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spk11: Good day, everyone, and welcome to the Corda Energy third quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Michael Liu, Chief Financial Officer. Please go ahead.
spk03: Thank you, Jamie. Good morning, everyone. Today, we are reporting our third quarter 2022 financial and operational results. We are delighted to have you on our call. I'm joined today by Danny Brown, Chip Reimer, and other members of our team. Please be advised that our remarks, including the answers to your questions, include statements that we believe to be forward looking statements within the meaning of the Private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings releases and conference calls. Those risks include, among others, matters that we have described in our earnings releases as well as in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During this conference call, we will make references to non-GAAP measures, and the reconciliations to the applicable GAAP measures can be found in our earnings releases and on our website. We may also reference our current investor presentation, which you can find on our website as well. With that, I'll turn the call over to Danny.
spk02: Thanks, Michael. Good morning, everyone. Thank you for joining our call. Well, we've now completed our first full quarter of operations as Cord Energy, and I'm pleased to be discussing our operating and financial results with you, as well as our peer-leading return of capital program. Additionally, we're going to give you some updates on merger integration progress, our ESG strategy, and our expectations for the balance of the year. So with that, jumping right into the third quarter, I can say that our performance here exceeded expectations. We had a large volume beat, which I think sets us up nicely for above consensus volume delivery for the second half of 2022. Paired with that, we are also lowering our capital guidance, which positions us for strong free cash flow delivery in the second half, which should be in line with street consensus. Given this performance and combined with our strong balance sheet, In alignment with our return of capital framework we announced in August, we anticipate delivering 85% of our free cash flow generated in the quarter back to shareholders. Most importantly, we continue to see very strong wealth performance in the field, even as we address some operational items that I'll discuss in a moment. So, digging in just a little more on our results versus our guide. Production exceeded our guidance in the third quarter, largely driven by strong wealth performance, which you can see on slide 10 of our latest presentation. Some mechanical issues with the casing on a few of our new wells has extended the timing for the completion on those wells, shifting our frac scale to the right. As a result, fourth quarter production was updated to reflect this new completion timing, as well as the associated volume impact of leaving surrounding wells, which are down waiting for completions operations to conclude, offline longer than originally expected. We've also included in our revised fourth quarter expectations the impact of many of our ESPs in the Saanich area being offline due to a power disruption caused by a vehicle incident. So, in aggregate, given our strong performance in the third quarter and taking into account the items above, we expect to deliver total second half production volumes favorable to our August update with slightly less oil but also slightly less capital. Importantly, we view these items as transient and timing related in nature. The field is performing very well and we anticipate no impact to our 2023 program. On capital, as I mentioned, we lowered our full-year capital guidance versus our August update, reflecting good performance in the third quarter, the schedule shift, and perhaps a bit too much conservatism built into our previous estimates. I'll note we continue to expect to frack around 106 wells in 2022, which is about the same as our August update. However, while total fracks are about the same, a number of our turn-in lines, or tills, will be pushed into 2023, taking our total till estimate down below 100 for the full year. Now, turning to our return of capital program. Given the strong quarterly performance previously discussed, we delivered an exceptional adjusted free cash flow of $326 million for the quarter. Recall that in August, we announced a peer-leading return of capital framework that returns 75% or more of free cash flow generated during the quarter when court has low leverage. We expect to return this capital through a balanced approach of base dividends, variable dividends, and opportunistic share repurchases. Our annualized base dividend of $5 per share has a yield of 3.2% and represents a 233% increase in less than two years. Our base dividend is a core part of our return of capital strategy and, importantly, is designed to be resilient at low prices and to be sustainable through commodity cycles. On repurchases, in July, we took the opportunity to repurchase $125 million worth of stock at an average price of $106.25. This represented close to 3% of the company, over 50% of the non-based dividend portion of our return program, and we have an additional $300 million of share repurchase authorization today. Given the above, we have declared a variable dividend of $2.42 per share for the quarter and have gone above 75% of free cash flow in determining this variable dividend. The aggregate variable payment of approximately $100 million is the difference between approximately 85% of the $326 million of free cash flow generated in the third quarter, minus the base dividend of around $52 million, minus $125 million of share repurchases. Since the merger closed, and including our November payout, we will return $869 million of capital as core, and our third quarter return of 