Investor Update

Dec 11, 2019

Good morning, and welcome to the TELUS Energy Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Sergio Maiwan, Vice President of Finance, Investor Relations and Treasurer. Please go ahead. Thank you, operator. Good morning, everyone, and thank you all for joining our call today. With me today to discuss the transactions are Tim Duncan, President and Chief Executive Officer and Shen Young, Executive Vice President and Chief Financial Officer. But before we get started, I'd like to remind you that a slide deck summarizing the highlights of this transaction has been posted to the Investor Relations section of Talos' website. So I'd encourage you to review as you listen to our call. I'd also like to take this opportunity to remind you that our remarks today will include forward looking statements. Actual results may differ materially from those contemplated by these forward looking statements. Factors that could cause these results to differ materially are set forth in last night's press release on Form 10 Q for the quarter ended September 30 filed with the SEC on November 6 and on Form 10 ks for the year ended 2018 filed with the SEC on March 13, 2019. Any forward looking statements that we make on this call are based on assumptions as of today, we undertake no obligations to update these statements as a result of new or future events. During this call, we may present both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP measures was included in last night's press release, which was also filed with the SEC and which is also available on our website at talusenergy.com. And now, I'd like to turn the call over to Tim. Thanks, Sergio. Welcome to the call, everybody. As Sergio, Shane and I are excited to walk you through this transaction. So let's get right into it. There's a lot to like here. Our team has been very patient yet opportunistic in trying to make sure we have the right assets inside the right deal structure to an already very healthy company. In this transaction, we're buying a high margin oil weighted cash flowing assets at an attractive purchase price. It's very accretive to our shareholders. So let's jump right into the deck. I'm going to move to Page 3. So what you can see here, we're buying 19,000 barrels equivalent a day in the Q3, very liquid weighted, about 68,000,000 barrels equivalent of 2P reserves. On a 1P basis, 83% proved developed. And then a tremendous amount of cash flow. We estimate about 150,000,000 dollars after CapEx for 2019. And what I'm going to talk about in this deck is that's going to provide us a lot of optionality when we put it together with the broader business from a capital allocation perspective. Part of that optionality is going to come from the 40 plus prospects we also are getting with this transaction in multiple play types across the Gulf of Mexico across a large acreage set and 700,000 gross acres. Moving to Page 4, I would say our team has never been afraid of complicated deals. And what you see here is we effectively entered into 6 different transactions yesterday across multiple entities that brings in again those both producing assets and also exploration assets. If you look at the slide on Page 4 from left to right, you'll also notice that it's a pretty good amount of diversity in these assets. We don't own any of these interests right now, which is I think good for us to diversify our asset base. Hopefully, we can own maybe a little more of some of these in the future. It's important for us to diversify. Also, if you look at this table, you can see that a couple of these assets you might be familiar with, we've been looking at these for a long time and we think they're great assets. I would call out Oddjob and Nearly Headless Nick, both of those have new wells coming online in the next 30 to 60 days. On the map on the right, this all fits in. You look at the acreage and it fits in well with our core areas. We're even going to expand our Green Canyon core area a little bit in the Walker Ridge around the Shenandoah development. And then you can also see in the graphs calling out the level of proved developed that we're getting in this transaction. Moving to Page 5 is a transaction overview. So we're paying $640,000,000 at the effective date of July 1, 2019. And I think when you look at a page earlier and you look at the free cash flow and you take that July 1 and move that forward to when we could close this in the Q1, we would expect a pretty material adjustment in closing costs on the amount of cash we need to pay into this deal. We'll also issue 250,000,000 new shares of Talos Equity and then we'll use cash from our current sources of liquidity and Shane is going to get into that in just a minute. After the deal, we expect to have $600,000,000 of pro form a liquidity based on an uplift in our borrowing base. And again, we're issuing $11,000,000 of incremental shares. But I think most importantly, when you look at the bottom of this page, this transaction is accretive on all the metrics. And all of these are important to us. Certainly, the cash flow per share is very important and the ability to really kind of push, I think, the NAV story for the business is also pretty important as well. So I'm going to move to Page 6. And essentially, the strategic rationale focuses on 4 key points here. First, I think it's great to have this business scale up a little bit. I think that's important. I think the basin needs more consolidation and we're happy to participate in that and it's good to see the scale that we're going to get out of this transaction. But also in these next two points, we were looking for