Petroleum Development Corporation Q2 2009 Earnings Call Transcript

| About: PDC Energy, (PDCE)
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Petroleum Development Corporation (PETD) Q2 2009 Earnings Call Transcript August 10, 2009 5:30 PM ET


Richard McCullough – Chairman and CEO

Bart Brookman – SVP, Exploration and Production

Gysle Shellum – CFO


Welles Fitzpatrick – Johnson Rice

Eric Seeve – GoldenTree

Michael Hall – Stifel Nicolaus

Les Bryant – UBS Financial


Greetings, ladies and gentlemen, and welcome to the Petroleum Development Corporation's 2009 second quarter teleconference.

Joining us today are Mr. Richard McCullough, Chairman and Chief Executive Officer; Mr. Bart Brookman, Senior Vice President of Exploration and Production; Mr. Gysle Shellum, Chief Financial Officer.

At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Richard McCullough. Thank you. Mr. McCullough, you may begin.

Richard McCullough

Thank you, operator. And good afternoon and welcome to the PDC second quarter earnings call.

Before we begin the presentation, I want to make a brief comment. As you've probably seen in our press release that we filed earlier today, we've announced that we'll be in the market today with a common stock offering for up to 3,750,000 shares. For legal reasons, we will not be able to discuss that equity transaction on today's call.

The second quarter of 2009 was another tough quarter overall because of low commodity prices. However, it was also another quarter where PDC delivered results consistent with our forecast, continued to drive down operating costs, maintained our liquidity and cash flows, and continued to take steps to position the company for improved performance as markets hopefully improve later this year or early next.

Before I share some of my observations regarding our key operating and financial highlights for the quarter, I'd like to update you on a few general corporate highlights. As you can see here on page 4, we completed the relocation of our corporate headquarters during the second quarter. We now have our entire executive staff in Denver along with our strategic planning, treasury, and investor relations functions.

I'm already seeing significant efficiency gains as a result of this centralization, and even though our accounting group remains in Bridgeport, Gysle and his entire team have not missed a beat and continue to deliver ever-improving external and internal financial information in a timely fashion. In fact, the delay today in releasing our earnings and second quarter Q was not at all an accounting issue, but rather related to the equity offering today.

As we've reported in the past, 2009 has been a year of extensive work in bringing our limited partnerships into SEC compliance. As you may recall, because of corporate restatements back in 2000, 2004, and 2005, we've been in a situation where we had to bring these 31 partnerships in compliance and really restate financial statements going back as far as 2005.

We have an entire team of PDC accountants and Price-Waterhouse auditors dedicated to this. I'm very pleased to update you today that this team has completed what's the equivalent 48 separate filings, quarterly filings or annual filings to date and gaining momentum. And if you remember, this compliance effort is very important to us, both at a general course, but also in connection with the possibility of reacquiring some of these partnerships.

On slide 5, as you remember, we completed our strategic assessment work in relation to our future plans at our recent Analyst Day. Those finds really fall into four key areas. One, a focus on scale and cost control; you'll hear more about that later in the presentation. The second one really focused on capital, both maintaining our liquidity and including a review of alternative financial sources including the possible JV in the Marcellus. A focus on demonstrating the vale-added nature of our commodity hedging program, and an effort to diversify and increase our drilling projects with an emphasis on A&D.

Today, we are making – announcing four separate developments related to these plans. First, of course, is the equity transaction that will add to our liquidity position. Next two are staff announcements, I'm very pleased to announce that Dewey Gerdom, a 30-year E&P veteran with nine years of operational leadership experience here at PDC, will become our Vice President of Eastern Operations and will head our Marcellus expansion effort. Prior to joining PDC, Dewey was actually a CEO of a small, successful E&P startup company and he was very instrumental in the expansion and build-out of our Colorado-based operating teams.

We are also very pleased to announce that Lance Lauck will be joining us later this month as our new Senior Vice President of Business Development. He will oversee our strategic planning, A&D, and business development efforts. Lance, a petroleum engineer with over 25 years of E&P experience mostly in companies quite a bit larger than PDC, has spent the last 10 plus years heading up A&D with Quantum Resources and before that, Anadarko. Lance has completed billions of dollars of transactions and will be a valuable new addition to our senior executive team.

