Ring Energy, Inc. (REI) Q2 2016 Earnings Report, Transcript and Summary

Greetings and welcome to the Ring Energy 2016 Second Quarter Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode and a brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Tim Rochford, Chairman of the Board of Directors. Thank you. Please go ahead.

Thank you, Brenda, and welcome all listeners to our second quarter and six months 2016 financial and operations conference call for Ring Energy. Once again, my name is Tim Rochford, Chairman of the Board. Joining me on the call this morning is Kelly Hoffman; our CEO; David Fowler, our President; Randy Broaddrick, our CFO; and of course, Danny Wilson, Executive VP in charge of all operations, is along with us this morning as well. Today, we're going to cover the financials and operations for the second quarter and the six months ended June 30, 2016. We are going to review our results and provide some insights as it relates to the progress thus far in the third quarter. And at the conclusion of the review, we'll open it up – we'll turn it back to the operator and open it up for any questions that you may have. So, with that, I think we'll go ahead and turn it over to Randy Broaddrick and ask Randy to give a review the financials. If you would, please, Randy.

Thank you, Tim. Before we begin, I would like to make reference that any forward-looking statements, which may be made during this call, are within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. For a complete explanation, I would refer you to our release issued Monday, August 8. If you do not have a copy of the release, one will be posted on the company website at www.ringenergy.com. For the three months ended June 30, 2016, the company had oil and gas revenues of $7.1 million and a net loss of $15.9 million as compared to revenues of $9 million and net gain of $534,000 in the second quarter of 2015. For the six months ended June 30, 2016, the company had oil and gas revenues of $13.2 million and a net loss of $31.2 million, as compared to revenues of $15 million and a net loss of $441,000 for the six months ended June 30, 2015. The dramatic change in the loss for both the three and six month periods of 2016 was driven primarily by a write-down of our assets based on a ceiling test calculation of $25.5 million for the three-month period and $46.9 million for the six-month period. This additional write-down for the result of changes in the PV-10 value of our reserves from year-end based solely on commodity prices. If prices remain at these levels, or drop further, we could be required to write down additional amounts in the third quarter of 2016 and beyond. Our revenues decreased for both the three and six-month periods when compared to the same periods in 2015 as a result of lower received commodity prices, despite having higher sales volumes in 2016. For the three months ended June 30, 2016, our oil price received was $41.22 per barrel, a decrease of 22% from 2015. And our gas price received was $2.33 per MCF, a 19% decrease from 2015. On a per BOE basis, the price received was $36.51, a decrease of 26% from the 2015 price. For the six months ended June 30, 2016, our oil price received was $34.69 per barrel, a decrease of 29% from 2015. And our gas price received was $2.13 per MCF, a 24% decrease from 2015. On a per BOE basis, the price received was $30.78, a decrease of 34% from the 2015 price. Production costs per BOE for the three months ended June 30, 2016 decreased to $11.31 as compared to $12.15 in 2015. Production costs per BOE for the six months ended June 30, 2016 decreased to $10.94 as compared to $12.66 in 2015. The primary reason behind the decreases per BOE for both the three and six month periods is an increase in sales volumes from 2015. Both production taxes are based on values of oil and gas sold. So, our production tax expense is directly correlated to the commodity prices received. Our production taxes as a percentage of revenues remained relatively flat and should continue to be. Our total depreciation, depletion and amortization or DD&A including accretion of asset retirement obligation per BOE decreased for the three months ended June 30, 2016 to $13.90 per BOE as compared to $18.09 per BOE for the same period in 2015. The six-month period ended June 30, 2016, our total DD&A decreased to $14.48 per BOE as compared to $21.76 for the same period in 2015. Depletion calculated on our oil-and-gas property subject amortization constitutes the bulk of these amounts. For both the three- and six-month periods, the primary reasons for the reduction per BOE is an increase in reserves from the comparative 2015 periods. Our overall general and administrative expense or G&A decreased for the three months ended June 30, 2016 to $9.87 per BOE as compared to $11.26 for the same period in 2015. For the six-month period, our G&A per BOE decreased to $9.66 per BOE in 2016, as compared to $11.72 for the same period in 2015. The primary reason behind the decreases for both the three- and six-month periods is an increase in sales volumes from the comparative 2015 periods. On a diluted basis, the loss per share for the three months ended June 30, 2016, was $0.41. This loss is reduced by approximately $0.41 per share excluding the $25.5 million pre-tax ceiling test write-down and an additional $0.01 per share excluding a $508,000 non-cash charge for share-based compensation which would result actually a gain of $0.01 if you excluded both items. This compares to a $0.02 gain as reported or $0.03 gain per share excluding a $656,000 non-cash charge for share-based compensation in the second quarter of 2015. There was no ceiling test write-down in the second quarter of 2015. For the six-month period ended June 30, 2016, the loss per share was $0.90. This loss is reduced by approximately $0.85 per share excluding the $46.9 million pre-tax ceiling test write-down and an additional $0.02 per share excluding a $1.1 million non-cash charge for share-based compensation for a loss of $0.03 per share excluding both items, as compared to a net loss per share of $0.02 as reported or a gain of $0.02 per share excluding a $1.3 million non-cash charge for share-based compensation during the six months ended June 30, 2015. Again, there was no ceiling test write-down during the six-month period in 2015. As of June 30, 2016, we had a cash balance of approximately $8.3 million and no amounts drawn on our credit facility. In May 2016, the borrowing base on our credit facility was reduced from $100 million to $60 million. This reduction is the result of the commodity price environment that we're currently in. For the three months ended June 30, 2016, we had positive cash flow of approximately $3.1 million or $0.08 per diluted share compared to $4.9 million or $0.18 per diluted share for the same period in 2015. For the six months ended June 30, 2016, we had positive cash flows of approximately $4.4 million or $0.13 per share as compared to $7.7 million or $0.30 per share for the comparative period in 2015. Lower commodity prices are the primary reason for these decreases. It should be noted that the cash flow numbers presented are cash flow from operations adjusted for changes in operating assets and liabilities, which is a non-GAAP measure. Please see our press release regarding financial and operational results issued yesterday for additional information. With that, I will turn it back over to Tim.

