HighPeak Energy, Inc. (HPK) Q3 2021 Earnings Report, Transcript and Summary

00:07 Good day and thank you for standing by. Welcome to the HighPeak Energy Twenty Twenty One Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. 00:33 I would now like to hand the conference over to your first speaker today, Steven Tholen, Chief Financial Officer. You may begin, sir.

00:44 Good morning, everyone, and welcome to HighPeak Energy's third quarter twenty twenty one conference call. Representing HighPeak today are Chairman and CEO, Jack Hightower; and President, Michael Hollis; and Vice President and Business Development, Ryan Hightower; and I'm Steven Tholen, I'm the Chief Financial Officer. During today's call, we will make reference to our November Investor Presentation and our third quarter twenty twenty one earnings release, which can be found on HighPeak's website. 01:21 Today's call participants may make certain forward-looking statements relating to the company's financial condition, results of operations, expectations, plans, goals, assumptions, and future performance. So please refer to the cautionary information regarding forward-looking statements and related risks in the company's SEC filings, including the fact that actual results may differ materially from our expectations due to a variety of reasons, many of which are beyond our control. 02:00 We will also refer to certain non-GAAP financial measures on today's call. So please see the reconciliations in the earnings release, which was issued on Monday afternoon. Our prepared remarks will begin on slide four of our November investor presentation. 02:19 I will now turn the call over to our Chairman and CEO Jack Hightower.

02:26 Steve, thank you very much for the introduction and I want to welcome everybody to our third quarter conference call. And basically, [Indiscernible] this is a very exciting report we have for you, we know that you have your press release and you can look at financial numbers and as we have mentioned earlier, we have lumpy production, so therefore, our financials are not as exciting. But when you look at our production, this is a significant growth story for twenty twenty two. We had our second rate early in the third quarter. We're focused on drilling margin fill pads in our flat top operating area and as we mentioned in our August call, we expected that this would cause our production volumes in the third quarter to be lumpy because we had temporarily curtail some of our producing wells. And I'll go into that in more detail throughout the presentation. 03:29 But now that that's behind us, our production volumes getting our wells back online and getting new wells starting to produce. We've rebounded nicely in since the beginning of October, we've been averaging approximately fifteen thousand five hundred barrels of oil a day, which is almost an eighty percent increase over and above our production in the third quarter. And that is a tremendous increase in production. It showed you the benefit of having our oil production go back – come back online successfully and then how much success we're having and adding our new wells. So and it's important to note that these production levels are a product of our initial one rig development program. 04:25 So, wells that are drilled with our second rig will begin to contribute meaningful production volumes in early twenty two. And then we're going to in addition due to our excellent well economics in current strength of the commodity market. We've added a third rig in late October and now plan to add the full year end another rig of fourth rig. We will continue to pull our present value forward for our investors and yet we'll do all this while maintaining our philosophy is saying less than one time debt-to-EBITDA. So, we'll go through the financials and talk about that as we go forward. 