Concho Resources (CXO) Timothy A. Leach on Q2 2016 Results - Earnings Call Transcript

| About: Concho Resources (CXO)

Concho Resources, Inc. (NYSE:CXO)

Q2 2016 Earnings Call

August 03, 2016 9:30 am ET

Executives

Megan P. Hays - Director-Investor Relations

Timothy A. Leach - Chairman, President & Chief Executive Officer

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Analysts

Jason Smith - Bank of America Merrill Lynch

John A. Freeman - Raymond James & Associates, Inc.

Michael A. Hall - Heikkinen Energy Advisors LLC

Arun Jayaram - JPMorgan Securities LLC

Jeb Bachmann - Scotia Capital (NYSE:USA), Inc.

Brian Singer - Goldman Sachs & Co.

David R. Tameron - Wells Fargo Securities LLC

Drew E. Venker - Morgan Stanley & Co. LLC

Jeffrey Campbell - Tuohy Brothers Investment Research, Inc.

Neal D. Dingmann - SunTrust Robinson Humphrey, Inc.

David A. Deckelbaum - KeyBanc Capital Markets, Inc.

Michael Scialla - Stifel, Nicolaus & Co., Inc.

Michael Dugan Kelly - Seaport Global Securities LLC

James Sullivan - Alembic Global Advisors LLC

Derrick Whitfield - GMP Securities LLC

Richard Merlin Tullis - Capital One Securities, Inc.

Jonathan D. Wolff - Jefferies LLC

Unknown Speaker

xOperator: Good day, ladies and gentlemen, and welcome to the Concho Resources, Inc. Q2 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll have a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Megan Hays. You may begin.

Megan P. Hays - Director-Investor Relations

Thank you. Good morning and welcome to Concho's second quarter 2016 earnings call. On the call with me today in Midland is Tim Leach, Chairman, President and CEO; and members of the Concho's senior management team. Our second quarter earnings release and corporate presentation are both available on our website.

Please note that we will make forward-looking statements based on current expectations this morning. Also, some of our comments may reference non-GAAP financial measures. Forward-looking statements and other disclaimers, as well as reconciliations to the most directly comparable GAAP financial measures, are provided in the earnings release and corporate presentation and can be found at Concho's website.

Now, I'll turn the call over to Tim.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning. Thanks for joining us on this busy morning. The second quarter of 2016 was a good one. Once again, it illustrates the power of our assets, the excellent commitment of our people. While the macro environment is dynamic, we're extending our track record of working all angles within our business to deliver strong operational and financial performance and position the company for the future.

Our performance this quarter highlights our ongoing drive to improve capital efficiency with a relentless focus on asset performance, cost savings and capital discipline. Let me start by summarizing the key achievements for the quarter.

Second quarter production increased 4% over the previous quarter and exceeded the high end of our guidance. For 2016, we now expect our annual production to show growth while maintaining our capital budget guidance and under spending cash flow.

Our outlook for double-digit production growth in 2017 also remains unchanged and, in some ways, improves. Double-digit growth in 2017 off a higher production base and a capital program defined by our cash flow at the current strip will be a unique achievement, reflecting the operational momentum and improving capital productivity across our assets.

For the first half of 2016, lease operating expenses averaged approximately $6.50 per barrel, a 12% reduction compared to LOE in the second half of 2015. The decrease in LOE reflects specific actions we're taking to generate sustainable operational efficiencies.

We're making substantial progress in several areas. For example, there is an asset-wide focus on transporting water disposal volumes by pipe rather than truck, which is more efficient and reduces transportation costs.

In addition, our efforts to optimize production in field development have reduced pumping costs. High-grading our inventory also contributes to lower LOE as we acquire assets complementary to our core positions and infrastructure while we're selling lower returning properties.

As a result of ongoing improvements in operations, we reduced our cost guidance for LOE to $6.75 per barrel at the midpoint. We also reduced our guidance for both cash and noncash G&A per barrel. Aggressively managing our cost structure, combined with strong asset performance, accelerates capital productivity gains, which increasingly enables us to do more with less.

In addition to delivering strong production volumes and reducing operating costs, we under spent cash flow for the fourth consecutive quarter, which further strengthened our balance sheet. Our commitment to capital discipline and a strong balance sheet provides us with opportunities to generate differentiated value for our shareholders.

The most impactful way we can affect the value of Concho is by becoming even more efficient, and we're focused on improving the productivity of each capital dollar invested. Each of our core areas is contributing to improved capital productivity.

In the Northern Delaware Basin where we've drilled more than 600 horizontal wells, our drilling team still finds ways to set new records. For example, in the second quarter, average drilling days improved to 19, smashing the prior record by 3 days.

We're also advancing the oil-rich Avalon Shale in Lea County where continued improvement is a direct result of refining lateral placement and completion techniques. This quarter, we highlighted early results from a density test on the Monet wells, and this appears on slide 9 of the earnings presentation.

These four wells targeted the upper Avalon zone on 80-acre spacing with a specific focus on optimizing the fluid system and sand volumes. We're excited about the outstanding performance of these wells as we move into development mode.

The Red Hills area in Lea County is an area where we've targeted bolt-on acquisitions for long lateral development. During the second half of the year, we plan to drill several long lateral wells, targeting the Avalon. And we'll look to replicate our success in the Wolfcamp where we believe significant upside exists.

In the Southern Delaware Basin, we closed the acquisition of 12,000 net acres in our core North Harpoon area at the end of the first quarter. We've added two drilling rigs to this acreage at the start of the second quarter, illustrating that anything we bring into the portfolio must be ready to move to the front of the drilling program.

