Berry Corporation (bry)

Good day and thank you for standing by. Welcome to the Berry Corporation's first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to our speaker today, Mr. Todd Grabtree, Investor Relations. Please go ahead, sir.

Thank you, Renz, and welcome to everyone. Thank you for joining us for Barrie's first quarter 2022 earnings teleconference. Earlier today, Barrie issued an earnings release highlighting first quarter results. Speaking this morning would be Trem Smith, Board Chair and CEO. Fernando Araujo, Chief Operating Officer and Executive Vice President, and Kerry Bates, Chief Financial Officer and Executive Vice President. Before we begin, I want to call your attention to the safe harbor language found in our earnings release. The release and today's discussion contain certain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. These include risks and other factors outlined in our filings with the SEC. Our website, bry.com, has a link to the earnings release and our most recent investor presentation. Any information, including forward-looking statements made on this call or contained in the earnings release and that presentation, reflect our analysis as of the date made. We have no plans or duty to update them except as required by law. Please refer to the tables in our earnings release and on our website for reconciliation between all adjusted measures mentioned in today's call and the related gap measures. We will file our 10-Q later today. We will also post the replay link of this call and the transcript on our website. I will now turn the call over to Trem Smith.

Welcome, everyone, and thank you for joining us this morning. We are pleased with our performance in the first quarter of 2022, and we are well positioned for a good year. As our results once again demonstrated, we are a cash-generating machine. With our new shareholder return model in place and current oil and stock prices, we are excited to report that we are on track to deliver top-tier returns just as we promised when we announced our new shareholder return model. With our new variable dividend that started with the first quarter 2022 results, plus our regular fixed dividend, we are delivering record returns totaling 19 cents per share or three times prior quarter returns, positioning us as one of the highest returners of capital amongst our peers. For 2022, we anticipate we will deliver a cash return equaling 120 to 150 percent of the approximately $100 million of dividends we have returned to our shareholders since our IPO in July of 2018. This translates to approximately $1.60 to $1.90 per share and a return in the mid to high teens. Our new return model is predictable, transparent, and simple, just like our business model. It allocates 60 percent of our discretionary free cash flow primarily in the form of cash variable dividends. The remaining 40 percent is for discretionary capital to be used opportunistically, including in the form of share repurchases. Last week, the Board increased the share repurchase authorization to $150 million in aggregate. Furthermore, we are executing the operations side of our business with excellence. We are hitting our production target, which, as a reminder, is to maintain production flat year on year. I'll explain how we do this. The foundation of our business model is our base production, which is the production that comes from our existing producing wells and, on average, accounts for 90% of our total production year in and year out before we ever have to drill a new well. It is predictable and does not require new permits. This is why our business can be modeled like a manufacturing or industrial business. We plan to fill the 10% gap to keep our production flat from year to year by drilling new wells for 6% of that production gap, and completing workovers in the existing wells for the remaining 4%. In other words, 90% of our cash flows comes from production out of existing producing wells. Fernando will share more details about our production activities, including the better than expected performance that we are seeing out of our Utah assets. We have steadily reduced our carbon footprint, and we are continuing to do so. As a reminder, through the end of 2021 and in early 2022, we reduced our carbon footprint by 13%, which is more than 205,000 metric tons, and reduced our operating costs by $14 million, mainly due to our focus on operational efficiencies and A&D activity, as well as ESG initiatives. We are continuing to reduce non-energy operating costs, Gas costs continue to rise due to various market factors. To address this situation, we recently improved our 2022 gas purchase hedging positions. And as we have mentioned previously, our access to the Kern River gas line from the Rockies to California increased on May 1st, this past Sunday, to provide up to 80% of our daily gas needs. further enhancing our ability to obtain gas from markets that have historically been cheaper and more reliable than California. Additionally, our oil production accounts for 91% of our current total production. Our oil production is well hedged, giving us visibility of our levered free cash flow over the next two plus years. C&J Well Services, our recent acquisition that provides standard well services to the industry in California and accelerates the reduction of fugitive emissions by plugging idle and orphan wells, has been fully integrated into the company. It is on track to plug approximately 2,000 third-party idle wells in California in 2022. Plugging wells reduces actual and potential methane emissions as well as other potential health and environmental hazards. According to the United Nations Environment Program and the Climate and Clean Air Coalition, methane is a powerful greenhouse gas, and over a 20-year period, it is 80 times more potent at warming than carbon dioxide. It also reports that methane has accounted for about 30% of global warming since pre-industrial times and is proliferating faster than at any other time since record keeping began in the 1980s. With C&J Well Services, we have the capability to address this urgent environmental issue today with technology that exists today. I will come back to highlight other ESG activities and initiatives as well as give an update on legislative activities in my concluding remarks. Now I will turn it over to Fernando, who will highlight the operational results of the quarter.