05:16 Now turn to slide four on your presentation and it's really interesting. I think to look at Howard County is the faded white line and all the activity in Howard County, but when you see our acreage block, our two contiguous acreage blocks and what we've added to signal peak from the last conference call and what we have open flat top now, it's a tremendous acreage position. In the quarter, we averaged eighty two hundred barrels a day compared to eight nine hundred barrels a day in the first quarter. And we of course, told everybody that our production will be all. We have literally had between four and six thousand barrels a day, shut end during this period to frac and wells. And but since mid-October, we've averaged fifteen thousand five hundred barrels a day. We've increased our acreage position up to sixty two thousand acreage and we still operate ninety two percent of our acreage position, we significantly closed ten thousand six hundred additional acres during the quarter. This gave us almost a one hundred of more additional locations. So when you look at us, there is a whole and even with four rigs drilling, we're going to have plenty of inventory, plenty of those forward value and our production increases that we'll talk about later, are going to continue increasing throughout twenty twenty three and beyond. We also have still the highest cash operating margins of any of our peers of fifty one and eighty eight and an average realized price of sixty three eighteen through the quarter. 06:59 On page five the next slide and is the most exciting slide, one of the most that we have at least through this quarter. And it gives you an explanation of when we started getting to thirty three or to three thousand three hundred barrels a day, and then we have the COVID-19 that was during that period and in a short period of time, we had the winter storm [Indiscernible] that took our production off, well, we increased from that up to fifty three hundred barrels a day in the first quarter, then we started back with our program and our production started taking off and of course, then we have the offset fracking where we had to shut in each of those categories have inhibited our growth during the period and then all of a sudden we get our wells back online and look at our production taking off in the third quarter or beyond third quarter into the fourth quarter and throughout the end of the year, just going straight up and that's significant – and that's with one we're in and that significant because we're growing our production expedientially. We're adding the second, the third and the fourth rig before year end and that growth is going to continue on into twenty twenty two. 08:23 Turning to the next page, getting to slide number six. We continue to receive great processes for our production, a realized price of sixty three eighteen is eighty nine percent of WTI, that’s higher than any of our peers in the industry and even with our hedges employees and our point out, we have a lot later on, point out, we had a lot of hedges that are very small amount of our production is hedged and we have plenty of exposure to price increases with oil process going up. 09:05 Our CapEx in the third quarter was sixty four million dollars excluding acquisitions, we drilled over one hundred and twenty four thousand four hundred feet of lateral food, not including our second horizontal SWD wells. So, we now have two horizontal SWD wells, we think they're the only two in the United States and they are very sufficiently handling our water disposal needs up in flat top. 09:37 As mentioned in our call, this quarter is really the steppingstone for growth as we go forward. Now if you turn to slide six and looking at that, we mentioned that in our press release, the earnings were down from forty million dollars to thirty three million dollars principally because of having our wells offline. Our CapEx, we mentioned what we were doing there, our realized pricing is still fantastic compared to our peers. Our production is starting to come back up again and so, I wouldn't pay too much attention to this, in the sense of, we knew this was going to happen. We knew we haven't take these wells offline when you take wells offline, your LOE goes up, your G&A cost per barrel goes up. All of these things will go right back into very efficient and being number one in our class as we exit the year in this quarter. 10:38 And now I'm going to turn it over to Michael Hollis to discuss the operations and the margins in some of the next few slides. Mike?

