Earthstone Energy, Inc.
Q4 2015 Earnings Call Transcript

Published: 14 Mar 2016

[Operator:]

Good morning and welcome to the Earthstone Energy Year End 2015 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] And as a reminder, this conference is being recorded. Joining us today is Frank Lodzinski, President and CEO and Neil Cohen, Vice President, Finance and Treasurer. Thank you Mr. Cohen, you may begin.

[Neil Cohen:]

Thank you and welcome to our year end 2015 conference call. Before we get started, I need to disclose that the conference call today will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. For a complete description of this disclaimer, please refer to last Friday’s press release. Also, listeners are encouraged to read our 10-K for the year ended December 31, 2015 in its entirety as well as all other reports and documents filed with the SEC for more detailed information of the company. The content of today’s call will include remarks from Frank regarding recent developments and a brief look ahead until 2016 related to our prime activities and our strategy and remarks from me regarding recent financial performance. I’ll now turn the call over to Frank.

[Frank Lodzinski:]

Okay, good morning, all. Robert Anderson usually joins us on this call, but he’s out taking care of business so this time it’s just Neil and I. Considering the commodity price environment, I think for 2015 we turned -- we accomplished certain goals and we turned in a decent fourth quarter. That said we’ve all worked pretty hard to get a lot of information into the market place so our comments herein will be a bit limited. We just want to provide a summary of activities, advise you all how we are coping with current industry conditions and answer your questions. First, because we’ve had a few phone calls on adjustments we’ve made here at year end, I want to address the adjustments we’ve made related to our pending litigation that we recorded in the fourth quarter. Our average daily production for the year after these adjustments was 3,936 barrels of oil per day representing a 63% increase over the prior year. That production level was lower than guidance due to these positive advances on our litigation with the operator of our Eagle Ford asset in La Salle County, Texas. These developments occurred shortly after year-end but have then appropriately reflected in our 10-K. In short, while our litigation continues on other matters, we accepted a non-consent status for nine, non-operated wells and recorded a reduction of approximately $9.2 million and accrued liabilities. These are gas wells with minimum oil located in the Hartwell [ph] field where our interest would otherwise be above 10%. Clearly, I’m not going to comment on length because the litigation continues but I will say that our net production that while our net production is lower we are benefitting from a significant reduction of liabilities, improved corporate wide net margin and a higher corporate wide oil percentage. Absent these adjustments and assuming our interest in these nine wells were maintained our full year production would have averaged over 4,300 BOE per day which is in the range of guidance that we released early in 2015. Turning to our costs, we continue to focus on cost reductions. In the last couple of calls I talked about operating costs and our efforts addressed operating cost continue. During 2015, we also addressed G&A cost and in January we took additional steps. In general, we cut virtually all of our long term contractors, some employees, rolled back salaries 10% and eliminated some benefits. These cuts will be fully implemented by the end of the first quarter and the annual savings associated with this is about $1.3 million which accounts for about 12% of our G&A. The G&A matters related to our staff was particularly difficult for me because we have such a great employee group and corporate culture. We did what we had to do, however I am pleased to say that staff morale and determination to succeed is high. I know that many of our employees are on this call are listening and I want to shout out to you all and thank you for your efforts and cooperation. I might as well say get your head down and keep on working hard so we can keep on doing what we are doing. We are also focussed on reducing professional fees which in 2015 included relatively high cost of the acquired SOX compliance and fees associated with acquisitions. Okay, I’ll just add limp [ph] here a little bit, I can’t believe that in the commodity price environment we had to implement all the SOX stuff in a period of about 6 months when usually you have a year, a year and a half to do this but nevertheless we’ve done it and we have a lot not all of those costs behind us. I’ll talk a little bit further. Our conference [ph] about our current activities and our outlook and so forth, but just a brief comment. In 2016, as I kind of indicated we might do in prior calls, we suspended our operating, drilling and completion activities. I’ll turn the call over to Neil to briefly discuss financial reports and tell you a little bit more about that later.

