Par Pacific Holdings, Inc. Q3 FY2020 Earnings Call

Greetings and welcome to the Par Pacific Holdings Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ashimi Patel, Manager, Investor Relations for Par Pacific Holdings. Thank you, Ms. Patel. You may begin.

Thank you, Shyamali. Welcome to Par Pacific's Third Quarter Earnings Conference Call. Joining me today are William Pate, President and Chief Executive Officer; Will Monteleone, Chief Financial Officer; and Joseph Israel, President and Chief Executive Officer of Par Petroleum. Before we begin, note that our comments today may include forward-looking statements. Any forward-looking statements are subject to change and are not guarantees of future performance or events. They are subject to risks and uncertainties and actual results may differ materially from these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements and we disclaim any obligation to update or revise them. I refer you to our investor presentation on our website and to our filings with the SEC for non-GAAP reconciliations and additional information. I'll now turn the call over to our President and Chief Executive Officer, Bill Pate.

Thank you, Ashimi. Good morning to our conference call participants. During the third quarter, we reported a negative adjusted EBITDA of $16 million and an adjusted net loss of $1.06 per share. While conditions improved modestly from the prior period, we continued to experience seasonally weak product cracks during the third quarter. We're also continuing to see improvements in the crude oil market. In the third quarter, the Chinese reduced their record buying of crude oil when compared to late spring and summer. As a result, waterborne barrels have been plentiful most of this quarter. The reduction in crude differentials bodes well next year for our Hawaii refining business. Global demand has slowly begun to recover from the depths of April and May, with product inventories declining materially in the third quarter. However, a winter surge in COVID-19 could halt or even reverse some of the improving trends that we are seeing across our businesses. Consequently, we're focused on improving our earnings capability without regard to market improvements. On the cost management front, we've identified $45 million in reduced cash expenditures for 2021 when compared to our third quarter run rate. When combined with contractual improvements, we anticipate well more than a $100 million increase to our 2021 earnings profile. None of these improvements are contingent on market recovery. We also successfully completed both our Hawaii and Wyoming turnarounds since our last earnings call. We've decided to reduce the scope of our Washington turnaround scheduled in the first quarter of 2021 to defer some planned growth projects. This was a difficult decision, but given the current outlook, it makes more sense to delay the planned improvements to our facility. Operationally, in Hawaii, we continue to operate only Par East to meet lower local demand. Beginning October 15, Hawaii's 14-day quarantine was modified to permit visitors to pre-test for COVID-19, and we are closely watching passenger arrival trends. Early indications have been very encouraging for a resumption in Hawaii tourism and therefore, jet fuel demand. Although the Logistics segment was a positive contributor, third quarter profit continued to be lower than the historical average due to lower refining throughput, some of which was related to the heavy turnaround schedule. In addition, lower jet fuel demand resulted in the underutilization of our Hawaii logistics assets. We are releasing two barges at the end of 2020 to improve profitability. This action is a key component of our cost savings for 2021. We also have completed our biofuels logistics system in Tacoma and are scheduled to receive our first unit train of ethanol next month. We believe the market demand for these logistics assets is strong, given our facilities' unique attributes and proximity to growing demand centers. Retail continues to be a strong contributor to overall earnings. Fuel margins were strong, but they declined from record highs in Q2, when commodity price declines benefited margins disproportionately. Volumes improved from second quarter lows, as economic activity increased. Regarding the pandemic and our ongoing efforts to protect the well-being of our employees and communities, our team has done a great job of maintaining operations and executing our turnarounds with effective social distancing. We've only identified one possible incident of workplace spread and have had zero positive cases from workplace contact tracing. I want to thank our employees for their dedication and for continuing to execute safely and efficiently. We believe that the commercial improvements we have obtained, when coupled with our cost-cutting and profit-enhancing initiatives, positions us to realize our objective of generating significant profitability and free cash flow. At this time, I'll turn the call over to Joseph to further discuss our operational activity.