In the Southern Delaware, we continue to deliver industry-leading well results. In the Upper Wolfcamp, we are continuing to test multi-zone potential. We recently achieved strong results from a 3rd Bone Spring well, with plans to drill additional 3rd Bone Spring wells before the end of the year. We are also quickly advancing our play in the Midland Basin. The Midland Basin represents our largest opportunity to capture efficiencies as we focus on two-mile laterals and multi-well pad development.

Our efforts to optimize development and maximize the value of this project are ongoing. The nine wells we added this quarter were drilled to a shorter lateral length, which is primarily a function of timing. We drilled these wells in 2015, and our shift to two-mile laterals began at the start of this year. We also tested smaller frac jobs on these wells, which provided us valuable information about cost versus well performance that we can use to improve future well economics.

For the balance of the year, our completion techniques will focus on large profit concentrations. We're currently completing an eight-well density test with four wells targeting the Lower Spraberry and four wells targeting the Wolfcamp B. These completions will utilize proppant concentrations of approximately 2,000 pounds per foot.

The New Mexico Shelf continues to outperform. During the quarter, well results for the shelf set another record, the second in as many quarters. With just two rigs running here, we've managed to advance horizontal development of the play and maintain stable production from year-end 2015 volumes.

Our strategy and diversity within the Permian are unique and give us our greatest competitive advantage. We have the ability to allocate capital across our assets and leverage our scale and technical expertise to enhance returns and recoveries and our relentless focus on improving capital efficiency will have an ever increasing impact on Concho. It will enable us to drive profitable debt-adjusted growth per share in the near and long term.

The acquisition market surrounding our core areas is also setting new records, and it's nice to have assets in the hottest zip codes in the industry. We currently have the largest and highest quality inventory in our history. Our consolidation activity must compete with our top tier drilling inventory and strengthen our financial position. While it's a target-rich environment, we will continue to take a disciplined approach in pursuing the right acquisitions to build for the future.

Sentiment is positive among our industry peers, and optimism is a driving force in our industry. At Concho, there's a lot to be excited about, but the outlook for commodity prices isn't much different since the last quarterly update. As a result, we maintain our commitment to spend within cash flow. The momentum we're generating reinforces our 2017 outlook for double-digit production growth while balancing capital and cash flow within the current price outlook.

The mission of Concho has always been to build something unique, to build a leading energy company that excels in any environment that creates shareholder value by investing capital in the best assets with the highest returns, that consistently seeks to improve performance and drive profitable growth per share.

Our vision for delivering on this mission today is simple. We believe that we can be the best by executing a disciplined capital program, delivering operational excellence and high-grading our investment opportunities. Our track record of performance, combined with focused and disciplined execution of our strategy, will enable us to generate value for our shareholders for many years to come.

Thanks for listening, and let me turn it back over to the moderator and take your questions.

Question-and-Answer Session

Operator

Thank you. One moment while we wait for callers to queue up. And our first question comes from the line of Jason Smith of Bank of America. Your line is open.

Jason Smith - Bank of America Merrill Lynch

Hey. Good morning, everyone.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Jason Smith - Bank of America Merrill Lynch

Tim, just on capital allocation. So, you've got six rigs running in the Midland and four in each of the Northern and Southern Delaware. So, I guess, as we look forward, is that a fair reflection of how you want to keep the capital allocated or given the results you saw this quarter in both the Avalon and the Southern Delaware, do you foresee, maybe, increasing the rollout of allocations back towards the Delaware?

Timothy A. Leach - Chairman, President & Chief Executive Officer

No. I think one of the things that I was referring to in the comments is that all of our core areas are delivering really good economics for us right now. So, I think, the capital allocation that you see today would be a balanced approach going forward. So, I think you ought to just expect us to continue to allocate capital based on returns and also in areas where we're testing new ideas.

Jason Smith - Bank of America Merrill Lynch

Got it. Thanks. And maybe just to follow-up on that, the new ideas. In the Midland, you discussed the proppant you guys are testing. But maybe, when you talk about testing well spacing and development patterns, can you maybe just frame for us what the existing configurations are and what the concepts are that you guys are testing there?

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. It's different depending on which zone you're talking about. But, in general, when we talk about density test, when we talk about our inventory and things like that, we're still eight wells per section in general, so it's not as dense as some of our peers are talking.

But the test involved testing spacing, but also the configuration of wells in the zone, whether it's a wine rack or a Chevron pattern or something like that. Also, lateral length and proppant and concentrate – there's big experimentation going on as we've discussed in the past. And I think we've got more data and running 16 rigs is one of the leaders in the industry. So, we're gathering data more quickly than most.

Jason Smith - Bank of America Merrill Lynch

Got it. I appreciate the color. Thanks.

Timothy A. Leach - Chairman, President & Chief Executive Officer

All right. Thank you.

Operator

Our next question comes from John Freeman of Raymond James.

John A. Freeman - Raymond James & Associates, Inc.

Good morning, guys.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Hey, John.

John A. Freeman - Raymond James & Associates, Inc.

When I look at the full year production guidance, it's continued to move higher versus your original expectations. When I look at the average lateral length for the first half of the year, it comes in roughly at about 5,200 feet, so about identical to 2015. So, in the second half, obviously, we get the benefit from the longer laterals. And I'm just curious, does your current full year production guidance, does it already account for the anticipated productivity gains you get from those longer laterals or is that potential additional upside?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. Hey, John. This is Jack. You may be confusing a little bit of completed wells versus drilled wells. I think in the second quarter, we averaged about 7,500 feet on the wells that were drilled. But the plan we have is consistent with what we had in the beginning of the year. And so, we've anticipated the current mix of well lengths.

John A. Freeman - Raymond James & Associates, Inc.