All right, Randy. Thank you. Appreciate that. I'm going to ask Kelly to give us an overview on operations for the last three and for the last six months. Kelly?

Thanks, Tim, and thanks, everyone, for joining us on the call today. In the second quarter, we drilled three vertical wells, two were on the Central Basin Platform, one is on the Delaware. And we re-fracked some existing wells in the Central Basin Platform as well. We continued to upgrade the infrastructures on the Platform and the Delaware and continued preparation for the commencement of the drilling of the three horizontal wells, which we'll talk about in a moment, on Central Basin Platform. For the six months, we've drilled four new vertical wells and re-fracked two existing wells and upgraded infrastructure on both assets. So, in the second quarter, our sales resulted production with 194,590 BOEs barrels of oil equivalent, and this is about a 7% increase over the same period in 2015. Our average net daily production was approximately 2,138 barrels of oil equivalent per day, and the average sales price per BOE received in the second quarter was $36.51 as compared to $49.46 in 2015 and that's a 26% decrease. For the six months ended June 30, 2016, our sales as a result of production were 428,760 barrels of oil equivalent. That's a 33% increase over the prior year. Our average net daily production increased approximately 23,056 barrels of oil equivalent per day. And the average sales price was $30.78 for that six months as compared to $46.67 in 2015 and that's 34% decrease. Our six month internal estimate 3P reserves that Proved, Probable and Possible was 40.282 million barrels of oil equivalent and the estimated present value using a 10% discount rate of the future net cash flow before income taxes, PV-10. The 3P oil and gas reserves as of June 30, 2016 was $442.457 million and that's using a NYMEX strip price as of July 1. And as Randy pointed out, let's reiterate this that in April, we received approximately $61 million from the public sale of 11.5 million shares of the company stock. Proceeds were used to pay off the senior debt facility and the latter can be put together at capital expenditure budget. For the remainder of 2016, approximately $23 million. And with that, I'm going to introduce you to Danny Wilson here and ask him to give us the current and future operations update.