Thank you, Tram. I want to begin my comments by reaffirming our commitment to the safety of our employees and contractors, protection of the environment, and regulatory compliance. In Q1, we continue to achieve solid safety results, including not having a lost time incident since 2019. This is best in class performance. In terms of operational performance in Q1, you can refer to the earnings release and thank you for details. I do want to highlight a few key achievements from Q1. As Trent mentioned, on average, our base production accounts for approximately 90% of our total production this year. Our goal is to keep production flat by filling this gap with work over a new drilling activity. In Q1, net of divestment and acquisition activity Our quarterly production was slightly higher than our production plan. In Q1, we operated on average with one and a half rigs, drilling a total of 26 wells, 22 wells in California and four wells in Utah. In California, we continued with our successful development campaign, drilling horizontal wells in the Midway Sunset Field and vertical wells in our hill properties. In addition to drilling new wells, we accelerated work over activities, both in California and Utah, completing 76 jobs with a rate of return greater than 100% for the program. As mentioned in the past, work over activity is our most efficient use of capital. In Antelope Creek, our Q1 bolt-on acquisition in Utah, we doubled production in the two months that Barry has been operating this property. This is another example of outstanding work from our Uinta Basin team. We have significant upside potential for additional workovers, operations improvements, and new drilling inventory, which is what an ideal bolt-on acquisition should look like. In Q1, non-energy optics remain essentially flat compared to last year, effectively mitigating market pressures. We continue to focus on operational efficiencies And unlike other oil and gas producing regions in the country, our inflationary pressures are going as we planned in California. We are a purchaser of fuel gas and the market dictates prices. Higher than expected gas prices increased our energy optics in Q1. This is mainly driven by current geopolitical pressures. As you may remember, our energy optics includes fuel gas purchases, which are partially offset by electricity sales from our cogeneration plants in California. We recently added new gas hedges, which effectively protects two-thirds of our gas demand at $4 on MMBTU. And as Tren mentioned, as of May 1st, we have additional physical line capacity in the Kern River line, which covers up to 80% of our total demand. Both of these initiatives will help us mitigate the volatility in gas markets. Also, Increasing oil prices outpays the cost of energy, resulting in an overall increase in our operating margin for Q1. To summarize Q1, net of divestments and acquisitions, our production went according to plan. We have done an excellent job in accelerating and executing our workover campaign, which has delivered great results, and our capital expenditures and production guidance are within plan. Now I'll turn it over to Kerry.

Hello. I'll keep my comments brief as Trim and Fernando have covered most of the important items. My first comment is that we expect our second quarter variable dividend to be much greater than the first quarter as the first quarter is seasonally our largest working capital consuming quarter. In Q1, working capital use was higher than we anticipated due to the rise in oil prices in the second half of the quarter. which caused a temporary increase in our quarter-ending accounts receivable balance. We have added a slide to our IR deck, slide 12, where you can see the historical quarterly changes in working capital. Again, we are well positioned to have a strong payout under our shareholder return model for 2022 and over the next few years. Turning to oil hedges, we are limited on our hedge volume by our credit agreement. For 2022, roughly 60% of our planned production is swapped at about $77 a barrel Brent. This provides certainty around our free cash flow and leaves upside for a significant portion of our production as we anticipate continued strong pricing throughout the rest of the year and beyond. Before turning it back to Trim, I want to highlight that the Board did approve an increase to $150 million of share repurchases in aggregate. We recently amended our credit agreement to allow us greater flexibility around share repurchases. Speaking of the credit agreement, we don't see a change in our elected commitment of $200 million. Although the borrowing base supports a higher amount, there is no reason to pay for liquidity we don't need. In closing, we aren't a resource play. Due to our attractive low decline curves and low capital intensity needs, our development and production business provides investors with strong predictability and visibility into our cash flows. This gives us the confidence to plan for and deliver significant cash returns and to provide additional value to shareholders, including through share repurchases. Back to you, Trump.

