Intrepid Potash, Inc. (IPI) Q4 2021 Earnings Report, Transcript and Summary

00:04 Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Q4 and Year-End 2021 Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. [Operator Instructions] 00:38 I would now like to turn the conference over to Matt Preston, Chief Financial Officer. Please go ahead.

00:47 Thanks, [Tyreece] [ph], and good morning, everyone. Thanks for joining us to discuss Intrepid's fourth quarter and full-year 2021 results. With me on the call today is Intrepid's Co-Founder, Executive Chairman, and CEO, Bob Jornayvaz. Also available to answer questions during the Q&A session following our prepared remarks will be our President, Brian Stone; and our Vice President of Sales and Marketing, Zachry Adams. 01:11 Please be advised that our remarks today, including answers to your questions, include forward-looking statements as defined by U.S. Securities Laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. 01:28 These statements are based on the information available to us today, and we assume no obligation to update them. These risks and uncertainties are described in our periodic reports filed with the Securities and Exchange Commission, which are incorporated here by reference. 01:43 During today's call, we will refer to certain non-GAAP financial and operational measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in yesterday's press release. Our SEC filings and press releases are available on our website at intrepidpotash.com. 02:00 I'll now turn the call over to Bob.

02:02 Matt, thank you very much, and good morning to everyone for joining us. We really appreciate your attendance and your interest in Intrepid. Declining physical inventories, strong demand, threats of railroad strikes, and now unfortunately turmoil in Eastern Europe has significantly contributed to rising fertilizer prices and supportive commodity environment, which has now led to another quarter of improving consolidated results. 02:34 We recorded adjusted net income of $8 million in the fourth quarter, bringing full-year adjusted net income to $21.8 million, a $40 million increase, compared to 2020. In the fourth quarter, we released nearly all the valuation allowance against our differed tax asset, which has led to approximately 7 million of income tax expense recorded for both the fourth quarter and the full-year 2021. The first time we have recorded a material amount of tax expense since 2015. 03:16 Our potash segment generated $12.5 million and 35.8 million of gross margin in the fourth quarter and full-year 2021, respectively. As we capitalized on rising prices and continued strong demand, fourth quarter realized pricing for potash increased to $504 per ton, a $120 increase over the third quarter of 2021. 03:46 Price increases announced in both the fourth quarter of last year and most recently in February of 2022 will continue our trend of rising prices through spring as we expect our realized price per ton to increase between $680 and $690 in the first quarter of 2022, an increase of approximately $180 per ton over the fourth quarter of 2021. 04:22 In-line with potash, our Trio segment continued to deliver strong results on rising prices and strong demand. Posted prices moved up $30 to $40 per ton in December 2021 and we recently announced another $35 per ton price increase, which is in effect as we speak today. 04:48 We expect our first quarter 2022 net realized price for Trio will increase between $440 and $450 per ton, and we are currently booking sales for second quarter shipments at the increased price level, which is approximately $215, more over last year. 05:16 The extra production shift we recently added at our East mine is adding some much needed production and will help us match the strong demand and positive outlook for the specialty fertilizer through the first half. 05:32 Sales and gross margin in our oilfield segment increased over the third quarter of 2021 as revenue from oilfield products and services such as surface use, easements and a produced water royalty continue to increase along with our oilfield activity. 05:52 Recent increases in oil price continue to spur additional investment in the Delaware Basin with producers looking to capitalize on the highest oil prices in the last decade. As expected, our balance sheet remains in solid shape with $36 million of cash on hand at the very end of the year, a number which has since increased to well over $60 million as of early this week. 06:23 With a strong balance sheet in a growing cash position, we announced in our earnings release, a $35 million share repurchase program. As we stated on prior earnings calls, once we reached the appropriate benchmarks, we would look to opportunistically repurchase shares depending upon market conditions, other factors and begin to return value to shareholders in the form of a share repurchase program. 06:55 As we noted in the earnings release, our strategy hasn't changed with the announcement of the buyback program. We still plan to invest across our business segments and remain open to opportunities both inside and outside our fans that we believe would complement our existing business and generate long-term value. 07:16 We view the share repurchase program as another tool available to our team to drive shareholder value. And with the approval in place, we will now be able to take advantage of that situation if the appropriate time presents itself. 07:33 As the largest consumer of salt, saturated brine in New Mexico, we're also excited to announce a joint feasibility study with the New Mexico Produced Water Consortium as technical consultant for the New Mexico Environment Department to evaluate the opportunity to beneficially reuse produced water from oil and gas production in the New Mexico’s portion of the Northern Delaware Basin as an inject date for our HB solar solution mine. 08:07 The pilot project is meant to prove the concept that treatment of produced water can meet the same constituent levels necessary to comply with standards and requirements for injection into our HB solar solution mine. 08:23 We are uniquely able to provide this service at its HB solar solution mine, which currently utilizes naturally occurring salt brine and groundwater as permitted injectates, which could potentially turn our approximate 100,000 barrel a day in [injection system] [ph] into a revenue stream with the opportunity to actually grow those volumes. 08:50 As most of our investors know, the HB solar solution mine uses a closed loop system in coordination with solar evaporation ponds for the solution mining of potash in a very environmentally friendly manner, and is already subject to numerous monitoring wells and a permit to the New Mexico environment department. 09:14 New Mexico produced water consortium is a trans-disciplinary public, private partnership comprised of academia, specifically New Mexico State University, government agencies, national laboratories, and the private sector whose mission is to advance scientific research and technology development, required to guide future state-wide produced water policy in New Mexico. 09:43 The New Mexico produced water consortium has already approved our submitted pilot proposal pursuant to and in compliance with the New Mexico Environment Department’s 2022 requirements for pilot testing. This high priority green pilot project is already preliminary scheduled to begin testing as early as the third quarter of 2022. 10:07 We are excited to cooperate with our public and private stakeholders in advancing the proposed environmentally friendly reuse of produced water. This project if successful, we'll aid in conserving existing ground water sources in addition to advancing and promoting Intrepid’s ESG goals and values, as well as the stated mission of the New Mexico produced water consortium. We look forward to keeping the market updated as we get closer to the pilot project later this year. 10:41 Overall, the outlook in the potash market has arguably never been better. Commodity pricing and crop inventory levels remain extremely supportive as do record farmer incomes globally. We are positioned to deliver significant growth in bottom line results and operating cash flow in 2022. 11:03 And now, I'll turn the call over to Matt for a review of our financial results and outlook.