And finally, we are announcing today that last week we engaged a financial and technical advisory firm to assist us in the development of a JV in the Marcellus. They will be working with us in possible outside venture partners to hopefully implement a JV prior to the end of the year.

On page 6, just to give you an update on our hedge position, we are hedged at approximately 69% of 2009 PDP production and – and similar percentage for 2010 at weighted average prices in the mid $6 to high $7 range. We have begun to put some hedges in place for 2011 and 2012, but we continue to watch pricing in this 2011-2012 time period and we have considered whether to hedge through use of floors to protect our downside. We have not executed these trades as we remain cautiously optimistic that the forward market may give us better pricing opportunities later this year.

We would point out that as the economy seems to be bottoming out and showing some positive progress over the last couple of months, industrial orders and other related – manufacturing related statistics have shown some strengthening and for that reason, we are cautiously optimistic about the future.

Page 7, though, shows our hedges on a weighted average hedge level by quarter for 2009. As we noted in our second quarter 10-Q, our realized prices were down during the second quarter. However, as you can see here, we expect almost mirror results in the second half of the year, with the third quarter being another down quarter and the fourth quarter rebounding significantly.

So if cash market pricing improves during the second half of the year, we may even post better cash flow per share results in spite of reduced production. If not, we do not expect a significant falloff in our cash flows as our hedges continue to provide strong continuity in results.

On page 8 – Bart and Gysle will report on our operating and financial results in more detail. But just to hit on some of the highlights, production was again up and right on forecast again. Capital and operating costs continue to track down, based both on general market conditions and the very focused efforts of our teams.

With CapEx reductions in Wattenberg in the high oil mix that we reported in our July 16th Analyst Day, our drilling economics continue to improve and earning a 33% internal rate of return range even with the depressed gas prices. Operating expenses continue to be reduced and actual results probably are twice what we projected at the beginning of the year. I think at the beginning of the year we were projecting like a 15% decline in operating costs and here you can see we are at – in the 27% to 33% range.

On slide 9, like previous quarters, when you exclude our non-cash hedging results, our financial results are highlighted by strong adjusted cash flows and a small adjusted net loss. In fact, our year-to-date cash flows maybe a little better than we forecast and our adjusted net loss of $0.4 million for the six months is well within our guidance. G&A expenses were up for the quarter, largely due to non-recurring expenses associated with Eric Stearns' departure and the headquarters relocation. And finally, liquidity remained strong at $154 million at quarter-end.

Page 10 shows our debt and liquidity position in greater detail compared to our peer group. As you can see, our metrics are well within the range of the peer group and with the renewal of our bank revolver during the quarter, our earliest debt maturity is now sometime in 2012. We believe this along with a $154 million in quarter-end liquidity, our announced equity deal on our hedges, all suggest that PDC is well positioned to withstand the impact of low prices even if they remain low for sometime.

On page 11, in summary, the second quarter was another good quarter from a cash flow per share basis and adjusted net income and particularly when you consider the non-recurring expenses and also from an operating cost standpoint. I'm pleased to announce that the four events that we covered earlier, I think these steps will further strengthen PDC and give us major momentum in the implementation of our strategic objectives.

We are still early in this process, but I hope that we are beginning to demonstrate just how focused our executive team is on making both operational enhancements in our current projects and moving forward with these new projects such as Marcellus that will make this company stronger and will deliver long-term value to our shareholders.

I'd like to now turn the presentation over to Bart Brookman who will make more detailed comments about our second quarter operating results.

Bart Brookman

Thank you, Rick. Overall, PDC's net production for the quarter was 11.2 Bcf equivalent, in line with first quarter and a 27% improvement, as Rick said, over second quarter of 2008. The Rockies production has showed a very slight decline to 9.8 Bcf equivalent from 9.9 Bcf equivalent.

The Wattenberg basin continues to be the company's largest producer on an equivalent basis, closely followed by Piceance and then in the Rockies by NECO or our Northeast Colorado assets. Michigan showed a slight increase in our production and this is due to some prior-period adjustments on our volumes and then Appalachian production was flat from the first quarter. Overall, the company had a net production of 123 million cubic foot equivalent per day.