[Neil Cohen:]

Thanks, Frank. For the year ended December 31, 2015 our production averaged 3,936 equivalents per day which is a 63% increase from the prior year. Production consisted of 63% oil, 25% gas and 11% NGLs. From a finance perspective, we reported adjusted EBITDAX of $25.9 million and adjusted net loss of $3 or $0.22 per share and cash flow from operations or for change in working capital of $1.81. Of course we recorded significant apparently -- throughout the impairments our net loss totaled $116.7 million or 843 per share. For the fourth quarter our production averaged 3,872 BOE per day consisting of 65%, 22% gas and 13% NGLs. However, because these adjustments related to the litigation as Frank spoke about earlier, we recorded in the fourth quarter, reported production was reduced to 2,736 BOE per day. From a financial perspective after adjustments reported, adjusted EBITDAX of $4.3 million and adjusted net loss of $2.9 million or $0.21 per share and cash flow from operations for changes in working capital of $0.29 per share. After impairments our net loss totaled $116.5 million or $8.42 per share. During the quarter, we continued to focus on cost specifically on a pre-end basis, total cash operating expense inclusive of LOE re-engineered and workovers [Indiscernible] as adjusted totaled $11.98 per BOE in the fourth quarter, G&A totaled $5.95 per BOE. Finally, our liquidity position is good. At the end of the year we had approximately $23 million in cash and approximately $69 million in availability under our revolving credit facility. Debt outstanding remains at $11 million. I’ll now turn the call back over to Frank.

[Frank Lodzinski:]

Okay, thanks Neil. So what I want to -- what I’d like to discuss right now is briefly what we’ve accomplished, our current operations, our reserves and where we are focussed on going in 2016. Inspite of the difficult circumstance in 2015 we accomplished certain goals; specifically we landed a meaningful and accretive corporate acquisition being Lynden Energy which also facilitates our entry into the Permian Basin. We converted a large portion of our acreage to HBP status and we improved our near term lease expiration profile to minimize our near term lease expirations. We lowered our cost structure related to basically everything, capital expenditures, operating costs and G&A. To address drilling and completions, on the drilling side because of the low commodity prices a little earlier this year we shut down our operated drilling and completion activities. We intend to limit our capital expenditures and remain well within operating cash flows. We have a 12 well frac inventory which provides us an opportunity to rapidly and significantly ramp up production while reactivating our drilling our drilling programs should prices co-operate. The recent rallying in prices is welcome but we need to see some stability and further improvement. With respect to our goals, we intend to acquire additional producing assets and acreage in our existing areas and pursue additional corporate acquisitions. Our pending corporate deal with Lynden is proceeding and should close in the second quarter. Simply stated, our goal for 2016 and beyond is to grow profitably. I believe that more corporate and acquisition opportunities will be available in 2016 and we are working towards larger acquisitions. In the interim we will continue to look for bolt-ons in our focus areas like we did in the second and third quarter of 2015. Finally, just a couple of comments on reserves. While reductions and reserve quantities are being recognized by nearly all companies in the industry, I find that situation personally and for Earthstone quite distressing. Simply, and a lot of you know me this is not going to happen two years in a row. Our reserve quantities were down about 32% in that range after accounting for asset sales, we did have some asset sales, production and SEC pricing. However, we did replace about 180% of our production. Obviously the majority of the reduction and reserves is related to commodity prices but to further explain our drilling and completion activities were directed towards capturing as much acreage as reasonably possible and minimizing near term lease expirations in order to preserve acreage and upside for future development. Most of our drilling efforts both in the Upper Austin Chalk and in the Eagle Ford well are locations that were already classified as proved undeveloped. The Eagle Ford locations that were drilled were generally on acreage to the southern end of our block and have the oldest leases. Aside from capturing acreage and holding upside for the future, these locations also provide a low cost ready access to existing gathering lines and provided certain other operating economies including multiple units drilled from pad locations which aided in lowering LOE. As a result of our efforts, our Eagle Ford acreage is approximately 60% HBP and only about 2400 net acreage could expire in 2016. So the net effect was success in capturing acreage and lowering lease operating expenses on a unit of production but obviously and unfortunately this also resulted in lower approved undeveloped reserves due to the lack of drilling by Earthstone or offset operators that moved reserves from probable and possible to proved categories. Okay, we’ll just wrap up. As many of you know our management team and many of our employees are investors in Earthstone and we are doing everything our shareholders and the markets would expect of us to weather this downturn. We’ll not let the downturn which by the way is probably the worst I’ve seen in my 43 year career [Indiscernible] from achieving our ultimate success and adversely impact our prior favourable track record. We clearly recognize that these are challenging times, but with our dedicated management and employees I am confident that we will maintain our solid financial position, expand our asset base, enhance our flow and trading volume and ultimately proper when industry conditions improve. We’ll just go ahead right now and open up the line for questions. And operator, you can start taking questions right now.