Thank you, Bill, and good morning everyone. In the third quarter, our system continued to operate safely and efficiently to meet customer demand and mitigate COVID-19 market headwinds. Our refineries are well-tuned to match market demand and our cost structure continues to reflect strong reliability and cost control by our team. To put it in perspective, our third quarter refining segment operating expense was once again approximately $9 million or 15% under our average 2019 quarterly expense. This is a repeat of our second quarter good performance. In Wyoming, our team has successfully completed the planned 45-day major turnaround. We have oil in and the plant is starting up as we speak. The turnaround which started on September 14 is expected to give us close to a five-year cycle and improve throughput flexibility of approximately 10%. Including the turnaround impact, third quarter refinery throughput averaged approximately 13,000 barrels per day. Our 3-2-1 Index for the quarter was $19.63 per barrel, and our realized adjusted gross margin was $8.53 per barrel, including an estimated negative $1.90 per barrel of turnaround impact. Our third quarter production cost in Wyoming was $7.51 per barrel. Our target throughput for the fourth quarter, with the turnaround impact, is just under 10,000 barrels per day. Rocky Mountains refineries have responded to the second COVID wave by reducing utilization rates through the third quarter to maintain PADD IV product inventory within seasonal levels. In October, our Wyoming 3-2-1 index averaged just under $20 per barrel. In Washington, our third quarter refinery throughput averaged approximately 41,000 barrels per day with an implied 96% of utilized capacity, compared to approximately 70% average for PADD V refineries. As a reminder, our yields and the integrated marketing presence in the Tacoma niche market has allowed us to maintain close-to-normal operations with minimum COVID-19 demand impact. Our third quarter Pacific Northwest 5-2-2-1 Index was $9.39 per barrel on ANS basis. And realized adjusted gross margin was $2.16 per barrel. Production costs were $3.40 per barrel. Our Pacific Northwest 5-2-2-1 index has averaged approximately $10 per barrel in October. At-front demand continues to be stable. And our target refinery throughput for the fourth quarter is in the 38,000 to 39,000 barrels per day range. We have completed our ethanol logistics project, which is giving our system improved ethanol capabilities with a more favorable cost structure. And lastly for Tacoma, our team continues to plan and optimize our first quarter turnaround. In Hawaii, we successfully completed our planned major turnaround in the third quarter. The hydrocracker discovery works went beyond plan. And as a result, our refinery throughput for the quarter came under guidance at 51,000 barrels per day. Our 3-1-2 Singapore Index was $1.92 per barrel on Brent basis, reflecting a slow global demand recovery for oil products. Our actual third quarter crude oil differentials were $1.13 per barrel premium to Brent, and our realized adjusted gross margin in Hawaii was a negative $0.47 per barrel, including an estimated negative $1.85 per barrel of turnaround impact. We continue to improve our margin capture in Hawaii through commercial, logistics, and other optimization initiatives to support cash flow breakeven in the downside and profitability in the long run. Production costs in the third quarter were $5.80 per barrel. In the local Hawaii market after a slow demand recovery during the third quarter, we are closely monitoring jet fuel and gasoline demand trends following the recent reopening of Hawaii travel and tourism by the state. Our 3-1-2 Singapore index has averaged approximately $1.90 per barrel in October. And our estimated fourth quarter co-differential is $2.07 per barrel premium to Brent. Target throughput in Hawaii for the fourth quarter is in the 78,000 to 81,000 barrels per day range. In summary, we continue to focus on safe and efficient execution. We successfully performed two turnarounds during this pandemic, and our operations are tuned to meet demand. And with that, I will turn the call over to Will to review our financial results.