When you look at our production forecast, the quarter actually came in right in line to slightly above second quarter. For the year, we continue to forecast 43.4 Bcf equivalent. Third quarter to date based on field readings, things are going very well, slightly above forecast and this is in spite of some ongoing non-PDC related gathering issues in Piceance that have knocked us off approximately 5% from our forecasted production levels. With the capital slowdown, our technical teams continue to refocus on production optimization efforts in every base and at every level. We are seeing some good results from those efforts.

On the drilling side, first thing I'd like to note is in the second quarter in the forecast, due to weather and different things we had anticipated a surge in the drilling and that is the blue line that is fairly strong in the second quarter. That drilling actually is being spread out over the year. But for the quarter, the company drilled 24 gross wells. All of these were in Wattenberg where we – as Rick said, we continue to see good returns on our investment, primarily due to our improving cost structure and the more robust oil pricing environment.

For the balance of the year, this forecast is really related to one rig in Wattenberg, non-operated projects that we have either approved or anticipate approving in the Wattenberg basin and then the vertical drilling in our Eastern operations, primarily related to our Marcellus program that we are in delineation mode.

2009 CapEx continues to be projected at $108 million, again focused on the quality drilling projects, value-added projects in the Wattenberg, both operated and non-operated and then the balance in the Marcellus drilling, geo-data acquisition in the Marcellus, and then a series of lower-cost, high-return recompletion projects in our Eastern operations.

I’ll touch on the capital improvements. Our operating teams have made tremendous progress in this area and are currently reporting 25% to 28% improvement really across the board for all of our basins. We are seeing strong movement in all areas of our AFEs, from the drilling, the completion of services, roads, locations, roustabout services and surface equipment.

So overall, we are very, very pleased. Most recent interactions with our operating teams, we continue to see great efforts with our vendors and suppliers in this area and I would be confident to say that we are mostly likely going to see additional improvement in these numbers by year-end.

On the lease operating expenses, continue to make progress here on the lifting cost basis. I would encourage everybody to look at the six months versus the three-month trend. We had a first quarter to second quarter adjustment in these, which washes out if you look at the first six months of ’09 in total.

You can see we had a 27% improvement in our lifting costs. Most of this came through the direct well expenses side, which is work-overs, ropes opened up, and all of these direct tangibles related to the well. The indirect is our labor and vehicles and related to our pumping staff. But overall, a 27% improvement. When you account for the factors in our overhead, you can see we've gone from $2.02 average for ’08 to a $1.36 first six months of this year or a 34% improvement. Again, we are very pleased with what our operating teams have done here.

Just hitting some of our highlights and updating Marcellus, one thing, we've been challenged on this one at times to go faster. Our acreage is HBP. We are learning a lot as we go here, both through the service companies and from other operators. We have the luxury of being a little bit more patient, but we plan on accelerating this program next year with horizontal drilling and continued vertical.

I'm happy to announce – which was actually announced a month ago, but we added 5,000 acres to Cambria and Indiana counties in PA. We have TD-ied our fifth vertical, which the completion is scheduled, I believe, for the 21st of this month. We are drilling on our sixth well and our plan continues to be to have nine vertical wells TD-ied by year-end, hopefully online. Two of those will be on the 5,000 acres that we added in Central PA.

We are in the middle of permitting and plan to shoot over the next 30 days our first seismic shoot over approximately 10 square miles in West Virginia. That will – that acreage will accommodate up to 30 horizontal well applications in that area. And again, the engineering and drilling plans are being put together. Best case scenario last this year for a spud, mostly likely case is early the first quarter next year for a spud on our first horizontal.

Drilling in the Wattenberg, we've talked about continuing to see strong economics there. We are running one drilling rig currently. Continued focus on our capital cost and LOEs. And then again, production, we are very pleased, in line or slightly better than forecast.

So with that operational update, I'll flip it over to Gysle for a financial update.

Gysle Shellum

Thanks, Bart. Let's start with the highlights for the quarter on slide 21. As Rick mentioned earlier, production volumes increased over the same quarter in 2008, a little over 27% and on target with our expectations for the year. We once again had a fairly strong hedge position in the quarter and it performed well. Realized gains for the quarter were $24.3 million. Compared to the first quarter, our average realized prices dropped from $7.08 in the first quarter to $5.87 in the second quarter.

If you remember, just a minute ago back to slide 7, showing our hedge positions for those relative quarters. First quarter and last quarter of this year are high prices and the middle quarters of the year are lower than the end for obvious pricing – typical pricing you'd see throughout the year for gas. We expect that average to be pulled up just a little bit for the entire year.

