Antero Midstream Corporation (AM) Q3 2019 Earnings Report, Transcript and Summary

Greetings and welcome to the Antero Midstream Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Kennedy, Senior Vice President of Finance and Chief Financial Officer. Thank you, sir, you may begin.

Thank you for joining us for Antero Midstream's Third Quarter 2019 Investor Conference Call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I'd also like to direct you to the home page of our website at www.anteromidstream.com, where we've provided a separate earnings call presentation that will be reviewed during today's call. Before we start our comments, I would first like to remind you that during this call Antero management will make forward-looking statements. Such statements are based on our current judgments regarding factors that will impact the future performance of Antero Resources and Antero Midstream, and they're subject to a number of risks and uncertainties, many of which are beyond Antero's control. Actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Today's call may also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. Joining me on the call today are Paul Rady, Chairman and CEO of Antero Resources and Antero Midstream; and Glen Warren, President and CFO of Antero Resources and President of Antero Midstream. With that, I'll turn the call over to Paul.

Thanks, Mike. I'd like to start by discussing the expansive cost savings efforts underway at Antero Resources, AR. Over the last year, we've been intensely focused on reducing the overall cost structure to make AR more competitive in a lower for longer commodity price environment. This process included a line-by-line review of every expense item throughout the company. Through this comprehensive review, we've identified the potential to remove $250 million from AR's overall cost structure in 2020 alone. As detailed on Slide 3 titled AR Cost Reduction Strategy Overview, the majority of these reductions will come from lower well costs and reduced lease operating expenses, or LOE, driven by the new flowback and produced water blending operations. Through these blending operations, optimized trucking logistics, drier completions and improved coordination during well turn in lines events, we expect to see $160 million of D&C CapEx savings and $60 million of LOE savings in 2020. Importantly, the vast majority of these savings can be achieved in-house and are under Antero's control. These savings allow AR to target a D&C CapEx budget of $1.15 billion to $1.2 billion in 2020 that is expected to generate 8% to 10% year-over-year net production growth. In addition, AR continues to focus on mitigating net marketing expense and has already entered into agreements to mitigate excess capacity this winter. These initiatives save approximately $15 million and AR remains active in evaluating opportunities to further reduce net marketing expenses with third-party midstream providers. Lastly, AR is targeting a 10% reduction in G&A or approximately $14 million of savings in 2020 from natural employee attrition and overall G&A reductions. Now let's move to Page 4 titled Marcellus Well Cost Reductions. Last quarter, AR announced a well cost savings initiative that targets 10% to 15% reduction in well cost on a per lateral foot basis or approximately $1.2 million to $1.7 million per well. The left-hand side of the page illustrates AR's January 2019 well costs at $970 per foot, that was assumed in AR's budget. Today, AR's well costs are $895 per foot, which equates to savings of nearly $1 million per well. Savings already achieved are substantially ahead of our previous second half 2020 target of $930 per foot. Our ability to achieve lower well cost ahead of schedule is primarily due to the acceleration of localized blending operations during the third quarter that resulted in reduced flowback water costs. The coordinated effort between AR and AM allowed us to quickly and successfully execute our blending program and deliver savings ahead of schedule. Before getting into the details of our new flowback and produced water blending operations, I want to briefly discuss our decision to idle the Antero Clearwater Facility. As you remember, we began construction on the facility in 2015 to become industry leaders in water recycling and to be at the forefront of environmentally responsible shale development. At the time, flowback water was not used in completions and there were industry-wide concerns regarding the long-term viability of injection wells in Appalachia. The decision to idle this facility was driven by its inability to operate at its intended specifications. As a result of idling the plant, we recorded a $457 million impairment of the facility. While we are disappointed in the outcome, we remain focused on developing new opportunities such as blending and other flowback and produced water initiatives that reduce the overall cost structure at AR. This in turn supports the sustainable development at AR that underpins the long-term growth at AM, particularly in a lower for longer commodity price environment. Slide 5 titled Antero Water Savings Performance shows the blending operations to date. Antero Midstream plays an integral role in providing blending operations for both flowback and produced water that drives CapEx and LOE savings at AR. As depicted by the yellow line on the chart, AR's all-in cost disposed of wastewater was in the $10 per barrel range during the first half of 2019. The downward trend in cost per barrel shown on this slide is driven primarily by an increase in blending volumes, which are depicted in the purple bars. These savings from blending combined with reduced trucking cost is expected to reduce AR's wastewater disposal cost by over $4.50 a barrel compared to the first quarter of 2019. While the EBITDA contribution from blending operations is not material to AM's overall portfolio, it is a critical business for AM supporting AR and driving down costs. Now let's move on to the discussion of our prime -- of our preliminary 2020 capital budget on Slide 6 titled 2020 Preliminary Capital Target. As depicted on the map on the right side of the page, in 2019, we constructed the backbone of our infrastructure into Tyler County, West Virginia, that supports AR's development over the next several years. Looking ahead to 2020, we have optimized our capital plan to focus on the highest rate of return locations at AR that are also in close proximity to existing gathering and water infrastructure. This allows us to target a capital budget of $375 million to $425 million in 2020 or a 40% reduction compared to the midpoint of the updated 2019 capital budget of $665 million to $685 million. Looking at our processing investments in the joint venture with MPLX, we have already invested a majority of the capital for Sherwood 12 and 13, which adds 400 million cubic feet a day of combined processing capacity in the fourth quarter of 2019. This increase in processing capacity at Sherwood along with 1 expected plant in the new Smithburg site in mid-2020 supports Antero's 2020 production growth without a significant amount of incremental processing capital investment. AM's capital flexibility in addition to its visibility into AR's development plan is a competitive advantage for AM. Before handing the call over to Mike, I want to briefly touch on AR's hedges on Slide 7 titled Industry-leading Natural Gas Hedge Position. During the third quarter, AR added to its hedge position for both gas and NGLs. On the gas side, we shifted 2022 hedges into calendar year 2021 to more closely align AR's hedge profile with its unutilized firm transportation expenses and modest growth profile. AR is now over 90% hedged on natural gas in 2020 at an average price of $2.87 per MMBtu and 89% hedged in calendar year 2021 at an average price of $2.80 per MMBtu, assuming approximately 8% to 10% annual growth in 2020, 10% growth in 2021. Based on strip pricing today, AR's hedge realizations more than offset its net marketing expense through calendar year 2021. On the NGL side, AR has been actively hedging and was able to take advantage of the global price spikes following the incidents in Saudi Arabia. As depicted on Slide 8 titled C3+ NGL Hedges capturing recent pricing strength, AR is currently 50% hedged on C3+ NGL volumes for the fourth quarter and 28% hedged in 2020. This includes a balanced mix of domestic hedges and international hedges for the volumes shipped to Europe and Asia out of Marcus Hook while AR's capital budget will be flexible based on commodity prices. This industry-leading hedge portfolio allows AR to have more consistent capital budgets that are less sensitive to drastic changes in response to commodity prices. With that, I'll turn the call over to Mike.

