EXPAND ENERGY Corp (EXE) Q1 2022 Earnings Call Transcript

Good day, and welcome to the Chesapeake Energy Corporation First Quarter 2022 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Brad Sylvester. Please go ahead.

Thank you, Andrea, and good morning, everyone. Thank you for joining our call today to discuss Chesapeake’s first quarter 2022 financial and operating results. Hopefully, you had a chance to review our press release and the updated investor presentation that we posted to our website yesterday. During this morning’s call, we will be making forward-looking statements, which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance, and the assumptions underlying such statements. Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements, including the factors identified and discussed in our press release yesterday and in other SEC filings. Please recognize that except as required by applicable law, we undertake no duty to update any forward-looking statements, and you should not place undue reliance on such statements. We may also refer to some non-GAAP financial measures, which help facilitate comparisons across periods and with peers. For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure can be found on our website. With me on the call this morning are Nick Dell’Osso, Mohit Singh and Josh Viets. Nick will give a brief overview of our results, and then we will open up the teleconference to Q&A. So with that, thank you again, and I will now turn the teleconference over to Nick.

Thanks, Brad, and good morning, everybody. Thanks for joining the call. We’ll get to Q&A shortly, but first I want to spend a couple minutes talking about where the industry sits today and how we’re seeing the year unfold. We’re off to a really strong start. In the Marcellus, we closed on Chief and we’re busy integrating these great assets. Our team is excited to unlock the value we saw in the acquisition, and we’re encouraged about the early opportunities we see for further upside. In Haynesville we’re through most of the significant elements of the integration and the results are strong. Combining the expertise on the Vine team with ours, we just drilled the fastest intermediate section in our history in the basin. In the Eagle Ford, we restarted our capital program, and we continued to see outstanding returns and significant free cash flow. Additionally, we also continued to lower our emissions profile, having completed over half of our pneumatic retrofit program and we’re well on our way to having our Marcellus assets join the Haynesville as independently certified responsibly sourced gas. The first quarter marks the first full period we owned the Vine assets. We delivered $532 million in adjusted free cash flow in the quarter, setting a new quarterly record for Chesapeake. As a result of this increase and the further uplift we expect following the close of Chief in March, we’ve increased the 2022 free cash flow outlook by $700 million, raising the midpoint of our range to $2.7 billion. We believe these transactions are great examples of how consolidation yields improve cost structures, capital efficiency, and most importantly, accretive free cash flow. Given the depth of our inventory and its resiliency through commodity cycles, we expect to maintain this robust free cash flow profile for a very long time. Today, our free cash flow per share and free cash flow per debt-adjusted share lead the peer group by a significant margin with $10 billion of free cash flow anticipated over the next five years. A robust dividend combined with a large buyback program positions us to execute what we believe to be one of the most powerful cash return frameworks in the industry. Given these facts and the view that our stock remains significantly undervalued, we initiated our $1 billion share buyback program in the first quarter and expect to accelerate the pace of our buybacks as we filed the final disclosures related to the Chief transaction this month. Given the current valuation of our stock, it’s certainly possible we will exhaust our $1 billion buyback authorization early and would then expect to seek Board approval to increase the authorization and continue retiring our shares, which will further enhance our already leading free cash flow and cash dividend metrics per share. In addition to our initial progress on our repurchase program, our first quarter dividend payment reached $2.34 per common share and our dividend yield currently sits around 10% for the full year 2022. If you include this share repurchase program, it reaches 14%. In total, at today’s strip, we expect to pay over $7 billion in dividends over the next five years. I’d now like to switch gears and talk about the macro environment. The war in Ukraine is horrible on every level, and we’re eager to see an end of the invasion. We’re also eager to help ensure the citizens of Europe and by extension, the rest of the world are not left without adequate energy resources should Russian supply continue to be interrupted or face further interruptions. The natural question for U.S. producers is: will you grow to solve the problem? We consider our capital allocation strategy on an almost daily basis, and are committed to maintaining our strong capital discipline. When we see opportunities to grow production and deliver supply to a market where it is needed and where we believe that demand is resilient and not temporary, we will consider growing into that demand. We continue to believe energy should be reliable, low carbon and affordable. We also believe that we have the inventory to deliver what is so desperately needed and have updated our inventory data and our slide deck for each of our basins to highlight the staying power of our portfolio, which spans decades at very low prices. In the near term, while prices in Europe are extremely high, they’re also much higher than they need to be in the U.S. We do respond to these economic signals and have done so in our 2022 capital program. We’re growing our Haynesville volumes approximately 10% year-over-year adjusted for the Vine acquisition. And as the market reliably expands, we will be ready to respond accordingly. We’re investing in the Eagle Ford again in 2022, after pausing through the pandemic, restarting our program at a logical pace as we redefine the appropriate development plan for this asset to maximize capital efficiency. We’re continuing to press for maximum volumes out of our Marcellus asset every day, as has been discussed at length by us and others, but we are constrained by lack of pipeline access to underserved markets, particularly New England. Additionally, we continue to hold discussions with counterparties in the LNG export market, and we hope to increase our exposure as the market continues to develop around these very important projects. We market greater than 4.5 Bcf of production every day, more than two Bcf of which is immediately adjacent to the LNG complex in the Gulf Coast and is already independently certified as responsibly sourced gas. We’ve also proactively reached out to partners in midstream and downstream markets, as well as our government contacts to discuss the best ways to see supply increase in the U.S. While we have not, and will not ask the government for any financial support, we would like to see the legal and regulatory environment embrace the need for infrastructure to ensure we can provide reliable, affordable, lower-carbon energy to limit energy poverty, and blunt the impact on the global economy when access to energy is used as a weapon. We’re actively engaged in these discussions and hope to see a solution to the war and by extension the challenge of high energy prices soon. While no company can tackle this challenge alone, we recognize policy changes will unquestionably be an important part of the equation, given the high prices Europe was experiencing prior to the Russian invasion. Our employees are united in the belief that together we can play a critical role in helping solve these challenges. Importantly, with the quality of our assets, our people, and our balance sheet, we are able to achieve all the critical elements of reliable, low carbon and affordable energy in a disciplined, returns-focused way to create a truly sustainable business. Operator, will now turn it over for Q&A.