Okay. And then, when I look at the encouraging data on the Avalon with the Upper and the Lower zones that you believe you've delineated, has there been – I'm just looking for a little bit more color, is there any difference in sort of how those two zones have performed? I mean, are they pretty similar?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. We've had pretty consistent results in the Upper and the Lower, John.

John A. Freeman - Raymond James & Associates, Inc.

That's great. I'll turn over to somebody else. Well done, guys.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thanks, John.

Operator

Our next question comes from the line of Michael Hall of Heikkinen Energy. Your line is open.

Michael A. Hall - Heikkinen Energy Advisors LLC

Thanks. Good morning and congrats on the good results. I guess, I wanted to go back a little bit on the proppant loading. I'm just curious, you made the point, Tim, early in the prepared remarks that you do have a unique view on the Permian Basin, given the asset base you have, it really straddles all the different areas. What sort of variation in proppant loading response are you seeing across the different areas? Are some areas more sensitive to proppant loading than others? And I'm just curious what other sort of color you all can provide in that context.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. I mean, we've gotten as low, I think, as about 1,000 pounds per foot. And now, we're testing loading at over 2,000 pounds per foot. And as I mentioned on the call, it's – or in my prepared remarks, it's different by zone. And you're trying to balance that versus drainage, versus the type of fracs you are getting, and the well spacing and configuration that you have, so.

And as you mentioned, we have so many zones and so many of the sub basins that every answer is a little bit different. And generally, of course, the higher the sand loading, the bigger the wells but that doesn't necessarily mean you're optimizing economics that way. So, we've been running experiments on how do we get the best capital efficiency. Long laterals really is driving the answer, and I mentioned placement in the zone and fluid composition, things like that.

So, it's a complex experiment, but I would tell you that the results have been very encouraging in all our areas. And we think we can continue to drive efficiency through the things we're learning about the properties and the zones.

Michael A. Hall - Heikkinen Energy Advisors LLC

Okay. Certainly, it seems like you have a lot to learn still. On the completion length, I'm just curious, what sort of lag would you say is a fair way to think about your drilled length versus completed length as we think about the go-forward from a modeling perspective, if it's even able to break down that simply?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

In terms of the average lateral length, Michael?

Michael A. Hall - Heikkinen Energy Advisors LLC

Yeah. Like the average lateral length of completed wells versus the average lateral length of drilled wells has tended to vary a decent amount. I'm just trying to think through going forward, what sort of lag is there? If we look at what you're drilling today, when is that actually going to get completed?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. Probably the best way to think about that, Michael, is two quarters from the drill to seeing them on that – the report the way we track it.

Michael A. Hall - Heikkinen Energy Advisors LLC

Okay. That's helpful. And then, on the LOE, very impressive improvements there. It sounds like a lot of that is quite structural. I was wondering, though, if you could comment on the other side, the cyclicality of it all. How are we all thinking about how LOE might behave as we move to the other side of the cycle? Hopefully, at some point here.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yes. Some of the changes that we're making are going to last. Putting disposal water on pipe versus trucks, changing the lift in the wells, those types of things should last. Cost of goods and services we know move up when there's pressure, but we think some of the important factors are sustainable.

Michael A. Hall - Heikkinen Energy Advisors LLC

Is there any way to quantify how much is kind of variable associated with the cyclical environment versus a more structural component?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

That's hard. I just watch the rig count and completion count to get a gauge of the industry, but it feels like at least half, if not more, are sustainable.

Michael A. Hall - Heikkinen Energy Advisors LLC

Okay. And then, last one on my end is just around the oil mix in the quarter came down a little bit. It sounds like some new plants were coming on. Is there also a component of just GOR shift that's kind of flowing through the system as you slow the activity relative to prior periods and should we expect that to kind of shift back up then as we move forward? How should we think about that mix going forward?

Timothy A. Leach - Chairman, President & Chief Executive Officer

The composition of the wells we're drilling is as oily as ever. I mean, you pointed out the quarter we had that Ramsey Plant come back online in the quarter, that had a big effect on gas production. At the same time, as far as timing, when you slow down and you don't drill as much, over time, the GORs go back up. But as our activity increases and we continue to build on what we're doing, I think it's going to certainly be within our guidance.

Michael A. Hall - Heikkinen Energy Advisors LLC

Okay. Great. Appreciate the time.

Timothy A. Leach - Chairman, President & Chief Executive Officer

All right. Thank you.

Our next question comes from the line of Arun Jayaram of JPMorgan.

Arun Jayaram - JPMorgan Securities LLC

Yeah. Good morning. Tim, I was wondering, you gave us some outlook comments in terms of growth for 2016 and 2017. And I know you've held with that double-digit forecast. I think you provided that when oil was in the low-$40s. Just wondering if you could help us think about, given some of the well productivity gains, oil has moved a bit, maybe help us think about where you think growth could be in 2017. I think the Street's at 11%. And perhaps – I don't know if you and Jack have thought about three to five year kind of outlook for Concho, and if you think this double-digit type of growth level is sustainable over the next three to five years within cash flows.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. I mean, we're always thinking about the long term. That's kind of how we built the company. We think it's important to be able to talk about how we can grow in the current circumstance with the current price forecast, the current efficiencies that we've gained on our wells and things like that, and then try to make it better.

And so, I think that the areas we're in, the way we're structured, how our cost structure is set up that we will – for the long term, we'll be able to compete with anybody in the industry on growth. And we're very, very pleased to be able to talk about growth within cash flow. And in fact, we've been underspending cash flow for several quarters and still growing. So, I think we're well-positioned. And our goal is always to surprise you to the upside.

Arun Jayaram - JPMorgan Securities LLC

Great. Thanks for that, Tim. And I did want to ask you a little bit about the Wolfcamp and some plans in the second half of 2016. It sounds like you may be doing some testing in the Northern Delaware Basin. I was wondering if you could give us some thoughts on some of that delineation activity.

