Earnings Call Transcript - CHRD Q2 2022

Operator, Operator

Good day and welcome to the Chord Energy Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Michael Lou, Chief Financial Officer. Please, sir, you may proceed.

Michael Lou, CFO

Thank you, Curl. Good morning, everyone. Today we are reporting our second quarter 2022 financial and operational results. We're delighted to have you on our call. I'm joined today by Danny Brown, Chip Rimer, and other members of the 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 reference 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 also find on our website. With that, I'll turn the call over to our CEO, Danny Brown.

Daniel Brown, CEO

Thanks, Michael. Good morning, everyone, and thanks for joining our call. Today we'll discuss our integration progress, our new return of capital program, second quarter 2022 operating and financial results, and finally, our expectations for the balance of the year. But first, I'd like to take a moment to address and acknowledge our employees. I know the past several months have been challenging, but your hard work and dedication have culminated in the successful close of our merger on July 1, great progress on integration, and have put us in an excellent position to succeed as we move forward. My sincere thanks for all you do for our organization. July 1st marked the end of two companies and the beginning of another. We chose the name Chord Energy as we feel the two common definitions of the word chord have significance to the merger and our organization. First, the mathematical definition of chord refers to the joining of two points on a curve, which we view as a metaphor for our merger of two premier and focused companies. Second, in musical terminology, a chord represents multiple musical notes played simultaneously to create harmony. We thought this was very aligned with the harmony we strive to achieve with all of our activities as we work to simultaneously be good stewards of our team, our communities, the environment, and importantly, the investment our shareholders have entrusted us with. Given this is our first conference call as a combined company, I'd like to talk about the progress we've made over the past two years and how that relates to our path forward. Over 2021 and 2022, our predecessor companies streamlined their cost structures and pivoted business strategy toward low reinvestment rates and high return of capital. We did this while implementing progressive shareholder-aligned long-term incentive programs. Additionally, we divested multiple non-core assets to focus on areas where we have competitive strengths. Oasis simplified and then divested its midstream company, which made the core EMP business more focused, less complex, and brought significant value to shareholders. We both grew our asset portfolios in core areas and did so in a prudent manner with a focus on value and our ability to return cash to shareholders while keeping leverage at appropriate levels. Additionally, we prioritized ESG initiatives, significantly increasing the transparency of the business and providing a baseline from which we can improve. Finally, we returned a significant amount of capital to shareholders through multiple avenues, including base variable and special dividends, as well as share repurchases. We've had a great deal of success, and we'll continue to manage the business in a prudent and sustainable manner with a best-in-class balance sheet, emphasizing return on and of capital. Now I'd like to provide a little bit more detail on integration progress. On that front, we remain as excited as ever about the future of our company. The industrial logic of the combination remains sound, and we are well underway with integration, having announced the organization's leadership through the first few layers of the company and are now working to select and implement the best practices, process, and systems across all of our organization. We're using the integration as an opportunity to challenge the status quo and seek ways to improve the way we do business. We're having our leaders and teams keep an open mind and determine the best way to do things going forward without any bias towards the way things were traditionally done at either predecessor company. This is critical if we're to capture all the opportunity that this merger offers, and we've seen great results. We have now identified over $100 million per year of merger synergies, which we expect to realize over time. On capital and operating synergies, we see multiple opportunities to leverage each company's proven strength in areas such as shortening well downtime, running a more efficient workover program, reducing drilling days, improving well completions, optimizing facility design and construction, and many other aspects of the business. We will elaborate more in the coming quarters, but I'm pleased with the progress we're making and the new opportunities the team has identified. Now moving to return of capital, Chord Energy announced its return of capital strategy last night, which is centered on a commitment to returning high amounts of capital to shareholders while maintaining financial strength. In accordance with this objective, we've made the plan dynamic as it allows for higher free cash flow