11:10 Thanks Bob. As Bob just highlighted, we are set up to deliver an outstanding year in 2022 with the full benefit of recent fertilizer price increases yet to materialize in our reported results. 11:23 Full-year 2021 adjusted EBITDA increased to $67.6 million, more than 3x our 2020 EBITDA of approximately $21 million, and we expect 2022 will again deliver outstanding year-over-year growth. 11:39 As you saw in our earnings release yesterday afternoon, we released approximately $216 million of the valuation allowance against our deferred tax assets in the fourth quarter. As a result of reaching both the [accumulative three-year] [ph] net income position and our improved outlook. 11:56 For those modeling the effect on our earnings, I want to reiterate some of what Bob said earlier and provide some guidance for future modeling. Along with the release of the valuation allowance, we recorded approximately $7 million of income tax expense for the full-year 2021, all of which was incurred in our fourth quarter results. 12:16 Going forward, we expect a book tax rate of approximately 26%, but with significant state and federal net operating loss carry forwards available to us, we expect to pay minimal cash tax, less than $350,000 annually for at least the next few years. Additional details regarding our deferred tax assets are included in our 10-K, which we expect to file later today. 12:42 Fourth quarter results for our potash segment benefited from higher pricing, although production was reduced compared to the prior year, due to the wet weather in Carlsbad last summer. Fourth quarter sales volumes were in-line with our historic average and we remain selective during the quarter in anticipation of improved pricing in early 2022. 13:02 We are now coming off nearly 18 months of strong potash demand, which combined with our production shortfalls has left us with lower inventory levels and less product available for sale than in the first half of 2021. We expect first half 2022 potash sales of approximately 130,000 to 140,000 tons split evenly between the first and second quarters. 13:26 Like many industries, we are experiencing some logistical delays with truck availability, which could push some tons into the second quarter, but will not lower our overall first half sales, product inventory and production are expected to return to historic averages in the second half of the year, which should drive an improvement in our per ton potash cost of goods sold despite general inflationary pressures. 13:52 Our fourth quarter Trio segment production and sales results were consistent with prior year and similar to our potash segment, we expect recent price announcements will continue to improve our net realized pricing and segment results in the coming quarters. Although we remain on allocation for our granular and premium Trio products, we expect sales volumes to closely follow prior year with 130,000 to 140,000 tons for first half 2022 split evenly between the first and second quarters. 14:23 Turning towards 2022 and liquidity, we expect to spend approximately $40 million to $60 million on capital investments in 2022 with $25 million to $35 million of that on sustaining capital. Increased sustaining capital compared to prior years reflects some inflationary pressures and also prioritizing some deferred projects from the past two years. 14:45 With the announcement of the share repurchase program, HB Green Disposal and an increasingly positive outlook for our earnings and cash flow, there are significant opportunities in front of us to generate long-term value for our shareholders and we look forward to updating everyone as the year progresses. 15:01 That concludes our prepared remarks for today. Operator, we’re ready to take questions.