Timothy A. Leach - Chairman, President & Chief Executive Officer

That Northern Delaware Basin, where you are talking about, I had some prepared comments on that it had some of the best well results in the industry. And I think our acreage is well positioned up there. And most of our activity has been in the Avalon that we talked about. But we are drilling Wolfcamp and that's a real great area. We feel very encouraged by the well results.

Arun Jayaram - JPMorgan Securities LLC

And, Tim, do you plan to have some specific well results in the back half of this year or this maybe bleed into 2017?

Timothy A. Leach - Chairman, President & Chief Executive Officer

It will probably bleed into 2017. To get 30 days of production history and have enough data that we think is meaningful.

Arun Jayaram - JPMorgan Securities LLC

Okay. Thanks a lot, Tim.

Timothy A. Leach - Chairman, President & Chief Executive Officer

All right. Thank you.

Operator

Our next question comes from the line of Jeb Bachmann of Scotia Howard Weil. Your line is open.

Jeb Bachmann - Scotia Capital (USA), Inc.

Good morning, everyone.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Hey, Jeb.

Jeb Bachmann - Scotia Capital (USA), Inc.

Tim, just going back to the Avalon quickly, can you remind us how much of your Lea county acreage do you think is going to be prospective for that zone?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. Jeb, we've kind of talked about it in terms of inventory and we're – in that oily Avalon, we're probably 750 wells, but the overall Avalon inventory is much larger than that.

Jeb Bachmann - Scotia Capital (USA), Inc.

Okay, Jack. And is that – do you guys see maybe a potential for a third landing zone, maybe in the Lower Avalon? Is it thick enough for that?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

It's a very thick zone, over 1,000 feet. We've only talked about the Upper and the Lower we're actually two zones at this point.

Jeb Bachmann - Scotia Capital (USA), Inc.

Okay. And I guess, last one for me, a question every quarter on M&A, just wondering where you guys have seen the best value right now or in the Basin, either side.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Oh, I mean, there's – both the Delaware Basin and the Midland Basin really have some outstanding results. And there are opportunities in both basins. And I think we find the best opportunities in areas that are in and around our core and areas that give us opportunities to drill long laterals and get the efficiencies you get from being a large operator with pad drilling and lots of activity.

Jeb Bachmann - Scotia Capital (USA), Inc.

Great. Thanks, Tim.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Brian Singer of Goldman Sachs.

Brian Singer - Goldman Sachs & Co.

Thank you. Good morning.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Brian Singer - Goldman Sachs & Co.

In the Southern Delaware, can you add more color on the Bone Spring 3? How far south do you think that could extend in future testing including any spacing cuts?

Timothy A. Leach - Chairman, President & Chief Executive Officer

We talked about the Southern Delaware a lot as far as having rock characteristics that are similar to the North. And we've highlighted that North Harpoon area as kind of the core of the core, and we feel really good about the prospectivity there. And then, as you move South, we're just going to have to test more to get more data on the extent down to the South.

Brian Singer - Goldman Sachs & Co.

And so, what are your next steps, further delineate the South of the Harpoon area or try to drill more within that area and try to figure the spacing and development?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yes. Brian, we're going to continue in that area for the remainder of this year and then, as Tim said, look to expand beyond that after this year.

Brian Singer - Goldman Sachs & Co.

Okay. Thanks. And then, can you talk a bit more about the Midland opportunity from here? You highlighted in your comments the efficiency gains that you could see. If we look at the well rates adjusted for lateral length, it seems the Delaware Basin is so much larger than the Midland Basin, and I know you've been kind of testing the proppant loadings there. But I just wonder what your expectations are for where well rates adjusted for laterals can go and whether you view the Midland rates of return as equal to or better than the Delaware.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Well, we do have projects in the Midland Basin that compete well with the Delaware Basin just like we do in the New Mexico Shelf. So, in return, it's what we focus on. So, I would just answer that by saying all of the core areas have projects that compete well on a rate of return basis, Midland and Delaware.

Brian Singer - Goldman Sachs & Co.

And so, what would be – would the efficiency gains that you talked to end up driving Midland Basin returns to more widely be competitive with the Delaware or ultimately where the Midland could exceed the Delaware. I'm just trying to think of kind of going back to one of the earlier question on capital allocation and thinking about that over the longer term.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. I think the enhancements we've seen in the Midland Basin, namely a water delivery system, ability to drill long laterals have allowed that asset to compete with the Delaware. Going forward, when I look at the allocation this year, it's about 25% to the Midland Basin. That's a pretty good proxy going forward. As Tim said, we're looking for a balance between the Midland Basin, the Southern Delaware and the Northern Delaware.

Brian Singer - Goldman Sachs & Co.

Great. Thank you.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

You bet.

Operator

Our next question comes from David Tameron of Wells Fargo.

David R. Tameron - Wells Fargo Securities LLC

Good morning, Tim.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

David R. Tameron - Wells Fargo Securities LLC

A lot has been asked, so let me just go big picture. Oil is sitting at $40, I know you guys are, I guess, you're at 16 rigs and going to stay – plans were to stay at that level for the rest of the year. I know you're hedged. But if we're $40 in three or four months, does that change the way you – does that change the activity level or how should we frame that up?

Timothy A. Leach - Chairman, President & Chief Executive Officer

No. I mean, we have built our current plan around – as you said, we are hedged, but we've build it around kind of the current Strip. So, we're operating in an area that we kind of planned for when we put this together at the beginning of the year. So, I think it's kind of steady as she goes. So, that's the way we characterized it when we started this. And I think the results and the economics we're getting are okay at today's oil price.