more free cash flow availability. We have that in the base business. It's good to see that continue to improve. That we think gives us optionality in this transaction in large part because we have such a good infrastructure of seismic. We have a good team in place. We have the right G and A infrastructure and we get to just put those assets into that infrastructure. And I can be very selective in how we think about allocating capital from this point forward that allows us to grow NAV in potentially a more valuable way. And then the final point we're making on Page 6 is we absolutely like the diversity. I think any business benefits from diversity and certainly we're getting that here. So we're going to move to Page 7. No, I think this is an interesting page. And what we're trying to do here is just think about some of the criteria we've heard that E and P investors are interested in. And so we tried to put that on a page. And what you can see here, if we walk it down, we talked about in terms of scale, what are the companies that have over $1,000,000,000 in market cap, there's 24 of those. What companies were over 50% oily, oil weighted in the 3rd quarter, and you can see then there's 16 of those. How many expect to have positive free cash flow in 2020 and positive yield, you can see that. Good leverage statistics and then some growth. And when you narrow that down, obviously, you've got a great group of companies in 6 companies. Now, I'm not going to suggest this is our peer group per se. These companies are bigger. They're certainly wonderful companies. What I would say is we screen this out before this transaction. And certainly after this transaction, I think it enhances our narrative around the screening. Yet I don't know if that value is fully reflected in the stock. And so we hope that this transaction, I think, brings more people to listening to our story and getting into our story and seeing the value proposition we think we add. So we're going to move to Page 8. And pretty self explanatory, this page is really dedicated on thinking about the pro form a business. In the Q3, we were 53,000 barrel equivalent a day business. There was a little downtime in that. When we put these assets on top of that in the same Q3, that moves us to 72,000 barrels equivalent a day. When you put the midyear reserves and these reserves together, 2P reserves around 260,000,000 barrels equivalent, 1P reserves at around 185,000,000 and again highly proved developed, which is something we like. I think, again, what we think is very interesting about this and not only de risk the returns on this transaction, but bolsters the broader business is the acreage set that comes along with this transaction, the prospects that come along with this transaction and then how we put those together and the prospects that come along with this transaction and then how we put those together in future capital allocation processes. And I do think we work very hard to try to pull together the right pieces and the right entities and the right assets into one deal. It can be announced at the same time. We're very proud we're able to do that and roll out that pro form a picture that we're rolling out on this slide. I think it also positions us to continue to look at other deals and other M and A opportunities and focus on trying to be a base consolidator. So moving to Page 9, and obviously this is a pretty interesting page and appraise that we can get pretty excited about. If you just look at the Q3, we had about 7% free cash flow yield. If you look at these assets, that moves us to 15%. And in part because a lot of things that we have in our business that we have to focus on, obviously, we have some P and A in the broader business. We're investing in Mexico that we're always very excited about. That's a generational type discovery. But some of those things aren't in these assets. These assets are high cash flowing. There's some great reinvestment opportunity in these assets. But some of the base business, G and G infrastructure that are in our base business aren't here. So when we put that together, you get an even cleaner look at our free cash flow yield. And I think that puts us in kind of the top 20% of some of the XOP listed companies. And then what it provides is the flexibility that we talk about on the bottom left on Page 9, the pursuit of other high impact projects. We can also think about debt reduction, liquidity improvement, strategic M and A. And then obviously, we certainly have more than ample liquidity to move forward on what were some of the plans that we're making with respect to Mexico. Page 10, I also think again, it's an interesting page. It's hard when you're out there in the M and A space and trying to find the right assets that can really move the needle, but yet not dilute some of the things that are important to you. And so we're very proud of our margin. I think we've had 70% and above type of quarterly adjusted EBITDA margins in the business if you participated in our quarterly calls. We don't want to lose that. We're proud of that. And what we're doing here is we're increasing the size of the business on a production basis by, I think, about 30%, 35%, and yet really keeping that net back per barrel BOE margin right around the same, maybe just a little less. But I would tell you over time, because of the way these assets roll in, because of the G and A and the kind of seismic infrastructure we have, we think this will actually drive down particularly the G and A cost per unit. So we're excited about that as well. So I think we're good. Let's move to page 11. Again, another part of this deal that