Thank you, Paul. I'll begin my AM comments by highlighting the recently announced AM cash dividend of $0.325 per share, a 114% increase year-over-year for former AMGP shareholders and a 40% increase year-over-year for Antero Midstream Partners unitholders. The dividend at AM was the 19th consecutive distribution declared since the IPO of Antero Midstream Partners in 2014. In addition, during the third quarter, we commenced our $300 million share repurchase program and repurchased 3.5 million shares for approximately $25 million, which equates to $0.05 per share of return of capital in addition to the dividend. Repurchasing shares at today's prices generates attractive rates of return in DCF per share accretion at AM. Looking forward, we expect our high single-digit return of capital growth target in 2020 to be comprised primarily of share repurchases. We believe this is an attractive use of capital, especially when combined with the 40% year-over-year reduction in AM's capital budget. Now let's move on to third quarter operational results beginning with Slide 9 titled High Growth Year-over-year Midstream Throughput. Starting in the top left portion of the page, low-pressure gathering volumes were 2.7 Bcf per day in third quarter, which represents a 25% increase from the prior year quarter. Compression volumes during the quarter averaged 2.4 Bcf per day at 39% increase compared to the prior year. Compression capacity was 90% utilized during the third quarter. Our 50-50 joint venture gross processing volumes averaged Bcf a day at 71% increase compared to the prior year quarter. Processing capacity was 100% utilized during the quarter. Joint venture gross fractionation volumes averaged 32,000 barrels per day and 88% increase from the prior year. Freshwater delivery volumes averaged 121,000 barrels per day, a 28% decrease over the prior year quarter. During the fourth quarter, Antero Resources picked up an additional completion crew, which we expect to drive an increase in completion activities and freshwater delivery volumes as compared to the third quarter of 2019. AR remains on track to achieve the volumetric targets for the FERC's $125 million earn-out payment from AM as expected to be paid in the first quarter of 2020. Moving on to financial results. Adjusted EBITDA for the third quarter was $218 million, an 18% increase compared to the prior year quarter. The increase in adjusted EBITDA was driven by increased throughput volumes. Distributable cash flow for the third quarter was $170 million, resulting in a DCF coverage ratio of 1.1x. Antero Midstream invested $135 million in gathering, compression, water infrastructure and the processing and fractionation JV during the third quarter. Gathering, compression and water infrastructure capital investments totaled $121 million, and investments in the JV totaled $14 million. Moving on to balance sheet and liquidity. As of September 30, 2019, Antero Midstream had $726 million drawn on its $2.1 billion revolving credit facility. In October, we added an additional lender to our revolving credit facility resulting in $134 million of incremental commitments bringing our total liquidity to $1.4 billion. Additionally, AM's net debt to LTM adjusted EBITDA was 3.3x at quarter end. I'll finish my comments on Slide 10 that summarizes the 2019 guidance changes. The left-hand side of the page depicts the change in our 2019 capital budget, driven by the deferral just-in-time gathering, processing and freshwater delivery projects, capital saving initiatives and the removal of the final Antero Clearwater Facility milestone payment, we lowered our capital budget to a range of $665 million to $685 million from $750 million to $800 million. The reduction in capital more than offsets the decrease in our adjusted EBITDA guidance resulting in a net positive cash flow impact of approximately $50 million at the midpoint of the guidance ranges. The reduction in EBITDA guidance is primarily driven by the idling of the Antero Clearwater Facility and includes an additional $10 million to $15 million of idling expenses during the fourth quarter that we do not expect to persist into 2020. In summary, we remain highly focused on capital discipline and our overall cash flow profile. During sustained periods of low commodity prices, this results in lower AM capital budgets and nonspeculative investment that still generates high asset utilization rates and EBITDA growth. This capital flexibility results in attractive cash flow profile and maintains AM's strong balance sheet, positioning it to continue growing the return of capital to shareholders in the future. With that, operator, we're ready to take questions.