David R. Tameron - Wells Fargo Securities LLC

Okay. And I know you've talked about this probably a year ago, but when you start thinking about – at $100, before it was, hey, we get equivalent returns when oil is at $70 or $60 or whatever the number was on the way down. How should we think about framing up returns? And I guess, in the current environment with service costs where they're at, what you've done on the operational efficiency side. I'm just trying to get a feel for where the breakeven number – how much that's come down for you guys over the last couple of months.

Timothy A. Leach - Chairman, President & Chief Executive Officer

One thing, at Concho and at the rest of the industry, we have really been focused on reducing our cost structure. And we had to do that because of the environment that we were in and what was happening with the cash margins. So, we have gotten – we've had had great progress on LOE, G&A just our total cost burden and that's helped the economics of all the projects and the economics of the company.

I think we told you before that one way Jack would characterize it was that at $50 – let's see, it was at $50 and above, things work really well; $40 to $50, things were okay; and below $40, things weren't any good. And I'd tell you that because of the efficiency gains and cost reductions and things like that, I think that whole scale has slid now $5 or $10.

David R. Tameron - Wells Fargo Securities LLC

Okay. I appreciate it. Thanks.

Timothy A. Leach - Chairman, President & Chief Executive Officer

All right. Thank you.

Operator

Our next question comes from Drew Venker of Morgan Stanley.

Drew E. Venker - Morgan Stanley & Co. LLC

Good morning, everyone.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Drew E. Venker - Morgan Stanley & Co. LLC

In the Southern Delaware, we've seen a number of large acquisitions within the industry recently. You guys actually had a nice swap, I guess, late last year. Are you still seeing acquisition opportunities left or the potential to swap sizeable chunks of your acreage to further block it up?

Timothy A. Leach - Chairman, President & Chief Executive Officer

Well, we just made a large acquisition in the first quarter there. And so, it was a focus area for us. Yes, there are – because of the power of long laterals down there, there are opportunities and reasons to block up your acreage.

Drew E. Venker - Morgan Stanley & Co. LLC

And then, North Harpoon has been an area you guys have been focused on for a while. How much delineation do you have left and are you focused more on optimizing your well design at this point since you should have, I think, a decent amount of well control?

Timothy A. Leach - Chairman, President & Chief Executive Officer

No, I always would like to have more information. I think there's still a large amount of delineation both aerially to find out where the boundaries are because we have a limited amount of data. And then, how many zones are productive? And you can read anything – you can come up with as many zones as you want to come up with based on what you read in the press, and – but frankly, we've gotten really good test results on two zones, and we'll continue to test other zones.

Drew E. Venker - Morgan Stanley & Co. LLC

Thanks a lot, Tim. And if we can go over to the Midland Basin for a second, you mentioned a spacing pilot in the Spraberry and Wolfcamp. Do you have other pilots planned this year to evaluate spacing across the position, as it's just a very large position in the Midland Basin.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. Well, this was an intense one that we were – we thought was very interesting to talk about. But as we said in past quarters, almost everything we're doing is some sort of spacing test. And that's true for the Midland Basin especially.

Drew E. Venker - Morgan Stanley & Co. LLC

Thanks for the color, Tim.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Jeffrey Campbell of Tuohy Brothers. Your line is open.

Jeffrey Campbell - Tuohy Brothers Investment Research, Inc.

Good morning. On slide 4, I found it interesting that production declined less in first quarter 2016 on 10 fewer wells, and then it increased in the second quarter 2016 on only five additional wells. And I was just wondering if you could discuss that a little bit. I was thinking maybe larger working interest or a stronger well performance, longer laterals, something else. I thought it was pretty striking.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. I think it's just the timing of the completion and the style of wells. I wouldn't read a whole lot into that. We've had a pretty steady amount of activity in the first half of the year.

Jeffrey Campbell - Tuohy Brothers Investment Research, Inc.

Okay. Thank you. On slide 8, the three primary Northern Delaware targets. Just wondering how much per pad multizone potential do you have in your current development plans? Or put it another way, what percentage of it maybe, just attacking one zone versus the ability to attack maybe more than one zone on a pad?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. So, in general, for the year, more than half of our wells are going to be drilled on pads. Some of those will be drilling wells in the same zones and some of those will be drilling wells in either two zones or multiple members of one zone. So, it's all across the board.

Jeffrey Campbell - Tuohy Brothers Investment Research, Inc.

Okay. And my last question was on slide 10. I noticed a Big Chief Pecos well on an area that hasn't seen much drilling lately. I'm just wondering if there's any color on resuming activity there.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. We have a couple of rigs running in that area now. We've drilled as many wells as anybody in that area. So, we're just continuing our work in that part of the Southern Delaware.

Jeffrey Campbell - Tuohy Brothers Investment Research, Inc.

Okay. Just to be really specific, what I was referring to is I actually saw evidence of a well in Pecos County. It didn't look like – I went back and looked at some old slides and it didn't look like you'd been that far South in a while. So, I was just wondering. It sounds like it's just part of your regular program.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

That's correct.

Jeffrey Campbell - Tuohy Brothers Investment Research, Inc.

Okay. Great. Thanks for the color. I appreciate it.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

You bet.

Operator

Our next question comes from the line of Neal Dingmann of SunTrust. Your line is open.

Neal D. Dingmann - SunTrust Robinson Humphrey, Inc.

Morning to Tim, Jack. Say, Jack – all right, for Tim, maybe. When you guys look at sort of drilling, going forward, I guess, for 2017, how do you think that you didn't mention on the HBP. Is that an issue, Tim, or is it mostly just a pure return basis as you were talking about allocation?

Timothy A. Leach - Chairman, President & Chief Executive Officer

That's becoming less of an issue over time. It wasn't much of an issue this year. We've talked about in the past how the Midland Basin was pretty much held by production. And there was a portion of our capital budget that was kind of obligation-type things we had to do but it becomes much smaller over time.

