Black Stone Minerals, L.P.
Q1 2017 Earnings Call Transcript

Published: 11 May 2017

[Operator:]

Good day ladies and gentlemen and welcome to the Black Stone Minerals LP, Q1 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Brent Collins, Vice President of Investor Relations. Please go ahead.

[Brent Collins:]

Thank you, Charlotte. Good morning to everyone. Thank you for joining us either on or by phone or online for Black Stone Minerals' first quarter 2017 earnings conference call. Today's call is being recorded and will be available on our Web site along with the earnings release, which was issued yesterday evening. Before we start, I'd like to advise you that we will be making forward-looking statements during this call about our plans, expectations and assumptions regarding our future performance. These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements. For discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday evening, and the Risk Factors section of our 10-Q which will be filed later today. We may refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of those measures to the most directly comparable GAAP measures and other information about these non-GAAP metrics are described in our earnings call or earnings press release from yesterday, which can be found on our Web site at blackstoneminerals.com. Company officials on the call this morning are Tom Carter, Chairman, President and CEO; Jeff Wood, Senior Vice President and CFO; Holbrook Dorn, Senior Vice President of Business Development, Brock Morris, Senior Vice President of Engineering and Geology; and Steve Putman, Senior Vice President and General Counsel. I will now turn the call over to Tom.

[Tom Carter:]