I'm pretty excited about. What we're showing on the map is our seismic infrastructure and that's in the light shade there. And then you can see this is specifically the assets that we're buying in this transaction. So this does not overlay our assets that was on the slide earlier. This is specifically the assets we're buying. Now what we're calling out are several of our facilities, Ram Powell, Pompano, Amberjack, Green Canyon 18 and the Phoenix HP-one and you can see some acreage around those facilities. And then we're calling out some of the bellwether facilities, particularly Delta House in the Mississippi Canyon area. We're also going to call out future facilities that are around some of the acreage that we picked up in Khaleesi, Mooremont and Shenandoah. Now I want to be perfectly clear. We're not buying into the Khaleesi, Mooremont and Shenandoah discoveries. Those are great discoveries with great operators. What we are picking up is exploration acreage around those developments and those discoveries, which again creates that optionality that we've been talking about from a capital allocation standpoint. On the left, just to kind of reiterate this, 40 prospects. One of those is a discovery that was made around the Shenandoah area, in the Coronado discovery, those have no initial estimates. You can see specifically the 480,000 primary term acreages we're picking up. And then again, I mentioned some of the facilities that are in play here. I'd be remiss to say, we're getting to spend a little more time with some great partners that we already have, and then we're going to pick up some new partners that we look forward to spending some time with as well. I think that also can enhance future business development opportunities. So I'm going to hand it over to Shane to hit the next couple of slides on the capitalization and key metrics. That's great. Thank you, Tim. And thanks everybody for joining us on short notice this morning for the call. Look, Tim talked a lot about the assets and the strategic merits of the deal. I think equally important are the financial implications and considerations. I'll spend a few minutes just talking about that. If you turn to Page 12 in the presentation, financing and pro form a capitalization, I'd go through a few points. As Tim mentioned, in order to maintain a strong credit posture pro form a for the transaction, we're funding this transaction with a combination of Talos shares as well as existing liquidity from cash on hand and revolving credit facility. I'd remind everybody at the end of the 3rd quarter, we had $90,000,000 or a little over $90,000,000 of cash on the balance sheet. We had $315,000,000 drawn on our $850,000,000 RBL. And I'll talk a little bit more about the RBL impact here in one moment. On the equity front, this deal will be issuing 11,000,000 tallow shares to sellers at closing on the deal. I'd like to focus just for a second on our bank group. They've been tremendously supportive of Talos for quite some time. And as part of our regularly scheduled fall redetermination, our borrowing base was increased from $850,000,000 to $950,000,000 In addition, we added 2 new banks to the group. That's a 12% increase, which is a bit of an anomaly in this marketplace today. So we can't be thankful enough to our bank group for what they've done. Focusing on this transaction, we brought them in and had them evaluate this transaction and sort of reevaluate the borrowing base and we'll be increasing the borrowing base by an additional $200,000,000 at closing. So the fully committed borrowing base at closing will be $1,150,000,000 inclusive of those new banks that I mentioned coming into the facility. So at closing, the anticipation is we'll be roughly 50% drawn on the RBL after closing adjustments are taken into account. And we should have approximately $600,000,000 of liquidity after the closing of the deal in the Q1 of 2020. As we thought about the mix of consideration for this transaction, maintaining our position among the best credit profiles in the sector was essential to the entire team. To that end, we expect the transaction to roughly leverage neutral at 1.2xpro form a net debt to EBITDA at closing, which we believe gives us a continued advantage in the current market environment. Now I'll move to Slide 13, valuation and transaction metrics. This transaction is accretive to Tallo shareholders on all key metrics. We think the valuation is compelling on both an absolute and relative basis and strongly additive to Talos' expected free cash flow yield going forward. The purchase price equates to an enterprise value to EBITDA multiple of 3 times 2019 estimated EBITDA and perhaps more compelling, a little over 4 times enterprise value to expected 2019 free cash flow from the acquired assets. Moreover, the transaction is a daily production multiple of approximately $33,700 per flowing BOE daily production and a 2P reserve multiple of less than $9.50 per BOE. As we compare this to the major comparable transactions over the past 12 to 18 months, we think these statistics are very favorable. So with that, I'll turn the call back over to Tim for a few remarks. All right. Thanks, Shane. So we're going to go to page 14 and wrap this up and look at actually a pretty nice image of our Ram Powell asset. In summary, we're extremely happy with the combination of the transactions. It brings Talos added scale, more free cash flow, greater diversity and major growth potential. The transaction is being executed at a compelling evaluation. It's accretive to our shareholders with a funding structure that preserves our strong balance sheet and liquidity. We