[Operator Instructions]. Our first question comes from the line of Holly Stewart with Scotia Howard Weil.

Mike, maybe the first question just on the 2020 CapEx number. I think last quarter you mentioned something in kind of that $600 million neighborhood. So a big reduction at this point in terms of what you're thinking. Is there or was there a change in AR's, like, development plan? I'm just trying to think through since their growth plans haven't changed for 2020, was there something else that you were able to reduce that infrastructure spend?

Yes. I think you can see it on our map, that's in our presentation. We're really focusing on the development in the Tyler County area with all the blending of the water really helps AR's cost structure to kind of just drill that next pad over. So really just focusing in that Tyler area and not expanding out into the Wetzel County really eliminate a lot of capital. Also, clearwater, not having any clearwater capital in 2020 is beneficial and then we highlighted that Sherwood 12 and 13 just came on in the fourth quarter of this year. So you have ample processing capacity to grow into. So kind of focus in Tyler County and then having processing capacity and not having clearwater really drove those capital reductions by about $200 million.

Okay. And so sort of think about that Wetzel County development being pushed out to maybe '21 or beyond?

Exactly. What has a gradually built out from our Tyler County position it really is very efficient just to kind of do pad-by-pad development, mowing the lawn out towards Wetzel County is our plans.

Okay. Okay. And then on -- you began the repurchase program, how should we think about that? Is that going to be systematic or lumpy? Just trying to get a sense for how we should allocate that capital.

Yes. It'll be opportunistic. You saw we bought back $25 million worth about 3.5 million shares in September. We've kind of -- we've got a $300 million program, it's obviously beneficial to buy back earlier rather than later so that you can get those shares and then not have to pay the dividend on that. We said that program would be -- we would not leverage the balance sheet to do that. So when you look at that, that gives you about $100 million to play with, so we plan on buying back that amount over the next couple of quarters.