Good morning. Thanks for joining us. Blackstone's firing on all cylinders and is off to a great start to the year. We set a number of new quarterly records in the first quarter, including new highs for production, net income, adjusted EBITDA and distributable cash flow. Production came in it 35.6000 Boe/d, up very nicely from Q4 of last year. We're seeing solid performance across the entire asset base and we're particularly pleased with what we've been able to do on our East Texas Haynesville/Bossier assets and the significant contribution, we're realizing from those efforts already. We saw volume growth in both the mineral interest and the working interest parts of our business. Our cost had come in line with or better than guidance, we're also had a very good quarter for lease bonuses at $13.7 million for the quarter and that's compared with the midpoint of our full year guidance of $30 million. What's encouraging to us is how broad based the leasing activity has been. While we share in the industries excitement over the Permian SCOOP STACK and Marcellus plays. Our leasing activity in the quarter shows that producers are dedicating capital well beyond just those areas. We're seeing robust activity across our entire portfolio, as we've said, we averaged roughly 75 gross new well additions per month in the first quarter, which is an improvement from what we saw last year and is on par with what we expected experienced in 2015, when the rig count was quite a bit higher than it is today. The Permian Basin and the Bakken Three Forks, where the two largest contributors on a gross well basis to that activity. Our borrowing base was increased to $550 million in our most recent redetermination up 10% from the previous borrowing base and that's based on the solid reserve growth we saw last year. That increase combined with the previously announced East Texas farmout and the use of units for acquisition have improved our liquidity position significantly. At the end of the quarter on a pro forma basis, we had approximately $175 million of liquidity available to us. We have plenty of dry powder available to us to continue to execute on our acquisition plans and remaining drilling capital budget for the year. I'd like to spend a little time today highlighting our recent acquisition activity particularly what we've been doing in East Texas. During the first quarter, we completed approximately $60 million in acquisitions in the Delaware Basin and in East Texas. Subsequent to quarter end, we continue to add to our position in East Texas. And we are quickly closing on $100 million of total acquisitions for the year-to-date of which roughly half has been done using our common equity units. As some of you may know the origins of Black Stone Minerals can be traced back to the 1860s in the assets of W.T. Carter & Brother, an East Texas Lumber Company. That acreage became a foundational asset for Black Stone. Over the years, we've picked up additional acreage in various acquisitions and we also from time to time took leases from other mineral owners in the area. At the end of 2015, we controlled approximately 73,000 net mineral acres in the Shelby Trough area that is perspective for the Haynesville and Bossier plays. In a portion of the Shelby Trough acreage in San Augustine County that we call the Brent Miller AMI, we negotiated a series of incentives with XTO, our operator in 2015 to encourage development of net acreage. That agreement has been a huge success with XTO drilling and completing 18 wells since the end of 2014. And back to Brent Miller, drilling activity was a single biggest driver of the production growth gains we posted this quarter. Because of our participation in that project as well as our mineral position there, we were early and seeing the improvement that's operation for making and drilling and completion in the Haynesville and Bossier wells. As a result of that exposure, we are able to see equally tremendous development potential in surrounding areas including Angelina and Nacogdoches Counties. Late last year, we began an acquisition program to expand our position in the Haynesville/Bossier play. We have a lot of insight and ownership picture in East Texas and we believe that we could be successful aggregator of mineral acreage there. Things have gone well for us in that program. And today, we have entered into agreements that have increased our position by approximately 18,000 net acres or 25% including the ACLCO transactions as well as others that we announced yesterday. In that particular transaction, we will be providing the sellers with a significant amount of common units and some cash for their interest in East Texas. I add that we will still have offers outstanding and the transaction will probably increase some insight. So, I expect we will have done well over $100 million in acquisitions this year once the full ACLCO deal is closed. ACLCO adds approximately 12,000 net mineral acres in the Shelby Trough and Angelina and Nacogdoches Counties. And includes an area where we already have a development agreement with a well-capitalized major oil and gas company targeting the Haynesville and Bossier play. That operator has recently drilled a couple of really great Haynesville wells and several more as well as a couple of Bossier wells are currently being drilled. Their early success led us to significantly expand that development agreement to cover additional development areas within San Augustine and Angelina counties. To put this in context at the year-end, we had approximately 17,000 net mineral acres under active development agreements with longer-term development potential across an additional 18,000 acres, all with XTO and San Augustine counties. With the expanded development agreement with the other operator an additional 58,000 net mineral acres mostly in Angelina County are under an aggressive development program agreement. Of the 58,000 net mineral acres recently contracting for development, 14,500 of those have been purchased since year-end as important as the recent acquisition activity is in creating value. The development agreements, which involves significant acreage we already own account for a nearly five-fold increase in the total acreage under development agreements. And even more potential to move the needle for us, we believe that the pace of drilling could exceed 20 wells per year in this new area by the end of 2018 resulting in up to 5,000 to 6,000 BOE per day of cost free royalty production adds each year. This series of transactions highlights what makes Blackstone so unique among mineral owners because of our dominant mineral position in the area, we are able to exert some navigational influence with our operator which as a mineral owner this is, that's a very important in respect to making forecast for future periods. On a well locations and time, this in turn allowed us to offer superior value to the mineral owners from which we were acquiring minerals because of our knowledge of the drilling pace in the area that would not have been possible without the deal structure we negotiated with the operator. During the development agreements which attract third-party drilling capital our acreage, we are able to accelerate well activity and dramatically increase the value across our existing and newly acquired minerals. To put simply, we've been able to significantly increase NAV of our Shelby Trough position, but opportunistically bolting on complementary acreage and negotiating agreements to accelerate its development. So, here are the things we think you might want to take away from the discussion about our East Texas activity. First, we think it highlights some of the ways Black Stone is unique compared to other mineral and royalty companies. By having the technical understanding of the asset, the institutional knowledge about the area and a substantial existing footprint, we are able to create a project that has a potential to grow production for years to come. The deals we've done with XTO and another major operator also show our ability to creatively structure deals that attract capital onto our acreage. Second, we believe the program we had in the Shelby Trough has a potential to substantially replace. The future cash flows we expect to forgo as a result of the farmout in Brent Miller in San Augustine with Canaan that we announced earlier this year. You recall that farmout saves BSM approximately $40 million to $50 million a year in capital expenditures. Our ability to generate cash flow after working interest capital is significantly enhanced following the ACLCO and other East Texas acquisitions and the development agreements we have in place. I spent a lot of time in East Texas, but I certainly want to also note that we are by no means focusing exclusively on one or two plays. To that end, our BD Group has been looking at a lot of packages in other parts of the country as well. We have plenty of dry powder at our disposal to execute on our acquisition programs. The last thing I want investors to take note today is the steps we are taking to increase royalty production as a percentage of our total production. We've made concrete steps in 2017 to maximize the value of our mineral and royalty portfolio and to benefit from the superior return on investments that these assets provide. With that, I'd like to turn it over to Jeff for his review of the quarter.