85% of free cash flow will amount to $277 million and represent an annualized yield of 18%. In other highlights for the quarter, in September we successfully monetized $16 million or about 76% of our Crestwood units at an approximate discount of 6.5%. Gross proceeds were roughly $428 million and we're expecting cash taxes of around $10 to $15 million. The company took the opportunity to monetize these units given an attractive mix of market conditions which allowed us to unlock this value at a fairly modest discount. After the sale, CORD currently holds about 5 million Crestwood units. Now turning to ESG. You may have noticed we recently posted a letter to our stakeholders on our website, along with pro forma ESG metrics for the combined companies. We provided this information in the interest of transparency and to remind the markets we are dedicated to providing robust disclosure and improving our performance. In 2023, we plan to resume publishing a full sustainability report after the integration is complete. Highlights include a trend of reduced GHG intensity, improved freshwater intensity, a continued commitment to safety for employees and contractors, and maintaining strong corporate governance. Cord is currently using Tier 4 engines and dual fuel on our frac fleet, and also battery systems on our rigs, which reduce the need for diesel-generated power. These technologies have mutual beneficial impacts of reducing emissions while also saving costs. On to the mergers. We continue to make substantial progress on integration and remain very excited about our prospects going forward. We continue to make progress on the staffing side, having solidified leadership over the summer, with further progress on managers and staff in the third quarter. We continue to integrate software and processes across all verticals. And as a reminder, we've identified over $100 million per year of total synergies versus our original expectations of $65 million. On the capital side, we're optimizing our drilling rigs and are implementing best practices. We're also implementing new practices to optimize completions as well as facility design and construction. On the operating side, in the near term, we're expecting initial investments to create the groundwork to reduce artificial lift failure rate, and we should start to see the benefits of that later in 2023. Additionally, we're centralizing maintenance and other operations while consolidating routes and driving further efficiencies. And on the G&A side, we remain on track for approximately $35 million of cash savings versus the pre-merger baseline. All in all, I'm very pleased with the progress we're making and the new opportunities the team have identified. I can't thank our people enough for driving this progress and making it happen. Your efforts are recognized and sincerely appreciated. And with those highlights, I'll now turn it over to Michael for some financial updates.
spk03: Thanks, Danny. I'll highlight a handful of key operating items for the third quarter. As you see in our IR materials, we converted to three-stream reporting for the combined company. I just want to acknowledge the Cord team for their hard work on this front. Converting to 3Stream was a major undertaking, and the accounting, marketing, reserves, and planning teams spent a ton of hours making this happen. Thank you. Crude realizations remain at a premium to WTI, which we expect will continue into the fourth quarter. Additionally, we provide a new disclosure on gas and NGL realizations, which are net of certain marketing fees. LOE averaged $9.86 per BOE for the third quarter, reflecting higher workover spending. As our guidance implies, we expect this to trend down in the fourth quarter. Cash GPT was $2.39 per BOE, below the midpoint of the range provided in August. And production taxes were approximately 7.9% of oil and gas revenues in line with guidance. As a reminder, our production tax guidance increased from 7.5% range in the first half of 22 to approximately 7.9% in the back half of the year, reflecting the recent increase in North Dakota oil taxes. This increase relates to a pricing trigger effective in June as a result of WTI averaging above $94.69 per barrel for three consecutive months. The rate is set to reset back to lower levels seen in the first half of 2022 if WTI averages below $94.69 per barrel for three consecutive months. And based on the latest WTI pricing, this is expected to occur in November. Cored cash G&A expense was $16.3 million in the third quarter, and that excludes $55.6 million of cash murder-related expenses. In the third quarter, court took the vast majority of the expected merger-related expenses, and we expect these items to fall significantly in the fourth quarter. Court paid no cash taxes in the third quarter. In the fourth quarter, cash taxes are expected to be approximately $10 to $20 million, plus an additional $10 to $15 for cash taxes associated with the September divestment of the Crestwood units. CapEx was $230.1 million in the third quarter, about $50 million below initial expectations. The delta largely relates to timing, which is reflected in our fourth quarter guidance. Overall second half 2022 capital expectations are down a bit from our August update. Cord has nothing drawn on its $2.75 billion bargain base. That's up recently from a $2 billion bargain base. And now we have a billion dollars of elected commitments up recently from the $800 million level. Cash was approximately $659 million as of September 30th. In closing, a huge thank you to the full Cord team for delivering a great third quarter and and expectations for the remainder of the year. This sets us up well moving into 2023, led by strong well performance and continued focus on cost control, which leads to excellent return on capital and a peer-leading return of capital program. With that, I'll hand the call back over to Jamie for questions.