15:07 Thank you. [Operator Instructions] The first question comes from Joel Jackson with BMO Capital Markets. Please go ahead.

15:43 Hi, good morning everyone.

15:47 Good morning, Joel.

15:49 Few questions. I'll ask one-by-one. Can talk about capital allocation that so, what kind of pace of the buybacks should we expect? What kind of liquidity [buffer] [ph] do you want to keep it all times, and talk about the SPAC, what you want to do there, how much you want to invest there? How that's going, do you think? Thanks.

16:14 First, let me talk about capital, as it relates to the buyback program. We believe and we have said repeatedly that as we begin to generate significant cash flow that we intend to use a portion of that cash for share buybacks. 16:34 We do not intend to go into that to buy shares back, but we think it's most appropriate to use, I hate to use the word excess cash, but because we will generate substantial cash, our intention is to use that cash when the opportunity presents itself at the appropriate stock levels to buy our stock back. 17:02 I hope that answers your question, but the main difference that I would like to make clear is that we're willing to use what I would call additional cash, excess cash, cash to using share repurchase rather than going into debt to buy shares back. 17:26 Second question was… [Multiple Speakers]

17:26 Oh, sorry. Go ahead. Excuse me. Sorry, go ahead.

17:32 Could you repeat your second question?

17:33 Yes, how much liquidity buffer, you may have already answered that, how much liquidity bugger are you comfortable with? And then talk about the SPAC and how much do you think you're going to point to that? How that's going and some of the rationale around that?

17:50 Let me talk about SPAC first. Really the only thing I can say is, all the benefits that would accrue to the sponsor will go to our shareholders. So, the idea, the general concept is it's a methodology to raise a larger amount of capital without diluting any of our existing shareholders and whatever benefits totally inclusive, accrue to Intrepid Potash as the sponsor will go straight to our shareholders and not to managers or anybody else. 18:32 So, it is a methodology to raise additional funds or larger acquisitions and have those benefits flow straight to our shareholders. I'm really now…

18:46 Yeah, and I'll jump in here a little bit Joel, with the S-1 filed in mid-January that that's active, we are not going to talk about the SPAC at all on this earnings call, outside of what Bob just said. So, I appreciate your understanding.

18:59 Okay. Just on potash. So, potash production should be normal level, I guess in the second half of the year, and if we have a prolonged issue with Russian and [indiscernible] Russian supply and the world's trying to squeeze at every ton of K that it can, what options do you have when you think about Carlsbad, think about flooding, old mines, and other places like, what could you do to add more capacity back? What would it cost you? How long would it take?

