Warren Resources' (WRES) CEO Philip Epstein Hosts Marcellus Acquisition Conference Call (Transcript)

| About: Warren Resources, (WRES)

Warren Resources, Inc. (NASDAQ:WRES)

Marcellus Acquisition Conference Call

July 07, 2014, 11:00 AM ET


Philip A. Epstein - CEO and Chairman

Saema Somalya - SVP, General Counsel and Corporate Secretary

Stewart P. Skelly - VP and CFO

Zachary Waite - Manager, Engineering and Business Development, Citrus Energy Corporation


Curtis Trimble - Brean Capital, LLC

Jack Aydin - Aydin Group


Good day, ladies and gentlemen and welcome to the Warren Resources’ Marcellus Acquisition Conference Call. My name is Stephanie and I will be your operator for today. At this time all participants are in a listen-only mode and we will conduct a question-and-answer session in this conference. (Operator Instructions).

I would like to turn the call over to Mr. Philip Epstein, Chairman and CEO. Please proceed, sir.

Philip A. Epstein

Thank you, Stephanie. Good morning, everyone. I’m Philip Epstein, the Chairman and Chief Executive Officer of Warren Resources, Inc. Thank you for joining Warren’s investor call this morning.

Before we get started I’d like to hand over the call to our Senior Vice President and General Counsel, Saema Somalya for a comment on forward-looking statements. Saema?

Saema Somalya

Thank you, Philip. Before we get started this morning I would like to remind everyone that all statements made during our conference call that are not statements of historical fact, constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could vary materially from those contained in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in our Forms 10-K and 10-Q, other periodic filings with the SEC and our press release.

In addition please note that today’s presentation may include some non-GAAP measures. Please refer to the appendix to today’s investor presentation which has been filed with the SEC on an 8-K dated as of today and which have also been posted to the investor section of Warren’s website at www.warrenresources.com to find disclosure and a reconciliation of such non-GAAP financial measures contained herein.

Philip A. Epstein

Thank you, Saema and welcome everyone. I’m very pleased to announce today a major acquisition for Warren in a new basin, the Marcellus, which significantly expands our asset base and positions us for continued rapid growth and profitability.

As set out in our press release and accompanying investor release this morning -- presentation this morning Warren has executed definitive agreements to acquire for $352.5 million substantially all of the assets of Citrus Energy Corporation in the Northeast Marcellus located in Wyoming County, Pennsylvania. The Citrus assets are in the core-of-the-core of the Marcellus and Citrus has drilled some of the highest producing wells in the Basin.

The Citrus transaction represents a major acquisition for Warren that will more than double our size in terms of net proved reserves and more than triple our size in terms of net production. The Citrus assets provide us with an entry into a new prolific natural gas basin. In addition most of the members of the Citrus management team, who have demonstrated a record of rapid success in the Marcellus, will be joining Warren to help us develop the acquired assets and continue on our upward trajectory of growth.

I would like to provide a few words of background and speak of the two events which have led us to this transformative acquisition. In December 2012 I was elected by Warren's Board of Directors as Chairman and CEO with the goals of (NYSE:A) maximizing our excellent oil and gas assets; oil assets in California and natural gas assets in Wyoming which provide for a steady long life production, and (NYSE:B) very importantly identifying new areas of growth.

My first job as CEO was to dig into our assets, understand with our team their potential and determine how we could leverage our skill sets to grow the company. The Warren team has done an outstanding job driving efficiencies on our existing asset base. We did a great job in 2013. We achieved records on three fronts, our revenues hit almost $130 million. Our net income was up 96% to $30 million and our EBITDA increased almost 20% to $80 million.

Our skill sets and focus are to exploit known resources and excel at environmental stewardship in sensitive regulatory environments. Our initial goal which we have now achieved was to trade in an enterprise value above PV-10 of proved reserves which was $504 million at year-end 2013. This is a distinction that the better, more “exciting” E&P companies have earned, those who demonstrate value beyond proved reserves.

However exciting in Warren's case doesn't mean pure exploration. We focus on the nuts and the bolts of reservoir optimization and of cost efficiencies. We believe that as geological risk is replaced by engineering risk the efficient use of capital is the future for the American energy industry. And this trend plays into Warren’s sweet spot.