spk11: Ladies and gentlemen, at this time, we'll begin the question and answer session. You may press star and then one using a touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue.
spk04: We'll pause momentarily to assemble the roster. And our first question today comes from Scott Hanold from RBC Capital Markets.
spk11: Please go ahead with your questions.
spk09: Thanks, Al. Good morning. You know, I was kind of curious on shareholder returns and, you know, if you can give us some thoughts on what you think about the mix going forward. And, you know, the context being you obviously were fairly aggressive in July with buybacks, but it looks like it shut down from that point. So, you know, as you see it, do you find that buybacks are more opportunistic versus when the stock price goes down versus something that's more sustainable. In just some context around that would be great.
spk02: Thanks for the question, Scott. Scott, it's good to hear you asking a question. On the return of capital program, if you look at what we did over the course of the quarter, it represented about 55% of our sort of what I'll call discretionary return program. So that's the non-based dividend portion of that program. And so we think that share of repurchases are a meaningful avenue and a meaningful part of our overall return of capital strategy, and certainly represented that within 3Q. As we look forward, I anticipate those will continue to be a meaningful part of a return of capital strategy. As you note, though, we do look at this opportunistically, not programmatically. And clearly early in the quarter represented a great opportunity for us to do that. And so we leaned in hard to that element as a result of that opportunity that we saw. And when we think about opportunity, it really is around sort of our not just where we think the inherent value of our shares are, but also our relative trading performance. And so we take lots of factors into account when we think about that. But we do anticipate it's going to be a meaningful part of our return of capital strategy, both now and as we move forward.
spk09: Got it. Thanks for that. And, you know, I guess my next question is going to target more on the identified synergies and integration, I guess, you know, holistically. You know, obviously, you all, you know, identified the hundred plus million dollar targeting. Can you give us some context just from obviously, as you know, everybody here is sitting on the outside looking in, just give us a sense of like, how should we see the synergies kind of evolve into, you know, I guess it would be ultimately free cash flow because, you know, obviously there's a lot of things going on, you know, such as inflationary pressures and everything else. So, like, you know, where do you think, like, from an investor and analyst perspective, we're going to be able to step back and saying, look, yeah, here are the synergies, obviously outside of the G&A, which are, you know, is pretty straightforward.
spk02: Yeah, and unfortunately, to your point, Scott, we've got a bit of a sort of changing backdrop that we're identifying these synergies against as we see inflation and overall costs move up. The good news is the overall organization is much better positioned than either organization would have been standalone to weather this sort of inflationary environment. And so the cost we're seeing are, you know, we're trying to hold ourselves accountable very deliberately with how we're thinking through synergies and the identified synergies that we've got. And so what I think you'll see is our cost structure being lower both from an operating perspective, an LOE perspective, a G&A perspective, and a capital perspective than it would have been otherwise. But of course, those overall, we have to factor inflation into this as well. And so the $100 million in synergies is really sort of at the same, same cost level. And so as you see cost increase, some of those will erode, but it would have been that much worse had we not been able to do this. And so we're trying to We're trying to be intellectually honest about this and hold ourselves accountable for it. We've got a lot of work streams internally within the organization to make sure we're actually realizing these synergies, but do understand that with the backdrop moving, it can be a little hard to quantify at the end of the day. What you should see generally, though, is an impact to our free cash flow, as mentioned, due to a lower cost structure, both on the CapEx and OpEx side.
spk09: Yeah, and I guess it does hit a lot of different line items, too, but I guess big picture is that you know, as we started thinking about 2023 CapEx, and I assume it's too early to give much color on that, but, you know, it'd be interesting to hear if you all think you can hold the line a little bit more relative to peers given those synergy savings potentials.
spk02: Yeah, it's a great question, Scott, and to your point, we're not ready to give full detailed guidance on 23 yet. That's probably something that's going to happen, you know, toward the beginning of next year, but I will say just more generically, that we feel really good about our ability to deliver next year. And I think given some of the impacts we saw across 2022, both the weather that we saw in April and now some of these till delays toward the latter part of the year, we're likely to show a little growth year over year for essentially a similar activity level. When we think about capital, with the inflation we've seen to date through sort of run through the system and given where we think things are going as we move forward, We're expecting, you know, maybe around a 10% increased cost for 2023 relative to 2022, but we're refining those numbers and we're going to give, you know, sort of full detailed guidance around that after the beginning of next year.