Thank you, Joseph. In the third quarter, we reported an adjusted EBITDA loss of $16 million and adjusted earnings of $57 million, or $1.06 per fully diluted share. First, addressing accounting items, our Washington refining non-GAAP results have been adjusted to exclude the impact of a $6 million LIFO layer liquidation loss, which will be reversed in the next quarter. Now, regarding segment performance, the retail segment contributed $15 million to adjusted EBITDA, benefiting from increased fuel volumes that were offset by a decline in margins compared to the previous quarter. Same-store fuel sales volumes decreased by roughly 21%, while merchandise sales increased by about 2% compared to the third quarter of 2019. Gasoline demand in Hawaii remains at 80% of pre-COVID levels, and we expect some modest growth as tourism picks up during the holiday season. Merchandise performance, especially in the Northwest, has remained strong. The logistics segment saw a $12 million adjusted EBITDA contribution, down $7 million from the 2019 quarterly average due to reduced activity in Hawaii. Although refining throughput serves as a useful metric and aligns with decreased profitability in Hawaii logistics, the key driver for increasing profitability from the third quarter will be the demand for refined products in Neighbor Islands, rather than growth in refining throughput. Washington and Wyoming's performance met expectations in terms of throughput and sales. As Bill mentioned earlier, we anticipate the launch of our biofuels logistics project in Washington in late fourth quarter, which should boost logistics revenue as we start meeting our ethanol requirements internally in 2021. The refining segment experienced an adjusted EBITDA loss of $34 million. Key factors influencing Hawaii's results relative to the second quarter included a roughly $4 per barrel improvement in crude differentials, a $2 per barrel enhancement in the Singapore 3-1-2 crack spread, and the partial quarter benefit from improved contract terms. However, these gains were somewhat negated by turnaround factors, including heightened refined product imports during planned turnaround work. We estimate that the turnaround reduced our adjusted gross margin by about $8 million to $10 million this quarter. Wyoming operated profitably during the busy driving season, though overall margins remained low compared to historical third-quarter averages. Moreover, throughput and sales dropped as we approached turnaround, which affected profitability. Washington faced challenges due to a reduction in our feedstock advantage against ANS and tightening diesel crack spreads in the Pacific Northwest. Laramie posted adjusted EBITDAX of $8 million and a net loss of $13 million for the third quarter. Cash used from operations was $8 million, including $19 million in turnaround costs. Excluding turnaround costs, working capital was a source of about $5 million. Capital expenditures reached $12 million, alongside $34 million in accrued deferred turnaround expenditures, totaling roughly $46 million, which includes around $7 million in overruns from the Hawaii turnaround. Accrued cash interest amounted to $16 million. Our total liquidity at the end of the period was $191 million, consisting of $127 million in cash and $64 million in available credit, benefiting from inflows in working capital. We maintained strong cost control across the organization, keeping our operating expenses and logistics cost of goods sold reductions near $50 million annually compared to last year. Given the overruns in the Hawaii turnaround, we are adjusting the upper limit of our CapEx and turnaround spending range upwards by $5 million to between $95 million and $115 million for the year, with expectations to land at the higher end of this range. We remain on track to meet our initial targets for COVID-related cash outlay reductions, which include cutting energy-related cost of sales, operating expenses, capital expenditures, and turnaround interest expenses by $150 million compared to previously set amounts. Looking ahead to 2021, in addition to achieving the $50 million reduction in OpEx and logistics cost of sales, we have identified another $45 million in cash savings for the 2021 calendar year across operating expenses and cost of sales that are not tied to market conditions. Two-thirds of these savings come from right-sizing logistics assets and aligning our Hawaii refining cost structure to historical Par East-only levels. Additionally, we have decided to narrow our planned turnaround for Q1 2021 to a range of $10 million to $15 million, down from the previously noted $35 million. We do not have any growth projects in the pipeline, and our historical regulatory spending has typically been between $30 million to $40 million. To summarize our remarks, we expect over $100 million in improvements for 2021 compared to the third quarter run rate. Specifically, we anticipate more than $55 million in top-line improvements from Hawaii and about $45 million in the aforementioned cost reductions. The cost cuts include about $15 million from COVID-related reductions in logistics OpEx and cost of sales, around $8 million specifically tied to Hawaii refining, with the remainder distributed across our business units. Furthermore, cuts in our Washington turnaround spending will enhance our liquidity for 2021. This concludes our prepared remarks. Operator, I will now turn it back to you for questions.

Our first question is from Neil Mehta with Goldman Sachs. Please proceed with your question.

Hey. Good morning, team. Thanks for taking the questions. I guess, the first one it was another strong set of results here from your retail business. It's one of the things that I know we all have been talking about is how do you help to better illuminate the value of those retail assets, especially given the successful monetization of some other assets in the industry? And how do you unlock the value of a retail business that's performing really well?

Our retail business is a highly valuable asset that has continued to grow and generate profitability and significant free cash flow, even during downturns when volumes were down. We are fortunate to have strong franchises, particularly our Hawaii operations, which benefit from high real estate costs, challenging supply logistics, and limited land availability, making real estate very valuable. Labor pressures faced by competitors are somewhat alleviated in Hawaii due to our unique partnerships with third-party store operators like 7-Eleven. We are very pleased with our team's performance in this sector. Our capital structure reflects the strength derived from our retail operations, allowing us to maintain a comfortable level of debt. The free cash flow generated from retail supports our debt obligations. While we recognize the need to enhance our communication regarding this value, we operate on a vertically integrated basis. We also need to consider ways to lower our cost of capital in relation to how we fund our retail business. Overall, we see retail as an attractive component that aligns well with our business strategy.