Thanks, Kerry. We had a good quarter and are well positioned for the rest of the year. Now I want to touch briefly on a few of our environmental, social, and governance initiatives, or ESG. First, one of our strategic focuses for our well-plugging business is to work with the state to plug orphaned wells in highly populated, often distressed neighborhoods, such as in parts of Los Angeles County. Many of these wells were drilled years ago, some even decades. C&J Services is highly skilled at dealing with these old and often complex wells. This is a critical component in achieving the state's goal to safely reduce emissions near at-risk populations. In addition, as carbon capture and sequestration projects make their way to the ECS, it will be imperative to ensure that all historic wells in the carbon dioxide sequence are appropriately shut in and plugged to ensure the reservoir is completely sealed. The technical competence to plug these very sensitive wells will be in high demand. C&J Well Services, working with CalGEM, other state government agencies, and other operators, is uniquely positioned to do this work. In conjunction with our environmental efforts, we continue to monitor the developments at the state level for CCS opportunities. On the legislative front, California seems poised to take action this year to embrace CCS as a necessary tactic to transition to a lower carbon economy. There are a handful of measures that have been introduced and currently making their way through the legislative process that deal with CCS, including three bills to lay the foundation and framework to make CCS a reality in California. One bill addresses the poor space ownership issue necessary to achieve widespread deployment of CCS. A second bill streamlines the permitting process for these projects. And the third bill directs agencies to adopt regulations and safety guidelines for CO2 pipelines. We continue to be very committed to being part of the energy . We are working with the state to make sure we can continue to provide Californians with safely produced, affordable, equitable, and reliable energy. Now I'll open it up for questions.

At this time, we would like to take any questions you might have for us today. As a reminder, if you would like to ask a question over the phone, simply press star 1 on your telephone keypad. Again, that would be star 1 on your telephone keypad. Our first question comes from the line of Leo Mariani with KeyBank. Your line is now open.

Hey, guys. I wanted to see if you can provide a little bit more detail on the regulatory side. Really just curious if you all have been getting kind of regular way oil drilling permits from the state over the last couple months. And I guess if so, do you have what you need for the 22 program at this point, or are you still a little short?

Leo, this is Tram. I'll handle this one. The question is that the – that we are getting permits that are handled under CEQA already. The issue is CalGEM is now the lead CEQA agency. CEQA stands for California Environmental Quality Act, which is a requirement in all activities, not just oil and gas, in California. While Kern County goes through its legal issues, where we expect by the end of maybe the second or third quarter this year, Kern County will become the lead agency. So the answer is yes, we are getting permits. We will currently have permits to take us through the end of June, and we expect to get another group of permits here shortly that will take us well into the year. But we don't have permits in hand yet, as we normally don't. Okay, Leo, I just want to make that clear. At this time, we don't have all the permits in hand for the entire year's activity, but we're moving forward and working with the agencies as necessary to get those permits.

Okay, but has there been, I guess, movement in the last couple months where they have been issuing them?

Yes, that's what I was just trying to say, Leo. Yes, we have been getting permits, yes.

Okay. Okay. And I guess any kind of specific update on any of the CO2 sequestration pilots you've talked about? Obviously, you went through the legislation. It certainly sounds like a positive that's moving through the legislature there. But anything kind of specific to Barry that you're working on?

As we mentioned in the previous call, the fourth quarter call, we have a – An LOI with a company that is investigating taking our CO2. Our largest generators of emissions are our cogens. And taking the CO2 and emissions from those cogens into a project they have going on in another basin. That is moving forward. And then we regularly touch base with CRC. Elk Hills is a very good place to store CO2. and we will be a participant as a source of CO2 for them as they progress. So those are the two activities for Barry at the moment.

Okay. And then just maybe you could touch base on the oilfield service business here. If I'm reading this right, it looks like you all did just over $3 million EBITDA there in the first quarter. I think you all had talked about annual guidance of $27 million on EBITDA this year, so it sounds like maybe it's off to a bit of a slow start. Can you maybe just give us a little bit of color in terms of how you're feeling about hitting that guide and, you know, explain a little bit on the recent shortfall?