[Jeff Wood:]

Okay. Thank you, Tom, and good morning everyone. So last night, we released our first quarter results for 2017and I'll just start by echoing Tom's sentiment, this was really a stellar quarter for Black Stone. We reported production for the first quarter of 35.6000 Boe/d and that's up almost 20% over fourth quarter production with contributions from both royalty and working interest volumes. Much of the increase as Tom mentioned was driven by the resurgence of drilling in East Texas. But we also saw an increase in production from resource plays in the Permian and increased production associated with conventional non-resource plays during the quarter. Our program with XTO in the Shelby Trough area of the Haynesville continues to deliver great results. XTO brought in several wells online in the first quarter in which we own approximately a 50% working interest and own a large share of the underlying minerals. As Tom mentioned another major operator is actively developing other parts of the play. So, we're now very excited to have two world-class operators focused on this core area of our minerals portfolio. Our adjusted EBITDA for the first quarter was almost $78 million and that's up 34% from last quarter and establishes a new high-watermark for Black Stone since we went public. In addition to the big increase in production EBITDA in the first quarter benefited from much higher lease bonuses and lower operating costs relative to the fourth quarter of last year. We also benefited from our hedge portfolio in the first quarter with realized gain of $4.3 million. More importantly, given the recent downturn in prices, we remain very well hedged for the rest of the year. Our hedge volumes for the rest of 2017 cover about 80% of our expected gas production and 70% of our expected oil production. So we're largely insulated from many near-term swings in commodity prices. Lease bonus and other income was $13.7 million for the quarter and that's an increase of almost $8 million from last quarter. As Tom mentioned, we continue to see leasing activity beyond the usual suspects of the Permian and the Haynesville. In fact this quarter, the main drivers were the Williston Basin in North Dakota, the Canyon Lime play and the Texas Panhandle and the Mississippi and Woodford. On the cost front leased operating expenses were $4.2 million for the first quarter and that's down from the fourth quarter and below the quarterly run rate inspired by our guidance. That was driven by a decreased work over expenses and cost efficiencies in our East Texas Haynesville wells. This is even more impressive when viewed in the context of increased working interest production. LOE per working interest barrel for the quarter was $3.19 compared to $4.35 in the fourth quarter. G&A also came in lower for the first quarter relative to last quarter. Total G&A was $17.2 million for the quarter, which is $3.7 million less than last quarter. Cash G&A for the first quarter was actually up slightly due to advisory and accounting fees as well as to increased legal and brokerage costs around our acquisition program. But that was more than offset by over $5 million and lower non-cash G&A costs. In total for G&A, we are in line with our guidance levels, but it is an area that we remain very focused on and we hope to be able to move those costs down further as we move forward in the year. So, overall cash flows are up significantly from last quarter and we are trending to the positive on almost every major category relative to our 2017 guidance. Yesterday, we announced our distribution to common unit holders for the first quarter of $0.2875 per unit or $1.15 per unit on an annualized basis. Distributable cash flow for the quarter was $68.5 million, which is an increase from 37% from last quarter. And this resulted in distribution coverage for the first quarter of 1.5x on all of our units and 2.4x on our common units. Furthermore, we maintained a 1.2x coverage ratio even taking into account the $18 million of working interest capital that we spent during the quarter. So, look we are excited that our efforts to grow the business while limiting our ongoing capital obligations are bearing fruit. We're living well within our cash flow before acquisitions. And finally, we're obviously in a great position to deliver on our commitment to increase the common distribution by $0.025 per quarter to an annualized $1.25 per unit next quarter. All this good news is also translated into an improved liquidity picture. We ended the quarter with outstanding debt of $388 million, which is 1.4x our trailing 12 month EBITDAX. Today, that debt balance is down to about $370 million. And with the increase in the borrowing base in $550 million, that means we have over $180 million of borrowing capacity today and that is before taking into account, our cash balance of almost $30 million. Given our strong coverage, reduced working interest capital needs and success in using equity as an acquisition currency, we are very comfortable today with our current liquidity picture. So with that Charlotte, we'll turn the call over for questions.

[Operator:]

[Operator instructions] Our first question will be coming from the line of Anthony Diaz from Raymond James. Your line is now open.

[Anthony Diaz:]

Hey guys, thanks for taking my question. So looks like this most recent deal was funded substantially with equity, it wasn't necessarily the case with the other 28% around there. So, I guess my question is, how should we think about this going forward, is there a benchmark we should be using with acquisitions going forward?

