Earnings Call: Q3 2019

Nov 7, 2019

Good day, everyone, and welcome to the Talos Energy Third Quarter 2019 Earnings Conference Call. All participants will be in a listen only mode. Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Sergio Maiworm, Vice President of Finance and Investor Relations and Treasurer. Please go ahead with the conference. Thank you, operator. Good morning, everyone, and welcome to our Q3 2019 earnings conference call. Joining me today to discuss our results are Tim Duncan, President and Chief Executive Officer and Shane Young, Executive Vice President and Chief Financial Officer. Before we get started, I'd 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 yesterday's press release on Form 10 Q for the quarter ended September 30, 2019 filed with the SEC yesterday 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, and we undertake no obligation to update these statements as a result of new information 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 yesterday's press release, which was 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, and thank you, everyone, for joining our call. It is a pleasure to discuss our Q3, which is highlighted by another positive earnings quarter, bolstered by solid free cash flow generation and numerous positive milestones related to our capital program with more discoveries leading to developments than we had originally anticipated, which we'll discuss in more detail. During the quarter, Talos continued to generate solid financial results with strong production rates and high margins, driven mainly by premium price realization and our conscious cost management efforts. Despite the production impacts associated with Hurricane Barry, we generated substantial free cash flow while continuing to invest in several of our key projects for the year, namely Bulleit and Orloff in the deepwater U. S. Gulf and the Zama appraisal in Block 7 and Block 31 in offshore Mexico. On the business development front, we executed agreements with both BP and ExxonMobil respectively related to exciting exploration opportunities. Finally, on the balance sheet front, we've substantially increased our liquidity with borrowing base commitment increase in the Q3. Our leverage metrics continue to improve with net debt to last 12 month EBITDA at 1.1 times. So let's turn to the quarter highlights. Production was 52,600 barrels equivalent per day, which is 73% oil and 80% total liquids and generated revenue of approximately $229,000,000 As we stated in our last earnings call, we knew Hurricane Barry would impact the 3rd quarter, forcing us to shut in approximately 85% of our production for about a week in July and causing approximately 4,000 barrels equivalent per day of production deferment in the quarter. Our current and third quarter ex in production rates are back to the normalized 56,000 to 57,000 barrels equivalent a day. WTI prices in the period averaged $56.45 a barrel, but our realized price was $59.54 a barrel after deductions. So a net of over $3 premium to WTI, which represents one of the benefits of our asset base because the quality of our oil and our access to infrastructure, which leads to premium pricing. Adjusted EBITDA for the quarter, inclusive of our hedge settlements, was approximately dollars It was $152,000,000 excluding the realized impact of our hedges. The EBITDA margin or cash margin was $32.57 per BOE hedged and $31.47 per BOE unhedged. Although we had a 69% adjusted EBITDA margin, which includes negative impacts of Hurricane Barry, those one time reductions were offset by seeing impact cost savings initiatives within our operating cost structure. We invested $116,000,000 in our Q3 in our capital program, inclusive of our P and A activities. Of this, approximately $100,000,000 was deployed in the U. S. Gulf of Mexico, while $16,100,000 was spent on our efforts in offshore Mexico, where we had further success in our Block 31 exploration campaign and associated evaluation program, which concluded in October. As of the end of the Q3, we maintained over $600,000,000 of liquidity following an increase in our borrowing base commitments to $850,000,000 which we announced earlier in the quarter. The company's net debt balance is approximately $705,000,000 and leverage as measured by net debt to trailing 12 months EBITDA was 1.1 times. We continue to closely monitor and maintain a conservative balance sheet, which we believe is amongst the best in our peer group. We also continue to add to our 2019 2020 hedge position in the quarter and Shane will provide those details shortly. We completed 2 separate transactions with BP and ExxonMobil, respectively, which will provide exposure to material exploration prospects with potentially significant resource volumes. In our Green Canyon area, we acquired a Hershey prospect from Exxon, which lies on 4 contiguous blocks, which is over 23,000 gross acres immediately adjacent to several of our key Green Canyon area assets and infrastructure. The agreement is structured with a contingent payment that requires no upfront consideration and no drilling obligations, but rather earn out payment if certain success milestones are achieved, which adds optionality and flexibility. We are now looking to bring a partner into the project to join us. It is our 2nd exploration related transaction with Exxon in 2019 and the 3rd overall transaction with the company in the last 18 months, including Ram Powell. We executed a farm out agreement with BP related to the Puma West prospect, also in our Green Canyon core area. This