Lifting costs, as Bart mentioned, showed improvement for the quarter. They dropped to $0.64 in the second quarter from $0.93 in the first quarter. Reality is somewhere in the middle as – at about $0.79 per quarter as we had an adjustment in the second quarter related to the reimbursement of cost that applied for the full six months. Adjusted cash flow from operations decreased slightly from $39.7 million in Q1 to $37.7 million in Q2, a direct result of softer prices and lower hedge prices for the quarter.

I'll pause a minute here. Another noteworthy event in the second quarter was we wrapped up our partnership drilling operations. We sponsored our last partnership fund in 2007 and drilling operations related to our partnerships were completed during the second quarter. We treated these operations as discontinued in our financial statement this quarter and have restated prior quarter's financial statements as well. This restatement had no impact on our results for the quarter or year-to-date; it merely changed the location of the segment's operating results in the statements.

Slide 22, summary of financial results. I'll touch on these briefly. Oil and gas revenue is about $41.6 million, well below the corresponding quarter of 2008, but slightly higher than the first quarter due to higher commodity prices. As Rick and Bart mentioned, LOE showed a significant improvement coming in at $14 million for the quarter, fully [ph] a third less than the same quarter last year, lower than expected for the remainder of the year due to the one-time issues Bart mentioned.

Operating margins don't compare favorably because pricing was at its peak in the second quarter of 2008. In comparison, it is favorable to the previous quarter, $27.5 million for the second quarter compared to $23.5 million for the first quarter. Our net loss of $33.1 million, $7.6 million less than the same quarter in ’08 – was $7.6 million less than the same quarter in ’08.

Both losses reflect the impact of unrealized mark-to-market non-cash losses from our hedges, about $47 million pretax in the third quarter and about $126 million pretax in the same quarter last year. Our first quarter results of about $5.7 million net loss were impacted by a similar unrealized mark-to-market cash loss of only $13 million pretax. The result is a net loss per share during the quarter of $2.23.

Adjusted earnings, a non-GAAP measure of earnings before non-cash impact of unrealized hedging gains and losses, was a net loss of $37.7 million. $3.9 million of pretax one-time charges to G&A included $2.9 million related to Mr. Stearns' separation from the company and approximately $1 million of headquarter relocation costs.

Our adjusted net loss – our adjusted loss for six months ended June 30 is about breakeven. So we are still on target for our guidance that we updated in the July Analyst meeting. We had strong cash flow results for the quarter even considering weak commodity prices overall. Cash – adjusted cash flow from operations, which is cash flow from operations adjusted to changes in working capital, was $37.7 million, about $7 million more than the first quarter. For the six months ended June 30, we had generated a little over $77 million from operations.

Per share amounts of adjusted cash flow were $2.54 for the quarter and $5.23 for the six months ended June 30. DD&A came in at $33.8 million for the quarter, significantly higher than the same quarter last year. This is due to increased production and higher per-unit rate. We've increased from $2.33 per Mcfe in the same quarter last year to $2.84 in the current quarter. This is largely due to a reduction in reserves at 12/31 last year due to commodity price decrease. G&A was $14.8 million for the quarter compared to $9.2 million for the same quarter last year. As I mentioned, the two significant one-time events that occurred during the quarter drove up costs.

Slide 23, debt maturity schedule. Rick touched on this. Our borrowing base was redetermined in May of 2009. The result was a reduction from $375 million to $350 million, a reflection of the change in commodity prices. We extended the maturity for three years. Spreads – borrowing spreads increased about 87.5 basis points. With LIBOR floating at historic lows, it didn’t – it does not amount to a significant increase in interest compared to what we forecasted or gave the guidance at the beginning of the year. Also it's worth mentioning there is no LIBOR floor on our revolver.

All of that leaves us with an available line of credit of about $130 million at the end of June and liquidity of about $154 million at the end of June considering our cash balance. We expect our outstanding borrowings to be neutral for the remainder of the year as our capital program will be funded from cash flow from operations. Our next redetermination is in November, 2009 and our bonds are not due until 2018. So our next maturity bullet, as Rick had mentioned, is in 2012.