[Jeff Wood:]

Hey, Anthony, it's Jeff. Thanks for the great question. I don't think there is a specific benchmark, what we saw here people had the election to take cash for equity and as you mentioned about 94% of those have responded so far chose equity. I think there is a lot of great reasons for that. We obviously think there's a tremendous amount of value in the stock. But, it also works very effectively within acquisition currency because you can generally carry over tax basis you get to continue to receive obviously a distribution similar to what you had as a mineral owner. And then, very importantly the way that we view this is more of a merger than an acquisition. So for ACLCO, for example, those people who have been long-term mineral holders are now long-term mineral holders across a much more diverse mineral base. So, people are generally pretty sensitive about selling minerals. So, we view this not as selling, but it's just sort of joining the Black Stone family and expanding their exposure to minerals.

[Anthony Diaz:]

Okay. That's helpful. And then, my next question on a different note. Just curious on the A&D market and how many opportunities you're seeing in the Permian now. I know you've grown your Permian footprint substantially since IPO. So I'm just curious, moving forward looks like you're focusing a lot in the Haynesville. But is there, are there are opportunities in the Permian, more so in the Delaware or Midland are you seeing anything on those fronts that that have sufficient scale for your footprint?

[Holbrook Dorn:]

This is Holbrook, Anthony. And we are seeing a lot of opportunities in both the Midland and the Delaware. To date, our position is around 41,000 royalty acres that's equivalent to a surface acre [indiscernible] around 23,000 that's in the core of the Midland around 18 of that's in the core of the Delaware, we're really happy with how we've grown that position over the years. We'd love to continue growing it. I think the way we look at the acquisition world, it's all about what the risk kind of reward is on each opportunity and we're seeing a great opportunity in the Haynesville/Bossier today. That doesn't mean we won't see great opportunities in the Permian tomorrow. So, there is a lot of inventory out there in a lot of plays and we're just, we'll pick our spots carefully.

[Anthony Diaz:]

Okay. All right. I will drop back in. Great quarter guys.

[Operator:]

Thank you. Our next question comes from the line of Nick Raza from Citi. Your line is now open.

[Nick Raza:]

Thank you, guys. Just a couple of quick questions. I think you guys are fairly clear on your remarks, but in terms of what you acquired this quarter, how much of your production the 35.6 MBoe/d was driven by acquired mineral interest?

[Tom Carter:]

Yes. Not much is going to be in that or actually hardly any at all will be in that first quarter production number.

[Nick Raza:]

Okay. And do you guys have sort of a run rate number for the acquisition that you completed thus far?

[Tom Carter:]

Yes. We do. They will be additive to 2017. We haven't started collecting those volumes [indiscernible] given the recent closings.

[Nick Raza:]

Okay. So and is it safe to say that with these acquisitions or your guidance the 35 to 37 you released end of last year would essentially incorporate these acquisitions as well or is that just organic, the 35 to 37.

[Tom Carter:]

Yes. That 35 to 37 incorporated small amount of acquisitions, just because it's part of our everyday course of business. So, we don't expect that these acquisitions will move our guidance. I mean, obviously, we're extremely happy with the production levels, to start the year we continue to standby opinion that production will incline over the course of the year, of course, probably not as the same quarter over quarter rate that we saw that the 20% that we saw from last quarter. So we are going to stick with guidance at this point Nick and revisited mid-year if needed but the takeaway here is that we're just really pleased with the way the assets are performing and believe through these acquisitions we've setup a course for production growth well into the future, not just for this year.

[Nick Raza:]

Okay. Understand…

[Jeff Wood:]

Yes. Let me just -- let me add to that, just a little bit. I just qualitatively, these acquisitions this year and this new development program that we have with the major operator out there. We'll take every bit of 9 to 15 months to spool up in terms of its overall activity level. But as we said earlier, we see that activity level maybe getting into the 5,000 to 6,000 Boe/d range and that would be well into the future and outside of our guidance cycle this year. And I think it's safe to say that virtually none of those volumes are included in our 2017 numbers.

[Nick Raza:]

Okay. That's good of an insight. And then, I'd be remiss if I didn't ask a question about lease bonus, but in terms of just the percentage breakdown, is a large part of that still in the Delaware or is it sort of evenly spread out between the basins that you mentioned?