10:47 Thanks, Jack. I'd like to start by congratulating our team on maintaining our peer leading cost levels in spite of recent industry wide inflationary pressures. This is a statement to their cost focus attention to detail and the measures they have implemented to keep our cost table in this current environment. We made great progress on our key objectives of operating and capital efficiency and have maintained our impeccable safety record. While rapidly increasing our production. 11:17 If you turn now to slide seven, our twenty twenty one margins driven by our low cost, high oil cuts continue to be peer leading, both on a hedge and unhedged basis. As shown by the benchmarking graph comparing high peak to our Permian peer group. These margins will continue to grow differentially to our peer group in twenty twenty two as we drive down LOE and G&A cost. 11:47 On the chart on the right of the slide, our LOE ran in third quarter ran a little hot. This is a transitory situation, we force all this and began the necessary corrective steps last year. The bulk of that transitory operating costs were related to three factors. First, our overall lower production in the third quarter due to curtailing material production for all completion operations. 12:16 We had roughly ten percent less BOEs to spread the cost. Second, cost incurred in several new wells are turned online, but prior to their production ramp up. And lastly, our current rental generator usage, until our new high peak substation is commissioned in the second quarter of twenty twenty two. This substation project remains on schedule despite the current worldwide supply chain bottlenecks. 12:47 Generator rental and fuel cost make up roughly two point five zero dollars per BOE of this quarter's transitory change. But even this change will trend down toward the second quarter of twenty twenty two as production continues to ramp, until it continue – until it goes completely away in May when we energize our system. This field wide electrification project will substantially reduce our operating calls in twenty twenty two and beyond but we will also dramatically advance our ESG objectives. 13:24 If you turn to slide eight, in flat top, the map on the left hand side of the slide as you can see, our third quarter activity was focused on multi well pad development on infill locations, which was a driver to our curtailed volumes in the third quarter. We have transitioned into full manufacturing mode and flat top, where we will focus one hundred percent on multi well pad development going forward. 13:55 We have successfully delineated both the Wolfcamp A in the lower Spraberry area across our entire acreage position as evidenced by our very robust well results and both of our key formations on all sides of our block. And look for high peak to methodically develop other benches in twenty twenty two. In signal peak, the map on the right hand side of the slide. In the fourth quarter, we will utilize our third rig to begin initial pad development across our acreage volume. We are currently drilling a Wolfcamp A and lower Spraberry pad and we will continue the delineation of the Wolfcamp D formation based on the strong well results from our successful Wolfcamp D well as well as the excellent results from offset wells in the area. We can't stress all exciting we are with the additional acreage we added in the third quarter as well as the well results to date and standing up the third rig in our single peak area. 14:59 If you turn now to slide nine, our team continues to be laser focused on cost saving initiatives as shown by our third quarter results, which remained flat with our prior quarters in spite of recent inflationary pressures. We are striving to keep our costs flat even as we accelerate our development plans by increasing rig count. We're in the process of implementing additional measures, which will offset inflationary pressures and will help lower cost further. Recycling a higher percentage of produced fluids, this is a benefit to capital calls as well as operational cost. 15:44 On our current pad that we're fracking today, we were averaging sixty percent recycled fluid and pump many stages at one hundred percent recycled. We've also averaged sixty percent of our entire stimulation fluid for the third quarter was recycled, produced fluids. Our local sand mine project will be operational by the second quarter of twenty twenty two and will reduce overall completion cost and advance our ESG initiatives by reducing emissions associated with trucking. 16:21 Our third quarter activity was focused in flat top where well economics continue to be fantastic. These economics are product of great reservoir performance, low cost and capital efficiency of our longer wells, high oil cuts and our differentiated realized pricing. These drive phenomenal results, a twelve thousand five hundred foot Wolfcamp A well at eighty dollars oil, pays out in less than six months from first production and generation in NPV10 of twenty million dollars a well and the lower Spraberry, no slouch coming in eighteen million dollars of NPV per well. These economics are Tier one in anyone's portfolio. 17:09 If you turn now to Slide ten. Our team is hyper engaged with keeping ESG initiatives, metrics, safety and the continued build out of the necessary infrastructure in the forefront of all of our daily decisions. We don't view ESG as something we need to implement. It's merely the result of doing the right things. HighPeak again utilize significant recycled produced fluids in our third quarter. We recycled over two million barrels during this quarter, which equated to approximately sixty percent of our entire stimulation fluid needs. 17:51 We were able to utilize again over a hundred or several zones were completed with one hundred percent produced fluid in the third quarter and our HighPeak substation project continues to remain on time with an expected online date in the second quarter of twenty twenty two. This will reduce the need for generators greatly reducing calls and emissions and give us the ability to run our rigs of highline power in the second half of twenty twenty two. 18:20 We also signed an agreement for a thirteen megawatt solar farm. Again coming online in the second quarter of twenty twenty two. During the daylight hours, HighPeak will be using solar power to drill and operate our wells. We've had zero recordable safety incidents and continue to provide our employees with flexible work environment in this post COVID world. It is a testament to high fees experienced team and ingenuity, that we've had the success that we've had to date as we continue to advance our ESG goals while rapidly growing our activity in production. My comments now complete, I'll turn the call back over to Jack.