[Operator:]

Thank you. We will now be conducting a question and answer session. [Operator Instructions]. Our first question comes from the line of Neal Dingman with SunTrust Robinson Humphrey. Please proceed with your questions.

[Neal Dingman:]

Good morning, Frank, Neil. Frank, quick question, I guess every time people ask this question in this kind of market with those Juggs you have and obviously laying down your rigs. Is it a certain price, Frank that would take to – take or bring activity back or how do you think about – how should we think about that later in the year?

[Frank Lodzinski:]

Well, Neal, that’s a tough question to answer, but I think our overall reserves we were price down when you consider differentials and so forth down around $45. Obviously, the price deck this morning was down a little bit. It’s down in the 37 range. I’ll tell you the truth, you guys know me. I just don’t know, but I’d sure like to see something with a strip price with $45 or a $50 handle before we are really active in drilling again. Virtually, all of our North Dakota acreage is HBP, 60% of our Eagle Ford is HBP. We have minimal acreage explorations and I’m prepared just to honker down for the time being and consider that. I just don’t see giving up all the upside that we worked so feverishly to include and position our shareholders and given it away at $37. So, I don’t know, give me a price stake, give me what you guys – you got all this brilliance on the other side of the line, each and every one you give me a price deck, I’ll tell you exactly what we’ll do.

[Neal Dingman:]

I got you. I got you. And Frank obvious with this Lynden deal, now obviously that’s close to closing, is it more now going forward, more in the Permian you’re looking, more in the Eagle Ford or you take either one to continue to sort of build positions?

[Frank Lodzinski:]

We’re actively looking principally for Eagle Ford and Permian opportunities, Ray might be on the phone, I don’t want to disregard the Bakken, because I think there are opportunities up there, but the Bakken is not one of the more favourite from the public market. So I don’t think we’re going to be simply focused on just the Eagle Ford or just the Permian. We’ll be looking at good opportunities in both areas and take it from now. I really think that if we can turn this or again not the slight array in the Bakken at all, because I like it up there. But I really think if we can turn this thing into our Eagle Ford and Permian Power House going forward, it would be well received by the markets when the prices improve.

[Neal Dingman:]

And Frank, if you did a deal, I mean, I guess is there every sort of option on the table in bringing a private equity help fund it that way to do another deal like Lynden shares. I mean did you talk about maybe your preference for structure?

[Frank Lodzinski:]

Well, it all depend, you guys know I mean you guys know our straight shooters [ph] my preference per structure may or may not fully compatible with what the investors want to do out there. So, we would be somewhat flexible, so long as the investors will reliable, embed with our business strategy we would embed with their business strategy and so on. So, we would not turn away a private equity investments, clearly if the capital markets improve we consider going to the capital markets and of course there’s been breath of fresh air and all of that recently. And as you know we’ve done sizeable acquisitions in partnership form with institutional investors in the past and then finally corporate deals where we could get out some stock and new deals like Lynden would be appreciated or I don’t know what word I’m looking for, high on our list.

[Neal Dingman:]

Got you.

[Frank Lodzinski:]

So, it’s a function. In the past we’ve done really good acquisition deals and partnership with institutional investors like GE and so forth, and there’s some of that kind of activity out there in the marketplace, so we’re not going to shutdown any options in this market.

[Neal Dingman:]

That makes sense. Thank Frank.

[Frank Lodzinski:]

Thank you.

[Operator:]

Our next question comes from the line of Jason Wangler with Wunderlich Securities. Please proceed with your questions.

[Jason Wangler:]

Hi, Frank. Good morning.

[Frank Lodzinski:]

Good morning.

[Jason Wangler:]

Was just curious on the CapEx breakdown, spending quite a bit up in the Bakken, it looks like it’s mostly just completing some wells this year, but just kind of just maybe asking for little bit color of the activity level you kind of see it there on the non operated side?

[Frank Lodzinski:]

Well, Rob is a lot closer to that and if you want some follow-up you can talk to him a little bit when he gets back into town and so forth. But on the non-operated Bakken you’ve got the -- go ahead, Neil.

[Neil Cohen:]

Hey, Jason, just for high level kind of modeling type assistance and actually at year end we had about 14 waiting on completion in the Bakken. We’re 4% working interest up there. We have to some get systemic color but interest rate there was coming online, for modeling purposes price assume equally over the course of the year, but as of 12/31 about 14 waiting on completion.