return when projected leverage is at low normalized levels. We expect to pay out 75% or more of free cash flow when projected normalized leverage is below 0.5 times EBITDA, which with our current strong balance sheet is where we are today. If or when leverage is above 5.5 times but below 1, we expect to pay out 50% or more of free cash flow. In any event normalized leverage exceeds one times EBITDA, we would pay the base dividend and use remaining free cash flow to rapidly pay off debt as our long-term leverage target is below one times at normalized pricing, and maintaining a strong balance sheet is a key priority for the organization. As part of our return program, we are increasing the base dividend immediately to $1.25 per share per quarter or $5 per share per year. This represents an increase of well over 100%. Given our outstanding share count, this represents an aggregate dividend payment of approximately $52 million per quarter. Our base dividend yield is the highest amongst our mid-cap peers and importantly is designed to be resilient at low prices and to be sustainable through commodity cycles. In practice, at the end of each quarter, Chord expects to announce a variable dividend based on the difference between our targeted free cash flow percentage and the amount of capital used to pay the base dividend and repurchase shares during the quarter. We expect both variable dividends and share buybacks to play a role in our capital return framework. In conjunction with our return of capital plan, we also announced the approval of a new repurchase authorization for $300 million, which is on top of $125 million in shares repurchased in July. Our return to capital program is highly competitive, represents our core strategic values, demonstrates our competence in the asset base and our ability to execute, and maintains organizational flexibility. Now for a few words on the second quarter, we pre-announce 2Q operating performance on July 1 and last night provided actuals, which were generally in line with those initial ranges. As you recall, severe winter weather hit North Dakota in late April, which had a significant impact on the power grid and adversely impacted production and per unit cost. However, actual performance during the quarter was stronger than originally expected after the storms as power was restored sooner than we forecast in May. Volumes exceeded expectations, realizations were strong, and per unit costs were better than we expected. Capital was also below our expectations, although this larger reflected timing as activity shifted to later in the year. And so as we look at the back half of 2022, we are providing third quarter guidance and also updated full-year 2022 guidance pro-forma for the combined company. Without the weather impact, our updated guide would be above our initial guidance, with the driver being good uptime and outperformance across the board on recent well completions. I encourage you to look at our latest investor presentation for some perspective on the new wells we've brought online over the past year, which are performing quite nicely. Including the weather impact, we are slightly below our original midpoint, but are very pleased with our operational performance. We updated our full-year 2022 capital budget range to $730 million to $760 million, reflecting our estimates for the second half of 2022 service pricing and expected completion activity. The increase versus our original expectation reflects increases in pricing beyond what we originally forecasted in February, as well as the shifting of some activity into the back half of the year, where service costs are higher due to inflation. The current services environment is just another example of why our merger makes great strategic sense. The increased scale of the company will allow us to level load our program, including keeping a pressure pumping crew working full-time, which should lead to greater operational efficiency and therefore lower cost than we would experience otherwise. Also, on the topic of completions, we recently brought on the Bakken's first dual-fuel crack fleet, which will drive our second half program while lowering our emissions profile. We currently expect to run three rigs and about one and a half rack crews in our near-term focused areas, which includes Spanish, Indian Hills, City of Williston, FBIR, and Cassandra. As a reminder, at our current completions pace, we have over 10 years of inventory economic at sub-$60 per barrel WTI. Finally, I want to discuss our ESG strategy. Chord Energy remains committed to our core ESG principles of providing safe, reliable energy in an ethically and socially responsible manner for the long-term benefit of our stakeholders. Transparency remains a key part of our strategy. We expect to provide more disclosure before year-end, including pro-forma metrics for the combined organization. Throughout the remainder of this year and 2023, the board and management will evaluate our current strategy and identify areas where we can improve. Shareholder feedback certainly influences this process, and we look forward to engaging with the investment community on this and other topics at upcoming conferences and other investor discussions. With that, I'll turn it over to Michael for some financial updates.

