Abraxas Petroleum's (AXAS) CEO Robert Watson on Q2 2016 Results - Earnings Call Transcript

| About: Abraxas Petroleum (AXAS)

Abraxas Petroleum Corporation (NASDAQ:AXAS)

Q2 2016 Results Earnings Conference Call

August 10, 2016 11:00 a.m. ET

Executives

Geoffrey King - Vice President and Chief Financial Officer

Robert Watson - President and Chief Executive Officer

Analysts

Neal Dingmann - SunTrust Robinson Humphrey

Steve Berman - Canaccord Genuity

Welles Fitzpatrick - Johnson Rice & Company

Will Green - Stephens

Mike Scialla - Stifel

Derrick Whitfield - GMP Securities

Mike Kelly - Seaport Global

Operator

Good day ladies and gentlemen, and welcome to the Abraxas Petroleum Corporation Second Quarter 2016 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Mr. Geoffrey King, CFO. Sir, please begin.

Geoffrey King

Thank you, Natsie and welcome to the Abraxas Petroleum second quarter 2016 earnings conference call. Bob Watson, President and CEO of Abraxas, joins me today. In addition, we have our Chief Accounting Officer and our VPs of operations, land and engineering available to answer any questions that you may have after Bob’s overview. As a reminder, today’s call is being taped and a webcast replay will be available immediately after the conclusion of the call.

I’d like to remind everyone that any statements made during this call that are not statements of historical fact are considered forward-looking statements and actual results could vary materially from those contained in these statements. Factors that could cause our actual results to vary are described in our filings with the Securities and Exchange Commission. I’d encourage everyone to review the risk factors contained in these filings and in our press releases.

I’ll turn the call over to Bob.

Robert Watson

Thanks, Geoff, and good morning. Well, the second quarter is behind us. On the last call, I said to expect a 10% to 15% production drop due to planned well shut-ins for frac protection. What I didn’t anticipate at that time was the significant gas plant downtime in the Permian, specifically in the Delaware Basin.

Consequently, production was down 17.5% quarter-over-quarter and we have been assured by our third party processor in the Delaware that the issues with that plant will be solved by this fall. So hopefully, you won't have to hear that from us again. But what did happen in the second quarter had set us up for a much better second half and by that we stand by our year-end guidance of an average of 6000 to 6400 Boes per day for the year and as a result of four near-term catalysts, and by near term I mean very near term catalysts that I would like to discuss.

In North Dakota, as of this morning we had completed 244 out of planned 246 frac stages on our Stenehjem Super Pad, containing six wells. The remaining two stages should be completed today. Some stages didn’t go as easy as we would hope but they all went. We are very proud of that. When finished for the six wells, we will have pumped approximately 46 million pounds of sand and 36 million gallons of water which equates to approximately 760 pounds of sand for foot lateral. For the most part we used high concentrated friction reducer which is a hybrid in-between slick water and gel, in a high energy, high intensity frac which was designed to reduce costs and increase production.

On the cost side, including last year's drilling cost which are probably down some more this year, our all-in cost to drill, complete, install artificial lift and production facilities, are going to average less than $6 million per well. On the increased production side, time will tell, but as of now we will very soon be drilling out frac plugs. We will pulling the frac strings of casing. We will run tubing with gas life valves and hopefully begin flow back before the end of this month.

By doing all this work now we will avoid future downtime and thus make our production profile more efficient and who knows, maybe we might even get lucky and get higher commodity prices. The impact on this project can be calculated as follows. There are six wells. The last 25 wells we have completed in North Fork have averaged right at 1000 Boes per day, 30-day rate. And we hope to be better than that now with our new frac design. So you multiply that six wells times 1000 barrels a day times 64% net revenue interest, that equates to about 3800 Boes per day. Compare that to our second quarter average of approximately 4900 Boes per day.

Catalyst number two. The Austin Chalk play in South Texas has perhaps taken a backset to the exciting news coming out of the Permian and perhaps that’s because there are not as many players involved, especially public companies. But nonetheless, the Austin Chalk is showing very compelling economics. Abraxas has successfully drilled our Bulls Eye 101H well in Atascosa County to a total depth of 14, 650 feet, which includes about 5900 foot effective lateral. We used rotary steering drilling technology on this well and consequently we stayed in our 20-foot target zone over 90% of the lateral length. We encountered much higher pressure than we anticipated but with very encouraging gas shows, including significant gas flares while we were drilling the lateral.