We look to leverage our skill sets to exploit known resources. We are very good at geologic and reservoir analysis and the application of state-of-the-art engineering practices. As we generated internal success we redoubled our efforts to find opportunities for external growth, and to use our balance sheet to establish a new core area. We established an effective M&A process of originating engineering and financially analyzing transformative acquisition candidates with the help of our outside engineering firm, Netherland, Sewell & Associates, Inc. and our financial advisers.

We also hit the refresh button on management in order to develop a broader expertise. We elevated internal talent to positions of greater responsibility and we brought on new technical operating and business development personnel who are attracted by Warren's entrepreneurial culture and our growth prospects. These individuals bring high levels of expertise from excellent companies. As our expertise and skill sets evolved we began to look at other basins and asset classes including unconventional resource plays.

The process of carefully diligencing assets is time consuming, but we firmly believe that being disciplined will yield and in fact has now yielded our ultimate success. As previously discussed we have been on a number of multi-hundred million dollar acquisitions in the past which had a significant PDP component, allowing us to optimize our capital structure and leverage our skillsets. As a result I am extremely happy to announce today -- today's acquisition of the Marcellus assets of Citrus which achieves all of our objectives in terms of size, PDP, cash flow, upside and establishing an excellent platform for our growth.

In addition we have a great team of talented individuals joining us from Citrus including Lance Peterson, the Co-Founder and CEO of Citrus who will join Warren's Board upon completion of the acquisition. On today's call I would like to provide an overview of the Citrus acquisition as well as the context for understanding the transaction within Warren's broader goals and strategies. I will then turn the call over to Zachary Waite, who we're happy to have joining our team from Citrus as Warren's soon to be Vice President of Business Development and Marcellus Operations upon completion of the acquisition.

Zach has successfully run the operations and business development of Citrus for the past five years. He will discuss some key points of the acquired assets from an operational point of view. After Zach, Stewart Skelly, Warren's Vice President and Chief Financial Officer will elaborate on some of the financial aspects of the transaction and how it affects our financial structure going forward. For reference the topics discussed on this call will roughly follow the acquisition presentation and we will be referencing specific pages as we go.

As set out in pages three and four of the presentation Warren has agreed to acquire assets in the Marcellus basin from Citrus, a privately owned E&P company and two additional working interest owners for an upfront purchase price of $352.5 million consisting of $312.5 million of cash and $40 million of our common stock valued at $6 per share which is about 6.67 million shares, representing a little over 8% of our outstanding common stock post issuance. Bank of Montreal is providing Warren with committed debt financing for the entire transaction.

The Citrus assets are located in Northeast Pennsylvania in the Marcellus basin in what is widely referred to as the core-of-the-core of the Marcellus. The assets averaged 82 net million cubic feet a day of natural gas production during the month of June principally from the lower Marcellus. Estimated net proved reserves as of July 1, 2014 were 208 Bcf per our third-party reserve report developed by NSAI of which 55% were proved-developed with over 305 Bcf of estimated net proved, probable and possible or 3P reserves.

The acquired assets will be 100% operated by Warren, are all held by production and are complemented with complete midstream infrastructure including some favorable gas sales contracts. We're acquiring the Citrus assets which include 13 constructed pads, sufficient to drill the remaining PUD locations in a number of upper Marcellus locations and an attractive valuation of approximately $4,300 per Mcf per day.

The acquired acreage position is located in the north part of Wyoming County, Pennsylvania. It’s generated top tier results over the past few years. As a reference the acreage is just south of Cabot Oil and Gas Corporation’s position which as you may be aware has also produced consistently strong results. In 2012 Citrus drilled seven of the top 25 wells in the Marcellus and they also drilled two of the top 10 wells in the entire United States on this acreage.

There’s considerable upside to the acquisition which Zach will touch on later with additional resource potential in the Upper Marcellus interval and through down-spacing. For example we've identified an additional 48 drilling locations in the Upper Marcellus none of which has been included in NSAI's 3P reserves. The Upper Marcellus could add a further four years of drilling inventory and provide significant present value to Warren using assumptions similar to other operators.

The substantial free cash flow generated from the acquired assets is expected to allow for a natural deleveraging of our balance sheet. The transaction has an effective date of July 1, 2014 and is expected to close in August.