And our first question will come from Doug Leggate of Bank of America. Please go ahead.

Thanks. Good morning everyone. Good morning, Nick.

Good morning, Doug.

Thanks for taking my question. I think you’d be delighted to know, I’m not going to ask you about variable dividends. I would like to ask you to elaborate on your comments around the U.S. gas situation. I’m trying to figure out how sustainable the dislocation between Europe and the U.S. is — the difference is pretty obvious, and $8 gas is pretty surprising as well. I’d love to get your perspective on that. Because you sound like you’re basically, forgive me, talking that down a bit. That’s my first question. And my second question, if I may, is we can’t ignore what happened yesterday with Cambridge. Presumably you’ve had some discussions; I’m curious where you think the gap is between what you’ve done as a strategy so far — asset sales, Eagle Ford is probably part of the discussion — and where you think the gaps remain. To the extent you can comment, I’ll leave it there. Thank you.

Sure. Let’s talk about gas prices first, that was your first question. We — you said we’ve talked them down a little bit. I think all we’ve pointed to with gas prices is that the prompt month prices are so far above breakevens for supply in the U.S. that we just don’t expect that to be a persistent price environment. The long end of the curve now has come up quite a bit, and for a couple years, we’ll be above four bucks on the curve. There are ample resources in this country to drive prices below $4 on the long end of the curve. We think if you have really adequate infrastructure to deliver gas to all of the markets where it’s needed, it should be back around three or maybe a little over three in this environment. Which means that with volatility on top of that from weather demand and things like that, it’ll go below the recent levels sometimes, and above three other times, and maybe bounce as high as $4 and see some lower prices too. But in general, we see that the adequacy of supply with breakevens around that level should drive prices lower over time. Right now we have all sorts of constraints in the market, so it does make sense prices are higher, but we all need to be thoughtful about how we manage our production in the face of those constraints. What we don’t want to do is force production higher directly into those constraints where production can’t get to the markets where it is needed. For example, if we increase production significantly in the Marcellus, it’s not going anywhere, so it’s not going to lower anybody’s prices. That’s not helpful and it won’t create value for our shareholders, and we’re not going to pursue that path. Those kinds of constraints we think will be sticky for a long time, particularly in the Marcellus, but constraints also exist on a micro level in a lot of places — access to services, equipment, and pipelines — so we think they’re persistent at least in the near term. Prices are going to stay up for a bit, but ultimately supply and demand forces will even out and they’ll come back down to a more reasonable level. So that’s really all we’re expressing there: we’re not going to change our strategy to a view that says the prompt-month levels of six, seven or eight dollars are a permanent price. That’s just not consistent with how we see the world. Regarding the story yesterday that was out in the press around discussions with Cambridge: we have a lot of discussions with shareholders including Cambridge. We always welcome feedback from shareholders and I don’t think there’s a big gap in how we all see the world. I think we share Cambridge’s view that our stock is undervalued. We’ve talked a lot about our Eagle Ford asset and we have a great asset in the Eagle Ford. We currently produce 52,000 barrels of oil a day out of the Eagle Ford. We generate a lot of free cash flow out of that asset. Just in 2022 alone, we’ll generate $1.2 billion of free cash flow out of the Eagle Ford before hedges, about $600 million after the effect of hedges. We shut down the Eagle Ford program completely during the pandemic oil price collapse and we just restarted it at the end of 2021. What we’re doing in the field today, we think, is going to add significant