Energy markets for the quarter. This slide is pretty close to the same allocation of markets as the first quarter. The important thing here is our CIG market is remaining between 35% and 40% of our total market. Much of our Rockies production goes to other markets. Our oil from Wattenberg continues to be a significant contributor, and on our – the financial impact of that is the 2010 prices are hedged at around $92 a share and the remainder of this year is also hedged around that rate.

Oil and gas hedges. This slide is a slide I hope is familiar to everyone. This is updated through June 30, 2009. With the current strip, weighted average forecast for the remainder of this year is $4.86. If you factor in all our swaps and collars, if you realize prices based on the strip and our hedge position, our current production would come in at $7.19 a share. If you add 15% production growth during the year, which – it looks like it's going to be a little bit less than that. Our average realized price would be about $6.89 for the year. Next year, we are looking at realizing a price in the range of $7.66 based on the 2010 strip of $6.39.

Adjusted cash flow from operations. This slide shows our quarterly buildup of cash flow from 2008 compared to 2009. Differences are obviously going to be prices between those two years. This points out how our hedging program provides us with a steady cash flow from quarter-to-quarter even in a depressed pricing market.

The next slide is the same slide for EBITDA – for adjusted EBITDA. Adjusted EBITDA is EBITDA before unrealized gains and losses from hedges. 2008 prices averaged about 30% higher than 2009 prices, which is the significant difference between the two years. The 2Q – the second quarter impact compared to the first quarter of 2009 in this schedule shows the impact of the difference in realized hedge gains between quarters and also impacting that is the $3.9 million G&A one-time charges that I mentioned earlier. 2007, just to remind you, includes a $33 million gain on sale of refills.

Slide 28 is our average unit lifting cost. We talked about this earlier, $0.64 for the three months ended and $0.79 for the six months. Our indicator of $0.39 is about where we expect to see coming in at the remainder of the year, possibly a little bit higher for the rest of the year. DD&A, we spoke about again. This rate is up for 2009 and we expect it to be in that range for the remainder of the year, possibly dropping a little bit in the next six months.

I'll leave the appendix for readers to review. If they have questions, we can address that in the Q&A session. And I'll turn it back over to the operator to moderate Q&A.

Question-and-Answer Session


Thank you. (Operator instructions) Our first question is from the line of Welles Fitzpatrick with Johnson Rice. Please go ahead.

Welles Fitzpatrick – Johnson Rice

Hi, good afternoon guys. I was wondering – I think at the time of the Analyst Day, you guys had about five verticals left, and I was wondering if you could just have sort of a timeline with regards to when the first Pennsylvania will be drilled?

Richard McCullough

Yes, wells. We had five left on Analyst Day, I believe. We've got five drilled now. So we have four remaining. The last two in West Virginia will be TD-ied I think over the next – hopefully over the next several weeks and then the two in Pennsylvania is on the new – as I said, we are going those on the new acreage that we acquired. And the permits on those are going to go in hopefully in the next week to two weeks and then we are probably looking at an October to November spud. I haven’t got the exact timeline from our land group, but I would say it's going to be in that timeframe.

Welles Fitzpatrick – Johnson Rice

I got it, great. Thank you, guys. That's all I got.


Thank you. Your next question is from the line of Eric Seeve with GoldenTree. Please go ahead.

Eric Seeve – GoldenTree

Hi. When I look at the 10-Q, capital expenditures for the first half of the year are a little bit under $105 million. I appreciate that there's a difference between the timing of when they go through your financials and when they are actually being spent. But given your guidance is $108 million for the year, can you talk about what we should expect to see flowing through the financials in the back half of the year?

Gysle Shellum

Sure, I'll take a stab at that. If you look at the Note 5 in our 10-Q and you may not have it in front of you, the actual change in properties and equipment during the year is $67 million. So that is the capital we have spent related to our capital program. That's the number that you compare to the $108 million we are projecting. So you can expect to see the difference, roughly $40 million spent in the last half of the year.

We've added a supplemental disclosure on our cash flow statement that shows what part of the capital expenditures on that schedule relates to accrued expenses at the end of the year and really is a working capital change rather than an addition to property and equipment. Nets down at the bottom of that page shows $37.7 million of the $104 million was the payment of payables that were accrued at year-end.