[Jason Wangler:]

Okay. That’s helpful. And that’s all I had. Thank you.

[Operator:]

Our next question comes from the line of Jeff Grampp with Northland Capital Markets. Please proceed with your questions.

[Jeff Grampp:]

Hey, guys. I wanted to go a little back more maybe to when you guys maybe little more excited about increasing activity, understand 45 to 50 on the strip is maybe a number that gets you more excited. Is that maybe a different number for completing the Eagle Ford ducts that you have or should we think about the ducts and kind of adding the rig back kind of kind of two sides of the same point there?

[Frank Lodzinski:]

Jeff, once again I realize this is difficult. We have put out our guidance in terms of what are projected BOE in oil and gas percentages are, operating cost and so forth. And by the way, one thing we didn’t put in there was the guidance on the DD&A, Neil, what are you thinking there.

[Neil Cohen:]

Yes. So, on guidance for DD&A and it just probably goes out, you know we’re still finding our estimate internally, but again from modeling purposes, $18 to $20 per BOE is probably a fair reason what estimates for -- purposes.

[Frank Lodzinski:]

So, I know I’m being non-committal Jeff, but from modeling purposes I really think you can kind of look to our guidance and kind of ramp it up with maybe a little heavier emphasis in the second part of the year in the Bakken over the course of year as Neil indicated. We’re going to turn – we’re going to focus even harder, I don’t know if we can, but focus even them harder on acquisitions. So I just can’t give you anything precisely. I mean the four Boggs wells that we have down there in Karnes County. We’ve got a 33% working interest that’s really good territory down there. Man, I’d sure like to get those going later in the second quarter, okay. And then we like to move back to Fayette County and we’ve got eight more wells to do there, where on average we’re about 50%. I kind of like to do those over the course of the second half of the year. And you know but if we are looking at $30 or $35 oil we are not going to know.

[Neil Cohen:]

Okay, that’s helpful. And then, just one last one. You guys kind of mentioned some non core asset sales and obviously you did one or two of those last year. Should we expect some kind of smaller things as you guys kind of clean up the asset base or is that maybe a little bit more commodity price dependant being a little bit more selective and opportunistic on that front?

[Frank Lodzinski:]

I wouldn’t focus in on any asset sales right now and to this anything we do would be relatively small you know probably under $5 million or something like that, but I just don’t see doing much of that right now in this environment. And particularly a number of those assets, our starter kit assets that we assembled back in 2012. They are gasy, the gas market is not improving, they are throwing off a little bit of cash flow. The Bakken were probably up around near what you think about 600 to 700 barrels a day up there. I don’t see like math stuff go in this price environment, so not material.

[Neil Cohen:]

Okay. Perfect. I’ll turn it back. Thanks.

[Operator:]

Our next question comes from the line of Welles Fitzpatrick with Johnson Rice. Please proceed with your question.

[Welles Fitzpatrick:]

Hey good morning.

[Frank Lodzinski:]

Hey, Welles.

[Welles Fitzpatrick:]

Is, am I remembering right, is $50 million still a pretty good number to keep that Lynden production flat and are you guys seeing any opportunities to swap around on the acreage there and maybe working through an operator position.

[Frank Lodzinski:]

Hold on a second. Do you have any number, what are we putting here.

[Welles Fitzpatrick:]

That is just for half our wells.

[Frank Lodzinski:]

Yes. Well we would have to look back, I think directionally in the ball park hold it flat but I’ll sort of back with you offline. On your question regarding, hold it flat, but I think you are in the ball park.

[Welles Fitzpatrick:]

Okay and any opportunities on swap in acreage and the area to get towards an operator position or not so much?

[Frank Lodzinski:]

No, I think no, no. We are quite happy with the acreage that Lynden has. We are in discussions with the various folks out there and so forth and we are looking for new acreage where we can expand our operations out there, but we are happy with what we have.

[Welles Fitzpatrick:]

Okay, that’s great. And then just one last one. Any update on the restricted show program those guys are still looking pretty good, is that going to be the method going forward?