value to the asset for our shareholders. We talked at the beginning of the year about what we were trying to accomplish with that asset. We talked about how we want to prove up wider spacing in the Brazos Valley area, which will demonstrate the full-cycle value of that asset. We also talked about delineating the upper Austin Chalk in our legacy South Texas position. We’re pretty encouraged by both of those things. We want to have our heads down and execute on that because we think we’re adding some good value in the near term, but ultimately we’re going to let the results of those programs inform us on whether we think we can maximize the value of this asset through our development, or if we should maximize the value of the asset by selling it to someone else. That’s the way we think about all of our assets all the time. We’re going to have our heads down executing on this program in the near term, and we think we’ll have results, certainly in the second half of the year, to talk about. We’re looking forward to that.

The next question comes from Matt Portillo of TPH. Please go ahead.

Good morning all. Thanks for taking my questions. Nick, maybe to touch on a comment you made to start the call: given the discounted value in your share price and the strong free cash flow guide this year, just curious — as we look at the guidance number at $2.7 billion free cash flow, less the dividends, it still leaves about $1.5 billion of free cash for you to deploy. I was curious if you might comment a bit on how you think about debt reduction versus accelerating the buyback program in light of the improved outlook.

Sure. It’s a great question, Matt. We do have a lot of incremental free cash flow as you’ve noted. We’re pretty eager to get going on the buyback. We’ve been constrained with our disclosure requirements around the Chief asset — we haven’t been cleared of MNPI. We will be very soon. Once we are, we expect to get going in earnest. We’ve been able to do a little bit during the quarter with some privately negotiated transactions and that’s been helpful. But we’re eager to do quite a bit more. On the debt reduction side, we have a little bit outstanding on our revolver today; following the Chief transaction, we’ll probably let that go back to zero. That’ll happen in the normal course as we go through the year. But we don’t really have a priority for debt reduction beyond that. I would call that just something that’ll happen as it happens. There’s no urgency necessarily to achieving that by any certain date.

Perfect. And then as my follow-up, just curious if you might be able to provide a little context and color on how you’re thinking about marketing your gas in the Haynesville. We’ve seen a little bit of congestion causing basis to widen out. There’s a lot of projects in the queue that might ultimately evacuate gas further south and open the door for stronger realizations, as well as possibly tying in more volumes down the road into LNG opportunities. At a high level, curious on your marketing strategy around the Haynesville moving forward and what we might expect from a news flow perspective over the next 12 months or so.

Yes, Matt, that’s a good question. Good morning. What I would say in addition to what Nick said is obviously this is a rapidly evolving space. Something that we are closely monitoring. The thing that gets us most excited is that if you look at the demand growth for natural gas in the U.S., roughly three-fourths of that is going to come from the Gulf Coast market and our competitive positioning because of the proximity to the Gulf Coast and to the LNG complex that resides there will be a competitive advantage that differentiates us. The other thing that we are very excited about — Nick referenced this earlier — is that 100% of our gas that’s coming from the Haynesville is RSG certified. At some point we think that will be another differentiator because as you think of end users and off-takers that are looking to secure LNG supplies, having it be responsibly sourced will also be a competitive advantage. So, we are very happy about where we sit. We are actively engaged in several different conversations. I don’t want to front-run that, but more news to come on that front, hopefully.