believe the pro form a company will be even better positioned to maximize the value going forward with greater optionality. And finally, I also think the combination of the financial framework, the strategic positioning and the growth potential make Talos a highly compelling investment case and the company investors can get behind. As I close this, I just want to thank our team here at Talus who bought into our vision and our strategy and they worked tirelessly on its execution And we're not going to be here without them. And I also want to thank for the be thankful for the support of our outside advisors and our lenders and obviously tremendous support from our Board. So with that, I'll turn the call back over to the operator and open the line for questions. We will now begin the question and answer session. The first question comes from Jeff Grampp of Northland Capital Management. Please go ahead. Good morning, guys, and congrats on the transactions. Jeff, congratulations for getting up on the West Coast this early. Well, you guys keep us busy. Wanted to first, I guess, get a better handle to the extent we can here, given it's early days here, but kind of near term growth opportunities. And you touched on a couple. It sounds like projects coming on here in the near term. But can you maybe expand on that or I guess to the extent you can help us get a better handle on the production profile as we look into 2020? And what kind of capital call do you think comes with these assets as we look into next year? Right. Yes. And look, that's a good question. I mean, one of the reasons we didn't jump in and guide this day 1 today is because look, we're 6 to 8 weeks away from guiding the broader business and we will guide it on a pro form a basis, when we get into the new Look, these are the same mature Miocene reservoirs that we have in our base business. And so when you model our base business and you think about that base business decline, we have that base business decline here. I think in our last quarterly call, somebody had asked a question, I'd have to pull the transcript on, hey, what's the kind of capital to keep this thing flat? And I think we talked about maybe 2 thirds of EBITDA or something of that nature. Here that changes because when you think about the base business, Jeff, our base business has some P and A investment. It's got G and G and kind of land investment where you're trying to pick up prospects. We're getting that here. We have investment in Mexico and all that is in the kind of pie chart of capital allocation in our base business. In this business, a good chunk of that's removed. These assets are clean. There's no near term P and A liabilities and there are near term catalysts. And so you have Headless Nick, which is near term catalyst. You have ODDO3, which is the near term catalyst. And there's going to be some other projects we roll out when we roll out the broader kind of combined business profile over the beginning of the year when we do the guidance. So I think as you think about this, the maintenance capital is lower to keep this flat, which means when we pull those cash flows in, we can put it into our combined business and have more optionality on that drilling part and kind of ramp that up a little bit. And that's what we're excited about. So normal declines if you do nothing, normalizing stuff, Jeff, just like all the modeling you guys are used to. A couple of new catalysts coming in quickly on these assets, Headless Nick and Oddjob 3, nearly Headless Nick and Oddjob 3, but then a press flow of prospects that we can pull into ours and then really shape what we want to do in 2020 2021 and less of some of the other things that we have to do in the broad business just to run the broad business. And I think that's what keeps this I think keeps this thing clean. We've never tried to grow a business at double digits growth rate. What we're trying to do is grow a business kind of at a nominal growth rate, but have better optionality. And I think this allows for all that to happen. Great. Really helpful comments and appreciate that. And for my follow-up, you kind of touched on it, the exploration portfolio that you guys are acquiring here. Can you just maybe touch on kind of the profile of those opportunities? I understand they're not all homogeneous, but these can be skewed towards more lower risk kind of tiebacks and some greenfield opportunities and talk about just kind of in general how these compete with kind of the legacy portfolio? Yes, right. Well, look, I mean, it is absolutely similar stuff to what we're used to doing. I mean, a lot of there's also some shallow water and some deep water. The shallow water stuff is stuff that's right down the middle of our fairway. Some of these assets we're very familiar with. On the deep water side, it's some of the same Miocene plays, some are above salt, some are sub salt. It does put us into some Wilcox opportunities, which we think are interesting, but in a little bit of a derisked way because we're following we're piggybacking some great developments that are ongoing such as Shenandoah. So we actually are doing a lot of the very same things you're used to us doing, tying back the facilities, subsea tiebacks, but we're also exposing ourselves to potentially some other high impact plays without having to show up at the lease sales and compete for those plays. So I think that's what's interesting. A lot of it is exactly what you would expect us to do with a little bit of exposure to some really exciting upside. I think that's the type of look, Jeff, it's a bit of a make or miss business, right? And you're trying to find