Neal D. Dingmann - SunTrust Robinson Humphrey, Inc.

Okay. And then just lastly, you didin't mention kind of a return basis. Now, obviously, like the Avalon after the density test and some of the returns you're getting, other parts of the Northern and Southern Delaware, as well as the Midland, does – I think Jack mentioned this, but I just want to kind of circle back to this. The New Mexico Shelf, with those 30-day rates of just sub-500, is it because of the cost or do the returns compete there with the other three plays? Is that why your still running the rigs there?

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. The returns are really good. The costs are low. I think the costs there was like $2.5 million a well or something like that. And so, those returns compete with anything we're doing. And we just don't have as big an inventory on the shelf as we do in other places. And it's all held by production. But it's a great asset.

Neal D. Dingmann - SunTrust Robinson Humphrey, Inc.

And then, Tim, you did mention, I think, it's slide 7 that shows how much costs have come down since first quarter 2015. It's pretty amazing. Is that now on a go-forward – I mean, can we think of that continuing in most areas? I guess what I'm alluding to is just basically service cost versus efficiencies. Do you see cost improvements still increasing? And if so – or is cost still decreasing? And if so, is that more because of continued service cost declining a bit more, or is that more just efficiencies?

Timothy A. Leach - Chairman, President & Chief Executive Officer

I think the majority of cost savings going forward is going to be efficiencies and not service cost providers reducing the cost for specific items. We still have continued to experience lower cost from the service industry. The rig count hit a bottom in the Permian Basin of I think like 130 or 140 rigs, and now it's up to 190. So, we've seen some increasing activity out here.

But at the same time, the Permian Basin's kind of where everybody wants to be. So, there's been equipment and people moving in here from other basins. So, I think we've got plenty of spare capacity in all respects. And so, I don't think we feel any cost pressure on the upside, and there may still be some room to move lower.

Neal D. Dingmann - SunTrust Robinson Humphrey, Inc.

Great details, Tim. Thanks.

Timothy A. Leach - Chairman, President & Chief Executive Officer

All right. Thank you.

Operator

Our next question comes from the line of David Deckelbaum of KeyBanc Capital Markets. Your line is open.

David A. Deckelbaum - KeyBanc Capital Markets, Inc.

Good morning, Tim and Jack. Just curious if you can provide us with any color on – as you go ahead into 2017, you've talked sort of about the double digits in cash flow staying within cash flow. What should we expect in terms of a progression of lateral length in your current designs or is that sort of conversation in that guidance? Is that more based on the current lateral lengths that you're drilling with?

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. It's based on the current lateral length. We have found substantial efficiencies in drilling 2-mile laterals everywhere we can. So, where we have the least configurations in the blocky acreage, you will see those kind of lateral lengths. And it's predominantly in the Southern Delaware Basin and in the Midland Basin. But the double-digit production growth that we're talking about is kind of within the system that we see today for how we configure our wells and how we drill them.

David A. Deckelbaum - KeyBanc Capital Markets, Inc.

Thanks, Tim. And can you guys remind me, I'm not sure if you provided this before, but just roughly what percentage of your overall acreage, at least in the Delaware, is amenable to the 2-mile laterals?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

David, you can kind of look at the map. It's in the Southern Delaware. It's where the majority of that ability would be. In the Northern, I think you will see us try to move the lateral length up. But we're talking hundreds of feet there of increase, not thousands like you could see in the Southern.

David A. Deckelbaum - KeyBanc Capital Markets, Inc.

Thanks, guys. I appreciate the color.

Operator

Our next question comes from the line of Mike Scialla of Stifel. Your line is open.

Michael Scialla - Stifel, Nicolaus & Co., Inc.

Good morning, Tim and Jack. Jack, I think you said in the past that – and, Tim, you alluded to this, I think, in answering David Tameron's question. I think you've talked about the drilling inventories that maybe 30% of it gives you a 20% IRR or better at $40. And I'm wondering, now with the results out of the Avalon and with the lower cost, has that number changed at all?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. It certainly has improved significantly since year end with the cost changes, so yes. And I think you could actually raise the bar above 20% and still have multi-decades type of inventory at this year's pace.

Michael Scialla - Stifel, Nicolaus & Co., Inc.

So, maybe more than – to tie in a fence around it more than 50% of the inventory, maybe, works at a $40 oil price now?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

No. No, I don't think that's fair necessarily. But I'd just say if it was 30% before, that number is higher somewhere between 30% and 50%.

Michael Scialla - Stifel, Nicolaus & Co., Inc.

Okay. All right. Wondering if you could say anything about where you are in the asset sale process for the Southern Midland properties.

Timothy A. Leach - Chairman, President & Chief Executive Officer

No. I don't really want to comment on that specific deal. I would tell you, though, that buying things every quarter and selling things every quarter is just kind of the way the machine works. So, we ought to – as we acquire things, we're going to be selling other parts of our portfolio to try to get more concentrated and cored up. And that's just a normal part of our business.

Michael Scialla - Stifel, Nicolaus & Co., Inc.

Okay. Fair enough. And last one for me. It just sounds like you're still testing in most of the areas. Is there anywhere in the portfolio that you'd say you're at full field development now as maybe that state line area there or still testing even there?

Timothy A. Leach - Chairman, President & Chief Executive Officer

We're still testing all the areas. I mean, we have gotten better and better. The more wells we drill, the more efficiencies we've been able to get out of our program. But I think that will continue. I mean, the experimentation will continue. New technology will continue, trying things all the time. It's been really encouraging.

And I think when somebody starts to say that they've got to crack the code and they got it figured out that's a sign of danger. So, we continue to get better, but I expect every year that we'll show some sort of improvements.