This is Kerry, and good to talk to you. The guide, we still feel very comfortable in the guide. First quarter is kind of the slowest quarter for CNJ. Revenue-wise was very strong. There was a couple inflationary pressures that they got hit with. One was adjusting all field-level wages up by $2. So that was a little higher than was expected. And then also fuel got them a little bit as well. So they're comfortable with the revenue. Revenue is actually moving better than we thought. Finding the personnel still is a challenge out there. A stat the other day that we heard is Del Taco now in California pays $21 an hour. for new employees. So think about that in the talk as you have to move. So you do have to make sure that you're offering a very good competitive wage in order to get out there and work. But Jack's doing a great job with that, and we still feel comfortable with the guide. Okay. Thanks, guys. Thanks, Leo. Thanks, Leo.

Thank you. Our next question is from the line of Charles Maddy with Johnson Rice. Your line is up.

Good morning, Trim, Terry, Fernando. Trim, I want to go back to the C&J well plugging. So I get that I think it's a great point that you're going to have to plug more wells to make these fields really a good place for CCS. I guess my question is, has the character or the size of this opportunity changed changed versus, you know, last year when you bought this business? It seems like it's gotten better. And if that is the case, is this something we should be thinking about for, is there at least 23, or is this more kind of a back end of the decade kind of thing where it's gotten bigger and better?

Well, there's two components to your question. So let me explain. First off, the state has the liability for thousands, tens of thousands of orphaned wells. Many of those wells, there's several markets here, many of those wells occur in highly populated areas. And C&J is uniquely positioned to take care of those wells. The other going to develop over time is the plugging around wells that are in the CO2 sequestration realm. And that should happen in several projects and probably will be a growing business, okay? Right now it's not a big piece, as you observed, but that will be growing over time. And there will be several aspects of it, Charles, and this is just me talking, which is one is preparation of those reservoirs for sequestration. Okay, wells, old wells will need to be plugged. And then as the reservoirs become utilized for sequestration, additional wells will need to be plugged. The other component that has changed, which is also positive, is the state is becoming more proactive in offering tenders for big packages of wells to be plugged. We didn't talk much about that today. and I'm hoping we'll talk more about it in future quarters as we win some of these tenders, which are currently in progress. The state is at tendering and understanding the complexities with plugging a number of orphan wells in a certain area. That is a change that's evolved over the last three to six months in my experience. Plugging business, when we bought C&J, the plugging business was about 20% of their entire business. That may continue to grow, and we continue to position. So we're delighted with the way it looks for the plugging business in that acquisition. Does that help?

Yeah, no, that helps a lot. That's great insight into not just your thinking but how the market's evolving. That's exactly what I was looking for, Tramp. And then, Kerry, I might get a follow-up for you. And I apologize ahead of time that this is a little down in the weeds, but I think it's an important thing to pull up. And it's about really your variable dividend. And so one of the ways that Barry is different is that you guys are calculating, different from other companies who put these variable dividend frameworks in place, you guys are doing it post-working capital adjustments, which makes sense. That's really where you're, you know, that's closer to real free cash flow, but it's not something that other people in this space are doing. So to drill in on the point that you made earlier about your working capital, you know, expansion or drain in 1Q, I get the part about your receivables going up as the oil price goes up. But what other things happen in one queue that make that a kind of working capital draw?

Yeah, so good question, Charles. And, you know, we were doing fine until March hit, but for good reason, prices went up and our AR went up about $25 million in March, which is one of the biggest drivers. But there's two other things that happen once, twice a year. So in the first quarter and in the third quarter, we pay our annual interest expense, our semi-annual interest expense on the bonds. So that's a little bit of a working capital use. But the other big item that's in Q1 that doesn't stand in any other quarter is what we call our 4 max lease, which is our annual royalty payment to Exxon for 4 max, which on average gets into about a $15 million number. give or take a little bit on an annual basis. And then the last item that we do also in Q1 will be – it's not as big a number, but you also pay your annual bonuses in Q1. So those are kind of the three biggest outliers versus the other three quarters. You've got interest, royalty payment, and bonuses.

Got it. And as those kind of roll off or don't repeat in Q2, that working capital adjustment – not only will go to zero, but could be flipped the other way.

That's right. Absinthe continues to drop at the end of the quarter on oil prices. And, again, it's a seven-day lag from the end of the quarter to when we get paid. So, you know, we get a little frustrated at times, but there's give and take with that as well. But those are the three big items in the first quarter, and that's the reason when you look at the other three quarters in the obligation, you'll see they're relatively flat. If you look at prices, prices impact a little bit on the AR, but other than that, they're fairly flat.