Next question comes from Nicholas Pope of Seaport Research. Please go ahead.

Good morning, everyone.

Morning, Nick.

I was hoping you could go into a little depth. This is obviously the first quarter we’ve seen with the Chief acquisition and I'm trying to understand a little bit of the guidance. I think you all said it was 800 million, 900 million wired production. It doesn’t seem like the guide for 2Q fully reflects that volume uptick. I’m hoping you could explain what the goal is right now with Marcellus in terms of maintaining production, where you think the maintenance level is with the new assets and kind of where things are post-acquisition on those volumes relative to where acquisition volumes initially were expected.

Yes, good morning, Nick. This is Josh. I’ll add a little color to that. With the Chief acquisition we’re just in the very beginnings of integrating that asset. I do feel like we’re off to a great start with that. If we look at our schedule, we’re a little bit back-end loaded in the quarter. So, for our gas assets, I think we’ll have 40 rigs to 45 rigs, but 20 of those come in June, so you will see a little bit of lumpiness to the production there. That may be something to think about in the model. A couple other things to point out: we do have some planned third-party maintenance occurring within the quarter as well, which will bring down volumes just a little bit. One of the more material movers — and this really occurred right as we brought the assets into the portfolio — there was a pad that produced about 80 million cubic feet a day, so roughly 13,000 barrels of oil equivalent per day. We shut that pad in for operational reasons; we didn’t feel like we could manage the risk safely on the site with drilling and producing. That was a choice we made, but that’s all volume that’s going to come back into the system.

Got it. So it sounds like this is fairly transient, because I think you guys were growing production in Marcellus and it just does not reflect the 800-plus number, which is where my simple math was on the acquisition, but it sounds like this is more transient in terms of where production levels are.

Yes. That’s what we expect for the year. Growing the asset obviously is challenging to do just with the lack of export out of the basin. But we do expect to see a little bit of lumpiness between quarters as we move through the year.

The next question comes from Scott Hanold of RBC. Please go ahead.

Yes, thanks all. On the back of the conversation around the gas macro, and I know you’ve talked about your hedging program in the past underpinning your capital program, but if you do have a view that some of these prompt months and some of the forward months may be a little bit ahead of themselves, does that incentivize you to hedge a little bit more? Would you be opportunistic with hedging at all, or do you still plan to be a little bit more pragmatic with it?

I’ll start this one and then Mohit may have something to add. We’re relatively light on hedges for 2022, so we haven’t been motivated to add a lot more here. We’ve been happy to see the part that we have unhedged rise and it’s been obviously a big tailwind to our cash flows. For 2023, you can see the way we lay it out in our slide now — we put a bullet on there that tells you what we’ve added since the last disclosure. What we’re doing now is a bunch of very wide collars, and we really feel good about those collars. Some of the collars that we’ve done have been as wide for the full year as four by ten, which is a very attractive spread to have access to a floor of four and a ceiling of ten.

Yes, I think the only thing I would add is traditionally a lot of these hedges that were locked in at emergence were done through swaps, but the skew on these collars has been so attractive that going forward we almost exclusively prefer these collars. They still give you exposure to the upside while protecting your downside, which is what we are trying to do. We’re pretty happy with what we’ve been able to tactically layer in with regards to the hedges.

Got it, appreciate that. My follow-up: you mentioned in regards to the buybacks that some of those were privately negotiated, and obviously there’s some perceived overhang in some of the ownership of Chesapeake. Do you see that as an opportunity to continue to utilize the buybacks to potentially do more private negotiated deals? Can you give a little color behind that and what you can say?

Sure. We won’t comment on who we’ve negotiated with directly, but we intended when we put the buyback in place to be ready if any of those large holders wanted to sell, to make sure that there was no disruption in the trading dynamics of our stock in the market if there’s a large chunk that wanted to sell. One of the things that’s been interesting about the perceived overhang of shareholders in our stock is that they’re reasonably happy shareholders, from what we hear — and patient. We’re generating great returns: the cash return elements, the pending buyback that can be accelerated now — all of these things point to a tremendous amount of upside in the stock. I call it a perceived overhang because I think a number of these shareholders could be there for a while, but we’re totally ready when any of them want to sell to be a buyer. We’re just not seeing demand for large sales today.