Michael Lou, CFO

Thanks, Danny. Second quarter results in our press release and upcoming 10-Q filing generally reflects standalone performance from our predecessor company. However, we provide tables in our press release and presentation, which highlight performance from each legacy company along with combined pro-forma Chord Energy results. I will now highlight a handful of key operating items for the second quarter. The numbers mentioned reflect pro-forma Chord Energy and are calculated on a three-stream basis for both companies unless otherwise noted. As a reminder, we'll be moving to three-stream reporting for the combined companies with third quarter results. In the second quarter, pro-forma Chord volumes of 158,600 barrels of oil equivalent per day were at the high end of the range provided on July 1. You'll see that our CapEx is a little bit higher in the second half, and as a result of that, our production guidance is also higher for the second half. Both crude and gas realizations were strong in the second quarter, as markets are fairly tight around the Williston and continue to remain strong for the second half as well. LOE averaged $10.06 per BOE for the second quarter, reflecting downtime and higher workovers related to the weather disruptions that Danny mentioned. As you can see in our guide, we expect per unit LOE to decrease a bit in the second half of the year, reflecting less downtime. Cash EPT was $2.81 per BOE in line with the midpoint of the range provided on July 1. Production taxes were approximately 7.4% of oil and gas revenue at the high end of the July 1 preliminary range. Our production tax guidance for the third quarter of 7.7% to 8.1% reflects the recent increase in North Dakota oil taxes. This increase relates to pricing triggers as of the beginning of June. WTI averaged above $95 per barrel for three consecutive months. The rate would also reset back to lower levels if WTI were to average below $95 per barrel for three consecutive months. Pro forma Chord cash G&A expense was $32.6 million, but $23.6 million excluding approximately $9 million of merger-related costs. CapEx was $172.7 million in the second quarter, below initial expectations. The delta largely relates to timing, and we updated our full year CapEx forecast for the latest pricing trends. Overall, pro forma free cash flow was over $300 million in the second quarter. As of July 31, Chord had nothing drawn under its $2 billion borrowing base revolver and we've got $800 million of elected commitments under that revolver. Cash was approximately $96 million as of July 31 as well. We're providing that July 31 data so that analysts have a reference point after merger cash consideration, special dividends, share buybacks, and a significant amount of transaction costs that were paid in July. Chord Energy also has $400 million of senior unsecured notes due June of 2026. Chord's debt ratings were recently upgraded by both Moody's and S&P. As Danny mentioned, we have announced a compelling return of capital framework. This includes a declaration of a base dividend of $1.25 per share payable August 30 to shareholders of record on August 16. Additionally, Chord repurchased approximately $125 million under its repurchase program in July at a weighted average price of $106.25 per share. This equates to about 2.7% of the company's market cap. We've also announced a new $300 million share buyback authorization on top of that. Overall, we continue to demonstrate a commitment to significant shareholder return with over $1.1 billion returned to shareholders in the past 18 months. In closing, thank you to the entire Chord team for the exceptional hard work during a quarter with extreme weather conditions and a significant amount of merger integration work. As a result of that hard work, we are executing extremely well from an operational standpoint, identifying more synergies than originally anticipated, which all bolsters our sustainable free cash flow outlook and our peer-leading return of capital program. With that, I'll hand the call back over to Caroline for questions.

Operator, Operator

The first question comes from Derrick Whitfield with Stifel. Please go ahead.

Derrick Whitfield, Analyst

Good morning, all, and congrats on your quarter and update.

Daniel Brown, CEO

Thanks, Derek.

Derrick Whitfield, Analyst

With my first question, I wanted to focus on the announced increase in PV10 synergies from the Oasis and Whiting merger. Relative to your base case, could you elaborate on the one to two primary drivers and if there are additional capital synergies, you're sensing now that the teams are fully integrated.

Daniel Brown, CEO

Thanks for the question, Derrick. I'm going to maybe talk about our integration process and the synergies we're seeing broadly and then ask Chip to maybe add some additional detail and maybe identify one or two areas that we think may be driving this. But I'll tell you honestly, Derrick, it's a lot of little things. One of the great things about the merger is that we really are using this as an opportunity to do a bit of self-reflection and look at how we do business. We are looking line by line across all aspects of our operations, our processes, our systems, and unsurprisingly, Oasis focused on certain things; Whiting focused on certain things and got very good at those things. This process has allowed us to truly look under the hood on each other's side and identify the best way we think to go about doing things. In some cases, we'll decide, and we have decided, that maybe the Oasis way and the Whiting way, neither one was the right way to do things. We're implementing a new approach moving forward, but this opportunity through the merger is really giving us a chance to reflect on how we do things. We're seeing improvements really across the board through lots of different categories. I'll turn it over to Chip, and he can give some more specifics on some of those that may be larger than others, but I will say it really is across all aspects of our organization and business.