Okay. Great. And maybe just one final one from me on AR. Is there any implications to AM if AR should receive a downgrade, like, from a financing standpoint?

No, there are not. Well, for AM, I mean, AM generally follows AR's credit rating. So as much as they are consistent with that, AM with AR would probably go down in tandem, but it's not on any sort of AM credit metrics.

The next question is from the line of Jeremy Tonet with JPMorgan.

Just want to follow up with the CapEx side of the equation here. And did a good job pulling back CapEx for 2020, but just want to kind of think longer-term normalize, I guess, and realize it's very difficult question to ask. But if we look into 2021, seems like the system is largely kind of mature backbone and built out so that argue, there is not a lot of CapEx that's left, but then there is other areas that you could expand to I think as you just touched on with Holly there. Just wondering how you think about what normalized CapEx could look like for this business going forward with what you guys see in front of you?

Yes. We talked about we had a $2 billion backlog and the initial cadence of that was $750 million to $800 million this year. We've obviously reduced that to $665 million to $685 million, and then we thought around $600 million next year and that's down to $400 million. And then the subsequent years after that were like $400 million and then $200 million. Looking out now with reducing that capital this year and next that kind of puts the capital budgets in '21, '22 and '23 in the $400 million to $500 million range. So kind of just evens everything out around that kind of $400 million and a little bit over range over the next four years.

That's helpful. And if I think about capital allocation here, just wondering, you talked about the return of capital to equity holders, but with the AM bonds kind of yielding near 10% right now, just wondering if that factors into your calculus there, if you might be opportunistic there or what do you think about that side?

No. We really don’t have any plans around that. The AM bonds have term on its, the first one is not -- maturity is not until 2024, and then the next 2 are '27 and '28. So I think the opportunity is at AR that those bonds traded at a discount plus the maturity is there in '21 and '22, is a little more near term. But at AM, we've got a really nice maturity schedule out there and we enjoy that term.

That's helpful. And one last one, if I could. Just if I look at the guidance, it looks like the JV contributions that you guys listed in the last slide here is down a little bit versus what you said before, just wondering if you could provide a bit of color as far as the delta, is that timing or is there anything else happening there?

Yes, I think it was just timing. But JV is definitely on schedule and with -- we just put on the Sherwood 12 and 13 in the fourth quarter and those should be filled in the next couple of quarters. So it's definitely meeting expectations.

Our next question comes from Crawford Kob with Tudor, Pickering & Holt.

So with regard to the share repurchase program, any preference between repurchasing AM units owned by AR relative to AM units in the open market?

No. We're just going to focus on the open market. I mean, that's obviously where AM can go out and just purchase every day and then just been opportunistic like I mentioned. So really haven't thought around the AR. The AR position is something that generates dividend for them and they enjoy. So really just kind of been focused on when you see the dips in AM share price and trying to be opportunistic and taking some up then.

Our next question comes from Kyle May with Capital One Securities.

I wanted to talk a little bit more about the water program. So you've talked about the water savings initiatives, but just wondering if you can give us some more perspective on how this effects the outlook at Antero Midstream compared to your prior expectations?

Yes, go ahead, Mike.

Yes. No. I was going to kind of just run through some numbers here from our -- for our blending operations, it's about $7 million of capital to AM for the second half of 2019. In 2020, that capital is about $10 million to $15 million, that would generate the EBITDA really kind of starting in 2020 of $3 million to $4 million from the blending, and then the trucking that actually occurs during that we get a cost plus 3%, so that's about $6 million to $7 million of EBITDA. So it will generate about $10 million of EBITDA and that's all from the blending. Just to review from the clearwater side, the clearwater had a couple of million dollars of EBITDA this year, but was costing about $10 million a quarter in capital. So it's actually consuming about $8 million of net cash flow. So not having that continuing after the fourth quarter is obviously beneficial for AM and then you're add in this blending opportunity for us, so the water initiatives are going to improve AM definitely in '20 versus 2019.

The next question comes from the line of Ethan Bellamy with Baird.

What is the probability of a renegotiation of contracts between AR and AM? How should we think about that?