All right. Thank you, Kelly. Just as Kelly and Tim have mentioned in the second quarter we did drill three wells. Two of those are San Andres wells on the Central Basin platform that came online at the end of June. We really didn't get to see the results of those until the early third quarter. Both wells came in as expected. They're good producers. One came in a little over 100 barrels a day and the other was about 50 barrels a day which was expected for each of the areas those were in. In addition to that, we did drill one 20 acre infill well on the Cherry Canyon, which we took all the way down to the Brushy Canyon. We did go and use this as a science well for our Brushy potential for later use. We did take several cores throughout the Brushy and the Cherry and we're in the process of fracking that well in the Cherry Canyon today. For the third quarter, we have drilled two Cherry Canyon wells, both of them drilled and had casing set. We are in the process of fracking one of those tomorrow. The other one will be next week. So, those should be coming on line very shortly. In addition to that, we have been diligently been working on building out our infrastructure in the Central Basin platform to support our horizontal San Andres drilling program, which we kicked off last week. As of this morning, on our first well, we are at about 2,000 feet and everything is going well. Things look good. Everything is going according to plan. Once we finish that well, we will move just directly on to the other two wells and drill all of them back to back. Completion on those wells are slated to begin in mid-September. We should start seeing results on those the end of September, early October. As for fourth quarter, we only at this time have one well planned out. And that will be a commitment well to hold acreage in the Central Basin platform. It will be a Clearfork/San Andres well. And we will continue to work on, again, building out our infrastructure to support horizontal program as that moves forward. And with that, I'll turn it back to Kelly.

Tim, go ahead please.

Yeah. Hey, listen, good job, Danny, and just maybe one other thing to point out as we wrap up that fourth quarter, not that we're not going to have plenty to do, we're going to drill that one vertical well. But remember, all of these horizontal wells, the three wells will be coming in online, and we're going to be doing a lot of work in preparation as we start looking at 2017. With that, I'm going to turn it over to David, and ask David to just give us a review. David, kind of share with us what we've been seeing here the last couple of months.

All right. Thank you, Tim. Over the last couple of months, plus or minus, we've not only seen the number of acquisition opportunities expand, but we're pleased to see a good number of those that are in our backyard. Since the downturn and crisis, we saw only really a limited number of deals. But of those limited number of deals, the majority of those were outside our area of interest. And I'd simply say, we've seen probably more quality deals in the last two-plus months than we've seen in the last year-and-a-half, and are hopeful that one or more will lead to something meaningful. That being said, quarter is no guarantee that neither of these will make the grade or will ultimately make it across the finish line. As Randy said earlier, we've got a clean balance sheet. We're well positioned and move quickly and decisively when the right deal comes along. Our evaluation team is reviewing several acquisition opportunities we like now, and we're optimistic that one, maybe more, will end up possibly affecting our company. With that Tim, I'll turn it back to you for closing comments.

Okay, David. Thank you, and thanks, everyone. I'm just going to kind of review real quickly starting with David. We have three key components as I see it that's been accomplished over the last number of months. One, to start with David's comments as it relates to the opportunities that we're seeing, you know folks, listen, we have seen more deals over the last 10 or 12 weeks that fit our program that were within our backyard, if you will, within our fair way than we've seen over the last year and a half. That's exciting. When you look at the capital that we raised last April, it took the company into a zero balance as it relates to a senior credit facility, added surplus capital to launch, what, we're very excited about, and of course, that's the three-well program that we commenced that Danny mentioned last week horizontally. So, as you can see, we're pretty excited about that, and we think there's a lot of exciting things that lie ahead of us. I know there's going to be a lot of Q&A, so I'm just going to turn it back over to Brenda, our operator. And Brenda if you'd be kind enough to open this up for Q&A, we'll go from there.

Certainly. [Operator Instructions] Our first question comes from the line of Neal Dingmann with SunTrust. Please go ahead with your questions.

Morning, guys.

Morning, Neal.

Hey, Kelly. My question is, first, obviously, now you're attacking that first program as you saw it, the horizontal program. Tim, when you and Kelly looked at the program, how much will that change depending on results? I guess, again I know I'm not going to push you to any sort of 2017 guidance or anything like that, but I guess overall, when you're looking at completing these first three horizontals, the thought as far as would you continue in the platform, which you moved over to the Delaware, you definitely have a lot of acreage. I'm just wondering how you would attack it, maybe after these first three wells.