19:36 Well, it's a variety of questions that are all intensely understudied. Obviously, our first shot is increasing the volume that we flood at our HB Solar Solution Mine and that project is already underway. 19:56 I'll just say, it's very much underway, and it's one earnings call away from being able to give a lot more detail in terms of what that could look like as we've got numerous engineers working on that as fast as I can. 20:10 The second which is teed up is a new cavern at Moab. The design for that horizontal cavern is being designed as we speak. As you know, we've successfully drilled four significant horizontal caverns out there to date. All of which have added incremental production each time we've done those, and that project will start in the most likely third or fourth quarter, most hopefully in the third quarter and come online for the next summer’s evaporation season. 20:46 And then a Wendover, we had a team of engineers out there this week looking at drilling additional deep brine wells, as well as additional brackish water wells to increase the amount of water that flows through the overall system out there. As you know, we've got about 150,000 acres of leases, 40 something, I'm sorry, 100 plus something miles of canals. 21:13 So, looking at ways, it's a giant water farm. So, in each of those facilities looking at different ways of increasing our potash production, as well as bringing on an additional crew at East to actually mine more langbeinite. So, I'd say those are four very concrete steps, one at each facility.

21:37 Just following up on that. Does that mean that at West that's pretty much done? And is there any way to get potash back over the langbeinite at East?

21:49 You know, we've got a very small group looking at West. I would say the West is probably our most expensive mine to bring back on, and so we're really going in a linear fashion as to cheapest tons to more expensive tons in terms of when and how we bring those back on.

22:16 Thank you very much.

22:21 The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.

22:29 Hi guys. This is Will Tang on for Vincent. I guess, can you guys talk about any early indications of increased oilfield activity due to the higher oil prices? And then like how should we be thinking about the potential tailwinds from higher oil prices or typically how long does it take for activity to, kind of see a pickup?

22:52 Well, I tell you. It was momentary. It's picked up pretty quickly. All you got to do is, look at the rig count in the Delaware Basin and I don't have the numbers off the top of my head, but the funds ringing every day. So, down and Intrepid South, here it is early March, we've got a sold out water book and so we're working with third-party water providers to provide more water. 23:21 So, it's just going to be a very good year, based on our primary customers that are already looking to increase their activity levels. So, I think all you got to do is, go read Exxon’s IR deck and Exxon has announced very significant plans in the Permian. Go look at Conoco acquisition of Concho, private companies or Caprock, Ameredev, BTA, [Titus] [ph], the list goes on and on. [Devon] [ph] of the companies that have all announced significant higher expenditures in the Delaware Basin.

24:13 Got it. Thanks. And then I guess just tracking on that capacity question earlier, but I think last quarter you talked about the optionality to add additional like 50,000 tons of productive capacity, kind of pending on your ability to hire additional staff? Can you talk about what you guys are seeing in the labor market right now? Whether that's a possibility, I guess this year to add that additional staff to increase capacity or not?

24:40 Well, we’ve definitely added the crew that we talked about. So, we were successful in hiring the personnel. I'll be very honest. The labor market tightens with each price increase. We have found a lot of people that have come back from the oilfield because of the nomadic lifestyle and the extended drive times. 25:03 I mean, if you go out to Southeast New Mexico, it takes three hours to get anywhere there and back. And so, it's a beehive of activity. And when you look at people's personal choices, they're choosing between a slightly higher wage, but a three-hour drive versus potentially a slightly lower wage, a more stable job as we did not lay-off anybody during COVID, whereas the oil companies laid-off tremendous numbers of people. So, I think we're – I think that the actions that we chose throughout COVID served as well. 25:48 It's two very distinct labor markets in terms of what people are looking for and we hear clearly articulated, but I don't want to make it sound like it's a cakewalk. It's a difficult labor market, but I do think we have a slight advantage given our 100 years of stability.

26:14 Got it. Thank you.

26:19 The next question comes from Lucas Beaumont - UBS. Please go ahead.