Got it. Thank you for the slide you prepared on that and for indulging that question, Gary.

No problem. Thanks, Charles. Thank you. Our next question is from the line of Steve Bush with Everglade Resources. Your line is open. Good morning, Steve.

Thank you for taking my call. I'm just kind of new to the stock, so I'm trying to wrap my head around the oil and gas derivatives number and why it's in revenues, and it's a pretty big number. If you could just kind of fill me in a little bit.

Yeah, I think from an overall point of view, the reason it's in there is so we actually get the realized price for our commodities. So it's adjusted so everybody sees the actual price that we receive on the products that are sold.

Okay. So, like, this was $161 million derivative loss for the quarter. Is that just purchasing forward contracts, or is that actual mark-to-market? Is it a cash?

That is a mark-to-market for the hedge book for that quarter, during that quarter.

Okay. So it's not cash. That's what I thought. Okay. That's right.

So, you know, it's prices. Yeah, if prices stay flat from here on, you won't see that mark the market. It's when you have big, wide changes that you see that, Steve. And as you know, the first quarter, we saw a substantial run-up in oil prices, and that's where you get that big number jumps out.

I understand. Okay. And so, just kind of an odd question, are we having any trouble with water droughts or needs for any kind of that water uses in California?

Steve, this is Trem. We do not have a problem sourcing water. Most of the water we use in our operations we actually produce and recycle. Okay. What we do with water is disposing of water that we don't end up using, that we have produced. Okay. And we have various disposal methods, including the best one is disposal wells. Okay. All right.

Okay. I think you guys are doing a great job.

Steve, hold on. Are you still there, Steve?

Yep. Go ahead.

Okay. You opened up the water thing. We are working very – we have one field in particular on the east side of the San Joaquin that has very – pure water that we produce. And we are very close. We're in negotiations on selling that water to one of the water districts that provides water to the farming industry in California. So I'm hoping we'll talk about that. But your point is we'll help with the drought conditions in that way.

Right. Okay. I appreciate it. Thank you.

Thanks, Steve. Nice meeting you. Welcome to the start.

Thank you. Thank you. Our next question is from the line of Nicholas Pope with Seaport Research. Please go ahead.

Morning, everyone.

Morning.

Hi, Nick. Just hoping to talk a little bit about the operating costs, kind of where it's running. I mean, obviously, energy – excuse me – has run up on the energy component of the operating expense. But just looking at the non-energy operating expense and kind of where that's running relative to kind of the full-year guide, I see a very active quarter for workovers. And I was kind of curious how that kind of was situated relative to kind of where the plan was and where operating costs kind of are trending over the course of the year relative to that kind of very active first quarter for workovers.

Yeah. Hi, Nick. This is Fernando. In terms of non-energy OPEX, as you know, that's basically our standard LOE. Just historically, we've been able to reduce our non-energy OPEX by about $2 a BOE since 2019. And this has proven to be very sustainable in 2021 and into 2022, as seen by the results that we have. Obviously, we've been able to realize significant improvements in operational efficiencies in all aspects of the operation, and these efficiencies are continuing into 2022. Now, we budgeted a slight increase in non-energy OPEX due to inflation, but for now, we are working within that number, so our actual Q1 dollar per billion number is actually below what we planned for. And we don't expect energy OPEX to be an issue beyond what we planned for. So we're staying within that about 5% increase compared to last year.

Nick, this is Kerry. I'll jump in. I think overall, non-energy OPEX, we're still comfortable with the range. I think we are, the energy OPEX side of things is where we're focusing on Again, getting about two-thirds of our daily demand or use at $4, I think, helps us get that back down. Getting access to the Kern line as of last Sunday, the full access of that is going to give us some ability to move some lesser expensive Rockies gas maybe to our areas as well. But I think non-energy OPEX good, energy OPEX on the higher side, but right now we're still comfortable overall with our guidance.

Got it. And the non-energy OPEX, I think it was 625 to 750 or something like that. Is that right on a unit basis?

No, I think it's energy.

Oh, energy. Yes, energy. Energy, yes. But we'll be on that. And I think we need to get through the second quarter before we refresh on the energy side of things. But I think non-energy objects we're still comfortable with in guidance. Got it.