19:03 Thanks, Mike. And I would like to everybody to turn to slide eleven in their presentation. This is probably the most exciting slide and tells a story of HighPeak in twenty twenty two. If you look on the left side and you look at the curve that we had at the end of the third quarter, at the bar goes straight up and then we take over starting at the beginning of twenty twenty two in the first quarter and see the end time. So you're almost straight up on your production with a four rig outlook, we try to be in effect to under promise and overperform in our presentations and what our projections are per the year and what our outlook is. 19:55 The royalty to our outlook we're averaging almost twenty eight thousand to twenty nine thousand barrels a day next year. We plan to exit at between thirty six and forty two thousand, we feel out that's a conservative estimate, but you can see and with that kind of growth with four rigs running with approximately six fifty million dollars budget that's been approved our Board of Directors. We feel like we connected the year with an EBITDA or an EBITDAX of almost six hundred million dollars plus a year. That's tremendous growth. We know the last three weeks or so or month has been great for our shareholders and effect a fifty percent gain from our twenty five million dollars we raised in our offering, but this is really the story everybody has to make their own decisions. But when you look at this and you look at our reservoir and you look at the performance we have, the capital efficiency we have with the team that we have in place and our total overall return on investment with our differentials on the oil pricing. The whole process stayed the same, our company is going to grow tremendously with our four rigs next year. 21:21 The next slide, twelve also combined with growing prevention volumes, but also growing our reserves, because as we grow our production volumes, we also grow our reserves, our parts are proved and developed locations. So, we will be adding additional reserves as we drill these wells. And one thing I'd point out on this slide is some of our growth is because of price increases, but most of our growth is because of drilling our wells. We've actually drilled now and operate almost sixty two wells, but only thirty three of those wells contribute to our increasing three hundred million dollars of PDP and these are only PDP value here. We do have some PDNP and some of the numbers, but on our growth profile, it only includes our pre-developed producing and that's its seven twenty three million dollars at the end of the third quarter. We have almost fourteen additional wells that will be coming online in the fourth quarter to be added to that, and that takes us in excess of eight fifty to one billion dollars in PDP reserves going forward into next year's business. So by adding one hundred wells, you can see how our production goes up. You've got to superficially in your mind, say, for every well, we get at least one PUD, sometimes two PUD develop locations. So the growth of the company in terms of proved reserves in terms of income in terms of production is going to be phenomenal next year. 23:17 Turning to slide thirteen if you think about looking at that, this is our liquidity in our financial overview, we've increased our credit facility now up to one hundred and ninety five million dollars, that gives us undrawn capacity of approximately one hundred million dollars plenty of liquidity. We will have the ability throughout the year to increase our borrowing base with the banks short of anything happening on towards in terms of oil process or that we can't foresee at the present time, we're very bullish on oil prices at the present time. We completed our twenty five million dollars offering and S3 eligible now to have a shelf offering. We do not plan on doing that. We don't need that capital right now, but that is a potential if we did need capital for an acquisition or something. 24:17 And of course, we've talked about acquisitions in the past that we would be very select and make sure it was a very accretive transaction before we would do it. But this gives us an EBITDAX target of debt EBITDA still staying below one time, at the end of the quarter, we were point six. That's a little unfair because we had a lot of production all by bringing these wells back on we're less than zero point three in terms of debt to EBITDA. And going forward, even with the forward rig program, we did not plan on getting beyond one-time debt-to-EBITDA and exiting the year at approximately zero point three to zero point three three times debt-to-EBITDA very healthy balance sheet going forward. 25:04 Now on slide fourteen and looking at that, you can look at this is kind of our hedge position. Keep in mind that philosophically we hedge to protect our borrowing base, we hedge to protect our capital budget, We don't speculate on hedges right now, we have approximately four thousand one hundred barrels a day, hedged at a price of sixty five eighty. Mike mentioned and alluded to how that compares to our peers. Many of the big public companies are having huge right-offs now and our hedges we're in good shape that gives us less than twenty percent of our projected volumes going forward in the next year that are hedged. So, they have plenty of exposure to the commodity, but yet we're going to hedge as necessary to make sure that we do it for protection. It's like an insurance policy. That's our philosophy. And as mentioned, we don't speculate on hedges. 26:07 So on slide fifteen to kind of wrap up our story. This quarter was a major leap forward and stepping some for growth going into twenty twenty two. Now, we've added our second and third rig, we will stand the fourth rigs before year end, we've maintained our peer leading cost structure in the face of inflationary pressures. And that's a true testament to Mike and our drilling and operations team is pretty phenomenal with the cost going up like they are, but because of their technological advances, their knowledge of the business, they've been able to continue and project for that five hundred and five dollars a foot in terms of our cost. So, our team has extremely focused on operational excellence, and I'll continue to be very proud of the lean team and all the hard work that they did to accomplish for me and for our shareholders and stakeholders, it's just phenomenal what they're doing right now I think we're the fastest growing company in the country, and I think we're going to continue that way, but we're not going to do it by getting out over our skis. We're going to do it in a responsible way and we're going to continue our pure leading margins. We're going to continue with staying less than one term debt-to-EBITDA in terms of leverage and we're going to continue with our cost levels. And hopefully, we are very set in place an opportunity to take advantage in each of these commodity prices that we see going forward. So, If you have any questions at all now, I'd like to open it up for questions.