[Holbrook Dorn:]

I think that emphasizes one of the great aspects of having a diversified mineral portfolio. A lot of the lease bonus for this quarter didn't actually come from the Delaware, it came from the Bakken; it came from North Texas; it came from the Haynesville; it came from some conventional plays. So it's a broad mix. And that really takes out -- just having that diversified portfolio really mitigates lot of volatility in our business.

[Nick Raza:]

Okay. And these rates for the lease bonus or the lease bonus payments, they were, sort of, well, let me ask the question this way, the royalty paid on these leases have they been sort of in line with what you guys have historically done?

[Holbrook Dorn:]

Yes, they have it. I mean, everything has its own individual market. But in the Bakken, that's more of a fifth to a quarter world in terms of royalty depend on which can negotiate, that's a forced pooling state. So you have a little less leverage there in times. In Texas most of those given where they were being leased were 22.5% to a quarter. So these were not royalty [fire] [ph] sale leases.

[Nick Raza:]

All right. That's all I had guys. Thank you so much.

[Tom Carter:]

Thanks Nick.

[Operator:]

Thank you. Our next question comes from the line of Kashy Harrison, Simmons Piper Jaffray. Your line is now open.

[Kashy Harrison:]

Good morning, guys. And a phenomenal start for the year. Say Tom, could you provide some color on how exactly you guys structure the development agreement with your operating partner. And then, can you speak to whether there are opportunities to do this across other areas within your portfolio?

[Tom Carter:]

Sure. Let me say that we don't want to give too much specifics on our Angelina county new development agreement. But I would say that generally speaking, there will be test wells drilled over a large area. And once that cycle has happened, we assuming everything goes away we hope it would go into a more of a development mode. And yes, in areas where we have sufficient concentrations of minerals, we have over the years done large scope development agreements. Those things are not low-hanging fruit and they take a lot of organic realization to get them going, but I can tell you right now in several other plays we're trying to do and have some beginning formation of those, those are great things for Black Stone because they have a lot of transparency to what the drill rates are and what the expectations are upon production increases that allow us to be able to forecast production growth and therefore distribution growth better for the market.

[Kashy Harrison:]

Got it. That's great color there. And then, just given the potential to replace the working interest net cash flows that were formed out earlier this year. And I feel like I ask this every quarter, but what are your thoughts on potentially exceeding the minimum quarterly distribution to unit holders maybe as we head into 2018 or the earlier part of 2019?

[Tom Carter:]

As we go into 2018 or 2020?

[Kashy Harrison:]

Yes. Into 2018 or 2019. What are your thoughts on increasing distributions above the minimum quarterly distribution to common shareholders?

[Tom Carter:]

Well, certainly we would love to do that. That's one thing I would say. We don't have any clear plans currently to go above the MQD. We also have to keep in mind our subordinated units and but I will tell you this and we may have more to say about this in the coming quarters. We are very focused on structuring our business to be able to continue to grow the common distribution beyond the first quarter of 2019.

[Kashy Harrison:]

Got it. Well, that's it from me. Thanks for the time guys.

[Tom Carter:]

Thanks Kashy.

[Operator:]

Thank you. Our next question comes from the line of Chad Mabry from FBR Capital. Your line is now open.

[Chad Mabry:]

Thank you. I had a follow-up to the acquisition line of questioning, if I could looking at ACLCO in particular. Tom, I appreciate the commentary in terms of order of magnitude the 20 wells a year the 5 to 6 MBoe/d. Just curious if that is mostly from the Shelby Trough area of this deal and if that's mostly from kind of the Haynesville/Bossier type of program, are there other targets that you are going to be looking for here?

[Tom Carter:]

I would say on a risk adjusted basis, 99.9% of that is Shelby Trough and Haynesville with some Bossier.

[Holbrook Dorn:]

And this is Holbrook. Just to be clear, while some of those 20 wells per year expected to be on the ACLCO assets. Those are -- we'll also cover a lot of existing Black Stone Mineral positions.

[Tom Carter:]

Yes. A minority fraction of those wells are on ACLCO. There is a much larger footprint than that out there and it's just the ACLCO part of it's just one part of it.

[Holbrook Dorn:]

I mean it's a large mineral position in Angelina County Lumber Company. And it covers, approximately 11 different counties and there's all sorts of good things happening in those counties and hopefully we'll be surprised upside with some other plays out there.