prospect is situated on exploration acreage that we acquired through our combination with Stone Energy. After we reprocessed our seismic over the block, we were encouraged with the exploration potential in the sub salt Miocene window and prospective targets similar to those found in BP's Mad Dog field to the east. After permitting the well, we engaged with BP to expedite the project execution ahead of the lease expiration. Shortly after executing our transaction with BP, the well split in October. Chevron has since joined a partnership with a 25% working interest in the project from BP, bringing the final working interest levels to 50% BP as operator, 25% Talos and 25% Chevron. As mentioned previously on the call, we also had exploration success in offshore Mexico in the Q3 in our shallow water Block 31 Sossamani exploration campaign, which consisted of the Sossamani II and the Tolteka I wells, both of which achieved better than expected results. The Sausamani 2 well had 148 feet of gross TVD pay with a 78% net to gross ratio at 2 shallow oil sands. In the Tolteka 1 well, the objective was to further delineate the deeper of the 2 sands found in the Shashamani 2 well, more outboard of the first well, possibly defining the reservoir limits with an oil water contact. What we found was a thicker than expected pay stand with $123,000,000 of gross TBD pay and a very encouraging 95% net to gross, all in the deeper target and without an oil water contact, increasing the potential size of the resource. So as we pull the geological data set together prior to disclosing the resource potential, we're encouraged not only by the results here, but how this success could open up other shallow oil targets with similar geophysical characteristics on the contract area. The discovery is located in less than 1 mile from shore and in less than 100 feet of water, so much shallower water than what we are doing in the Block 7 area where Zama is located. Because our activity in Block 31 was part of the 25% cross assignment trade with our Block 2 contract, Talos has now drilled 8 wells across 3 different offshore contracts reinforcing our belief in the potential of offshore Mexico. In our offshore Block 7, as I mentioned on the last call, we continue to be very proud of the execution of the appraisal program in Zama in the first half of the year. The geological data set we've collected there is unprecedented for an appraisal program in offshore Mexico. We are continuing to advance our predevelopment work and anticipate a 3rd party reserve estimate by Nolan and Sol by the end of 2019, providing an independent view of the resource potential. We also filed for and received a 2 year extension of the primary term on Block 7 in the Q3, which will allow us to test other exploration ideas on the block through September 2021, including our Ciplock and Pocahtac prospects. So several moving pieces and upcoming milestones on Block 7, including our ongoing unitization discussions with Pemex, all of which all of with the hope of reaching FID in 2020. So many other additional highlights across our core areas. The Green Canyon area, which includes the Tornado field and the broader Phoenix complex as well as our Green Canyon 18 field accounted for net daily production of 19,700 barrels equivalent a day. Following the previously announced success of our Bulleit and Orloff projects, we believe those discoveries can each generate gross unrisk production of 7,000 to 10000 barrels equivalent per day once brought online. We expect Orlov to begin 1st production early in the Q1 of 2020 ahead of schedule and Bulleit to follow in the Q3 of 2020. The Mississippi Canyon core area, which includes the Pompano, Amberjack, Ram Powell and Gunflint fields had a total net production of 19,000 barrels of corn a day in the Q3 And our Ram Powell asset work is ongoing to host production from the Stonefly subsea project, which is expected to come online in the first quarter of 2020 and will become another source of income for Talos as the Stonefly operator will pay a production handling fee and their proportionate share of the operating cost of the facility. Our shallow water and other core area accounts for both our shallow water assets as well as some small deepwater assets. This core area produced point 9,000 barrels equivalent a day in the quarter. During the quarter, we commenced production from 1 well in our Ewing Bank 306 field and also drilled and completed our Grand Isle eighty two well, which initiated production in October. Asset management activities, our asset revitalization and maintenance program generated 2,700 barrels equivalent a day gross or 1,500 barrels equivalent a day net in the Q3 at a highly economic conversion cost of $3,400 per BOE per day. As we begin to look forward, we're finalizing contractual terms for 2 rigs related to our 2020 drilling plan. Among those, we expect to utilize a platform rig for near field exploration in our Green Canyon and Mississippi Canyon core areas, starting with the Green Canyon 18 platform. We also expect to sign a contract for a deepwater rig in the coming weeks. The deepwater rig contract will commence in 2020 and we will utilize the rig in the Bulleit development in next year's deepwater projects, which we'll announce in due course. As always, our goal is to build a capital program that combines asset redevelopment and near infrastructure drilling for short turnaround to production, while also allocating capital to high impact exploration projects, all targeted inside generated free cash flow and we look