Chip Rimer, CFO

Yeah, Danny, thanks. And Derrick, thanks for the question. I want to ditto what Michael and Danny said. I really appreciate the teams working through the last quarter under rough winter conditions. You think about the day job they have to do and the night job to put this together. As Danny indicated, it is across all phases, but I'll give you a couple, Derrick, as examples. On the completion side, one of the ways one of the legacy companies was doing their completions, we believe will impact our downtime on our production side. There will be less sand that enters the wellbore on the production side phase, and when you do that, we think we can improve our downtime drastically. When you do that, we have a couple of associated costs with workover rigs reduction and other savings costs on parts of that business when you're doing the workover side. There's a safety piece that gets improved. What we haven't included in the equation is that we'll stay continuously flowing or pumping or working. So there's an upside on the production side. Another aspect I'd like to point out is probably the facilities built. There's a modular design that is prefabricated in a shop, which minimizes the impact on location size to about 30%. Labor costs are cut in about 50% when you do that. There's also a safety component there. In terms of drilling, on the completion side, we are also using batteries to minimize our diesel impact and CO2 emissions. We're using the first dual-fuel fleet in the basin, so we're using CNG, which minimizes diesel usage. You have these values on cost that we see, along with the value on the ESG side. I'm really proud of what the team has accomplished and their impact.

Derrick Whitfield, Analyst

That's great. And as my follow-up, I wanted to ask if you could speak to the A&D market in the Williston at present with the understanding that you're still digesting this recent merger. I wanted to get a sense as to your appetite to participate in further industry consolidation.

Michael Lou, CFO

Yeah, thanks, Derek. I think we continue to see a range of opportunities from maybe small private opportunities to larger asset opportunities and other corporate opportunities. It really is a spectrum across the Williston, and we are obviously very focused on integration but also open to looking and examining further consolidation, recognizing that sometimes you don't control the timing of those opportunities. We'll be on the lookout for anything. We're very happy with what we're seeing with our transaction and bringing the two organizations together. We think we've got a significant inventory depth and a great position, but if we see opportunities to make our company better and deliver more value to our shareholders, that's something we're absolutely going to look at. So, I see a range of opportunities there, and we'll be looking at them, but our status quo position is a pretty strong one.

Derrick Whitfield, Analyst

That's great, Daniel. Great update, guys.

Operator, Operator

The next question comes from Phillips Johnston with Capital One. Please go ahead.

Phillips Johnston, Analyst

Hey guys, thank you. Next, let's see the higher payout ratio, and as you’ve noted, I don't think anybody else in this mid-co oil group is really close to that level. The question that many will, of course, have is sustainability over time. So just wanted to get your updated thoughts on overall inventory depth. You mentioned that you're okay with the status quo, but just kind of wanted to drill down a little bit and get your thoughts on inventory replenishment over time. I think that the last figure I have from you guys is around 1,000 to 1,100 gross locations for the combined company based on four to five wells per DSU.

Daniel Brown, CEO

Thanks, Phillip. This is Daniel. I'll ask Chip to weigh in if he's got some incremental comments here. I think that's still sort of how we see the world. I will say that as we're looking through and evaluating, as we can move from potentially two-mile laterals to three-mile laterals, which we like because obviously it delivers significantly more lateral footage from the zone, but at a lower capital cost. Those counts may change a little bit, but the overall lateral footage will stay about the same. One of the things we've talked about internally is we focus a lot on well counts and sometimes rig counts. What really matters is the lateral footage that we actually deliver in zone. From that perspective, on normalizing to the scenarios we talked about before, we still see around 1,000 to 1,100 wells, but as we convert to three-mile laterals, that number may go down, but the lateral footage stays the same, and the capacity to deliver production for our organization stays the same as well. Generally speaking, I think we feel like we've got about 10 years' worth of inventory from a development pace perspective, and obviously if we see opportunities to bolt on and increase that and it makes sense for us to do so, we're going to be very inquisitive about those types of things. But the inventory depth is pretty significant as we stand today.