[Chad Mabry:]

Got it. One thought if I could on just production, can you remind us what's your target of mineral and royalty production, you came in 59% percent last quarter and that was down a bit from 62%. Just curious kind of where say by the end of 2017 where you expect that to be a normalized rate?

[Jeff Wood:]

Yes. Chad, I think through 2017, because again that farmout deal doesn't really kick in, it applies to wells that are spud starting this year. So I think we'd be very consistent with still with the guidance we gave last quarter, which is, we would expect that those working interest volumes to remain around these levels through 2017. But as we get out into the further years, we plan to push that down to where royalty makes up 75% plus of our total volume mix.

[Chad Mabry:]

Great. That's all I have. Thank you.

[Tom Carter:]

And just a little add-on to that is, obviously when you're working interest volumes are in the 40% range with a large portion of it coming from the Haynesville and we farm it out. We have to work extra hard to replace those volumes that we are not spending CapEx to create with royalty volumes and we're just -- we're very gratified with the direction that we're seeing out there in the pace of being able to do that. We think we're well on our way to being able to replace and actually expand the after CapEx, net cash flow from that program.

[Operator:]

Thank you. [Operator instructions] Our next question comes from the line of Brian Brungardt from Stifel. Your line is now open.

[Brian Brungardt:]

Yes, good morning guys. Just curious on the strategy here in Angelina County, previously you guys have talked about the leasing strategy of holding back some of the leases -- to lease at a future date, is that a play here and do you have the potential for future working interest if the play turns out as you anticipate?

[Brock Morris:]

Holbrook, you want me to take that one?

[Holbrook Dorn:]

Sure.

[Tom Carter:]

Well, it is a direct outgrowth of that strategy. We held back a lot of acreage over there and we felt that the time was right to put it into play. Specifically, this program over there is a little bit atypical in that. It's geared very much to rig count rather than the traditional leasing activity. But, and so therefore, we are very interested in the active -- and excited about the activity level in that area. Second, in two out of the six areas, we have a significant working interest option. And in the other three, we have a little bit smaller working interest option to participate in those wells and we fully expect at the right time to move those into a non-operated capital source and retained additional non-CapEx intensive overriding royalties on those that would add to our production base without cost.

[Holbrook Dorn:]

I would also just add that while we -- this is a lot of acreage that's been put under several development agreements. We really haven't pulled this -- we haven't just moved this and parked into an area or with an operator that's not going to be developing it, without gain the details, this is not a standard lease. And so, we would expect that this operator will be developing this for a number of, number of years actively in the future.

[Brian Brungardt:]

Great. I appreciate the color there. And Tom regarding the comments surrounding the 5,000 to 6,000 Boe/d, potential incremental production there in Angelina, is that including just what has been closed to date or does that also include some incremental acquisition expectations? And then, just to follow it on top of that in terms of magnitude, how should we think about what is left on the table to acquire in Angelina?

[Tom Carter:]

Well, let me try to answer that this way. The 5,000 to 6,000 per day is sort of a mid-range expectation off of what we have put in place so far. We hope to continue to expand our position out there and in that play there are some other areas that we have not put into play yet. So I don't think that's the maximum. I think it's a baseline midway on the risk spectrum, 12 to 24 months out initial run rate.

[Brian Brungardt:]

Got you. And then, just one last one, if I may. Appreciate the color regarding XTO activity during the quarter. Any color regarding their planned activity as fiscal 2017 progresses and in turn how we should be thinking of production volumes ex any Angelina impact?

[Brock Morris:]

Yes, Brian. This is Brock Morris. XTO has been running two rigs in San Augustine County for the last couple of years and that activity is expected to continue. There is actually one rig running right now. They're in the process of switching out rigs. So they are between rigs with one of them. But we anticipate that the activity is going to continue at the same level for several years or many, many years of development in that area at a two rig pace.

[Brian Brungardt:]

Got you. Thank you very much guys.

[Operator:]

Thank you. And at this time, I'm not showing any further questions and would like to turn the call back over to Tom Carter, Chairman, President and CEO.

[Tom Carter:]

Well, thanks to everybody for joining us today. We're glad to be able to bring some of this clarity to you and we're excited about the prospects for the rest of the year and on into the future. Thanks a lot.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.