We are planning a 27, plus or minus, stage hybrid frac using lots of sand which is scheduled to commence in August of '19, which will hopefully lead to first production by the end of the month. The significance to Abraxas, we currently own about 7700 net acres, mostly held by production. And I call your attention to a press release of May 17, 2016 by EnerVest announcing their acquisition of BlackBrush's interest in the Karnes trough, which we feel is very similar in a geologic setting as the Atascosa trough where our acreage is located. EnerVest acquired a little over 7,000 net acres with five wells for $650 million. I might add that in that same press release EnerVest reminded people that that was their third acquisition in the Karnes trough, totaling $1.3 billion. Abraxas' enterprise value as of today is approximately $270 million.

Catalyst number three. I have mentioned all of the, almost daily exciting news out of the Permian. Not many people give us credit for our Permian assets, specifically our approximately 5600 net acres of approximately 8700 gross acres, held by production position in Ward, Pecos and Reeves County in the Delaware Basin. By this weekend we should have spuded our Caprito 99-101H horizontal well targeting a 4700 foot lateral in the Wolfcamp A formation. Latest I have heard is that the rig is actually moving in today. If all goes as planned, we hope to have our production by the end of September and with success I believe people will start giving us credit for our Delaware position.

We will own in the well, approximately a minimum of 52% and a maximum of 100% depending on consent and non-consent and the non-consent would be subject to a 300% penalty. I might add that after an in-depth study by our geology department, we have identified up to four separate target zones under most of our acreage.

Catalyst number four. So far I have identified three catalysts with a pretty identifiable time track. The timing on the fourth is indeterminate and this is our previously announced divestitures program where we have identified certain non-core assets that contribute little to our EBITDA and thus little to our bank borrowing base. This program is ongoing. If we are successful in selling these assets and once again I will reiterate that none of these are at fire sale prices. Proceeds could be in excess of $30 million, giving us that much more liquidity to address our exciting future upside.

Thanks to all of you for your interest in Abraxas. Now we will open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from the line of Neal Dingmann from SunTrust. Your line is open.

Neal Dingmann

Bob, obviously a lot of potential things going on here or actually are going on. How do you think about allocation? Let's say for instance on that point four, if you don't get that sold anytime near term? You obviously have some exciting areas. I mean obviously Bakken, given what's going there, Austin Chalk. And then, to your point, all the excitement now we are seeing in the Permian that you are likely not getting credit. Is it still, when you and Geoff think about it, to stay around cash flow? Do you bring in a partner? For a company your size you certainly have a lot of potential projects out there, so I'm just wondering how when you sort of map this out for '17, how you are thinking about it.

Robert Watson

Well, we are currently thinking that, and dependent on results, obviously, from the chalk and the Permian, that we can show some pretty substantial growth by drilling within cash flow. That’s certainly our goal. A lot depends on what happens in the future, especially with commodity prices and as I said, results from these two wells. But we see having a three-pronged capital program gives us the option to flip capital from one to the other depending on economics. And we view that as a very big positive for us and certainly not a negative.

Neal Dingmann

And do you think, just when you look at sort of all these asset positions, I know you mentioned in the press release potentially doing a little bit of additions in the Perm. How do you see just asset sales or bolt-ons, again specifically in these, in the Bakken, Austin Chalk and Perm, kind of playing out, let's call it in the next year or so?

Robert Watson

Well, we are continually trying. We have made a number of offers. We haven't had a whole lot of success. I think just the news in the last month coming out of the Delaware Basin has hampered our ability to make acquisitions there. But we will continue to try. We have a number of people that have small non-operated working interest in our leases where we are the operator and there is no hope for them every becoming operator or controlling their destiny. And they are subject to pretty strenuous joint operating agreements which call for pretty heavy penalties if they go non-consent. So, hopefully, they will come around and we will be able to transact on more than we already have.

We have concluded one small deal and we have a number of offers still outstanding that hopefully some will come to pass. In the Bakken and Austin Chalk, I think there is opportunity for us to expand our Chalk position. We have done a very thorough regional study of the Chalk in what we feel like it takes to be economically productive. Depending on the results of the Bulls Eye well, we will be in a position to go out and start acquiring additional acreage. The Bakken is pretty tough. Things are very very tight up there in the core area and not many people are willing to trade or sell. So I would anticipate if we have any success it will be in the Delaware or in South Texas.