Michael Scialla - Stifel, Nicolaus & Co., Inc.

Very good. Thank you.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Mike Kelly of Seaport Global. Your line is open.

Michael Dugan Kelly - Seaport Global Securities LLC

Hey, guys. Good morning.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Good morning.

Michael Dugan Kelly - Seaport Global Securities LLC

Concho was, early on recognized the potential merits of the Southern Delaware Basin, and it seems like the rest of the industry is catching up a year, a year-and-a-half later. Tim, I'd love to get your thoughts, really, on – just to look across the entire Permian right now and what areas of formations in your mind have the potential to exhibit the greatest positive rate of change if we look out a year, a year-and-a-half going forward right now? Thanks.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Well, the entire Delaware Basin is still in early stages. I mentioned we've drilled 600 horizontal wells in the North. That's probably the highest area of concentration of wells and information gathering, and we're still learning there.

And I think, there, the Wolfcamp zone hasn't been tested as much. It's probably more widespread than anybody recognizes. It holds lots of upside potential. The Southern Delaware Basin is very early as far as getting enough information and wells to delineate all the productive zones. And so, I think there's still a tremendous amount of work to be done there. And so, we like the Delaware Basin, and the top tier areas of the Delaware Basin continue to grow.

And the Midland Basin has – there's lots of companies with lots of data, and it's probably further along in industry's understanding of what works and what doesn't work and where the Wolfcamp works the best, where the Spraberry works the best. But, in general, I think for both the Midland Basin and the Delaware Basin, it's still early innings.

And everybody's – the number of wells that companies are drilling have gone down. It's amazing to me that we have more rigs running in the Permian Basin than I think just about anybody. And we're only running 16. We were running almost 40 two years ago. So, lots of things have changed.

Michael Dugan Kelly - Seaport Global Securities LLC

Okay. Great. Good color. And then, secondly from me, just correct me if I'm wrong here, but on the long-term strategy, it seems like you guys have shifted somewhat to talk more about staying within cash flow or growth within cash flow. And I'm curious, in years past you've had no problem outspending, and I'm curious on what would get you to kind of go back to that mindset potentially look to outspend and push growth more. Thanks.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

I would challenge you a little bit on the we have no problem outspending cash flow because I think that was a onetime moon shot kind of project where we saw our balance sheet was de-levering naturally, acquisitions looked expensive, and we announced that two by three plan where we could double production within three years. That was not kind of our normal way we operate, but those were the conditions at that time. And we had great success in that program. We were well on our way to achieving all those goals.

Today, it just seems like – in the kind of times we find ourselves in with the volatility, having a strong balance sheet, being able to demonstrate capital discipline and improving capital efficiency is the way you set yourself apart from the rest of the field. And that's what we're focused on. And we think we can show really dramatic results staying within cash flow. And I think we can show growth that's going to be very well received.

Michael Dugan Kelly - Seaport Global Securities LLC

Okay. Great. Thanks, guys.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah.

Operator

Our next question comes from the line of James Sullivan of Alembic Global Advisors. Your line is open.

James Sullivan - Alembic Global Advisors LLC

Hey, good morning, guys. Thanks for taking – for the call. Just picking up on the last point about balance sheet. I mean, just looking at various of your leverage metric continue to flow down, I think your total debt to flowing production is down like 20% year-on-year.

Can you just update us on your thinking on investment grade? I know you guys have been very stable with the ratings agencies have been rewarded for your conservatism here. What are the other metrics you guys are focused on? And is that on the front burner for you as you think about the next couple of years?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yes. I think maintaining our rating in this environment, I think, is very positive and a recognition by the agencies of our business. In terms of investment grade, we think that will be a result of the way we run our business, and it depends on which one you're talking to. The absolute size and reserve base is a big factor. But, again, I think it will just be a result of the way that we run our business.

James Sullivan - Alembic Global Advisors LLC

Okay. Fair enough. And just kind of to follow up on that. I know that one of the things that maybe had been an obstacle or a roadblock had been "asset diversity". I know you guys think about yourselves as operating three different areas and maybe some people look at you and say, oh, this is Permian only and that kind of thing. Is that a sole concern or how does that involve this at all?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Oh, it's certainly not a concern of ours. We have four core areas in the Permian across several hundred miles. So, we feel like it's plenty of diversity.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. I would just add that the Permian is a big place. And it wasn't that long ago that our biggest concern about the Permian was just takeaway capacity, and that has been solved. And with our ability to export crude oil and our access to different markets, we think if you were going to have concentrated assets, the Permian's the place you'd want them concentrated.

James Sullivan - Alembic Global Advisors LLC

It absolutely makes sense. So, just real quick. You've sort of alluded to this in an answer to another question, but as I look at your 2017 program, you guys talk about doing it within cash flow. And I think your weighted average floor price per hedge is about $55 (49:32) there. And, actually, you guys are just about breakeven there.

But it sounds like you guys are saying that with the cost structure coming down, maybe your unhedged, company-wide cash flow breakeven point might be kind of coming down below $55, maybe to $50 or even the high-$40s. Is that the right way to think about that?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

I think that's a fair assessment, yes.

James Sullivan - Alembic Global Advisors LLC

Okay. Perfect. Great. Thanks, guys. That's all I had.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Derrick Whitfield of GMP Securities. Your line is open.

Derrick Whitfield - GMP Securities LLC

Thanks. Good morning, guys.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Derrick Whitfield - GMP Securities LLC

So, Tim, just building on your Southern Delaware comments, we've heard from industry including Anadarko this quarter the potential for four to eight intervals. I would be interested in your take on how you would frame that and how you currently rank your two delineated intervals in terms of returns.