Before I hand the discussion over to Zach Waite I'd like to summarize some of the key strategic points of the Citrus acquisition for Warren as shown on page six of the presentation. The Citrus acquisition established for Warren a strong foothold in perhaps the most prolific natural gas basin in North America. We've already identified several opportunities to expand our position in the area and we will monitor and pursue those opportunities in the future if we think they make sense.

Along with the acquired acreage Warren will be retaining key personnel of Citrus upon completion of the acquisition, including Zach and Dan Collins who will soon be Warren’s Vice President of Marcellus Land, all of whom have helped Citrus grow these assets and maximize their performance and returns. The retention of key Citrus personnel along with our ability to leverage our existing geologic exploitation and regulatory expertise from our California and Wyoming operations provides confidence in our ability to operate successfully in the Marcellus basin.

The acreage is 100% HBP and Warren will be the operator, which will allow us to create and implement the optimal drilling plan. While we priced into the transaction the current relatively high basis differentials in the Marcellus we believe that planned increases in pipeline capacity will improve realized prices. We analogized to the experience in the Rockies, where build out of infrastructure has significantly narrowed basis differentials. As such we are optimistic on the mid to longer-term prospects of owning natural gas resources in the Marcellus and we will seek to leverage our new platform accordingly.

Lastly the transaction is highly accretive, substantially increasing our EBITDA, production and cash flow on a pro forma basis which Stewart Skelly will elaborate on later. Development drilling is entirely self-funding and free cash flow from the acquired assets will allow for natural deleveraging of our balance sheet.

At this point I’ll turn the call over to Zachary Waite, who will become our new Vice President of Business Development and Marcellus Operations to provide some greater detail on the asset themselves. Zach?

Zachary Waite

Thanks, Philip. I really appreciate the introduction and let me say that I’m excited to be joining the Warren team and to continue to develop these assets. I first joined Citrus in 2009 and have been responsible for the development and production of all 30 wells that Citrus is producing on this acreage, including an additional three that are drilled and waiting on completion. We have been very fortunate to have a very strong team on this asset, many of whom will be coming over with this acquisition, have consistently produced some of the best wells in the Marcellus.

Let me run through some specifics on the projects and acreage as well as some of the key wells that the Citrus team has produced and where we think a lot of potential lies to unlock more resources on this acreage. Citrus began leasing in the Marcellus and specifically Wyoming County in 2008 after completing extensive geologic engineering and marketing studies of the play. A focus throughout this discussion will be gas marketing and how Citrus’ strategy has been concentrated around maintaining market optionality for the produced gas while supporting initiatives by Pennsylvania industry to grow their gas usage through supplying them locally produced gas.

This strategy has led to the acquired assets providing a substantial portion of its total production to local business pursuant to a strong sales contract that runs through June 2015. This is also paired with a highly engineered mid-stream system that allows us the option to send all the remaining gas to either of the two interstate pipelines that the system is connected to, depending solely on where the best gas price is that day. Developing this complex and sophisticated mid-stream system has only been possible due to the great results across the acreage block.

As you can see on page five of the presentation, something that we are very proud of, over 75% of the wells production results within the acreage are in the top quartile for all Marcellus wells. The crown jewel of these well is our Johnston 1 1H well. This well IP’ed at 36 million cubic feet per day with a 30 day average of 25 million cubic feet per day. It was the first Marcellus well to cumulatively produce 10 Bcf and is currently producing at a rate of 6.5 million cubic feet per day and has cumulatively produced 11.5 Bcf to this day, a great well to say the least. While this is an incredible well this is not an isolated outcome for the acreage.

Average 30 day IP rates across the block have ranged from about 8 Mcf per day to 16 million cubic feet per day -- I am sorry 8 million cubic feet per day to 16 million cubic feet per day. These types of single well results have led to tremendous year-over-year production growth.

2010's annual gross production average was approximately 17 million cubic feet per day, has grown to 87 million cubic feet per day for 2013. The average gross rate for production for the month of June was 135 million cubic feet per day. These results are typical to the Northeast Pennsylvania, Marcellus which has created pricing pressure in the region while our extremely talented team has remained focused on cost control and maintaining top tier production efficiencies to minimize costs while being ready to implement ongoing development plans.