spk04: Appreciate all that. Thank you. And our next question comes from Derek Whitfield from Stiefel.
spk11: Please go ahead with your question.
spk06: Thanks and good morning all. Morning, Derek. Perhaps for Danny or Michael, I wanted to touch on inventory. It's certainly a topic of focus throughout earnings thus far. As we've talked about it in the past, the market generally overvalues Permian Inventory and undervalues Wilson Inventory. As investors are increasingly focused on the quality and depth of inventory, are there any general high-level comments you could offer on the resiliency of your returns and the impact your monolaterals will have on your ability to sustain comparable capital efficiency? as you look out over the next three to five years.
spk02: So, Derek, I love the question, and I tell you, Michael and I had a conversation about this recently, and so since you mentioned him, I thought you had some great comments in the conversation that I had with him, so I'm going to ask him to respond to this, and I may weigh in with some color comments as we go forward.
spk03: Yeah, Derek, great question. Look, I would say it's a couple of things, and I like the way you framed it. I think that with more three-mile laterals, with the synergies that we just talked about as well, and that coming through, you will see capital efficiency hold pretty strong through our program over the next few years. So the sustainability of that capital efficiency we think is actually very strong. We are not seeing maybe the same magnitude of cost pressures that you might see like in the Permian. And so there might be some additional pressures where other companies are seeing that we might not be seeing necessarily quite as much. And then I think the other important piece that you kind of touched on as well is the predictability of our inventory versus maybe other basins in general. You know, we are a more mature basin and we have, I think, very good, strong predictability into our inventory and A little bit less of the things that other basins are being challenged with as they're spacing and parent-child degradation. I think things are just a little bit more understood in the Bakken. So the predictability, I think, is a very strong consideration as you're looking at not only the capital efficiency and the resiliency and the length, but also that predictability piece.
spk04: Terrific.
spk06: And as my follow-up, I wanted to build on Scott's first return of capital question. While you clearly stopped short of increasing the payout to 85% in your messaging, it would appear that you have a strong balance sheet clearly in cash positions and that that could allow you to sustain over 75% for the foreseeable future. Is that a fair assessment?
spk02: Derek, we've got a strong balance sheet. We think we've got a great return of capital plan and program, which does have some pluses at the end that allows us to lean into those if we think that's the appropriate thing to do. So given the free cash flow generation, the low reinvestment rate that we've got, and our balance sheet, I think we're in a great position for a return of capital.
spk04: Terrific. Thanks for your time this morning. Thanks, Derek.
spk11: Our next question comes from Neil Dingman from Truist Securities. Please go ahead with your question.
spk05: Hi, everyone. This is Patrick Enright stepping in for Neil Dingman here. At the start of your presentation, you mentioned the operational delays in the third quarter, I believe it was due to a casing issue. First part of my question is whether this is a one-off or something that you've seen that you anticipate may occur in the future. And then the second part to that is what was the impact of the casing issue to the surrounding wells? Is there a typical downtime timeframe that you can provide?
spk02: Thanks for the question, Patrick. I might lead off quickly and then ask Chip Reimer to weigh in on some more operational specifics. Generally speaking, we see this as a one-off event. sort of for a discrete set of wells that are involved in this. And so nothing sort of systemic or what we think would be repeatable associated with this. And so that's good news. It is frustrating. But I'm going to ask Chip to weigh in and provide some more detail.
spk07: Yeah, Patrick. This is Chip Reimer. Thanks for the question. And you're right, Danny. It's a one-off issue. We've already repaired one of the wells, and the second one will be done today or tomorrow, probably. Anticipate fracking these wells later in the month sometime here. We had those prior set for end of third quarter, and we're going to have to push those later to the end of the fourth quarter, but that's the impact on that. And then you hit it exactly right. When you have some of these wells, it depends how many wells you have around. You have to do the frack protect and shut those down. And so When you look at it, probably what we adjusted our guidance to, probably 75% is associated with this event, but it's a one-time event. I feel real good that we're going to be able to frack that and keep it going. Terrific there. Thanks very much. Yeah, and it's really, we had a white space in the back, so we're just extending this down. We didn't have a period of time there. We didn't have a completions running, and so it's just pushing it down a little further. Great there. Thanks.
spk11: Our next question comes from Phillips Johnson from Capital One. Please go ahead with your question.
spk08: Hey, guys. Thanks. Maybe just to follow up on Scott and Derek's question on capital return, it makes sense you guys got aggressive on the buyback given where the stock was in July. But I know the formula uses variable dividend as sort of a plug to sort of get you to your total target. So just wondering why you plugged at 85% rather than 75%.