26:28 Hey guys. Thanks for my question. So, I just wanted to go back to potash again, if we could. So, you sort of flagged that you're expecting pricing to be up another $180 in the first quarter. So, could you please just discuss for us like how much of your second quarter order book is already locked in and how you're expecting pricing to move in the second quarter, based on where we are, sort of seeing spot pricing in March with the lag in February and March? So, even if things kind of stabilize from here, which I mean, it doesn't look like they're going to do that yet, but should we still be seeing, sort of high plus pricing flowing through into the second quarter as well? Thanks.

27:06 We believe we're going to see really stable pricing throughout the end of the year. As to the timing of when the actual price increases started and we're taking advantage of, I'll let Zach walk through that. But we do believe what's going on globally has provided a good floor for why prices should be very stable on an extended period of time, and when I say extended, I'm talking the next 12 months to 18 months for a whole variety of reasons, which we can go back into. 27:45 Zach, if you want to talk about exactly how the price increases started and when your second quarter increases started kicking in, etcetera?

27:53 Yeah. Thanks Bob. As we noted earlier, we announced a second quarter increase earlier in February and we've been booking sales since then. I think we saw a really good momentum I’d say over the last couple of weeks, you know was more a spring application begins out there in the market and our buyers are coming in and customers are coming in for resupply. So, looking ahead to Q2, we're positive right now, based on realizing those volumes at those increased levels.

28:25 Right, thanks. And so just wondering Matt, and you guys mentioned that the first half production was, sort of only going to be about 140,000 tons, have I got that right. So, I think, I mean, that's a bit lower than sort of what you guys have had historically with the production issues. So, I was just wondering has there been any impact given the lower volumes in kind of how you're having to contract at pricing? Are you having to, kind of meet your customer’s needs with the lower volumes and is that causing you to maybe contract further routes, and then impacting the flow through of high pricing as we move through the year as well, or is that not really effective? Thanks.

29:04 I would say, it's obviously worked to our benefit and that we've got fewer tons to supply. The domestic market is extremely tight. And so, if you look at the threat of the Canadian rail strike, if that were to happen, the U.S. market would become much, much tighter. But I would say that the domestic market is a very tight market, and so the price increases that we've announced were able to achieve all of them, with very little pushback from customers. 29:43 I'm not going to say they're happy about it, but the same time, you have to look at the price of corn, wheat, and soybeans, and I always urge people look at coffee and Coco and palm oil, cotton, we service cotton. And so global commodities are doing so well as our farmers across the world. So, while potash prices still remain in that 3% to 5% of input cost. Farmers are making plenty of money and the potash that they can find, they can surely afford to buy.

30:26 Right. Thank you.

30:30 [Operator Instructions] The next question comes from Jason Ursaner with Bumbershoot Holdings. Please go ahead.

30:44 Good afternoon.

30:47 Hi, Jason.

30:49 Just kind of a similar question what you just got on an MOP, but shifting to Trio, that's quietly shifted, I guess these last couple of quarters from the detractor to a pretty big bright spot, kind of the same line of questioning, is the order book there and the outlook, is that firming in the specialty markets, similarly at all to how it is in the MOP market? Or is there shorter lead times there? I guess you gave the figure on where tonnage is going in terms of pricing, but just trying to, I guess can figure out sustainability there?

31:26 Yes, let me back up. As to our premium and our granular products, we are on total allocation for 100% of that product. As you know our standard product, which is what we then convert in to [power product] [ph], there's very few people that buy standard other than to mix it with something else, but we're seeing incredible demand. Trio is in short supply as in a premium product and a granular product. 32:01 So, we're able to, like I said, keep our customers on allocation and this go around our competitor is following every price increase. In fact, for the first time in years, our competitor actually took to price up themselves. So, it's nice to see Trio finally being a very significant bright spot and generating a lot of EBITDA and cash flow that will go to the bottom line. So, I hope I answered your question? If you need additional color Zach is here to add some additional color.

32:42 Okay. Well just on a GAAP basis, I guess the gross margin there was 32% in the quarter, so was up nicely sequentially from Q3 and obviously was a detector last year in the gross deficit, but what do you think is the incremental margin there? As you're taking price up, another $100, I don't know where it's going with both the price increases. I guess, you said there was a new one, a second one that you're now booking for Q2, that was at the 450 a ton level. What's the incremental margin you think there in terms of, on the cost side?