So just out of curiosity, what do you think is hanging up Chesapeake stock relative to its peers? What do you think as a management team you need to address to get Chesapeake stock to move further higher?

It’s something we talk about almost every day. I do think that perceived overhang is a challenge for some investors. If we had a little bit more turnover in the shareholder base that might help. But again, I think of it as a perceived problem. Our shareholders generally share our view that the stock is undervalued today. We’re all focused on how to drive this stock price higher and have it better represent the underlying value of the assets that we own. We think the buybacks will go a long way toward that. We will be actively buying our stock: if some large holders want to sell, they can sell to us; if they want to hold, we’ll buy from others in the market. We’re eager to execute on the buyback because that cash can go a long way toward retiring the share count, which will improve our per-share metrics and should highlight the value in the stock and drive the share price higher. We’ll continue to execute on our plan and push for the buyback and are optimistic about what that will do for our share price.

The next question comes from Charles Meade of Johnson Rice. Please go ahead.

Good morning, Nick, Mohit and the rest of the Chesapeake team.

Good morning, Charles.

I have one question about the Chief assets up in the Marcellus. When I look at the map of what Chief brings to the table next to your map, that moves your center of gravity or extends you kind of northwest into more central Bradford County. As you’ve spent some time with these assets, are you seeing anything different than what you expected as you move northwest, away from where your historic core has been?

Yes, good morning, Charles. This is Josh. No, I don’t think we’re seeing anything materially different. The geology is a little bit different, but this is extremely strong reservoir with unbelievable deliverability, which results in great returns. We do think there are opportunities to make the asset better. Specifically, we’re looking at completion design improvements, like cutting back a little on the amount of water used. We think there are some opportunities to potentially widen spacing a little bit, especially around existing producers. Those are things we’ve proven within our own assets and are transferable. There are also more tactical things like how we choose to steer a well and land it within a particular zone — it’s about maximizing the contacted reservoir within that lateral. As we’ve looked at some of the wells in the Chief data set relative to how we operate, we’re convinced we’ll improve performance there.

Got it. So, Josh, just so I understand: is this how Chesapeake would do things differently from Chief, or is this how you do things differently just as you move into the northwest part of your existing design?

It’s really about us using our history and technical expertise to expand into that acreage rather than there being something unique about the rock. It’s transferable techniques and optimizations.

The next question comes from Josh Silverstein of Wolfe Research. Please go ahead.

Hey, good morning guys. I was curious about the potential for you guys to sign off-take agreements on the LNG side. You have a lot of capacity in Haynesville to supply directly to facilities. Can you give us an update on your potential to sign off-take agreements and whether you might be thinking about taking equity stakes in one of these facilities?

I’ll start and Mohit can add. We’re really excited about the opportunity to do something like that. Exactly where we land on that spectrum of signing off-take agreements versus taking positions in facilities is to be determined. There’s a lot of work to do to determine which facilities we want to partner with and how we want to gain that exposure. What we’re really focused on is creating diversification of price. Any deal in the LNG world is typically a very long-term contract. While there is a big delta between U.S. gas prices and European or Asian gas prices today, over the tenor of that contract you’d expect volatility in that spread. Sometimes it will be favorable, sometimes less so. It’s really about a diversification strategy and we’ll continue to think about the right way to approach that. We’re seeing a lot of opportunities to do it with a number of different counterparties and we’ll take our time to work through it. We’re excited about the potential.

Josh, from a diversification angle, if the deal is linked to Henry Hub that’s not as attractive to us. What we are trying to do is diversify into an LNG-indexed deal. That might be linked to an index like TTF. The internal discussion is about what’s the right amount to hedge or to allocate. Think of selling into different bases: the LNG complex is another basis we want exposure to. From a diversification point of view, think in the range of maybe 10%, 15%, 20% of our production, if we can link it to some sort of an LNG index price, whether through physical agreements or synthetic deals, that’s what we’re driving toward.

Great, that’s helpful. You guys have been a lot of oil management since reemerging, and you still have the East Texas asset in the portfolio. What activity are you doing there this year, and are you looking for something to figure out whether it remains in the portfolio?

We don’t have anything material in East Texas. Sometimes rights show up on an acreage map depending on what you’re looking at, but we don’t have anything material that we maintain in East Texas.