forward to providing more details on our next call. In summary, we believe it's been a highly successful quarter for Talos despite a material weather shut in. We continue to deliver solid financial performance, generating free cash flow in the U. S. Business while investing for the future on both sides of the Gulf and drilling opportunities and business development activities, while also maintaining financial discipline with substantial liquidity and low leverage. We continue to remain excited about the company's prospects for the remainder of 2019 and into 2020 and continue building resilient and highly profitable company with attractive prospects for the future to drive shareholder value creation. I'll now turn it over to Shane to discuss the details of our financial results. Thank you, Tim. Like to take a minute to review the Q3 results and then touch on our liquidity, hedging and 2019 guidance. As Tim highlighted, Talos recorded adjusted EBITDA in the quarter of approximately $158,000,000 This equated to $32.57 per BOE margin or 69%. These results reflect our solid quarterly production, which included the impact of Hurricane Barry, the pricing premium we realized to WTI, which for the quarter was $3.09 per barrel after transportation and other deductions and the continued focus on cost control throughout the entire business. This cost control kept LOE under $10 per BOE and cash V and A at approximately $3.18 per BOE, including the effect of the deferred production from Berry. Excluding these deferments, LOE per BOE would have been in the low 9s and G and A per BOE would have been below $3 Net income for the quarter was approximately $73,000,000 or $1.35 per diluted share. As Tim mentioned, capital expenditures for the Q3, which included just over $22,000,000 for P and A, were approximately $116,000,000 This figure includes a little more than $16,000,000 spent in Mexico during the quarter. Despite deferred production from the hurricane, Talos generated positive free cash flow over the quarter, and we expect this to continue to be the case in the 4th quarter. From a balance sheet perspective, we ended the quarter with $795,000,000 of total debt. This includes approximately $83,000,000 for our finance lease on the HP-one. Adjusting for cash of approximately $91,000,000 our net debt to LTM adjusted EBITDA was 1.1 times. Turning to liquidity and hedging. As of September 30, we had $612,000,000 of total liquidity. This included $521,000,000 of undrawn opportunistically layer in additional hedges during the quarter, adding almost 2,000,000 barrels and 2,750,000 MMBtu during the quarter at a weighted average price of $55.40 $2.45 respectively. Please refer to our 10 Q filed last night for additional details on our current hedge position. Reflecting on our guidance for the full year 2019, we expect production to come in near the low end of our full year range. This is primarily due to the previously disclosed production deferrals related to Hurricane Barry and unplanned shut in at Pompano during the first half of the year, as well as Boris 3 production leveling out near the low end of our original expectations. We expect LOE and G and A expenses to come in near the low end of our guidance as a result of continued cost control, while workover and maintenance expenses will likely be near the higher end of our previously disclosed range, including the impact of an additional $2,000,000 of expenses related to Hurricane Barry. We expect that our full year capital expenditure guidance will be supplemented by 3 main factors. 1st, our previously announced participation in the Puma West project with BP second, the expected full realization of success based capital in our Bulleit, Orlov and Ewing Bank 306 projects. 3rd, acceleration of capital from future years in non op activities, primarily Orlov. We now expect accelerated first production at Orlov in very early 2020. This brings total 2019 expected capital expenditures to $540,000,000 to $550,000,000 for the year. Finally, we are pleased to see Talos added to the S and P 600 Small Cap Index on November 1. We believe being added to the index will broaden our investor base and enhance the trading liquidity of our shares. With that, I'd like to hand the call back over to Tim. Thanks, Shane. And in conclusion, we believe the Q3 of 2019 was an important one for positioning Talos for success moving forward. Despite production disruptions, we delivered solid operating and financial performance while maintaining a conservative balance sheet. We had consistent success to drill bit on both sides of the Gulf of Mexico, declaring several new discoveries with potential for near term production additions next year. Finally, we continue to be active in adding to our portfolio of growth opportunities. We are pleased with the performance for the quarter and look forward to closing out 2019 successfully. And with that, I'll turn the call back to the operator and open the line for questions. Our first question today comes from John White from ROTH Capital. Please go ahead with your question. Good morning and glad to see everything is going well for you guys. Thanks, John. I have to ask, I didn't see it in the press release, Block 31 looks like some very strong and encouraging results. Any test data that you could disclose? Yes. So we I think what we have disclosed speaks to the content of the reservoir rock, the fact we had 2 wells, those wells came in as planned. The second well actually came in thicker than we expected and again further away than the first well. And so the fact that