[Frank Lodzinski:]

Well yeah I think so maybe to a little lesser extent because what that restricted show program did particularly in Northern Gonzales and in Southern Fayette. It really allowed us to capture several units where there are additional drilling to do, drilling and completion on the wells. For example, we’ve got a couple there where we got a couple of wells on production and each of them have probably three more wells that we can drill. So this was really a way not only to try to maximize EURs but also a way of deferring capital cost by installing pumping units and then later on by installing artificial lift and then pumping units and then actually later on having to move all that off and bring in a rig to drill a frac or whatever have you, okay. So, it’s a good method and at -- this makes it all a little tacky but at $90 or $100 we might continue to do the math or we might open the wells up you know wide. So, I know I’m being a little bit awkward here, but we like that approach. We’re also cognizant of where the market is and what other people are doing and we are going to continue to look at it, but the production method that we are using also has an economic consideration and a consideration of deferring cost. So once again another merely mild kind of non-committal answer well as I apologize for that.

[Welles Fitzpatrick:]

No, no that makes perfect sense. Thank you guys so much.

[Operator:]

[Operator Instructions] Our next question comes from the line of Steven Berman with Canaccord Genuity. Please proceed with your question.

[Steven Berman:]

Good morning Frank and Neil.

[Frank Lodzinski:]

Good morning, Steve.

[Steven Berman:]

Back to the M&A and A&T market, the main reason that’s been given for -- lack of activity has been widespread between [Indiscernible] are you seeing that narrowed all Frank as you just kind of from 30,000 feet looking at the overall market you are saying that we might be getting closer to a pickup in activity there?

[Frank Lodzinski:]

Well Steve there just hasn’t been enough transactions for me to answer that definitively. You know over the course of '18, see I already got my head focused on $100 oil and a huge profit for our investors in 2018, so there you go, sorry for that 40 in slip. There were a lot of deals in 2015 that were just yanked, I mean just yanked where they tried the process and so forth and really nothing went appreciably other than you know the Permian base deals which in the core areas look pretty good. From other staff it seems that there is a continuing disconnect between buyers and sellers and I think if the prices move up a little bit and we start seeing this 37, 38, 39 and seeing some stability in that and perhaps the forward curve is projecting something better than that, I think that disconnect will tighten. Okay, I think it will be less, let me put it that way. So, we are focused on acquisitions that have a heavier PDP component. We’re not going to go out and buy something that has you know 500 barrels a day and 5000 acres, okay with short term drilling commitments. So we are focused on things that have a higher PDP component. We’re also focussed on both private and public corporate acquisitions much like the Lynden thing where we might be able to effectively and accretively utilize our stock and gain greater following on the stock side. And those seem to be -- am I encouraged that we could pull off something like that both from an asset standpoint. Yes, because I do think that assets that have a PDP component, there are going to be larger companies that are going to be putting those out, because from their perspective maybe there is not a huge amount of upside potential but you know finding something that has 2,500 barrels a day and 4000 or 5000 acres to develop, that fits into our bailiwick [ph] really, really, really nice, okay. The bigger companies I think and I think this is not appreciated in the markets out there. The bigger companies many of them have done lay-offs, many of them are focused on high amounts of leverage and they simply don’t have the human capital to address the types of properties I just mentioned. So I think that there is going to be quite a bit more coming out and that’s what we are focused on.

[Steven Berman:]

Got it. One maybe for Neil, if I saw this correctly the $37 million in change that’s out on the Lynden revolver shows up its short term debt if that’s the case how do you intend to refinance that one step under Earthstone’s umbrella?

[Neil Cohen:]

Irrespective of how it shows up on their balance sheet our intent is to pay down that facility and inherit their borrowing base subject to redetermination. So improved formal [ph] we’ll have about $14 million of debt outstanding and about $30 million of cash.

[Steven Berman:]

Got it. Okay. Thanks guys.

[Frank Lodzinski:]

Okay.

[Operator:]

Our next question comes from the line of John Aschenbeck with Seaport Global. Please proceed with your question.

[John Aschenbeck:]

Hey good morning. Had a follow up on 2016 activities specifically in the Permian and I appreciate the color that you’d like to see $45 to $50 strip to get back to work, but was just wondering if, Frank, has given you any idea what it would take for them to accelerate activity?

[Frank Lodzinski:]

Well, I’m not going to put words into their mouth. We have met with those folks, they have a fine reputation. We feel pretty good about establishing a favourable cooperative framework going forward. If I had to guess right now, it’s not like they are going to start throwing a wheel barrel of money or a dump truck full of money towards its development. So at those price tags, so we haven’t had any substantive discussions Robert formal. Robert and Neil had some discussions going with those guys as we will. And I just right now, I think I had -- if I told you that we were pushing them to significantly increase drilling activity and they were doing the same task, that’s just not happening right now.