27:57 Thank you. Ladies and gentlemen. [Operator Instructions] First question comes from the line of John white from ROTH Capital. John?

28:16 Hello, operator?

28:20 Hey, John, we can hear you.

28:20 [Multiple Speakers] ask your question.

28:22 Okay. Yeah, the operator cut out there for just a second. Thank you. I wanted to make sure I understand Mr. Hollis’ comments on drilling at signal peak, you're currently drilling a Wolfcamp A well and a lower Spraberry well, is that correct?

28:41 That is correct. Yes.

28:43 Okay. And then you plan to drill a Wolfcamp D in the fourth quarter?

28:49 Yes, sir. In the fourth quarter, we're all currently drilling the Wolfcamp A lower Spraberry very bad. We'll move and drill it too well Wolfcamp D pad about two point five miles east of where we're currently drilling and those will be to fifteen thousand foot Wolfcamp D wells. We'll again move down to the southern portion of our block and drill again, another two well Wolfcamp D pad both fifteen thousand feet wells.

29:17 Okay. And the last two well pad for the Wolfcamp D that you mentioned, is that going to be in the first quarter of twenty twenty two?

29:26 Yes sir. The drilling will roll into the first quarter, the completion of all of these wells will begin at the end of the fourth quarter and roll into the first. So you'll see production late first quarter from all of this activity.

29:40 Okay. Thanks very much. And your twenty twenty two guidance is very impressive.

29:46 Thank you, John. We appreciate it.

29:48 I'll pass it on.

29:53 Thank you. Next, we have Nicholas Pope with Seaport Research.

30:03 Good morning guys.

30:05 Good morning, Nicholas.

30:06 kart Hey, I was hoping you could talk a little bit more about the power project and the generators you have coming online. I guess what is that as you kind of look at the financial model and the spend you guys have been seeing on that side of things, where does that show up? Is that where the drop in LOE is coming from? And I guess how much of the power you all going to be able to generate for I guess the rigs versus operations? Just trying to make sure, I understand what all that's going to.

30:42 We might answer that question, Nicholas.

30:43 You bet, Nick, that's a great question. And look toward in the third quarter going into all the way up to May of twenty twenty two in our flat top areas where we're putting in the substation in a solar farm and that project, all of it will be energized together in May of twenty twenty two. But between the third quarter of this year and end of second quarter next year, most of the new wells we're bringing on, we're having to generate that power locally. 31:16 So, we're doing in a numerous different ways local generation with just a propane power generator, other places we build what's called many grids trying to reduce that total calls. In the third quarter with our eight thousand two hundred BOE a day it averaged about two point five dollars per BOE. That cost, again as these wells come online, the total cost, we will stay the same as it is today for the generators in place. So, for BOE, that we will go down between now and next year on the – into the second quarter. We will continue to have to add some generators. So as you look into twenty twenty two, the way you can kind of think about it, is our LOE was really hot in the third quarter. Fourth quarter this year going in the first and second next year, you'll see a drop roughly a dollar a barrel each one those quarters until May of twenty twenty two and when that happens, we flip everything at flat top to our power distribution system. So not only the generators for all of our pumps, transfer pumps, but also our rigs are going to be plugged directly into the power lines. 32:33 So that'll have a direct CapEx benefit for us. As well as getting a lot of this local power and local fuel being bird and emissions will all now be efficient power from the power grid as well as from our solar farm during the daylight, we will be running our rigs and operating our wells off of that solar grid. And hopefully that gives you a little flavor.