we didn't reach the reservoir limits is highly encouraging. One of the biggest reasons we're kind of stopping there with this resource is we actually the discovery looks like it goes out of our geophysical range. It was actually part of this. It's not covered by seismic. We need to build that hole a little bit. That's going to take just a little bit of time. Again, that's actually a positive. These things are bigger than we thought. All that's in the contract area to be sure, but just a little bit of work there. So working with our partners who are sensitive about kind of what we disclose here, just making sure we update you guys and say, look, we think we've tapped into a shallow oil play. It's bigger than we expected. It was a great trade that we did in terms of Block 2 and Block 31. And we think it's typical when you're developing one thing about the spacing, John, is what we're trying to do here is open up the lower pliocene to the middle Miocene in offshore Mexico. A lot of times when you're opening up those plays, you're trying to calibrate geophysical amplitudes, you're trying to chase shallow stuff if you can chase it, deep stuff where it's appropriate. The fact that we think we've tripped into a shallow oil play here is pretty exciting as we move forward. But I think what we've disclosed is the appropriate disclosure for where we are right now. I can appreciate that. Thanks for the detail. Sure, John. Our next question comes from Jeff Grampp from Northland Capital Markets. Please go ahead with your question. Good morning, guys. Hey, Jeff. Was curious as you're starting to put together the 2020 plan tier, don't want to tie you down too specifically to a number. I know it's still early days, but can you give us a sense maybe directionally 2020 CapEx relative to 2019? Give us a sense if it's going kind of similar levels or if it's going to go up or down or just any kind of, I guess, early time commentary would be helpful. Yes. Look, I mean, obviously, we typically guide that in the next call. I think what we're trying to work through is, when we look at the base production we have now, and I think I mentioned in my remarks that we've restored all that hurricane stuff and you can see that there. And then we look at the projects we know we want to develop, obviously, and then some of the prospects we know we want to drill. We've got to try to balance the general view of we want to keep the same free cash flow positive. So you've got several working schedules. We talked about entering into these rig contracts. We're going to try to keep those contracts flexible. Obviously, the first dollar is about maintenance. The first dollar is about hooking up the things we have, and then we think about where we can balance the high impact exploration. I don't want to guide whether I certainly wouldn't see it going substantially up. I don't want to guide whether it's flat or down until we kind of wrap up those processes. But nothing changes in terms Jeff in terms of how we think about this. We've got projects we want to get online. We've got some near infrastructure drilling we want to make sure we execute every year and then we want to balance some high impact stuff because that's the benefit we think of the Gulf of Mexico. We think there is a higher ceiling on the potential from an exploration perspective and we want to make sure we sprinkle that in when we develop these plants. Some of those we want to talk to our partners with as well. So we're right in the throes of it. I think the tenant that you can rest easy on is, again, we obviously generating a lot of free cash flow in the Gulf of Mexico business this quarter, expect to next quarter. We're going to build a plan that expects to do that again and typically kind of that $55 ish environment. Okay. That's helpful. And my follow-up on Puma West, curious if you can kind of talk about generically what the timeline looks like? And do you have a sense, I know ultimately it's a BP operated project, but if you find oil there, do you know what that timeline kind of looks like, to when first oil could potentially be achieved given the fact there's obviously some not too far away existing production and infrastructure? Yes. There's some things related to that project that we probably would keep confident right now. I think what makes it exciting is really if you follow BP's general public remarks, they've spent a lot of time and a lot of money and a lot of research and development around seismic imaging. And you know that's a specialty of ours, Jeff. We work on it all the time. But they work on it at an even higher level. And so we saw something here in our efforts that we thought was interesting. We did have an expiring lease, a lease that we picked up due to combination with Stone, a primary term expiring lease. And we started permitting that and then BP called us. And that's again another neat thing about what we do here offshore that you've got someone with the sophistication of BP calling us and saying we're willing to move a rig around and put that on your acreage step because we think what you're holding is interesting. Now depending on what happens, it can go several different ways. First, you have to be lucky enough to have success. So exciting as this is, the building a second production unit related to the Mad Dog area. That's interesting. There's other assets in the area. Some of those operated by Oxy. That could be interesting. But I hate to say this and I'm not trying to avoid the question, but you really have to find out what you have and what you're