Eric Seeve – GoldenTree

Okay. Thank you, guys, very helpful. So if I assume about $40 million in capital expenditures for the remainder of the year, I would have expected a really significant positive free cash generation. It sounds like you're calling for free cash flow to be basically flat and the revolver to end the year at similar balances to what we are seeing right now. Is there other than CapEx and interest expense? Are there any other meaningful cash outlays you are expecting in the second half of the year? Is your – is it possible that your revolver – your guidance on the balance sheet is conservative, or am I missing something?

Gysle Shellum

No, I think we expect to see the revolver come down a little bit. Our capital program was front-end loaded. So we borrowed up a little bit in the first half of the year and because we are spending less in the second half, we expect to see that debt balance come down a little bit.

Eric Seeve – GoldenTree

Okay. Thank you. And my last question is with respect to the equity offering. One, just trying to understand, is the price there already set? And two, is this just for general corporate purposes and to make sure you have plenty of room on the revolver and liquidity or is this potentially part of another transaction?

Richard McCullough

Eric, we've been advised not to deal with those kinds of questions. I would refer you to both the press release and the offering document that speaks to both those issues.

Eric Seeve – GoldenTree

Okay. Thanks very much.


Our next question comes from the line of Michael Hall with Stifel Nicolaus. Please proceed with your question.

Michael Hall – Stifel Nicolaus

Thanks. Good afternoon. Just a question that I want to make sure I got the point clear. It sounded like earlier, Bart you mentioned, I wasn’t sure if you were saying third quarter was coming in – production was coming in, looking strong right now or – but then I thought you referenced lower than expected in the Piceance.

Bart Brookman

Well, actually yes – I apologize, that may have been a little confusing. Overall corporate production right now based on field readings is in line or slightly above the forecast on the one graph for third quarter. And what I was trying to say, that is in spite of having some difficulties in Piceance over the last 30 days where we've had some gathering issues and it did – as I said, in Piceance, we've been knocked off of our expected level by about 5%. So bottom line is our basins are doing very well. Piceance, we are working with our gathering company to resolve the issues, but – and these are not long-term issues, these are short term related to a compressor station, operational issue.

Michael Hall – Stifel Nicolaus

Is it line pressure issues or –?

Bart Brookman

It's mostly run time. I mean, but it's a little bit of a blend but it is run time related to a compressor station.

Michael Hall – Stifel Nicolaus


Bart Brookman

Clearly something we are going to work through and we are working very closely with our gathering company there.

Michael Hall – Stifel Nicolaus

All right. And then one more, if I may, if I'm looking out to the November redetermination, if we have a kind of similar strip, let’s say, you guys expecting any sort of material downriver revisions in your borrowing base or any outlook around that?

Richard McCullough

We really don’t have anything we can project on that. The banks haven’t set their price decks for the second half of the year and are not giving us any indication at this point of what to expect.

Michael Hall – Stifel Nicolaus


Richard McCullough

That's all I can give you Michael.

Michael Hall – Stifel Nicolaus

I understand, worth a shot. Thanks.


(Operator instructions) And our next question is from the line of Les Bryant with UBS Financial. Please go ahead.

Les Bryant – UBS Financial

Hi guys. I haven't talked to you, but I knew the previous management quite well. I have a question regarding your mapping of the Marcellus with your nine direct wells or straight wells. Are you tactically setting those up so that later on if you find that horizontal is working much better, that you can could build a window and go horizontal with those wells?

Bart Brookman

Actually, that's a good question. The answer is yes. We could always tactically take the vertical well bore and kick off. I don’t think that would be our plan. Once we get the 3D seismic – I mean, the plan with our vertical program was to really get some geological data and some vertical production data. We've been very, very pleased with the geology and all the data that we've acquired and the pressure data. And I would say we are modestly happy with the production data.

Clearly, we think this is the horizontal play for us, especially in West Virginia. And – so I think if I were to lay out the future of this play, we will use our 3D seismic, not enter the nine well bores, use the date from the nine well bores and our seismic, and try to optimize the placement of our horizontal wells.

Les Bryant – UBS Financial

Good. It sounds good. Thanks.


We have no further questions in the queue at this time. I'd like to turn the call back over to management for any closing comments.

Richard McCullough

Thank you, operator. And again, I would like to thank everybody for their participation in the call, especially at this late hour back East. We appreciate your continuing support of the company, and look forward to speaking to you again soon. Thanks.


Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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