Chip Rimer, CFO

I'm sorry, this is Chip Rimer. I would just kind of add onto that. Yeah, I agree 100% with what Danny's saying, and we're really looking at how we can manage and basically transition from two-mile to three-mile laterals because you imagine that last mile is probably 40% to 50% of the cost of what it is typically for two miles. So that capital efficiency is what we’re focusing on, and as Danny said, you really can't think in a world of rigs or wells anymore; it's about actual lateral footage.

Phillips Johnston, Analyst

Okay. And then just to follow up on the MA question, a 75% plus ratio would, of course, still leave you guys in a position to build cash at a pretty rapid clip, but what kind of appetite would the board have to do a deal that would temporarily push the leverage ratio above the 0.5 times threshold or potentially even above the one times threshold?

Daniel Brown, CEO

Well, I think if we see, obviously, that's I don't want to speak for the board because that's a discussion we would have at the board when that situation presented itself. But I think organizationally, if we saw a deal that we thought would make us a better organization and over the long term deliver more value to shareholders, in that situation that would take us to a leverage sort of above 0.5 or even potentially above one, that’s something we'd absolutely look at if we thought it was the right thing for us to do. I think maintaining a low leverage ratio is something that's very important for the organization. Our financial strength is a key tenant. That's why we've made this return of capital framework dynamic. If we found ourselves in that scenario, we would use incremental cash flow to deleverage pretty quickly to get back down under one, which we think is where we should be as an organization. That said, we don't feel compelled to do anything. Again, we feel like we've got a great position as we stand. If we see opportunities to improve that, of course we're going to look at it.

Phillips Johnston, Analyst

Sounds good, guys. Thank you.

Operator, Operator

And the next question comes from David Deckelbaum with Cowen. Please go ahead.

David Deckelbaum, Analyst

Well, thanks for taking my questions today.

Daniel Brown, CEO

Thanks, David.

David Deckelbaum, Analyst

I want to discuss the capital program. You mentioned some delays from Q2 into Q3, and CapEx has increased into the $200s, suggesting we may return to the $150 level. Looking ahead to 2023, considering the efficiency gains from reducing the number of rigs and the synergies you're identifying, how can we view the cost levels in the fourth quarter as sustainable moving into '23? If you're maintaining these levels in 2023, should we expect significant additional spending beyond what you've seen in '22?

Daniel Brown, CEO

Yeah, this is Danny. I'll make a few comments and then ask others to weigh in. We're not specifically discussing 2023 right now, as we are still putting our development plan together, which we will discuss in the coming quarters. Generally speaking, we're looking at a maintenance to maintenance plus program, with growth being very low and not significant year-over-year. There is some cyclicality in how we deliver production. We'll have one completion crew running continuously through the year, and another one will operate in the middle part of the year to deliver production. Our peak production will likely occur in the fourth and first quarters, followed by a slight dip until we resume completions and begin the next year. If you take a fourth-quarter number and apply that to the next year, it could mislead you regarding overall delivery for 2023. From a 2023 standpoint, the delivery plan should be similar to that of 2022. As previously mentioned, we will reduce rigs from four to three, but the lateral footage delivered throughout the year will remain fairly consistent year-on-year. Therefore, you should consider our 2023 plan to be quite similar to the 2022 plan.

David Deckelbaum, Analyst

I appreciate the color on that. And just maybe as a follow-up, it's highlighted certainly in the presentation that well performance of the combined companies has at least been matching or slightly exceeding some of the targets. With some of the integration and thoughts going into '23, are there any material changes that you're looking at undertaking that would change perhaps that performance going into '23?

Daniel Brown, CEO

So go ahead. So, David, I would say we are looking at sort of all aspects. I think a lot of these are maybe incremental changes relative to the way either organization did things previously. If we see, I would say, revolutionary changes that we think could offer significant improved performance, clearly we're going to be investigating those. But most of these adjustments are really about incremental improvement, but when you stack a lot of those changes together, they deliver some pretty impressive results. Unless Chip may comment more.

Chip Rimer, CFO

No, I would agree with that, Danny. Also, I think I give credit to both legacy companies and their subsurface teams. The subsurface teams have really understood, I believe, well spacing on DSU or infield drilling in things like our sand area, and they've brought significant impact to the company. As Danny said, there are small incremental changes we are making as we go along.