33:23 I’m going to let Matt answer that, but most of that goes to the bottom line, straight to the bottom line and we believe that there's significantly more room in the premium and the granular markets given the tightness of the market. And so because people literally buy that on a quarter-by-quarter basis, we don't see orders going out so far like we would see in potash. 33:51 It makes more sense to price that product on a quarter-by-quarter basis. And as long as the market remains as extremely tight as it is for premium and granular, we are very optimistic about where that market has the opportunity to go. Once again, Zach’s available or Matt's available for…

34:16 Yes, I'll jump in there a little bit Jason. We gave the guidance on Q1 pricing 440 to 450 per ton. You announced another $35 increase in February, which we think will capture a lot of that in our second quarter sales unlike the potash market, which maybe took a week or two to get started. 34:37 We're seeing a lot of growers here really increase their awareness around magnesium, as well as sulfur and we've had a lot of interest in our products for second quarter. It's really driving a lot of good organic demand in the regions, you know, we domestically haven't necessarily seen in the past. And so, overall outlook for Trio is especially fertilizer given those secondary nutrients is really positive today.

35:03 Okay, great. And just on the cash figure, the 60 million as of yesterday. I guess, besides just from a [number of second] [ph] from a balance sheet perspective, is there anything we can or maybe should be taking away from that operationally? You earned, I guess almost 24 million in the first two-months of the year. Is that before the normal collection cycle for the spring season or is there anything noteworthy, you could, kind of point to from the working capital standpoint in the 60 million figure versus 36 million to end the year?

35:38 It certainly starts to reflect some of our early 2022 sales [rolling] [ph] into our bank account there, but I’d say the majority of the spring season really peaks March, April. So, we feel we’ve got a lot of good information and good news to come here for the spring season, we're really just getting started when it comes to operating cash flow in our results.

36:04 Okay. And, I asked about it a couple of quarters ago, but lithium prices have been, kind of going nuts here as well as a lot of other commodities. I don't remember if you were evaluating it as a carbonate versus a hydroxide resource, and to be totally honest, I'm not sure if I even fully understand the difference, but just at a high level with the prices moving higher, is this changing the calculus at all and the value of those reserves and potential to create a royalty stream there, for someone willing to go after that business?

36:37 You know, Jason, what we've repeatedly said is lithium occurs very abundantly throughout the world. It's what it's attached to that makes it difficult to extract the value. And so, our lithium is attached to magnesium, which there are several pilot studies going on across the world by a couple of different companies that are attempting to come up with commercial technologies to separate the magnesium from the lithium, so that you then have a lithium product, lithium carbonate product that you can either choose to sell the lithium carbonate or upgrade it even further. 37:23 So, we continue to stay in touch with a lot of the companies that are working on the technology to try to separate it from the magnesium because that's the most to expensive part for us given our lithium reserves. So, I just want to be clear that we've said the same thing. We're working with a variety of companies that are working on the technologies to separate those and we're following lithium prices extremely closely, but we've yet to see a commercial technology and we've had several people approach about trying to do a pilot test, but there just hasn't been the success at separating magnesium from lithium on a commercial basis yet.

38:11 Okay. And on the water feasibility study, I appreciate all the details that you provided in the prepared remarks. What was the amount of water you said that normally is getting injected into the HB system and is the study to see at this, I guess messes with like the oil blanket that would be in solution mining or is this to add to that or I guess, is there anything else you could add to, what would make this a unique solution?