Okay. And the follow-up here is on liquidity, which you referenced, it was down slightly quarter-over-quarter, but still in a good place around $200 million. Just talk about how you feel about your liquidity situation, especially in a downside scenario. If we don't get as the demand recovery that we're anticipating here in 2021, what is your confidence in your ability to navigate this from a balance sheet perspective?

Neil, this is Will. I think we're comfortable with our liquidity position. And I think the best way to think about is probably refresh some of the commentary that I provided earlier this year, and really tie back to our 2021 views that we've outlined here. And again, I think the best way to think about it is to start with our fixed charges. So if you exclude the Washington turnaround, we expect our quarterly CapEx requirements to be somewhere between $8 million and $10 million a quarter. And then let's call our cash interest and our amortization somewhere in the $16 million range. So between, let's just say base maintenance CapEx interest and amort, it's about $25 million quarterly fixed charges. I think that's probably a good place to start. And then let's take a look at the retail side of the equation, which has been running at about $15 million a quarter of EBITDA. And I think our logistics a fair way to think about that is somewhere in the $15 million to $20 million per quarter range, which is up from where we've been over the last two quarters, but I think reflects again our expectation of improvements in tourism particularly in the Neighbor Islands, and then you take our corporate overhead at $10 million. So if you add up all of those pieces, you get about $20 million to $25 million of EBITDA before you consider refining. So I think that's probably a good place to start. And so if you assume a zero quarterly contribution from refining, you're really looking at somewhere between a zero to $10 million quarterly cash burn versus our September ending liquidity of $191 million. I'd say, there's likely to be a working capital reversal as I referenced, but we feel like this gives us adequate liquidity to address our needs.

Yes. Thanks everyone. Just to follow-on on what you just said Will about the working capital. Can you talk about some of the puts and takes we could see there going forward? And maybe how large of a reversal we should expect?

During the quarter, we incurred approximately $35 million in accrued turnarounds, with around $18 million paid out. This results in a working capital benefit of about $16 million related to turnarounds, along with an additional $5 million source. Overall, this gives us a working capital benefit of roughly $20 million to $21 million for the quarter. However, we anticipate a likely reversal of some of that benefit in the fourth quarter. There are many factors involved that make it difficult to provide an exact figure, but that should give you a good perspective on how the turnarounds progressed during the quarter.

Okay. Thanks for that. And then I guess in terms of the crude diff guidance for Hawaii. So you said $1.13 premium. But in the prepared remarks you talked about some of the looseness in the crude market that could benefit Hawaii in 2021. Any thoughts about just where you're seeing the dips for the barrels that you're buying now for Hawaii?

Yes. This is Bill. I'm going to let Joseph handle this. But let me just say that, I think the big factor that we've seen has generally been fairly tight dips in the spring and the summer. It then loosened up for most of the third quarter. And then as prices have started to deteriorate and as the Asian economies have started to pick up, we have seen some strengthening in the dip although that's a fairly recent trend. So the outlook is pretty good for Q1 and frankly even going into Q2. But as given our supply chain we're starting to already think about the latter, think about Q2 and even the latter part of Q2. And that's where we might start to see some tightening again. But Joseph, I don't know if you'd add anything to that.

Yes. I don't have much to add. I will only say that we started to pick up some Q1 cargoes. And as you would expect when COVID-19 dominate the markets it's weak and the differentials remain low. So fully agree with everything Bill just said.

And Brad, the only thing I'd add is, the fourth quarter does still have some impact from I'll say earlier in this year acquired cargoes that are bringing the number up in that $2 range that Joseph is quoting.

Okay. Got it. If I could ask one more question, could you share any insights on the EBITDA generation from the biofuels project you are completing in the fourth quarter, particularly in the current environment?

Yes. I think Brad, based on our internalization of our ethanol consumption, we think it's worth somewhere between $3 million and $5 million a year probably more likely on the upper end of the range. And we think there are some attractive growth projects that allow us to serve growing demand centers there that could make that number grow.

Hi, good morning, Bill and Will.

Hi, Matt.

Good morning.