trying to do. But what I would say is, even in a case where it's quite large, there's still a lot of infrastructure in play. This is an area that actually is filled with various infrastructures put in, in the last 5 to 10 years. So I think we're going to have plenty of options. I think this really comes down to are we going to be lucky enough to find something as material as we hope it could be. Sure, sure. No, helpful commentary and I appreciate that it's still early days. So, I'll let someone else stop in. Thanks for the time. All right, Jeff. Thanks, man. Our next question comes from Marshall Carver from Heikkinen Energy Advisors. Please go ahead with your question. Yes. Good morning. My question on Block 31 was already asked, but I did have another question on NGL pricing that it's not a big part of revenues, but it did took a sharp decline from Q2 to Q3 more than sort of benchmark pricing did. Do you have any color on go forward NGL pricing? Like how should we think about Q4? Or was there anything special going on in the Q3? Yes. Marshall, Shane here. So pricing was soft. I think you've seen this sort of as a phenomenon sort of impacting a lot of players in the industry, not just Gulf, maybe even not as bad in the Gulf. I would say, in the Q3, that a part of that impact was a result of a PPA related to some historical bookings. And so I would think we would carve that back as we get into the Q4 and beyond. So I think for the actual realized, we're probably a little better than the print due to that. But like I said, it's a small part of the overall revenue mix. Okay. Thank you. Our next question comes from Richard Tullis from Capital One Securities. Please go ahead with your question. Hey, good morning, Tim and Shane. Looking at the Zama unitization process, any additional details could you provide there on just how the process is going? And maybe updated timeline on when you might expect to get to finalizing an agreement there? Yes. Good morning, Richard, by the way. We I think if you go back and look at a couple of our decks, and I'm sure they're on the site, you can go grab them. We have a kind of a condensed timeline on that project, which sets some expectations of what we'd like to achieve in terms of FID. And if you look at that slide, and again, I'd encourage you to go look at it and Sergio can make sure you have it. There's 3 processes we're doing at the same time and they're all concurrent with one another. One is, again, we've had Noah and Sule over. We actually took them out, by the way, separate issue, but we took them out to the core lab to look at the cores and that's always a fun field trip because those rock properties are little in the soil to confirm the resource, putting that out there as a goal for the end of the year, that's a milestone that's in our control. We're working on the development plans. We're working in terms of getting things drafted and getting everything ready to submit to that development permit to the government when we wrap through unitization. Again, more in our control, we're confident about those things. Then we go through the unitization. I think I've said it in the past, Richard, and I'll repeat it because I think it's worth repeating, is that everything we do here are many of the things we do here, I probably shouldn't say everything, we're doing at times for the first time in offshore Mexico. And this negotiation is definitely something that is the first in the history of offshore Mexico, certainly the first one Pemex has had to do. And so there's a cadence to this and there's an ebb and a flow, and there's a lot that we discuss. We discuss technical items. We discuss commercial items. Obviously, the 2 biggest things that we have to work through is initial equity splits, operatorship and then we work through ultimately how to redetermine those equity splits. And that's common in every unit negotiation. Keep in mind, we've spent all the money to date and we've taken all the risk to date. And so we feel good about our position, but we're mindful and respectful of Pemex. They have a desire to drill a well. We understand that. We've talked to them about whether that's necessary or not, but we understand the pride they have in wanting to contribute some data to the conversation. And so we just have to work through that. But I think I'm not changing our general goals here Richard and I'm not changing that chart if you will that you see on that slide because we can control the other two issues that as soon as we wrap up unitization, we can immediately put this into the development process with the government who I think has been very mindful of those permits and done a good job approving those permits and still stay on track with kind of that second half of the year FID. So I'm not changing that yet. The unitization is a process in amongst itself and we're working hard every day with Pemex to try to work through that as quick as we can. Thank you, Tim. That's helpful. And just last for me. Can you provide some thoughts on just the current landscape for the cost side of things, particularly since you're going through the rig negotiations currently? Yes. So a couple of things. I mean, I think costs have creeped up a little bit. I don't think that's an uncommon statement. I would tell you because they have a little bit on labor, a little bit on boats and transportation, a little bit on rigs. When I think about it on the OpEx side, just the fact that our team is doing such a good job on cost control, I think speaks to their effort when they're able to do that