Thank you. And I was hoping you could expand a little bit on kind of the CO2 capture pilot that you're talking about on the co-gen facilities. It sounds like that's like a small-scale project issue. is this something that realistically you could see CO2 capture from your electric generation facility? I mean, is that realistic at this point in their life to see CO2 capture, or is this more of kind of a test case to see if it could be viable? I mean, are these facilities actually capable of capturing CO2?

Actually, the capturing of CO2 is not the issue. The issue is getting the permits by the group we have the LOI with will be taking that. The technology exists to capture the CO2, so we are able to do that. There are various methods that cost different things, and so we'd all run the economics as well. But that's been around for a long time, and we can do that. The issue with those projects is taking them from when they've been captured to the location they're going to be injected into the subsurface. One of the pieces of legislation that I mentioned in the talk, the CO2 pipelines, that is a much, that's an area that's never been addressed legislatively or regulatory-wise in California. So that's where the risk associated with. If you think about it, for us, the CO2 emitters are going to be our steam generators and our cogens. In California, the biggest CO2 generators are going to be industry, of which there's some, but not as much, cement factories, utilities, things like that. And that's where the capture of larger volumes is going to occur. and that will contribute as a source of CO2. But for Berry, as our ESG deck supports, we produce about 1.4 million metric tons a year. So we actually don't produce that much, but as a company we are measured by how much we reduce, and that's why reducing so far in the first quarter, we completed the reduction of 205,000 metric tons, which is a big deal for us. So, no, it's more than just a pilot testing thing. This is something that would be very beneficial to Barry, and it's doable.

And is the idea that the CO2 that you're intending to capture, I mean, is it purely for sequestration, or is there, I would assume it would have to be a more pure source of CO2, for use in CO2 floods. Is it pure sequestration that we're talking about?

Well, yes, it is pure sequestration, right. And Barry has no plans to do a CO2 flood to generate additional hydrocarbon production. Got it. If that's what you mean by CO2.

Yeah, exactly. Thank you.

No, no. This is pure sequestration. I appreciate the time, guys.

Thank you. Our next question is from the line of Joseph McKay with Wells Fargo. Your line is open.

Thank you. Thank you for taking my questions. I was just wondering if you guys could maybe dive into kind of that 40% side of the discretionary capital and just kind of how you're thinking about it at these levels with you have the increase to the share repurchase plan and kind of, you know, $100 oil. How are we balancing kind of the repurchases versus organic inventory growth and some of the other options embedded in there?

I would say it's a calculus model, but I think in California we'll be limited by permitting and the ability to get the permittings to be able to grow. So I think we're comfortable with our current guidance based upon and where we're at from permitting. As Fernando pointed out, we've had some very good success in the Antelope Creek bolt-ons to increase there, but it won't be substantial enough to really take over that 40%. We are looking at some additional bolt-ons that would take part of that as well, but I think also we're keenly focused on total shareholder returns. the right opportunity comes around to be able to repurchase some shares, I think we will take advantage of that as well. So I would say it's fluid. It's not tightly defined. But, again, the right bolt-ons will come out of that, and then I think the rest of it will be focused much more on the share repurchase side as well.

Okay, thank you. That helps. And then maybe just a quick follow-up on Charles' question about the variable dividends. obviously the working capital was kind of a headwind to this quarter. I guess moving forward, if there was working capital change that went in the other direction, would the variable dividend be kind of based on the inflow coming in, or would you kind of maybe pocket that change for future quarters when it reverses and use it to kind of even things out a little more?

No, I think from our point of view, to keep the math simple, let the math just work like math, Some quarters will be a little higher, a little less, but overall, I think we're still comfortable. As Trent pointed out, that $1.60 to $1.90 range for that dividend return. And so I think with that being said, it blends out over time.

Gotcha. All right.

That's all for me. The long-term investor will continue to reap the benefits of the cyclicality of the working capital, but again, We don't see as much cyclicality in Q2, 3, and 4. It's really the first quarter, and you kind of – the next three quarters should be fairly steady if historical working capital stays in place, stays in place.

Gotcha. Makes sense. Thank you very much.

You bet.

Thanks. I think that's it.

Thank you. I really want to thank everybody today for the time, and we're looking at a good second quarter. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.