[John Aschenbeck:]

All right. Appreciate that Frank. That’s it from me.

[Frank Lodzinski:]

Great.

[Operator:]

And next question comes from the line of Ben Wyatt with Stephens. Please proceed with your question.

[Ben Wyatt:]

Hey good morning, Frank and Neil. One quick question maybe on the M&A front and sorry if I missed this, but just curious if you guys maybe see any opportunity on some of your distressed peers, whether we are talking to Eagle Ford Bakken whatever you basin you want to talk about, but is there any opportunity to work with those guys or just bond holders going to get in the way our distressed set guys are already there that would impede any type of opportunities there, just like to get some color around that?

[Frank Lodzinski:]

Okay, look so this is -- so I will respond Ben you and the other guys know I’m not bashful but of course my opinions may not be what’s prevalent out there in the market place. But I’d tell you, you know I’ve been doing this for 43 years. I’ve never really seen situations where the companies and the bond holders got together to shed assets and put them with another operator. It seems like to me over the years and maybe some of the things we’re seeing now, it seems that you know management has a bankruptcy tool that they can employ and maybe would employ and bond holders, I just haven’t seen a lot of other than restructurings for you know continuing moving forward and things like that, I haven’t seen bond holders really do anything appreciable to leave any equity value on the table for the management team and their shareholders. I guess I joke and I don’t want to offend any bondholders but bondholders seem to me over the course of the year that they are in a primal position and they are basically unwilling to leave anything on the table for the equity or for the management or whatever have you know. That said, you know we of course would like to cooperatively approach companies where we might be able to affect the deal, but that hasn’t been and we have had some discussions with the private equity guys to do that and so forth, but that doesn’t seem to be the bigger focus. The bigger focus is for us is deals that we could do on a cooperative basis for an entity as a whole like Lynden or an asset basis out of a private equity firm or rather cooperative basis with the firm that’s holding debt and a cooperative management teams. So once again another lack of definitive but I just -- frankly I just don’t see a lot of merit chasing those kind of deals amongst our peers unless you could really do so on a cooperative manner with the bondholders and with the management.

[Ben Wyatt:]

Very good. Frank, appreciate it. That was it from me, thanks guys.

[Frank Lodzinski:]

Okay, it looks like. Do we have anybody else?

[Neil Cohen:]

There’s one more.

[Frank Lodzinski:]

Okay one more. We are trying to keep this open and answer all the questions. So we’ll take this one more unless somebody pops up on the line here.

[Operator:]

Our next question comes from the line of Brad Carpenter with Cantor Fitzgerald. Please proceed with your question.

[Brad Carpenter:]

Hey good morning, Frank and Neil thanks for squeezing me in here. Just one quick one from me and I know it’s early in the process and obviously there is a lot of moving parts with price stacks in the Lynden acquisition, but I was curious if you had any preliminary discussions with your banking group about expectations for the redetermination in May?

[Frank Lodzinski:]

I think that the answer is yes, we’ve had conversations with our banks. We are getting together with them and we are considering perhaps expanding the bank group or how we are doing that. We didn’t want to wait till the last minute. Lynden has a $40 million borrowing base. We have an $80 million borrowing base. I’m not going to give you any guidance onto what on a combined basis it would be, but I don’t think we can plan for $120 million. I don’t think cuts I’m hoping and I don’t think the cuts are going to be wholly severe and knock it by 35% or 40% but it depends on what the price tag does.

[Brad Carpenter:]

Right. Okay, understandable, that’s still helpful there Frank. I appreciate that. Thanks.

[Frank Lodzinski:]

Okay.

[Jason Wangler:]

Just want to make one quick clarifying point, Jason from Wunderlich. You had asked about our Bakken inventory I had mentioned 14 earlier, its closer to a little over 30 wells as of year-end, just wanted to clarify.

[Operator:]

Okay. There are no further questions at this time

[Frank Lodzinski:]

Okay. Thank you all for calling in and you know we worked hard to be transparent here and get a lot of information and make it as least confusing under these industry situations as possible. We are always open, call us if you have any more questions and we’ll do our best to accommodate. Thank you very much.

[Operator:]

This concludes today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.