The acreage is completely held by production which allows us to be flexible with capital allocation depending on commodity prices. As you can see on page eight the Citrus operating team has being able a develop Marcellus best breakeven of $2.41 per Mcf by concentrating on production results and capital maintenance. Our average AFP is $7 million for an average lateral length of 4,700 feet which is a great achievement with our limited scale. Pad and pipeline infrastructure across the block is in place which will help to minimize lead time from expending capital to generating revenue.

An ongoing project that we're excited about is the compression system that's currently being designed for our gathering system. This compressor station is expected to lower the system pressure by 350 PSI and will allow greater deliverability from all the wells. This project is expected to be online around third quarter 2015 and we expect that this will continue to flatten the declining curves of the wells.

Due to all the factors that I just discussed we believe that the team is ready and poised to quickly respond to dynamic demands that come with being located in a volatile gas market. As we continue to develop, to identify proven and probable drilling locations as well as evaluate and test the upper Marcellus and down spacing the lower Marcellus we remain ready to execute in the most efficient manner possible. Efficient growth has been the team's goal and motto for the last five years. And we are very excited to join a team like Warren that has these same values and goals.

Now I'll turn it over to Stewart Skelly, CFO of Warren to discuss the financial aspects of the transaction and how it affects the financial structure of the company going forward.

Stewart P. Skelly

Thank you Zach. Now that we’ve discussed the acquisition and some of the technical data let me touch on a few of the financial aspects of the transaction such as the financial benefits to Warren or plans for financing the acquisition and the impact of the transaction on our leverage statistics and liquidity.

As Philip mentioned the acquisition is transformative in terms of its effect on our scale in addition to our areas of operations. It will increase our estimated net proved reserves by 208.3 Bcf from approximately 202.5 Bcf at December 31, 2013 to a total of 410.8 Bcf on a pro forma basis. It more than triples our current net production by 82 million cubic feet per day to a pro forma total of 118 million cubic feet equivalent per day.

It will have similar transformative effects on our EBITDA which we expect to grow consistently over the next several years. Traditionally Warren has aimed to hedge approximately 50% of both oil and gas production on a forward 12 to 24 month basis and we're exploring hedging alternatives for the current production associated with the acquisition in order to protect our cash flows. This will be particularly important given the recent price volatility in the Marcellus.

Turning to the balance sheet on page 12 of the presentation, Warren has ideally positioned itself for this type of sizeable acquisition by maintaining a conservative leverage position between a fully committed bridge financing and the anticipated increase to a borrowing base from $175 million to $225 million. As a result of the acquisition we expect to maintain ample liquidity with which to develop the acquired assets over the coming years.

At close of the acquisition we expect our liquidity to exceed $100 million. We have already begun to examine the various long term financing options, including both debt and equity capital markets and we should have the flexibility to respond to market conditions to tailor our permanent capital structure.

Following the acquisition we anticipate our total debt increasing from $83 million to approximately $413 million and our total debt, last 12 months EBITDA ratio increasing from approximately one times as of March 31, 2014 to an estimated three times after the acquisition. However the substantial free cash flow generated by these assets should allow us to de-lever going forward with a goal of bringing leverage back below our target threshold of 2.5 times.

Now I would like to turn it back over to Phil for some final comments. Philip?

Philip A. Epstein

Thank you, Stewart and thank you Zach. To summarize, on page 13 of our presentation, Warren remains focused on creating shareholder value. We view the Citrus acquisition as not just accretive but as adding another strong platform to Warren’s asset base for a long term growth. The acquired assets add robust cash flow even in the current commodity price environment which allows us to be comfortable with the leverage we're taking on in this transaction.

The equity component of the purchase price demonstrates confidence on Citrus' part in its assets as-well-as the strength of Warren's existing asset base. We believe that we will have a very well balanced portfolio of assets following the acquisition which should provide us a strong degree of commodity price optionality. And going forward we intend to continue devoting significant capital and operational resources to our properties in California and Wyoming in addition to the Marcellus assets.

At this point we would like to turn the call back to Stephanie, our operator and open the call to any questions you may have.

Question-and-Answer Session


Thank you. (Operator Instructions). The first question we have comes from the name of Curtis Trimble from Brean Capital. Please go ahead. Your line is open.