33:02 Yeah.

33:03 One thing I would add to that is when we bring all that back online in May or so of twenty twenty two, we anticipate our cost to go from that eight point nine seven dollars down about four point fifty dollars to five point twenty five for our LOE costs, so significant savings. Fully bring everything in funds.

33:28 Got it. That's great. I had one other additional thing. On just kind of like the shape of the production profile. Do you all anticipate any significant kind of offset production impacts like you saw in the third quarter as you kind of add these other rigs? Or is that more specific to the third quarter and we shouldn't see that that volume, I guess it's impact going forward?

33:58 Anytime, nick, you are in effect, fracking close in and doing large pads, you can have some impact in terms of having to shut in offset production while you're fracking. But we won't see the impact that we had in the third quarter probably ever again. We're the way we're just developing our areas and with our pads and with our large system and the infrastructure in place, we're going to be able to eliminate and reduce any impact while we go forward and almost twenty five percent of our area down south and the wolf deep formations specifically is not near as impactful as it is and some of the other zones. So, we don't see we see it happening every now man, but not like it was in the third quarter.

34:58 I got it. That's great. That's all I had. I appreciate the time guys. Thank you.

35:03 Thank you.

35:09 Thank you. Next, we have Jeff Robertson with Water Tower Research.

35:15 Thank you, Mike, as you all to further develop the signal peak area. Do you see the opportunity or necessity down there to do some of the same type of things that you've done flat top things like electric substation upgrades or enhancing accrued delivery contract or solar or any of those opportunities to enhance your costs in that area?

35:41 Thanks. Yes, that's a great question. And When you look at our CapEx budget for twenty twenty two kind of the high level way to look at that is about seventy five percent of the CapEx going to flat top, about twenty five percent of the drilling Capex going to signal peak. However, when you look at the infrastructure that we've laid out, it's opposite, only about twenty five percent up in flat tops since most of the infrastructure in place and has already been built and about seventy five percent down in signal peak. However, as Jack mentioned a little bit single peaks a little different. The vast majority of what we had to do in flat top, it will be a similar system just smaller. So the total CapEx spin for the infrastructure will be lower. From a power standpoint, a lot of the wells mainly the Wolfcamp D wells will be gas lifted as opposed to running ESP. So, we've got a longer time period before we would have to go upgrade the electrical infrastructure, but absolutely, putting in the right water handling facilities and having the right gathering for oil and gas will be put in place.

37:03 Thank you for that. And then Sorry. I lost my turn it's off for a second. If you think about the Wolfcamp D. I know previously you all had put a number of locations in slide deck. Can you quantify or will you at some point update, the location counts that you have put out for both flat top and single peak?

37:31 Yes, Jeff, the numbers that are in the presentation that we’re put out this morning are updated but think of the Wolfcamp D as six wells across section down in signal peak will average closer to thirteen thousand foot laterals, a lot of these are going to be fifteen thousand foot wells, but from a density of wells across a mile, it's six wells per mile.

37:59 Okay. And then last question, I think on your slide, you show the number of feet you all drilled in the third quarter, do you have a number at least that would tidy to your twenty twenty two capital program to the number to the footage you expect to drill next year?

38:15 Yes, or average footage, again with the mix that we have, it's closer to twelve thousand feet, twelve to twelve five and you're looking at two wells per rig per month. So, think of it as twenty four per rig times for at around that five zero five dollars a foot for that thirteen thousand, twelve five to thirteen thousand foot total average lateral link, and that would get you real close to what we have in our budget.