Yeah. Well, that's an excellent question. And I do – by all means, Kelly, if we – Kelly and I and Danny and David have spent a lot of time over the last couple of months focusing just on that and a lot of that reflecting forward, Neal, into 2017. Let me just say this, that right now, if everything goes as we believe it will go, it's realistic that we'll set our sights next year, platform – referencing platform only for about 20 to 30 horizontal wells. There may be a little bit of vertical work, but for the most part, it will be the horizontal side of it. As it relates to Delaware, you heard Danny mentioned a little while ago that we drilled the one well all the way to the Brushy, particularly for the science, although we're completing in the Cherry. Well, there's risk behind that, and maybe I just turn that to Kelly. And Kelly, give us your thoughts on this as well.

Well, we have – I've talked so much about the Central Basin Platform. We certainly don't want to give the impression that, by any means, that our [indiscernible] project, which is the Delaware [indiscernible] in an area that we have is secondary in any stretch of imagination. It was just one that was down the slate, if you will. It was the second thing for us to do. So, we had a [indiscernible] well that's on the north end of our property, so to speak, and then we have a well ourselves on the south, and we needed a data point in the middle. And this gave us a great opportunity to do two things. By drilling well in the middle, we will get the data point along with some very meaningful course which we saw a lot of great things, exactly what we're hoping for and more. But at the same time, it will allow us to prove up even further that the idea of 20 space – 20-acre down-spacing on the Cherry Canyon. So, we're very sort of killing two birds with one stone, and we were excited to see the results that we got out of that, and then we're obviously going to be seeing some added production from that Cherry Canyon area. So, that was our thought there.

Got it. And then just one last one here quick, Kelly. Just on M&A. It seems like a lot of guys are continuing to add some Delaware acreage around you all. Is there opportunities – I mean, you always talk about bolt-ons that you and Tim are seeing. Besides that, is there opportunities to work with some of these players that might have to hold acreage, and you could come in and work some sort of deal given you all are focusing on some more of the shallower zones?

Yeah. I think there's actually two areas of thinking there, and what we're looking at right now is, obviously one of the things you just pointed out was that working with majors to help protect deeper production [indiscernible] from shallower concepts there that could work out with them. And at the same time, there's a lot of stuff that we've identified sort of running from an east, west standpoint of where were located, and even further south of us that we think is going to have some shallower opportunities in the Cherry and Brushy Canyon that we want to try to take advantage of. This is an area that has a very broad footprint. And it fits in our area of interest, and of course we're going to continue to try to add on to what we've got as we can. And we're seeing a lot more things, and there's a lot more to talk about.

Great. Thanks, Kelly.

You bet.

Our next question comes from the line of John Aschenbeck with Seaport. Please go ahead with your questions.

Hey. Good morning. Thanks for taking my question. I have a follow-up on the acquisition targets that David and Tim both mentioned. I was wondering if those opportunities are biased more towards the Central Basin platform or other areas in the Permian.

David, go ahead and take that.

Yeah. Be glad to. John, right now the majority of these are on the platform. And it's, again, it's interesting to see the number of deals that we see recently come in, and so, it's been keeping us pretty busy. But we really are – it's nice to be able to have some good projects to work on.

Got it. And would it be safe to assume those are smaller corporate acquisitions of smaller private operators in that area?

More private. Yes. And let me also add, it's not that we're discarding the Delaware by any means. We'll continue to keep our eyes and ears open in that area as well. It's just that it just seems like in the last couple of months, the ones that we see there, they've been more on the platform.

Okay. Good deal. And then, a follow-up on the Delaware. Was curious to get an idea of timing on a potential Brushy Canyon horizontal test if any.

Yeah. Let me address that to begin with and the other guys could jump in if they like. There's no question, John that 2017 is going to bring the Brushy Canyon horizontal. I can't tell if it's going to be the first quarter or first half for that matter. But one of the reasons, again, as we mentioned just a little while ago, is that that well that we drilled through the Brushy was for the purpose of running cores and get as much science and get as much information we can, so that will help us determine when we're going to kick that off. I can share with you, on top of what Danny has already said, is that we're very encouraged from what we've seen. So, with that, I think it's safe to say that you can all expect to see Brushy Canyon activity next year.

Okay. Good deal. And then, circle back on M&A, one follow-up here if I could. Just looking at your latest slide deck, you layout about 18,000 net acres currently in the Central Basin platform, and talking about those potential acquisition targets. What do you think the opportunity set is there in the Central Basin platform? Could you – is it large enough to potentially double that number or maybe just any way you could quantify that.