That's one of many discussions we're having. I think, Ethan, that's we have to think about the overall Antero family there. So if something were done, it needs to be favorable for both at the end of the day. And so obviously if we did something that was overly favorable for AR that would be good for AR, but not necessarily for AM. And historically, by not doing anything that's -- it's been tough overall for AR, then there is a flow-through negativity to AM. So there is room for something to happen there, but it's just one of -- gosh, half a dozen different parties we're having those discussions with around sort of extend type discussions and otherwise. So it's just one of many and it's hard to handicap whether or not anything happens with any particular one at this point. But hopefully, we get something done with the majority of those.

Okay. With respect to the 2020 CapEx program. Can you give us any granularity about how much is within and without of the MPLX JV and is there any lumpiness or return that we can be modeling in terms of specific spending or projects?

I can kind of give you a year-over-year comparison, Ethan, the low pressure is very similar in 2020 to 2019. The compression you're actually spending quite a bit less in 2020. We put a lot of compression on this year and definitely up on the Tyler County, so you're spending about $90 million less in compression in 2020 versus 2019. High pressure is somewhat similar. Fresh water infrastructure, you're down about $40 million year-over-year, we built a big trunk line in 2019 that goes through the heart of our Tyler County development, so obviously don't need to replicate that. You're down about $40 million on the clearwater because you obviously don't have any capital in 2020 versus 2019. And then specifically to your question for the processing and fractionation JV, we're down about $100 million. We spent $175 million this year, we're thinking it's $80 million to $90 million next year, that does even indeed have the Hopedale 5 election in for the fractionation. So it even includes that. So quite a bit less spend, we did just put on, as I mentioned, Sherwood 12 and 13. So I think you only have 1 processing plant in the budget for next year.

And remind me the governance of that JV, who controls the spending there?

It's a joint JV, it's 50-50.

Mutually agreed to, but Antero proposes what its growth plans are, and it goes from there with the partners planning what will be needed in what time frame.

Okay. Last question. You've got a dividend yield at AM that is uncompetitive and uncompelling, assuming that the share price does not recover, it looks like that cash might be better used for something else. Could you talk about how you think about the distribution policy or dividend policy here? And is there some point in the future where you're modeling AR not necessarily needing that cash or allowing you the flexibility to change the dividend policy if you wanted to do that?

No. We really haven't thought about changing the dividend. Obviously, we haven't increased it and we don't plan on increasing it. Like I mentioned, the return of capital is going to come in the form of buying back shares. So when you actually look at our model, we highlighted that the trend of the capital going much lower and then you have the EBITDA growth that kind of meres AR's growth plans, your coverage goes up to the 1.2 to the 1.3 range, so that's really not a profile that would lend itself to be reducing the dividend. You also kind of lookout in '21, '22, the cash flow plus the dividend payout -- cash flow, excuse me, less the dividend payout, less the capital is about at parity, you're almost free cash flow after dividend. So again, not a profile that would suggest that you would be needing to cut any of the dividends. So we don't see that in the future. We just plan on holding it flat and then returning capital through buying back shares. If it just stays down at these low prices, we'll just be opportunistic and get a lot of shares in.

Paul, if you'll indulge me, just one question. With respect to gas macro, you guys have historically made an agreement about decline rates leading to supply correction, which would improve price. Do you still see that? Are we sort of in the doldrums but just early on that thesis? What are your thoughts right now?

Yes. And do we have a page of that in our presentation, may be on our website. On our website, Ethan, is shows what natural gas prices are at NYMEX prices plotted over this last year, so cal '19 and it shows what horizontal gas rig count is doing. And we have that both for nationwide and also for Appalachia and that is tied to the local price to the TETCO M2 price. But the big picture is that prices have been sliding, it's taken a little, but rig count has begun to fall pretty dramatically as many people are following. And then we also showed that for completion crews and those are getting idle too and so as from experience in the business that self-correcting on both sides. And on the high side, get self corrected and on the low side get self corrected. So should see a fall off in supply. Of course, where it takes a little while, there is a lag time. If you drill a well, you actually want to complete it before you back away and stop spending money. So a little bit of lag time. What will be the pecking order? Well, the least sensitive, of course, is -- are the pure oil plays as in Permian Basin and so on that the gas price is not material for them, but that's not that large of a proportion of our total gas supply, 10 to 13 Bcf a day, out of 90 plus. And so then what are the next least vulnerable? Well, it's the mix in plays like Antero with liquid supporting the development and then one gets to the dry gas basins, and I think many people who follow this have the more vulnerable ones on the list, you can already see rig counts dropping in some and maybe it will happen in some others too. So do see it self-correcting. And meanwhile, on the demand side, I've made the argument before that demand will be stickier, especially with LNG that the LNG shippers and off-takers are looking for 10 to 20-year contracts and so they'll need that gas once they put in the infrastructure much longer. So supply can fall off with gas prices, lower rig count, while demand will increase once the infrastructure is sunk. So I would say that it's just a matter of time as it has been for the last many downturns, and -- but all investors are seeing that macro, but wondering when. So for that, obviously, we all hope sooner the better.

