's kind of an interesting time in our business. I think if you were to look on the private side, And so I'd say there still is some stress around doing deals from those kind of folks. And so I haven't really seen that change yet. And maybe we need to go a little bit longer into this low cycle before that happens.
I'm not sure. I think as we've seen from announced public public deals, I think the market has been quite I'll call it fickle or very particular about what it's expecting to see. And that probably explains why we're at a 10 year low or a 20 year low on M and A. I think as it's particular to the mid con here, we're in a pretty good shape where we are. Donnie and his team are doing a great job on our land footprint.
And so we have lots of running room there. So there's really no pressure that I feel that we need to go and do anything at all for our business, certainly not in this cycle. So M and A is always looked at in the shop, but I haven't seen anything that gets me overly excited to say, hey, that's something I need to do.
Got it. That's it for me. Thank you.
Thank you.
Thank you. This brings me to the end of our question and answer session. I would like to turn the floor back over to Mr. Wood for closing comments.
Thank you, operator. We appreciate your time and interest today. Should you have any questions, please do not hesitate to reach out to our Investor Relations team. This concludes our call and thank you all for dialing in.
Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines at this time and have a wonderful day.