Operator, Operator

The next question comes from Fernando Zavala with Pickering Energy Partners. Please go ahead.

Fernando Zavala, Analyst

Hi guys. Good morning. I was hoping to dig a little more into the thought process behind the updated returns, specifically how you thought about balancing the building cash for potential M&A or share purchases and downturns versus paying out the vast majority of your cash flow apparently?

Michael Lou, CFO

Yeah, thanks. I think maybe I'll take that one. That's a good question. One of the great things about having a really strong balance sheet is that we believe it affords us a lot of flexibility, including the flexibility to be opportunistic if we see the right opportunity out there. As a result, I don't think we feel compelled to build a big cash balance because we have that inherent flexibility just because of the financial strength of the organization. That's why we've got that 75% plus out there, because in very low leverage scenarios, we would anticipate returning a significant portion of our free cash flow to shareholders.

Fernando Zavala, Analyst

Got it; thanks. And then a quick follow-up. I just wanted to get updated thoughts on the Crestwood ownership and the plans for those heading?

Michael Lou, CFO

Yeah, I think from a Crestwood perspective, we continue to really like the company. Clearly, they are a very important strategic partner for our organization. The equity performance has been good, and we like our ownership stake in that. I think over the long term, we recognize that that's not a core strategic holding for us, but we're pleased with that investment and think it is a great organization for us to have a holding in.

Fernando Zavala, Analyst

Thanks, that’s it for me. Appreciate it.

Operator, Operator

Last question comes from Prashant Jani with Truist Securities. Please go ahead.

Prashant Jani, Analyst

Good morning. I'm not sure if you guys explicitly outlined it, but I assume part of the rationale for the combination of the two companies was kind of a mid-stream position that could maybe reduce some of the constraints you've seen before. Have you had enough time to kind of look into this? Are you maybe going to reshuffle the operational plan specifically for this, or do you think you'd just focus on the highest return areas and let it shake out?

Daniel Brown, CEO

Well, I think when we're looking at development plans, and I'll ask Chip to weigh in, clearly we take all aspects into account as we build out a development plan, both those areas where we get the highest returns, but if you can't get those returns reliably in market, then those may not be the best area for you to drill at that time. We try to work in advance with our midstream providers as we can to ensure that we get the right infrastructure in place to work in the areas we want to drill, but that's an iterative process. As we build out this plan, we sort of take all that into account, preferentially going into those areas that we think offer us the best return, but also being cognizant of the infrastructure constraints that may be there, and working with our midstream providers to sort it out over time. Maybe I'll ask Chip for additional comments.

Chip Rimer, CFO

This is Chip Rimer. Thanks again for the question. Danny is exactly right. It's a holistic look at the program. What are your best returns? Where do you have takeaway? Where you don’t have takeaway? Thinking way ahead to ensure that we talk to our midstream providers so we can have that access properly connected to our wells. There’s an ESG component on this as well, so we want to make sure every molecule is captured and flowed down those lines. So as a responsible operator, that's what you’ve got to do. We have to ensure we’re closely connected with third-party providers. Our teams work closely, and every time we go through a budgeting process, we consider what wells we will produce. It's all around returns but ensuring product movement down the line. Well, I think as we looked at the strip, if the strip fell appreciably, then clearly we would look at those prices again. We think that the $65 and $3 represents a reasonable long-term normalized mid-cycle view, but clearly our thoughts on that may evolve over time, and we want to ensure that we maintain deep financial strength for the organization. If we found ourselves in a very different environment, we would absolutely go back and reevaluate.

Operator, Operator

Thank you. This concludes our question-and-answer session. I will now turn the conference back over to Daniel Brown for any closing remarks. Please go ahead.

Daniel Brown, CEO

All right. Thank you, Caroline. To close out, I'd like to thank everybody for their time today. I'm very pleased with the exceptional progress we've made in transforming our organizations. We remain committed to our core strategy, which revolves around return on and of capital, balance sheet strength, and being a sustainable operator. We're excited about the opportunities going forward for our shareholders, employees, communities, and other stakeholders. With that, thanks for joining our call.

Operator, Operator

This conference is now concluded. You may now disconnect. Thank you for attending today's presentation. Have a good one.