Timothy A. Leach - Chairman, President & Chief Executive Officer

I wouldn't argue that there's potential for four to eight intervals. I would say that we've tested two of them with good results and high productivity. And so, I think the opportunities that are being identified by industry within the Southern Delaware Basin or within the Delaware Basin, we certainly agree with. It's just one thing to talk about potential and then another thing to talk about well results and success.

Derrick Whitfield - GMP Securities LLC

Thanks. And then, just in terms of how you rank your two delineated intervals to-date in terms of returns?

Timothy A. Leach - Chairman, President & Chief Executive Officer

They're both very good. I wouldn't say that we would prefer one over the other based on returns, it's just one's – the upper Wolfcamp was the first thing we started developing. It was the deepest zone that we've started developing and had good results in. And now we've got two, and I think that will continue to expand.

Derrick Whitfield - GMP Securities LLC

Great. And then, lastly, regarding the Avalon, any view on how much of your inventory could be developed through longer laterals?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. Probably about a quarter of that inventory that I've mentioned earlier has long lateral potential.

Derrick Whitfield - GMP Securities LLC

Very good. That's all for me, guys.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Richard Tullis of Capital One Securities. Your line is open.

Richard Merlin Tullis - Capital One Securities, Inc.

Thanks. Good morning, Tim and Jack. A lot has been asked already, so I'll just keep mine quick. In the Southern Delaware Basin, so the results in the second quarter showed a large increase in the 30-day rate on a per lateral foot basis for the four wells completed compared to the prior quarter. What was the big driver there? Was it the 3rd Bone Spring well in the North Harpoon area or was it something else or a combo?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

It certainly wasn't that one well, although that well was included in the mix, Richard. It's just the culmination of all the things we're talking about – learning more, optimizing the completions, and just the geography of the wells.

Richard Merlin Tullis - Capital One Securities, Inc.

And, Jack, are you able to provide the 30-day on that Bone Spring well?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

No. We didn't separate that out. But it is in the totals that we provided.

Richard Merlin Tullis - Capital One Securities, Inc.

Okay. And then, just lastly, you talked a little earlier about drilling longer laterals in the Avalon in the second half. Could you remind us what the average lateral roughly was in the 30-day rates for, say, the Avalon wells drilled over the past couple of quarters?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Well, the ones that we've highlighted this quarter were 1-mile wells.

Richard Merlin Tullis - Capital One Securities, Inc.

Okay.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

That's roughly been where we have been in the Avalon.

Richard Merlin Tullis - Capital One Securities, Inc.

Okay. All right. That's all for me. Thank you.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Operator

And our next question comes from the line of Jon Wolff of Jefferies. Your line is open.

Jonathan D. Wolff - Jefferies LLC

Good morning.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Good morning.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Hey, Jon.

Jonathan D. Wolff - Jefferies LLC

Hi. The rig count in the Midland went up a bunch; it's a gross rig count obviously. Could you talk a little bit where you're drilling in terms of working interest levels, whether it's – a lot of it's in the 25% area or if it's sort of it's a higher working interest area where, I believe, you said average throughout Midland was kind of low-40%s working interest and I know you operate almost everything.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. The average over the Midland Basin is a little over 50%, and I think the program this year will average out to something close to that.

Jonathan D. Wolff - Jefferies LLC

Okay. And in terms of going up from one to six rigs, can you help us think about that on a gross, can you help us think about that on a capital basis?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Yeah. The net capital we have allocated to the Midland Basin has stayed about the same, but some of those shifts in rigs due to working interest is what has caused the increase in rig count.

Jonathan D. Wolff - Jefferies LLC

Got it. In the Delaware, gas processing and, obviously, in water and other things or issues on – should we expect a bit of lumpiness around the gas oil mix? I understand the comments on the GOR rising, but are they sort of – the plants come on in a lumpy fashion that causes the growth or the trajectory to be kind of uneven?

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Jon, going forward, it should – we should be in good shape the rest of this year and beyond. On the oil mix, we did arrest a decline in oil production this quarter. And as we progress through the remainder of this year and into next year, I expect to see that oil volume as a percentage pick up.

Jonathan D. Wolff - Jefferies LLC

Okay. Thanks, Jack. Last one, maybe for Tim, is the progression of your PDP decline rate, I think it was sort of high 30s a year ago and kind of moved maybe lower 30s. Where are we now?

Timothy A. Leach - Chairman, President & Chief Executive Officer

Yeah. We talked about a year ago it being high 30s and then high 20s. And then, it's probably going to improve a few points, but it flattens as the actively slows down.

Jonathan D. Wolff - Jefferies LLC

Got it. Last, last one, sort of taking us into the thought process of the management on whether to increase CapEx or not because your cost control is unbelievable. I enjoyed your comments about commodity markets staying weak and being weak and not being the right time. Has the thinking evolved over the last two months in terms of whether it makes sense to go faster or slower or same?

Timothy A. Leach - Chairman, President & Chief Executive Officer

We think right now that trying to stay within cash flow and showing that discipline, and then showing success within that discipline is a differentiated kind of theme that we have. And we feel very confident we can execute on that. So, that's what you ought to expect from us in the near and long term, I think.

Jonathan D. Wolff - Jefferies LLC

Got it. Very helpful.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

All right.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Thank you.

Jack F. Harper - Executive Vice President, Chief Financial Officer and Treasurer

Thanks, Jon.

Operator

And that concludes our question-and-answer session. I would now like to turn the call back to Tim Leach for closing remarks.

Timothy A. Leach - Chairman, President & Chief Executive Officer

Well, yes. Thank you and I know this is, maybe, one of the most busy days of the year with all the companies coming out at the same time. So, appreciate all the good questions and the attention to this call and look forward to talking to you more in the future. Thank you.

Operator

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

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