spk02: So Phillips, appreciate the question. As you know, when we put that framework out, we put that framework intentionally out with some pluses at the end to give us some flexibility. And so if we felt like we were in a position where we could lean a little harder into return of capital, given quarterly performance, given balance sheet, we had an opportunity to do that. We think the performance we saw in the quarter and given where our balance sheet sits currently was an appropriate thing for us to do to lean in a little harder into this return of capital strategy, and that's why we landed on the 85%. Okay. Makes sense.
spk08: And then just I guess you've got about 5 million units remaining in Crestwood. Just wondering what the plan might be for that. And then I guess if you did ultimately monetize that, I believe the tax leakage would be a little bit higher than the units that you just sold. So can you remind us what the potential tax implications would be?
spk03: Sure. Great question, Phillips. So yes, we have 5 million remaining shares. What I'd say is that the share sale that we did in September was pretty opportunistic. We saw a great chance of doing a few things. One, monetizing some of the units at a good discount, really helping the trading of the Crestwood units as well by removing an overhang. As you know, those are always kind of tricky monetizations, and so this is a way to really have a pretty elegant solution, but it was pretty opportunistic. It came very quickly and came together at a great discount for us as well. I'd also note that we are very happy shareholders. They're doing a fantastic job. They're our largest midstream provider and we're the largest customer on their system. We love what we're doing. You see the well productivity that we've been talking about and the strength of that. We feel very confident in what Crestwood's doing. So we really like those shares. They're paying a really strong distribution as well. So we like that side of it as well. So we have no current intentions on that side to speak of, but you mentioned the tax perspective on that. So what you'll note is that the large sale that we did in September comes with very little tax leakage on those units, but the remaining units have actually a negative basis associated with them, and that'll lead to, if we monetize tax let's say today at the current share price that Critswood's trading at, it would be about a 40% to 50% tax leakage on the remaining shares. So that gives you kind of a band of what that might look like in today's prices. Obviously, that changes a little bit if prices move up or down on those units.
spk04: Great.
spk08: That's very good, Colin. Thanks very much, Michael. Appreciate it.
spk04: Absolutely.
spk11: Our next question comes from David Eckelbaum from Cowan. Please go ahead with your question.
spk01: Thanks, Danny, Michael, Chip. Appreciate you taking the time today.
spk02: Absolutely. No problem.
spk01: You know, wanting to talk about just the Crestwood modernization, obviously now you have, you know, almost $700 million of cash on the balance sheet, and you project to be quite free cash generative. You have a pretty generous return on capital program, but And anyway, how do you think about the cash balance right now? It appears to be a bit elevated and doesn't seem like the Crestwood monetization is necessarily going or being considered in terms of return on capital. So maybe it's more philosophical, but just wondering how you're thinking about that heading into next year.
spk02: Yeah, thanks for the question, David. So I think it's a great question, and we continue to evaluate the use of proceeds here and And I'd say, as always, we've been transparent about our thoughts here. We frame our capital allocation decisions really around four different buckets, those four being around organic growth opportunities, debt repayment opportunities, inorganic opportunities, so M&A-type things, and then share returns. I'd say we think we've got a pretty robust framework from a share return perspective. I talked briefly about our capital plans and our capital plans for for our 2023. And obviously, as you mentioned, our balance sheet's in a great spot, so debt repayment isn't really something that we're very focused on. And so I think we have, given this return framework we've got that we feel is pretty robust, we also do think about how we're positioned within industry. And we've mentioned before that consolidation is an important is an important theme for us and that we need to participate in that one way or another. And so we think having a little bit of firepower on the balance sheet to be opportunistic if the opportunity presents itself is a good thing for us. But we're going to be very prudent about that. I think I'll say that we've passed on a few opportunities and we're very discerning on these sorts of things, but we think we're well positioned to be a consolidator. And just given... you know, given our balance sheet and where the banks are at currently, it probably makes a little sense for us to have a little firepower around that. But we'll continue to evaluate the use of proceeds and really all capital allocation in the framework I mentioned earlier. And really our goal at the end of the day is to be seen as great capital allocators across the cycle, and that's really important to us.