Given the improvement in natural gas prices could you talk about your strategy for Laramie, I guess both in terms of just current operations as well as potentially monetizing that investment?

Sure. Matthew, this is Will. I think we've written down our investment in Laramie to zero. And again I think the recent improvements in gas prices certainly improve their outlook for 2021 and I think are positive for that business. That said, I still think it's a very difficult market environment to monetize the natural gas asset. So while I think the free cash flow outlook for Laramie has improved, I think the ability to market that asset is challenging. I think ultimately that's something we'll continue to monitor. But I think that's a difficult position today.

Okay. And then on the refining side. So in the third quarter you ran Par East at 51,000 a day, did not run Par West. If demand recovers, is there any significant cost or other hurdles to restarting Par West?

Matt, this is Bill. There aren't any significant costs associated with restarting Par West at this time. However, considering the current market conditions in Singapore, including the cracks and crude oil differentials, there's no reason to restart right now. Even if there is a rise in jet fuel demand that could slightly improve the situation, it won’t make a difference unless there is a significant improvement in product cracks.

Sounds good. Thanks for taking my questions.

Our next question is from Jason Gabelman with Cowen. Please proceed with your question.

Jason, if you're speaking we can't hear you.

Sorry, he was accidentally dropped from the question queue. We apologize for that. Now we have Jason Gabelman from Cowen. Please go ahead.

Can you hear me?

Yes. Sorry about that Jason.

I wanted to ask two questions. Firstly, regarding Hawaii, you mentioned some benefit from new product sales contracts impacting your earnings. Can you share what the magnitude of that benefit is? Also, do you anticipate these benefits to continue reflecting in the earnings, meaning are there additional contracts you’ve signed that will improve margin capture in Hawaii? Secondly, I noticed that your guidance for Tacoma throughput in the fourth quarter is quite strong, better than what your peers in the lower 48 are predicting. Are there specific characteristics of that market that you believe will support throughput even during this period of weak demand? Thank you.

Jason, this is Bill. I'm going to let Joseph handle the Tacoma question on throughput and I'll just address your question on the commercial improvements in Hawaii in particular. As you know, Hawaii is somewhat of an unusual market and then almost all the volumes are contracted sometimes a year or more. And we've had a number of contracts that have come up in the last six months and we've had conversations with our customers regarding the improvements in the economics. We still supply fuel to virtually all of our customers below where we think the cost of importing that product is. And I think that's because we have a very low-cost refining operation. But overall conversations with a number of our customers in the last six months have improved the economics of our business. And as I alluded to, when we look at the earnings profile in 2021 we see a $100 million uplift $45 million of that is related to cost savings. And the remainder $55 million reflects the improvement over the Q3 run rate. So the Q3 run rate already reflected some improvement. So you can assume that the overall commercial improvements were greater than that $55 million number.

And with regards to the Tacoma question. First, Tacoma made money, I mean contributed cash flow in the third quarter even in a very low-market margins environment. So running the incremental barrel was actually helpful. And as long as the incremental barrel margin is better than the variable cost this will continue to be directionally a good thing. Now with regards to the fourth quarter, we are dropping our throughput guidance by almost 10% compared to the third quarter. So we are adjusting to this market environment. The other thing I will mention about Tacoma. Remember, we have a very unique yield structure. 40% of what we make is really asphalt and VGO. So we are less relying on the light product demand and have more stable commodities to continue to sell in the down cycle environment.

Great. Thanks a lot for the color.

Thank you.

Thank you for taking my question. I have a quick follow-up regarding the cash outlay for turnarounds in the fourth quarter. It seems you mentioned a reversal of around $20 million in working capital. I want to clarify if we should interpret that as cash spent on turnarounds that were accounted for but not paid in the third quarter. Could you provide clarity on the actual cash outflow for the fourth quarter related to turnarounds? Additionally, could you remind me of the figure for 2021? I thought I heard it was $15 million, which differs from the $35 million guidance given previously. What led to this reduction in 2021 compared to the original guidance?

Sure, Patrick. It's Will. There are a couple of questions in there. Regarding the accrued turnaround, there is about $16 million of accounts payable that was recorded at the end of September 30th related to the turnarounds. We expect that to be paid out during the fourth quarter. Additionally, the ongoing activity that Joseph mentioned in Wyoming will continue in the fourth quarter. So, we are looking at both the accounts payable carried over from the third quarter and the expected turnaround expenses for Wyoming in the fourth quarter, which is likely in the $10 million to $15 million range based on the overall annual guidance we've provided. I hope that answers your question regarding the spending.