38:47 Okay. Thank you very much.

38:50 You bet. Thanks, Jeff.

38:54 Thank you. Next, we have a follow-up with John White with ROTH.

39:01 Thanks. And follow-up again on signal peak. I know it's early that the wells that you drilled and completed plus offset operator wells, how are those wells doing? What kind of comments would you offer?

39:22 Yes, John, and again, like I say, we're extremely excited about them. For instance, our Wolfcamp D well had an IP kind of thirty rate of about eight fifty barrels of oil a day and a peak gas rate of close to one point five million dollars a day, especially with today's gas prices that helps kind of reduce our returns there a little bit as well. But just on strictly the oil, these are very strong results. And again, we've got a nice acreage position, the offset operators to our West have, it's almost a lay down when you look at the wells that they have online, and they've got some longer dating wells. our wells tends to delay right on top of theirs from a performance standpoint. 40:08 So, again, we're very excited about it. In the acreage that we picked up, We do have three wells there being completed today that we are non op and so we'll give some more data over on the left side of our acreage block as well.

40:25 Okay. Yeah. That sounds like good results. On Slide eight to the southeast of your acreage. There's some white space. To the Southwest and to the northeast. There's some white space did some of those areas fill in a little bit with the recent acquisition?

40:48 No, that is we're showing the yellow is the recent acquisitions. Again, like we always say, we're always in the market looking to add things if they are accretive to our portfolio. And you can see on this slide, the well that we have drilling to the south to help to delineate that as well. So, again, very excited about what's out here. When you talk about what's south of the entire yellow block, that's the [Indiscernible] feel. So, it'll be very difficult, it's very high density drilled, very shallow stuff. So, there may be some activity that could drill south under it, but probably we'll see it a lot of movement further south.

41:35 Okay. I really appreciate that detail. Thank you. I'll pass it on.

41:39 You bet. Thank you.

41:43 Thank you. Next, we have Jeff Robertson with Water Tower Research.

41:49 Just to follow-up, Jack, as you look at a lot of the larger companies? Keeping a lid on their capital spending in favor of distributing cash flow. Does that have any impact on the competitive pressure or a company like High Peak in terms of either your costs or your ability to look at consolidation opportunities? Is there as the competitive pressure changed much with the way the company are trying to execute their plans now?

42:22 Actually, Jeff, I don't see it impacting us in a negative way at all in terms of competitive pressure. We are a growth company. We're not mature. We can't be in a position of just maintaining within the Acreage box like this, we've got to take advantage of the opportunity we see, but undoubtedly as we go forward, and we build our reserves and build our production. 42:53 We'd be a lot more attractive for one of the bigger companies to want to acquire us one of the main reasons is because our performance on each individual well is much better than most of their economics on their big portfolio. So we have a very high profit margin, very big return on investment in internal rate return. And but in terms of acquisition opportunities and consolidation for us. We look at everything that's out there, there's lots of opportunities in our area and we just want to make sure that if we do it that it's dripping off the page [Indiscernible] accretive to our acquisition opportunities. Other than that, we're going to go slow. Eventually, we do want to share with our shareholders. We just need to go ahead and get our acreage position. To a point because even it at the end of twenty twenty two with four rigs running, our growth profile just continues right into twenty twenty three and twenty twenty four and then when we [Indiscernible] so early in the beginning of developing this wonderful asset we have that our focus is going to be to do that to start with. Hopefully that I answered your question.

44:16 Thank you. That does Jack. I appreciate it. Thank you.

44:24 Thank you. There are no further questions. I will now turn the call over to Jack Hightower.

44:32 I just want to thank everybody for being on the call today. And as you can see that this position us for growth in the future and position us for an outstanding development program in twenty twenty two and we're extremely excited and look forward to further the conversations to let you know the results of what we're accomplishing. Thank you very much.

44:59 This concludes today's conference call. Thank you all for participating. You may now disconnect.