Neal Dingmann

Okay. And then just lastly, Permian, the downtime, is that, again, you look at that as just temporary and going forward do you see potential other issues like that?

Robert Watson

Well, I am very disappointed in it. I am tired of having to use that as an excuse for missing production targets. We have had and I have participated in, face to face meetings with our third part processor and they have gone over in quite some detail their plans to fix the issue. They know it's an issue and they are in the business of processing gas and when they are down, they are not processing any gas and consequently not generating any cash. So I want to take them for their word and they say that all the issues will be solved by this fall which will be good timing for us to bring on our first Delaware well which should be fairly gassy.

But time will tell. We are stuck until early 2018 with the gas contract with these people. So if they don’t perform then there are other options out there and we would certainly be in a position to pursue those other options if need be.

Operator

Thank you. Our next question will come from the line of Steve Berman from Canaccord. Your line is open.

Steve Berman

You are pretty excited about the potential of the Atascosa trough and the Karnes gets more of the publicity. But now that the Bulls Eye well is down, can you elaborate a little bit, did you see anything there? I know you talked about overpressure, gas shows, etcetera, but anything else that confirms your feelings about the potential there?

Robert Watson

I think, we have done about as much geology in the Atascosa trough as it possible, supplemented with 3D seismic. That gave us our initial reason for doing what we did. And then the results that we saw while drilling this well, much higher pressure than we anticipated, much higher concentration of gas than we anticipated. We had significant flares, numerous times while we were drilling the lateral. That was all a very pleasant surprise to us. So at this point in time we think our geology study was telling us the right thing and about a month from now I will be able to confirm that.

Steve Berman

Okay. And then I realize natural gas and NGL prices in the quarter were not great. Can you talk a little bit about that and your expectations for the second half of the year?

Robert Watson

The primary driver on our gas differentials and NGL prices is our contract with ONEOK up in the Bakken. The easy way to say it is that under the contract which allowed them to construct the facilities they needed to construct to buy our gas. They get the first $2.50 per Mcf and then we get 82% of everything over that. We have not received hardly any revenue from our gas stream up there for almost a year. The good news is, July price is firm somewhat and we are now expecting to see some real dollars coming from our gas stream. So hopefully in the second half, you will see that our corporate-wide gas differentials will close considerably as well as our corporate-wide NGL price.

I might add that assuming we get our Delaware basin gas takeaway facilities up and running. That’s pretty high BTU gas as well and it does get market prices. So the more gas we get online in the Delaware that’s also going to drive up our average and help on a differential basis.

Operator

Thank you. Our next question will come from the line of Welles Fitzpatrick from Johnson Rice. Your line is open.

Welles Fitzpatrick

If I am spotting this first Delaware well right, it's up in that ROC acreage. A, is that correct, and b, could you talk a little bit about the location selection process for the Caprito?

Robert Watson

It is in the ROC. It's in section 99 up there which is the very southwestern section of our acreage block. B, we have had a lot of activity in and around us and with the knowledge of that activity we have been able to use that as an analogy to what we see geological wise under our acreage. And we felt like there really wasn’t a differentiating factor. We could have drilled a little bit closer to the most recent wells that are direct offset to it. But it boiled down to a land and title issue and up in the ROC area our land is much easier to understand and consequently we felt like that was a good place to start and hopefully by starting our activity up there it might allow us to consolidate ownership a little bit better.

Our next location could quite possibly be down there directly offsetting the Jagged Peak wells but there has to be a lot of title work done on there and if not, the title is different from the surface down to the deepest producing zone, which is Ellenberger, and essentially each zone has different ownership. So it's very complicated on who owns what and where. We are working on it. Hopefully by the time we get our second well ready to go, we have the option of going down there. Not saying that we would but substantial [results] [ph] up in the ROC area, there is no reason why we don’t continue developing that. I might add that those leases up there are old leases and they are subject to a 1/8 royalty. That puts us way ahead of most of the people out there in the Delaware that are buying new leased which call for a quarter royalty, and has a significant favorable impact on return on investment.