Thanks, guys.

The next question comes from Noel Parks of Tuohy Brothers. Please go ahead.

Hi, good morning.

Morning, Noel.

I had a couple questions. Based on what I’ve been hearing from other producers, would you comment on services quality and what you’re seeing in the field — how things have been as far as the quality of equipment, maintenance, reliability, and so forth? I’m trying to think back to the last time we had a boom on the service side. I’ve heard a few anecdotes here and there of problems or slowness with maintenance and repairs. If you could talk about that and whether any particular basins are more impacted, that’d be great.

Good morning, Noel. I wouldn’t say there’s a particular basin where this is a bigger problem. Much like the broader economy, labor is tight. In an industry where we’ve seen growth with rigs being added over the last year, that stretches the service organizations. You see rigs coming out of stack and being restarted, and generally across the industry that leads to some inefficiencies as equipment gets warmed up and crews gain experience operating it. We’re not seeing any basin-specific issues; it’s an industry trend due to tight labor markets. Anytime you’re in a constructive commodity price environment with activity ramping up, those struggles are going to persist. As an operator, we manage our strategic partnerships closely to stay on top of service quality. Safety is a huge focus, and ultimately all of this translates into overall cost performance. Our longer-term strategic partnerships help shield us from some of the issues, but generally it’s an industry challenge right now.

Great. Could you talk about sand availability across the basins for you? What does that look like?

Sand as a commodity for us is not really an issue. We feel good about the sources that supply the basins we operate in. In Texas, we’re advantaged because we own our own mine at the Brazos mine just outside of College Station, which provides security. The bigger issue is sand logistics, which varies by basin and is more of a challenge. It’s often the distance from a mine to the location. In the Marcellus we use railcars and we’ve seen labor issues that created some problems, such as union strikes, which created some operational headaches — something we maybe wouldn’t have expected and was out of our control, but it didn’t disrupt operations materially. In places like the Haynesville and our assets in Texas, it’s about availability of truck drivers. So it’s really about partnering with logistics managers to attract and retain drivers to service our operations.

Okay. Thanks a lot.

The next question comes from John Daniel of Daniel Energy Partners. Please go ahead.

Hey guys, thanks for putting me in. Just a couple operations questions. First, can you update us on the experience you’ve had with the new generation electric frac fleet?

Today within our frac fleets we’re running roughly five frac fleets, one of which is an electric frac fleet up in the Marcellus. There’s been a learning curve there. We were one of the first adopters of that technology in the Marcellus, and I feel like we’ve hit a stride and seen some efficiencies. The electric frac pumps should be more efficient, but you’re relying on the quality of the gas and the generation being used on site to manage it. We see opportunities to expand that into the future, but equipment in the service sector is tight; more electric fleets have to be built which requires capital. We’re in constant communication with our suppliers about opportunities to expand that segment.

Do you ever see a scenario where you could be 100% electric or are there operational reasons why that wouldn’t make sense?

It is definitely possible and I wouldn’t rule out a 100% electric fleet at some point. We constantly monitor the market, and we need the capacity to be developed, so timing depends on market development and supplier build-out.

Assuming, hypothetically, no one cared about capital discipline and you decided you wanted to ramp activity from here, how quickly could you do that?

That’s a big assumption and we’re in a world where people do care a lot about capital discipline and we think that’s right. But if you wanted to bring in a new rig and start going after growth, you’re at least six months from that rig showing up and starting to drill, so it would take a while to meaningfully ramp.

Got it. Thank you guys very much, and congrats on a great quarter.

This concludes our question-and-answer session. I would like to turn the conference back over to Nick Dell'Osso for any closing remarks.

Well, thanks again for joining our call. Behind our exceptional employees, I believe Chesapeake continues to deliver what the market demands today for a premium valuation. We’re focused on our portfolio of high-return assets with scale that matters. We’re generating significant free cash flow and have one of the industry’s strongest frameworks to return cash to shareholders. We’re committed to ESG excellence and to answering the call for reliable, affordable, and lower-carbon energy the world desperately needs today. We’re eager to provide a deeper dive into the depth of our portfolio and what we believe it will deliver for our shareholders at our Analyst Day, which we intend to host later this year. In the meantime, we look forward to continuing to update you on our progress. Thanks again, and have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.