the right shots and give yourself the right exposure and manage risk the right way. We're always going to do some blocking and tackling around our assets. We think that's our first capital that kind of keeps the business flat and then maybe slightly grows the business. But it's what do you do with that additional capital and what are you exposing yourself to that really gives you the benefit that this basin has to offer. A lot of that is right here in this acreage set. And I think that's what makes us so exciting. All right. Good stuff. Appreciate the time, guys. All right. Thanks for waking up, man. The next question comes from John White of ROTH Capital. Please go ahead. Good morning and congratulations, guys. All right, John. Thank you. Did you mention at closing it will be 50% drawn on the redetermined bank facility? Right. That's right. Okay. And very briefly, can you give us some background and ownership on the sellers? Yes. Shane, I think you have that. Yes. I got it. So look, I mean the owner of ILX and CASTex was primarily Riverstone. So I think it might be a little outside of that. I would say, as we think about the ownership going forward today, our sponsors own roughly 64% of the shares outstanding on a pro form a basis that may go up to about 69%, something just under 70%. So it won't change the mix all that much. Okay. I appreciate it. Thank you. All right. Thanks, The next question comes from Ray Deacon of Petrolotus. Please go ahead. Yes. Hey, good morning, Tim. Congrats on doing a deal that was creative enough to allow you to use equity in this market. Yes. Appreciate it. Thanks. Yes. And I was curious if you could detail on kind of revised inventory numbers was very helpful. But I guess, is there kind of a year's inventory comparison or sort of return on inventory that you'd sort of expect? I'm just trying to get a sense of kind of quality. Right. That's a fair question, Ray. I would say a couple of things here. One, look, we will absolutely get through the year and pull everyone together and take a deeper dive into this stuff. So do know that's coming. But what I would tell you is when you look at this if you look at the size of our business, and we're certainly very happy with our own inventory, let's be perfectly clear about that. But when you look at just the scale of our business and the inventory related to that business, and you look at the scale of this business and the inventory related just to this business, I would say it's disproportionately weighted here because of the creativity of this deal and the amount of acreage we pulled in. And so that only becomes accretive just on that metric, which I don't even think we listed, exploration accretion. I don't think there's a metric for that. And so we focus just on that. I would say that might have the biggest check. And that's interesting because again, Ray, what I kind of just said, that's the business worth, right? I mean, one thing about offshore is you introduce yourself at times to what I call that right side of the log normal distribution. You have a chance here from time to time to take the right shot and you end up with a Zama as we did in Mexico. You got to be smart about those shots. They don't weight up our capital program. Maybe they're 10%, 15% of our capital program. By pulling these assets in, in the way we pulled them in, that 10% to 15%, we think gets potentially much smarter. And I think that really is an enhancer for shareholders and a key part of this deal. And look, we're going to dig into more of that and what that looks like once we get through the year and kind of pull all this forward and think about it in Analyst Day. Okay, got it. Thanks very much. Okay. All right. Appreciate it. Thank you. The next question comes from David Heikkinen of Heikkinen Energy Advisors. Please go ahead. Good morning, guys, and thanks for taking the question. Thinking through the Yes. Look, that's a good Yes. Look, that's a good question. I'll give you kind of my thoughts, Shane. Jump in here too. Keep in mind that as Shane talked about, this private equity sponsorship ownership goes from 63% to 69%, right? And so what it is now, all those shares are fully registered, David. We filed the S-three, those are registered shares. They have flexibility on kind of how to think about what to do with those shares. And so you don't have a new different shareholder here. And so I think you really that is not again, in my view, I wouldn't really even focus on that. It's the same 2 shareholders. We've been blessed with their support. We're lucky for their support. They've been great shareholders and continue to be great shareholders. And the mix between those two changes a little bit, but that relationship really doesn't change a little bit. There are again, the vast majority of their shares are already registered to the extent they find the right time to put those in the market. Is that So, Vinari was primarily cash. That was cash. That's fair point, David. Yes, that was cash, Right. In the mix of considerations of the $640,000,000 that particular mix was cash. Okay. That makes sense. So it really doesn't change their intent in Riverstone's commitment. Okay. Yes. On the use of free cash flow, one of the thoughts and questions is like how do you reduce leverage? I mean, you're still 1.2 times, so you're not overlevered. You stay kind of equally balanced. But how do you think about what you do as your cash flow now? Yes. Look, and I think Shane, I want to get your thoughts here. I would say just on a previous question around being percent drawn, we were exactly 50% drawn when we closed the Stone transaction. And guys, correct