in the face of slight increases in cost because related to our general operating cost structure. So I just want to take an opportunity to continue to recognize their efforts. On the capital side, when you think about rigs, again, you can look at these facts as fast as I can. So we probably have access to the same research. I think utilization in the Gulf has gone up Recently, I think it's up as high as 95%, maybe this time last year it was around 75%. So you're going to see when you have utilization go up a little bit of increase in price. I think the active rates right now maybe in the high 180s and that could creep into the low 200s. Couple of things I would say on that. One, that's a manageable price. And 2, I think the reason that that inflation is manageable is because I think the nature of the contracts that us as operators are entering into are a little different than they were 5, 6 years ago, shorter terms, more flexibility. So even though you're seeing the unitization creep up, I do think you're seeing the flexibility on the contracts, a little more in the operators' favor because I think there's just less operators. And I do think there's a series of rigs coming into the market in the back part of 2020. So again, a little bit of inflation, but it's manageable for the different variables that I just discussed there. All right, Tim. Thanks so much. You got it. Our next question comes from Sean Sneeden from Guggenheim. Please go ahead with your question. Good morning, guys. This is Julie Piccillo, for Sean Seaton. So Tim, we were just wondering how you think about maintenance capital for the business. I know there's a lot of sweet parts there, but should we think about the unit DD and A rate at, I guess, dollars barrel as a reasonable proxy? Look, I think like everything else that can be a little lumpy. I think I've seen quarters where it's somewhere between $14 $18 I don't look, that's a whole different almost offline discussion. I don't think that's unreasonable. And I think when you look at our operating cost and the way we're managing our margins and then you think about those margins and how we reinvest that into again the pillars that I talked about with respect to first focusing on developments and then focusing obviously we have P and A and those types of things. Everything is in that number. So again, I don't think that's an unreasonable number and a decent way to think about it. I think that what we try to remind folks of is there's a lot of capital that we spend that doesn't actually go into production. Again, we have P and A capital we need to spend. We have typically some capitalized G and A. We might have some other kind of maintenance items. But typically, we're able to do that and still grow the business. I think it's probably around 2 thirds from a maintenance perspective. But again, I probably don't focus on it every day, but probably 2 thirds of EBITDA gets you there. And that's kind of one of the tenets of how we build the budget going forward. That's perfect. Thank you so much. Yes. And our next question is a follow-up from Jeff Grampp from Northland Capital Markets. Please go ahead with your follow-up. Hey guys, just one quick one. On the debt side of things, can you talk about any recent thoughts on potentially refiing the bonds? If that's something you guys are monitoring closely? Is there enough term where that's not kind of, I'd say, maybe a near term focus of Shane's here? Just kind of any thoughts you guys have on that? Yes. Look, I'll let Shane give you his thoughts. I mean, the first question is, do you monitor the high yield market closely? I think the answer is absolutely yes, and everybody does. But Shane, why don't you kind of give me your feedback as well? Yes, absolutely. Look, I would agree wholeheartedly with what Tim says that we do. It's something we watch. It's something we talk to a lot of guys that are in the market about fairly frequently. I'd say, as we think about the capital structure broadly, we're really focused on 3 things. The first is low leverage. We think we're there. We like where we are. 2nd is high liquidity. We think we'd like where we are there as well. And the third is maturity profile. And so that's something that we intend to work on as soon as we have a market opportunity to do it. Yes. I think the other thing I would say, Jeff, echoing some of Shane's comments, you look at and again, I would encourage you to go look at her presentation out there, but I think the $55 the value of our reserves is $3,500,000,000 I don't have the exact number, but the value of PDP reserves is over $2,000,000,000 and we've got pretty low leverage and a heck of a lot of asset coverage rate and pretty expensive notes. And that's not a combination I'm fond of. And so if we can figure out how to right size that and get the right cost capital, we would absolutely access that market. I hear you, man. Appreciate the math. Thanks. Got it. And ladies and gentlemen, at this point, I'm showing no additional questions. I'd like to turn the conference call back over to management for any closing remarks. I appreciate that. Again, thank you everybody for joining the call. We love the Q and A and happy to answer those questions. And we appreciate everybody's interest in the company, and we're excited about where we're going from here. And we look forward to talking to you guys again in the next quarterly earnings call. Ladies and gentlemen, that does conclude today's conference call. We do thank you for joining today's presentation. You may now disconnect your line.