Welles Fitzpatrick

Yes, that's great. It looks like you guys have a lot more vertical well control up there. And the four zones that you talk about in the Delaware, is that the Wolf A, two Bs, and a Spraberry?

Robert Watson

It's Wolf B, the Wolf A, the Bone Springs Wolf A contact, and then a zone up in the Bone Spring 3. Those we have identified as/or legitimate target. The Lower Wolfcamp A is our target in this specific well.

Welles Fitzpatrick

Okay, perfect. And then just one last one. Can you talk about when you would be looking to spud the Angel Eyes well? Are you going to wait till you see some longer dated results from the first one or do you think you're going to go ahead with that?

Robert Watson

I think within 30 days of production we will feel comfortable saying yes or no to that. And we are preparing titles as we speak and I think there is a pretty good probability that it would be drilled before the end of this year.

Operator

Thank you. Our next question will come from the line of Will Green from Stephens. Your line is open.

Will Green

It sounds like you guys are fairly close on getting those Bakken wells to sales. I guess I'm just trying to kind of narrow in on how 3Q is shaping up. So I guess, what in your mind has to happen or what is a reasonable time frame to expect those wells getting to sales at this point?

Robert Watson

Well, we are targeting by the end of this month. And that’s barring a major problem which we don’t anticipate but we are going and doing some preparatory work on those wells now which will alleviate the need of shutting of them in and doing that work in the future as production starts slowing down. We think that’s a prudent thing to do. It's the most efficient and economic thing to do. It does slow us down a little bit from getting flow back, but still by the end of this month we should have a -- starting at the end of this month we should have a full month's contribution of the Bakken wells in our third quarter numbers.

Will Green

And you mentioned that the third party downtime down in the Permian was a big contributor. Can you maybe talk through how much that was a factor in terms of the volumes that you guys lost? And then it sounds like that's still down right now. Is that correct?

Robert Watson

Yes. We have anywhere from 7 to 9 million a day of fairly high Btu gas, well I shouldn’t say that, it's not as high as what the Wolf Bone will be, and I don’t what our net is of that, probably 65% of that is net. And it has been suffering probably more than half of the down time and the rest of the time it suffers from high line pressures, so we can't deliver the full capability of the well. So I would say that if you put in 50% of 65% 7 to 9 million a day of the entire quarter, you can see the impact on our production. It's a pretty big number and certainly a very high priority for us to fix. I might add, back on your comment on the Bakken, we had a number of wells shut-in for frac protection as well and we are in the process of putting those wells back on as we speak. In fact the first one went back on production to date. So that will also boost third quarter production quite a bit.

Unidentified Company Representative

One other thing just to mention on there, it's kind of important, is on the Sten 3 and Sten 4. Those wells we had limping along since the last frac job when they took hit. So they have been severely curtailed all year. We have cleaned them out with [coil] [ph] and so we should get essentially higher rates out of those.

Will Green

That's really good color. I wonder if I could just maybe ask you guys to help us with how the quarter trended or even if you guys would be willing to give us how July looked as a company. I'm just trying to get a sense for that average on what it looked like as you guys had downtime, and as we see these wells that were shut-in, come back on, and these new wells that you guys are completing. Obviously a big impact to you guys in the later part of this quarter, how we think about the difference in how 3Q and 4Q looks, if that makes sense.

Robert Watson

Yes. I don’t have the numbers directly in front of me but I remember looking at them and I think it was, the first month of the quarter is about 5100 barrels a day and the second month was right at 4900 barrels a day and the third month was probably 4700 barrels day. And the third month was more impacted by frac shut-ins then the rest. So that’s not going to be too far off in your modeling even though those numbers aren't exact but it's pretty close.

Will Green

And I could probably assume that July carried the same trajectory with some additional downtime for the fracking in the Bakken, right? Is that fair?

Robert Watson

That’s correct.

Operator

Thank you. Our next question will come from the line of Mike Scialla from Stifel. Your line is open.

Mike Scialla

I wanted to ask a little bit more on the Chalk. You're drawing an analogy from the Atascosa to the Karnes trough and I know you made that analogy with the Eagle Ford as well. You drilled a couple of really good Eagle Ford wells there but then you saw a lot of variability after that. I'm wondering, one, did you ever pinpoint the cause of that variability? And then two, is there any reason to believe that you won't see that kind of variability in the Chalk?