Yes. Yes, that's perfect.

For 2021, we've adjusted the projected spending for Washington. Initially estimated at $35 million, it has now been revised to $10 million to $15 million, with most of this amount expected to be incurred in the first quarter. Additionally, we do not foresee any growth projects. Historically, our spending on regulatory and maintenance has ranged from $30 million to $40 million. Therefore, if we take the average of that range and consider the lower end of the Washington estimate, we could anticipate around $45 million for the 2021 turnaround.

As a result of that, that's very helpful. With the reduction in scope, does that mean you are planning another turnaround in 2022 or 2023? I think we were previously considering that there would be several years without any major turnarounds after completing this busy period.

Yes. I believe there will likely be another turnaround needed in Washington sometime in 2022. We are focusing on the critical items during the first quarter. Additionally, we have decided to defer some of the planned growth expenditures. I hope that answers your question.

It does. Thanks. Congratulations on a strong quarter despite the tough market. Thank you.

And our next question is from Jake Gomolinski-Ekel with Ellington Management Group. Please proceed with your question.

Hey, good morning and thank you for taking the questions.

Good morning.

Good morning.

The increase in passenger traffic to Hawaii appears to be up four to five times the volumes seen in September, going from about 1,300 to 2,000 per day, and at one point in mid-October we had over 7,000 per day. Are you noticing any positive effects from this rise in passenger traffic, and is it related to changes in COVID restrictions in Hawaii?

Jake, it's Bill. It's still quite early since the quarantine was lifted on October 15th, so we're just starting to see the effects. I'm pleased with the upturn, which is significant, although cracks remain weak. Volumes haven't changed dramatically yet, and it's too soon to quantify the full impact. However, the return of tourism in Hawaii will likely drive an increase in jet fuel demand as well as higher consumption of ground transportation fuels, especially in the Neighbor Islands. As we see more demand there, the first improvement will come in Hawaii logistics, since the growing demand for jet fuel and ground transportation fuels will increase the utilization of our logistics assets, positively impacting our bottom line. The jet fuel demand is expected to rise to a point where our Par East refinery may struggle to meet the needs of the island, leading us to start importing to satisfy all of the island's demand. We may only need to reach about 50% of the passenger demand before we have to consider importing. We have effectively used up Par East, but I want to clarify that this doesn’t mean it makes economic sense to restart Par West or justify any increase, as cracks are still not favorable. Importing would be the better option at that point.

That's helpful. It seems there was a drop in the data likely due to many people ending their quarantine, bringing us down from 93% to 75%. There's still a way to go to reach 50%, but it's good to know. Based on what you're observing with the forward curves and your outlook, I want to look back at the transcript to review the numbers. What is your expected cash burn between September 30th and when do you anticipate shifting to positive free cash flow?

I think Jake, the best way to think about this is obviously, there's a lot of moving pieces for the different businesses, but I'll just focus you in on Hawaii refining, given that's where there's been the largest cash consumption year-to-date. And I think with the contract improvements you heard, Bill reference as well as the cost reductions that we've referenced for 2021. And I think the best way to think about it, from a market index perspective is to take the 3-1-2 less the crude diff guidance that we give. And I think if you're in the $1 to $2 per barrel range, you're approaching breakeven, with the improvements that we've made.

I would like to connect the previous questions about working capital and the turnaround numbers. I was wondering if you anticipated any specific cash consumption figures based on the outlook you have for the period up to the inflection point. We're trying to understand the buffer between your liquidity and that estimated number.

Yeah. I think there's probably too many pieces there to give a concrete piece of guidance on free cash burn there. But I think trying to give you the variables you need to consider, in order to effectively model it.

Okay. Those are for me. That’s very helpful. Thank you.

Thank you, Jake. The pandemic has created unprecedented destruction in the energy sector. While we obviously cannot influence market demand, we can control our costs. We can control our asset base there's numerous other factors. Your management team is focused on managing what we can control to ensure that we generate significant profitability when the global economy recovers. I appreciate your support. Have a good day.

And this concludes today's conference. And you may disconnect your lines at this time. Thank you for your participation.