Curtis Trimble - Brean Capital, LLC

Thank you, very much, congratulations on the transaction everyone. I was hoping maybe you can give us a little bit more detail on drilling and completing project and maybe a forward look for the second half or the first half of 2015 in terms of activity levels and the associated capital expenditures.

Philip A. Epstein

Thanks, Curtis. What we're going to do is comment generally on the assets here today and their robust cash flow. We're going to provide greater guidance in mid-August when we do our second quarter earnings call, so we can lay that out for you more specifically. But we intend to continue on our stated drilling program in California and in Wyoming and as well to continue the anticipated drilling here in these assets. But we will come back to you with the specifics later on if that's okay.

Curtis Trimble - Brean Capital, LLC

Good deal. I appreciate it, not a problem at all. And I guess you mentioned three wells that are drilled, and on the way to completion. Can you just tell me how many rigs you have got going in that area now, is it one on a pad and so you have got another well on that four well pad or something of that nature?

Philip A. Epstein

Zach, you want to answer that?

Zachary Waite

Yes. Curt, we currently do not have a rig running in the Marcellus acreage. We've finished drilling those wells that are waiting on completion earlier in 2014 with plans to complete them as per our budget right now, fourth quarter this year.

Curtis Trimble - Brean Capital, LLC

Fair deal, and can you put a number on net acres that were associated with the transaction?

Philip A. Epstein

We're looking at acquiring 5,800 net acres, little over 5,800 net acres.

Curtis Trimble - Brean Capital, LLC

And do you have the average working interest and the gross acreage number I guess just to give an idea of the…?

Philip A. Epstein

It's about 75% pretty uniformly across the acreage.

Curtis Trimble - Brean Capital, LLC

Perfect. I very much appreciate it.

Philip A. Epstein

Okay, thanks a lot.


(Operator Instruction). And we have a question which comes from the line of [Arne Anise] from Sidoti and Co. Please go ahead. Your line is open.

Unidentified Analyst

Hey, good morning everyone.

Philip A. Epstein

Hi, [Arne] [ph].

Unidentified Analyst

I was hoping you can give us some more details about the 30 wells that you have operating as far as like average production, maybe the formation that they target?

Philip A. Epstein

Okay, sure. Zach can fill in here. They all are targeting -- almost all are targeting the lower Marcellus and they have been executed over the last four year -- of the program. Zach do you want to add a little bit more on color there?

Zachary Waite

Yes, as I’ve said in my comments during the first part of call we had IP rates in the range of -- across the entire block around 8 million cubic feet a day to up to 16 million cubic feet a day with our best block at 25 million cubic feet day per 30 day average. We initiated our drilling program back in 2009 and have had multiple drilling programs with the one rig program across the acreage and our latest drilling program like I said earlier had finished up earlier this year in the first quarter.

So that’s a good key on where our activity has been during the life of the project and then also as Phil stated all but one well has targeted the lower Marcellus.

Philip A. Epstein

Great. And [Arne] [ph], all of these wells that we have been looking at historically and we are planning for in the future have extremely robust over 100% IRRs. This is what’s made the acquisition extremely attractive to us. These are big wells, relative to Warren’s other programs but each one of them provides significant resource and IRR potential. So that really is complementary to our existing asset base. We will continue to drill in California and in Wyoming but these wells will provide more robust upfront cash flow and we will be utilizing that to continue to develop the acreage, the entire program on cash flow will be self-funding.

Unidentified Analyst

Okay, great. Thank you, thank you. Just another question if you guys don’t mind. As far as the upper Marcellus, my understanding is the deal stipulates about 25% working interest to remain with Citrus. Has this formation or the upper Marcellus being tested in your acreage at all? And if you can also give us some more details about the 25% working interest, is it like a reverse - reversionary interest or how is the deal structured as far as that, if you don’t mind?

Philip A. Epstein

Yeah, Citrus has drilled one Upper Marcellus well in the lower eastern portion. It was basically a well which was drilled in order to HBPV acreage. The rig was in the area and it was prudent to do that and so the results in the southeast which generally were less good, not as good as the other parts of the acreage. On the Lower Marcellus we’re not -- we don’t think those are indicative of the Upper Marcellus. The Upper Marcellus and the rest of the acreage we have comped out to what Cabot has discussed and Cabot is indicating about 75% of the production attributable to Lower Marcellus will be found in the Upper Marcellus.