Robert Watson

Well, certainly there is no guarantees but what we also found out when we were studying the Eagle Ford results and the Karnes trough, it had a very heterogeneity effect as well. There is some very good wells in the Karnes trough and there is some very poor wells. And like that Atascosa trough, we cannot come up with a reason. I mean we can speculate but there is no convincing evidence one way or the other. So we are hopeful that the Chalk will be more homogenous. Our theories are that it should be. But certainly there is no guarantees. We will just have to wait and watch. I might add that every horizontal Chalk well that we have analyzed in the Karnes trough, has been good. Every Eagle Ford well that we analyzed in the Karnes trough has been some good and some bad.

So, who know, it's still early in the play and I know there are a lot of people that put a lot of money into it, so they are betting that the homogeneity will continue in the Karnes trough and we hope for the same in the Atascosa trough.

Mike Scialla

I guess you have the benefit of having drilled through the Chalk with all these Eagle Ford wells. Were you able to look at log data as well or did you share any data with BlackBrush or anybody else that would give you any additional comfort?

Robert Watson

Yes. We have some good friends at BlackBrush and we had an open conversation about what they were targeting in the Chalk and it was the same as we recognized as the obvious target in the Chalk. And it seems to be working. I guess the best evidence we had in the Atascosa trough is that we allowed a water disposal company to drill a water disposal well on our leases in, I think it was on the Grass Farm's lease. And they drilled a well down to the Edwards, which means they go through the Chalk and the Eagle Ford. And while they were drilling the Chalk, the well actually kind of kicked and blew out on them and they produced a substantial amount of oil into the pits while they were trying to get the Chalk under control. So that’s the most recent geologic data that we had on the Chalk, the rest of it is just well logs that we have seen. But we do identify a certain target zone, it's about 20 feet thick and it's the same target zone that they appear to be targeting in the Karnes trough. And as is I said, using rotary steerable, directional equipment, we were able to stay in that 20-foot target zone over 90% of the lateral length. So we couldn’t be more excited about it right now and we just can't wait for that frac to get started next week.

Mike Scialla

You said you're doing a regional study. Can you say where you think it may be prospective in general? I mean it obviously covers a huge area, I don't want to pinpoint trade secrets. But is it, I guess let me couch it this way, are you willing to step a long ways away from the Atascosa area or do you want to stay kind of focused in one particular area?

Robert Watson

Well, I certainly don’t want to give up our trade secrets, that’s for sure. But I would say that the Chalk does not appear to be a good target in a good number of areas. So we will be staying away from them. The problem with the other areas is most of the good Chalk or what we consider good Chalk on our regional mapping is on Eagle Ford held by production acreage, so it's probably not available. For us, we have identified some areas that are kind of out of the mainstream Eagle Ford play, that look very attractive in the Chalk and so we will be concentrating on them.

Mike Scialla

Great. And last one for me. Just wanted to ask on the borrowing base redetermination for October. You're going to be adding some reserves with these wells in the Bakken. Any sense there, if oil prices were to stay constant with where they are now, what would happen to the borrowing base? And I guess maybe two, would the non-core sales you talked about have any impact on that?

Robert Watson

Let me answer the last question first. The non-core sales have very little impact on our borrowing base. So if we are successful there, it's a real net game for us. We don’t know what the bank price deck is going to be, they don’t know what it's going to be two months from now. If it is where it is right now, we don’t anticipate a significant change mainly because of all the new wells that we are going to be adding. When those wells become on-production, we will submit a new reserve report for them to use in our redetermination which would include them all as PDP.

Operator

Thank you. Our next question will come from the line of Derrick Whitfield from GMP Securities. Your line is open.

Derrick Whitfield

We will stay on, or go back to the Bulls Eye, I should say. Any color you guys can offer on the mud weight or pressure gradient in that well?

Robert Watson

Yes. We were anticipating low 9s and we had to go up to the low 10s to hold it back. 10.2, 10.3, Will is saying, which was quite a surprise to us. It's a good surprise obviously but there was one weekend where it was pretty dicey getting that well under control. But we did and so another reason to be excited about the upcoming frac.

Derrick Whitfield

That definitely sounds positive. And then just to put some numbers around Neal's earlier question on 2017. Could you comment on your estimated maintenance capital, assuming current capital cost?