38:43 Well, let me put it this way. We currently inject a naturally occurring salt brine that has constituents in it that we mine potash and we don't have any problems with. Current recycling technology or treatment of produced water technology, just today can treat produced water as long as it's not attempting to desalinate the produced water to a higher standard already than what we're injecting underground with our [indiscernible] for well. 39:20 So, we just need to run a pilot study. I mean, even though we've got the results off the back end of the recycling plan, and we've got the result the chemical analysis of what we're currently injecting in our [indiscernible], in order to meet the regulatory thresholds we have to do a pilot study that shows with a peer review group and a study group of 7 hand-picked people who’ve already been picked, who've already chosen to do it, and peer review that everything that we know to be true, we got and we do it and it's done in a “study fashion” according to the guidelines set forth by the produced water consortium that this concept has been adequately studied. 40:13 And what makes Intrepid different is we already have a closed loop system. So, there is no discharge and we already have monitoring wells that have been in existence for well over a decade and we don't have any leakage from our current solution mines. So, we're extremely well positioned. We just have to check regulatory boxes that were set forth in House Bill 546, the Produced Water Act to put produced water to beneficiary use. So, I hope I answered your question.

40:55 No that – I guess I'm just trying to understand, if it's successful, how much water – how much produced water could this [Multiple Speakers].

41:03 Right now 100,000 barrels a day. Right now, what we inject is about a 100,000 barrels a day. We believe that we could slowly ramp that up in 50,000 barrel increments. We've got, for example, we own the AMAX mine, it's already permitted to inject into it. So, we need to build a pipeline up to it. 41:30 Given the ESG, the clear ESG benefits of this project, there are several oil companies that are interested in partnering on the project because of the ESG benefits. In theory, and I want to say that very stressfully in theory, we could get up to 300,000 barrels a day of injection, and we could actually store that for at least 10 years without having to build any new ponds. 42:05 The benefit is that we would then produce more potash. We’d have to build more ponds, but the potash grade of the brine, by injecting more brine and giving it more residence time, you're going to produce a higher grade of potash brine into your potash ponds that will naturally give you increased potash production with the project all by itself. 42:39 So, there are a lot of moving parts and pieces that we look forward to explaining and articulating and answering questions to – but just getting it to this point has been, we've had to navigate some brand new loss that have been passed, and we've overcome those speed bumps, and right now the produced water consortium is very excited about this project, because it is a closed loop system with existing monitoring wells. 43:12 And most importantly, we're not having to desalinate the brine. We already inject a salt saturated brine. So, most other beneficial use projects that are out there are trying to figure out how to take produced water desalinated, which is the most expensive part and then try to use it in some agricultural fashion. And as you know, it's that desalination part, which can cost anywhere from $1 to $2 a barrel. We actually add salt to our brine. So, we’re in a very unique position.

43:51 And there would be enough produced water in the area around the mine. I guess, I'm just trying to understand, like it sounds, you know $100,000 a day is not a small opportunity, yet this is successful. I guess this is what I'm getting at.

44:05 Well, if you listen to Conoco, Exxon, and a lot of the other oil companies, there is a wall of water. Raymond James has done some great research on this. There is a tremendous amount of produced water looking for home and we're talking multiples and multiples of what we could potentially handle.

44:29 Okay. And just last question, obviously, I'm – obviously I’m a little biased, but I feel like the investment case is still being pretty misunderstood here by the market. Do you have any update on the plans for an eventual Investor Day? I know the timing between COVID and the variants and the Pecos trial, saw like things got pushed back and timing got messed up, is that potentially back on the table at all for this year to try to [Multiple Speakers]?

44:55 Absolutely, you know between COVID, regulatory changes that we had to adapt to, we would love to have an Investor Day to really explain our full cycle water management program. I think with the announcement today of the HB Green Disposal, you now see how we still own significant fresh water rights that still go into fracs. 45:26 We've got significant recycling equipment that we're negotiating to put that recycling equipment to work and now we're talking about taking water off the back of that recycling equipment that we work, and put it to use in produced water injectate to use to mine potash. So, hopefully, that picture is becoming somewhat clear as we describe these various pieces.

45:54 Yes, it is. Great. Appreciate it. Thanks.

46:00 This concludes the question-and-answer session. I would like to turn the conference back over to Bob Jornayvaz for any closing remarks.

46:10 I just want to thank everyone for taking the time to listen to our comments this morning. Thank you for your interest in Intrepid. And we wish everyone a great Tuesday. Thank you very much. Goodbye.

46:25 This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.