me if I'm wrong about that, but I think kind of right at 50% drawn. And I would tell you, if you fast forward at 18 months, 19 months and you said, would you rather be kind of 50% drawn, but with $600,000,000 of liquidity, I think then you might have had $350,000,000 of liquidity in a bigger business and more prospects. I would tell you we're in a hell of a lot better place today. But I think we've got all sorts of optionality on kind of use of proceeds of that free cash flow. Yes, there is. You touched on a lot in this presentation, whether it's in the business, in the balance sheet or other presentation, whether it's in the business, in the balance sheet or otherwise. So it's important. I think near term, certainly a focus to take that 50% down to something south of that is going to be a focus and I think a little bit broader picture. I think as we think about the overall refinancing of the second lien notes, I think that'll be an important component or ingredient to how we ultimately use the cash flow longer term. I think that's something we got to sort of deal with in the front end of that. Okay. And then in the $24,000,000 of cash expenses, are there any key people that are coming over or G and A cuts that would be in that? Or is it just really the straight operating costs on the acquired property? Yes. I think you just hit it, David. There really isn't there might be a couple of team members we need to add here, but really it's not significant enough to mention. It might be tightening up, again adding a couple of folks that are familiar with the assets. But really we have the infrastructure in place. We have a team in place. We have the seismic in place. And I just think that's really a neat benefit of again, a maturing Gulf of Mexico business, which is what we are. And so, I think what we're focused on is just normal operating run rates. I think you're going to see I don't think we want to pre market many synergies here because these are good margining assets. But I do think on the G and A side, and I would tell you that we run around $3 a BOE and we operate pre transaction over 90% of our stuff. That's a pretty good little run rate for an oil weighted company. I would tell you post transaction, I would expect that particular flowing metric to come down, which again is a benefit of the transaction. Okay. And then on Q3 volumes, you all had like 4,000 offline. Was there anything offline on the acquired properties that's coming back or is that pretty much a run rate production? Yes. I think that's a pretty good run rate. They had a little less impact than we did. I think everybody's impact was a little bit different. And so they had a little less than we did. So I think they had for those assets, it's a better run rate than say for our assets that had a little more impact. All right. And then just crude quality on the acquisition, any deducts or they treated LOS? Yes. No, I think similar to ours. I mean, they trade similar to HLS and LLS and a lot of those assets in Mississippi Canyon are good stuff. And again, a lot of the shallow water stuff, good stuff. So not too dissimilar to what we do. Okay. That's helpful. Thanks, everybody. All right. Thanks for joining. The next question comes from Arvind Sanger of Geosphere Capital. Please go ahead. Thank you. Congratulations Tim on a great acquisition. Thank you. Question about what kind of competition are you seeing to get such a great deal? Does that suggest that this still remains a buyer's market with not enough competition to have to be able to get such a great deal? No. Look, that's a great question. I don't know if it's I mean, it's an interesting question. I don't know if it's really a competition issue as much as it's a sourcing capital issue. And I mean, look at the challenge right now to source capital, this is a greater than $500,000,000 deal. And look, I would tell you in the history of Talos, we've done now 3 deals greater than $600,000,000 We're proud of that. We're proud of our execution in that. But I think when you get over a certain hurdle, you've got to pull in different multiple sources of capital and you can see we've used some equity here. We're using a healthy bank group. We are not accessing the high yield market here. That's something we can think about if that market opens up in the future. But I just think you get a deal done, you both have competition and then that competition has to go rely on a market. Those markets I think it's the latter. Those markets have been difficult and we've done, I think, a very good job trying to position our key stakeholders to want to be involved in the things that we are working on. And then we're lucky for their support and we're happy for their support and we use that support in the marketplace. And so but I don't think we ever underestimate every deal is hard and every deal requires a lot of creativity and a lot of effort and we're just glad we got this one done. Great. Thank you. All right. Thanks for the question. This concludes our question and answer session. I would like to turn the conference back over to Tim Duncan, President and Chief Executive Officer, for any closing remarks. Thank you everyone for joining. We know that was short notice and we know some of you had to wake up pretty early on the West Coast. And so again, we appreciate you joining. We're grateful for your interest in our company. It's our job to go execute, which we intend to do. And we look forward to talking to you guys after the New Year and rolling out guidance. So again, thanks for joining and that will conclude my remarks. This conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.