Yeah. David, Kelly [indiscernible]. Yeah. So, David or Kelly, you guys can respond to that. But that the number is substantially higher than what we already have. But go ahead guys.

Yeah. There's no question about it. You're talking sort of about two different ideas. David's talking about acquisitions mostly and he's working at ideas that have production, as well as acreage. But just from a pure acreage standpoint, we've grown in the past three-and-a-half years in probably one of the busiest parts of the country especially the busiest parts of Central Basin Platform from zero to 30,000-plus acreage. So, we have a [indiscernible] for doing that type of thing. We're very confident that we can take a current net acreage position that we have right now and increase it substantially. Could we double it? I think the potential is there, no doubt about it. The question is, how far north do we want to go. How far south do we want to go. But really looking, remember we consider anything two to two-and-a-half hours or so away from us, which gives us considerably far north and south outside the basin and certainly as a perimeter and as our background, and our playground and where we can actually take advantage of that. So, yes, I think we're very confident that we can increase the size of acreage. Could we double it? Remains to be seen, but we'll continue to work forward on it.

Got it. Very helpful. Thanks for the time, guys.

You bet, John. Thank you.

Our next questions come from the line of Richard Tullis with Capital One. Please proceed with your question.

Hey. Thanks. Good morning, everyone. Looking at the second half of the year, Kelly or Tim, what do you think the production growth range could be for the, say, the third and fourth quarters. You brought three wells, development wells on at the very end of the second quarter. You've already drilled and get ready to complete three more.

Well, Richard, as you know, we don't give a formal guidance. You'll also note from what Danny reviewed earlier and what Kelly touched on is that the activity that took place in the second quarter didn't really contribute to the production profile or model that it certainly is going to contribute in the third quarter. So, we feel that the three wells that were drilled in the second quarter are going to contribute during the third quarter as it relates to maintaining our production level and, in all probability, a boost that. So, we're anticipating second quarter production plus, and I think we're very comfortable saying plus, plus. As it relates to fourth quarter, as Danny mentioned earlier, we're hoping that we're going to start seeing production as early as October, whether that at the end of October, it remains to be seen. But that should contribute from those three horizontal wells. So, I think we're going to see pluses on third and fourth quarter. I believe that once we see the results probably by the time that we're having our operational update for the third quarter, it will come up sometime in mid-October, we're going to be standing on a very strong foundation as it relates to looking forward and what we can expect.

All right. That's helpful, Tim. And going back to the horizontal wells being spotted at this time, it sounds like you'll be completing those wells and maybe bringing them online in October. When do you expect that you would provide, say, that first update on results for those wells?

Well, we'll certainly by mid-October along with our third quarter operational update. The question is whether or not we'll – I think really it goes down to whether or not we will come out with some information in advance of that, and we'll just have to play that by ear. But it's likely that we will because we know that there are a lot of folks out there that are anxious to hear. So, whether or not it ends up being mid-October along with the report on the rest of the operations for the quarter and for the year or whether we have an isolated time to – in advance of that to put some information out still remains to be seen.

Okay. And then just lastly, done a good job of bringing the LOE per barrel down. I guess you're averaging less than $11 a barrel in the first half. What's a good run rate, say, for the second half of the year?

Yeah. Danny?

I think we've been concentrating very hard on that, here, especially these last couple of months. I think you can expect to see the same. I think we'll still stay in about that same range.

Okay. Well, that's all for me. Thank you.

Thanks, Richard.

Our next question comes from the line of Joel Musante with Euro Pacific Capital. Please go ahead with your questions.

Good morning. I just had a couple of questions on the Brushy Canyon. The neighboring operators are – do you have any wells drilled by neighboring operators in – around your acreage?

Concho.

And what kind of well results are you seeing from Concho?

The results were seeing up there is – it looks like their [indiscernible] are going to be in the 300,000 to 400,000 BOE range.

Okay. And is that like a one mile lateral?

That was a one mile lateral, about three miles north of our existing acreage.

Okay. All right. And how many horizontal well locations do you think you have on your acreage?

We feel like we probably got somewhere between 80 to 100, somewhere in that range. Just kind of depending on the length of the laterals, we're looking anywhere from 1 to 1.5 miles.