Robert Watson

Yes. We have actually done a lot of modeling on that and we feel like we can keep production flat or actually grow it a little bit on a $25 million budget, which is considerably less than what we would be anticipating in the current commodity price environment for cash flow. I think that’s a real feather in our cap and I think you will see us stress that in the upcoming conference season because I don’t think that’s a story that many companies can tell.

Derrick Whitfield

And Bob, would that $25 million in your current budget be focused primarily on what is known in the Bakken today or would that include some combination of the three core areas?

Robert Watson

No, it just includes the Bakken since we have got -- and it's approximately six wells a year which would cost us about $25 million and we have got 60 more locations. So that’s ten years worth of holding production flat in the current commodity price environment with no contribution from anything else. So we are hopeful that we will have other opportunities, the Chalk and the Permian to throw into that mix. But at least for conservative modeling purposes, actually Geoff did them for our board yesterday, we had a board meeting and we had some of the same questions. You know, what it takes to stay flat in this environment and so we are pretty comfortable with that number and I think that’s an exciting thing for us to be able to talk about that not many people can.

Operator

Thank you. [Operator Instructions] Our next question will come from the line of Mike Kelly from Seaport Global. Your line is open.

Mike Kelly

Good color on the maintenance capital there. I think that's helpful. Wanted to, now that we've got that taken care of,- flip back to the Delaware. Bob, can you talk about maybe just the opportunity on buying out some of your working interest partners here? And what you think is, I don't know if you have a goal in mind there, how much you are willing to pay up as acreage prices have risen here over the last month? We would just kind of like to get that net acreage number too here and just really the opportunity there. Thanks.

Robert Watson

Yes. I think if we were willing to pay a little bit higher price than what we have offered, we could get more done. Luckily, we are in a position of being able to test our idea and keeping it quiet before we have to make that decision. I don’t want to say what we are offering or what we are expecting to have to pay for competitive reasons, but right now we are sticking with our original offer. And the reason being, the comparable transactions that you are well aware of out there have been for contiguous operated positions. What we are trying to buy are somewhat contiguous but there we have four, five or six different leasehold areas but these are non-operated positions, relatively small. And I don’t think they command the same price as an operated contiguous position should command because the control feature does not go with what we are trying to buy whereas the control feature is in the hands of the buyer at the high dollar of the contiguous operated positions. So that’s the stance we are going to continue to take. As we develop these assets, as I said before, we have relatively old joint operating agreements that these lands are subject to. And they have a pretty hefty penalty on non-consent, 300%. And we are very very happy to drill 100% wells knowing that after a 300% payout we have to give up some of the interest because we will have gotten most of the return out of that operation and not have to pay anything for it.

Mike Kelly

Makes sense. Taking the other side of that too, I think you were contemplating selling this acreage, at least a year ago you were. If you just use prevailing prices here for an operated contiguous position, the numbers could get pretty meaningful real quick. Really, actually the latest deals look like they're the size of your market cap if you do that multiple on it. So just any thought? Would you part with this if you got that sort of price?

Robert Watson

Well, that’s a tough decision. We are pretty excited about the upside that we see. I would say that we would rather sell reserves than acres. So give us an opportunity to prove up, derisk it and that would apply to everything we have for that matter. And then could potentially consider an offer on our reserve basis and not on an acreage basis, which could get us the numbers considerably higher than that market cap, the way we look at it. But it's not de-risked yet. We got to do that.

Mike Kelly

Got it. One more from me. Do you have a production number associated with the potential divestitures there, that $30 million number? How much production would be associated with that potentially?

Geoffrey King

It's about 250 barrels a day.

Robert Watson

It's just got a lot of upside. And by the way, Trinity just got a new great pitcher. Need to talk to you about him some time.

Operator

Thank you. At this time I am showing no further questions, I would like to turn the call back over to Geoffrey King, CFO, for any closing remarks.

Geoffrey King

Thank you, Natsie. We appreciate your participation today in Abraxas' earnings conference call. As I mentioned at the start of the call, the webcast replay will be available on our Web site and a transcript will be posted in approximately 24 hours. Thank you and have a great day.

Operator

Ladies and gentlemen, this concludes the conference. You may now disconnect. Everyone have a great day.

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