spk01: Thanks, Danny. It was a nice and fulsome response. If I could ask one about 23, I know you're not prepared to give explicit guidance, but thinking about just sort of benchmarks or goalposts, is it fair to say with fourth quarter, you know, the implied guide or explicit guide of 170 to 200 includes perhaps a little bit more activity than we would see on an average run rate basis next year? You know, one, is that fair to say? And then two, I guess if we think about just cost inflation on top of what we're seeing now, do you still have outstanding RFPs for most of the work to be performed in 23 with frack crews and drilling rigs?
spk02: So on the RFP side, we've got rigs contracted through, you know, through the better part of next year, not completely through the full year, but through the better parts. So sort of think through kind of third quarter timeframe. And so from a rig standpoint, that's that's nice. You know, I will say there's, you know, on any of these things, particularly with some of our completion costs, a lot of these costs are pass-through in nature, and so as we see fuel costs move up, our costs move up, and, you know, we can see labor adjustments and that sort of stuff, not so much on the rigs, but with some of the other services we have. So I think it helps secure those services for you. Certainly on the drilling side, it helps lock some of your costs in, but you can see some cost movement, even with your contracts on some of the balance of the program. But feel great about the services, you know, the availability of services for us as well as the rates we've got currently under contract. With respect to activity, you know, fourth quarter, to your point, we've got a lot of activity in fourth quarter. It's probably not on a run rate basis, probably a little more than what we would do on average over the course of 2023. So it may not be the best marker to use if you're trying to project out what our 2023 program looks like. My comments earlier with respect to kind of how we're thinking about 23 is probably a better way to think about it. So I think probably slight production growth year over year. We recognize we've had some hiccups over the course of this year with the weather that came through earlier in the year and then with these till delays. So slight production growth likely year over year. for, you know, on an inflation-adjusted basis. I think maybe it's a similar cost, but factoring in inflation is probably 10% up, something like that.
spk01: I appreciate the answers.
spk11: And once again, if you would like to ask a question, please press star and 1. Our next question comes from Paul Diamond from Citi. Please go ahead with your questions.
spk10: Good morning, all. Thanks for taking my call. I just wanted to touch base quickly on, as you guys progress more towards three-mile laterals, has there been any kind of unexpected pain points or unexpected simplicity that you guys have encountered, or has it all been pretty run-of-the-mill?
spk02: Yeah, I'd say one of the great things about Bakken is it's pretty easy drilling up there, and we've certainly seen that with these three-mile laterals. A lot has chipped away more, but the program's gone very, very well.
spk07: Yeah, and I'll knock on wood, it's gone very well, Paul. So I appreciate the question and the drill outs. So, you know, that's always one of the challenges. And we have a coil unit out there that can go three miles. We've been able to go, we have eight or ten of these out right now. We've been able to go almost near the toe all the way to the end. Plus we use dissolvable plugs. And so we feel real good about clean outs. And that's actually going to save us when it's all said and done because some of our plant had two clean outs on these going forward. So I see a big savings there going forward.
spk10: Understood. Thanks. And then just one quick follow-up. You guys have talked about wanting to be very selective about any potential bolt-ons or acquisitions and should you pass on a couple of deals. Was it more of a pricing or an acreage or kind of what was the rationale on passing and kind of what makes and what in your mind is that sweet spot for a deal?
spk02: Yeah, I think you factor all those things in. And so you want to make sure that you're Which I think is appropriate. How do we weigh those things against one another? It may be cost and acreage and quality of inventory and quality of existing production. So there's a whole lot of factors that go into it. We think we're in a great position. We've got a deep inventory base within our own position currently. But we do think we are a very sensible consolidator. And so we're going to be opportunistic and look to participate in that market, but also recognize that We need to make the organization better through these actions, not just bigger through these actions. So we'll be selective, but when the opportunities present themselves, we want to be able to act on them if they're the right thing.
spk04: Understood. Thanks for your clarity. Thanks, Paul.
spk11: And, ladies and gentlemen, with that, we'll conclude today's question and answer session. I'd like to turn the floor back over to Danny Brown for any closing remarks.
spk02: Thanks, Jamie. Well, to close out, I'd like to thank everyone for their time today. I'm very happy with how the integration is progressing and think we're creating an excellent company with a differentiated opportunity to create value. We remain very committed to our core strategy, which revolves around being strong capital allocators, retaining financial flexibility, and returning significant amounts of capital to shareholders. We're doing this with a focus on sustainability and drive for further improvement across every aspect of our business. We're excited about the opportunities going forward for our shareholders, employees, communities, and other stakeholders. Thanks for joining our call.
spk11: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
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