Our next question comes from Pat Sheehan with Bank of America.

This is actually Gregg Brody, Pat called in for me. And then obviously a big update today across the board with AR and AM. Just honing in on a few things. You mentioned AM and AR working together and also the opportunity to take some of your transport -- possibly negotiate some of your transportation costs with other third parties. Help me think about how that plays out? Is it a [indiscernible] where net present volume neutral or is there possibility that in the case of AM it actually there is some shared payment, I guess?

Yes. It all depends on the parties. And we're not going to get into the details on that, Gregg. But I'd say discussions are pretty free-form around all of those midstream service arrangements. So it's hard to pinpoint any particular viewpoint or strategy at this point. I think you just have to be patient and we'll see what gets done there.

Got it and that's helpful. I appreciate that. You can't negotiate against yourself on the phone. So just in terms of dividend. You mentioned -- you threw a number out there, I think, of $100 million over the next couple of quarters. Is that what we're supposed to think about is when you talk about high single-digit growth of return on capital, but it's effectively $100 million you've allocated for 2020 for that [indiscernible]?

No. Yes, the $100 million really that number comes from when, if you recall, Gregg, from initial -- when the Board approved this share repurchase it cannot be additive to leverage. When you do the math on how much you have that you're supposed to increase the dividend by so that's 7% to 9% and that's off of $600 million. So when you do math on that, what is that? $50 million to $60 million increase in dividends, that was kind of the initial pod you are working with. But when you actually buy back shares sooner rather than later, you don't have to pay dividends over that 2-year time frame, so that adds to the pod. You kind of add that $50 million to $60 million plus dividends that you don't have to pay on the shares that you bought back and that's how you get to $100 million.

Got it. You ran through the math that I was trying to figure out. All right. And then maybe just one more here with just the clearwater. So I think I heard you say on the call that there's -- this $10 million to $15 million expense for idling doesn't continue next year, but I'm just reading the 8-K you put out that says you're unable to estimate the cost thereafter. Is that -- how should I reconcile?

[Indiscernible] included that magnitude. There always could be some costs in 2020, but not $10 million to $15 million a quarter.

And then you mentioned that this wasn't operating as expected, but it looks like this was sort of the shared paying together, that would -- for AR and AM to work together. How do you think about that -- is it as simple as it wasn't working properly or is it was there sort of some net present value analysis that you guys were doing when you thought about idling this and not using it?

Yes. Fundamentally, it just wasn't working properly relative to the design and what we envisioned it was going to be able to achieve.

Our next question comes from Ned Baramov with Wells Fargo.

Just looking at AR's production growth guidance for 2020 of 8% to 10%. Could you maybe talk about what does that translate to in terms of gathering growth on the AM side given all the puts and takes related to royalty interest and third-party acreage dedications, et cetera?

Generally, the only real reconciling item, if you recall, Ned, is that on we are on the eastern side kind of Harrison County, West Virginia, of our Antero Resources acreage in the dry gas area, that's not Antero Midstream dedicated acreage, and there's no development that occurs there, so that actually declines. So when you actually hear about percentages for AR, you generally add about 1% or 2% for the gathering, compression, volumes and a little bit more than that on the processing for Antero Midstream's growth.

Got it. And then maybe can you break out the maintenance CapEx number from the total CapEx guidance you provided for 2020?

We don't have that exactly calculated, but it generally runs and it's not calculated this way. But if you look at our maintenance capital is generally in the 10% of the capital range. So I think this quarter it's $30 million or something like that. So probably around $50 million, $60 million next year.

We have no additional questions at this time. So I'd like to pass the floor back over to management for any additional or concluding comments.

Sure. Thank you for joining us on our conference call today. If you have any further questions, please feel free to contact us. Thanks, again.

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