So the Citrus team and the Warren technical team has done a whole lot of work on this part of the transaction, the Upper Marcellus. We feel very good about the Upper Marcellus right here and we think that for example Cabot’s disclosures support that confidence on our part. In addition, one of the things that we were embedded into this deal was that Citrus and their owners retained a 25% working interest in the Upper Marcellus. So they will be participating with us on a side-by-side basis. There is a small two-well carry there but given the potential for drilling 48 locations that we've identified in the Upper Marcellus we find that it was a really good signal to us at Warren from the folks who really understood the acreage and were excited about the Upper Marcellus that they made a pretty good stand on retaining ownership and paying their way on the Upper Marcellus.

So none of the Upper Marcellus was given value by -- was engineered in our reserve report. We see a lot of value there. We think that it could add tremendous PV for us and of course it adds more locations. So our game plan is to test out the Upper Marcellus in what we consider the more sweeter spots of our acreage and give it a good go in the next year.

Unidentified Analyst

Okay. Thank you very much.

Philip A. Epstein

Okay. Thank you [Arne][ph].


The next question we have comes from the line of Jack Aydin from Aydin Group. Please go ahead.

Jack Aydin - Aydin Group

Hi, guys, congratulations. So a good deal. Now two questions for you. One, on the 13 pads you have how many wells do you have right now per pad and how many wells you might want to have on each pad? And the second question from me is basically what percentage of your production is really -- is dedicated to industrial users?

Philip A. Epstein

Okay. As I said we've 13 pads constructed. The utilization of those pads varies across the acreage but right now on average since we've 30 well producers there is three wells per pad. Zach, do you want to give some more comment on that?

Zachary Waite

Absolutely. We do have multiple wells per each pad but like Phil has said the utilization does vary. There are at max I believe four wells on one pad and there is one pad that has a single well. So we do -- we have designed the pads at the beginning of this project to utilize them for the full development of the acreage and including even some excess room for development beyond what we initially anticipated that are [inaudible] for development type of project. So that allows for ability to support other Marcellus development and potential down spacing development as well. So Phil I’ll turn it back to you for the remaining questions.

Philip A. Epstein

The question Jack which is a good one is on the existing sales contract to industrial users. We're looking at these proven -- these productions to be placed with industrial users. We have one contract in place which is for 40 million cubic feet a day gross which is being utilized by an industrial partner of ours. And we're anticipating -- and that contract runs for another year and we anticipate finding -- either extending that hopefully and finding other industrial users in the area.

We've done some research on that. Obviously the whole basis differential issue is a priority issue for us. We've priced into this transaction the basis differentials. We feel comfortable with that. And we're cognizant of the volatility and takeaway issues but we've stress tested our assets under this acquisition, under the various pricing assumptions. So we feel good about the rate of return on the purchase price and we plan to obviously execute a number of hedging strategies to help limit our downside here and continue to look for longer-term solutions.

Jack Aydin - Aydin Group

Thank you.

Philip A. Epstein

You are welcome. One other thing and I do feel that we've done the research -- of course we don't have the crystal ball but if you look at the type of activity in the midstream and the takeaway capacity that's planned and on the book and that's being implemented right now, we think like the Rockies that had an abundance of gas and not enough pipelines numbers of years ago, we're all drilling there and suffering large basis differentials, the pipelines were built, there was industry support, there was end user support and looking out number of years we see similar opportunities or similar execution here. I mean I think the gas will find the home at an appropriate price.


(Operator Instructions). And we have no more questions at this time. I'd now like to turn the call back over to Mr. Philip Epstein.

Philip A. Epstein

Well great. I appreciate everybody's participation in this call. This is a great transaction for Warren. I think it's clearly focusing on our continued effort to create shareholder value, a transformative acquisition and provides a new core play for us, doubles our asset base, cash flow. It's an accretive and low risk acquisition. It leverages our technical and operational expertise in exploitation engineering, horizontal drilling and environmental stewardship which we take very careful -- seriously. These are very high preforming assets and they will be coupled with our high performing oil assets. We see a lot of upside here. We're extremely happy that the key Citrus personnel will be transitioning to Warren. We think this opens up a new chapter for Warren and we appreciate shareholder support. So thank you all and have a great day.


Thank you. Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for joining and enjoy the rest of your day.

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