Okay. Great. And then, just on the vertical program this year, look like you changed that up a little bit, and you're drilling more Cherry Canyon wells. Was there anything to that?

What we were trying to do there, Joel, was we were trying to – two things, obviously, we've talked about. One of them was testing to see if the 20 acre infill, what it would like in the Cherry Canyon, because if that appears to be – appears to be working for us, that opens up a tremendous amount of drilling that we can move forward with a very low risk. And the other was obviously to test the Brushy with the cores to see what that would look like.

Okay. Well, that's all I have. Thanks. Appreciate it.

You're welcome, Joel. Let me just add one comment to that, Joel, if I may. With reference to your questions pertaining to the amount of locations we potentially have, you are making reference horizontally, et cetera, to Delaware. You know that we're specifically talking about the Brushy there. So, the Cherry has been more of a vertical, that couldn't possibly be something we consider at some point in time. But when you make reference to horizontal activity, we're thinking Brushy for the moment.

Right. Right. That's what I meant.

Yeah. Very good. Thank you.

Right.

Our next question comes from the line of John White with ROTH Capital. Please proceed with your questions.

Good morning, guys, and thank you. So, you're going to drill the horizontal San Andres. You're going to drill all three wells to TD back to back. Is that correct?

Yeah. Correct.

I beg your pardon.

Yes.

Okay. And then, are you going to complete one fracking, complete one and observe the results and then proceed to frac the second well?

No, we're not. We're playing on fracking those back-to-back, all three.

Okay. And you want to give us a rationale for that?

First of all, cost is going to be in our favor to gain those services back-to-back, plus timing and scheduling is important to us, too.

Okay. Well, thanks a lot.

Thank you.

Thanks, John.

The next questions come from the line of Jason Wangler with Wunderlich Securities. Please proceed with your questions.

Morning, guys. Just kind of have one maybe for both basins, though. As you look at the infrastructure side, I know that the vertical side has been fine. But as you start looking more at the horizontal side of it, I think you've mentioned before that the Central Basin and kind of a little better infrastructure to start with. But could you maybe just comment how you see that playing out, assuming it has some success both this year and next year in both basins on the horizontal front, kind of what – where we should be looking at as far as what we might need with that success?

Yeah. Good question. Danny?

As far as infrastructure goes, we're actually in pretty good shape. We are building out. We have excess water disposal capacity in our Andrews County, Gaines County areas. So, that is one nice advantage that we have right now that we're going to have – not going to have to deal with too much. There may be a need for two or three additional saltwater disposal wells, but if we do that, one thing we've done is build these out so that they're all tied together. We have a very extensive disposal system. We can move the water around different places. One thing we are doing differently in the horizontal program is we are building our own pipeline, oil pipeline. We've reached an agreement with Centurion [indiscernible] Oxy up in that area. We're actually building an oil storage facility directly next to facility they currently have in place. We're building a – just a couple of hundred foot long pipeline between two facilities, so that we can directly fill in to their pipeline which should give us a tremendous cost advantage on our oil moving forward due to the fact we won't be tracking that. We are doing that ourselves. We talked to several third party midstream people about it, and we came to the conclusion we could do it far less expensively and quicker to just go in and do it ourselves, and that way we don't have to assure a midstream company that they're getting their profit margin out of our oil. And beyond that, the electrical grids in good play, in good state. Overall, I think we're sitting very well infrastructure-wise.

Jason, I might add on top of what Danny just said as it relates to the pipeline, one of the advantages is for the oil that we put through that pipeline, every winter out here in West Texas can be pretty brutal from time to time. We get a lot of freezing weather out here, a lot of snow at times. In the last couple of three or four years, it's been difficult for a week here and there with the heavy freezes. These pipelines will alleviate some of the issue for moving oil. So, we won't to be able to progress with getting trucks in and even getting them on the highway. For the barrels that go into the pipeline, obviously, we'll continue with those sales. So that's going to help us.

That's great. And just maybe if I could just follow up to that. Thanks for the color. Just the timing. Are those going to be up and running as you get these first couple horizontal wells on or is that kind of 2017 thing? Just curious on that because that sounds pretty incremental.

No. No. Those will be up and running. We expect to have all of these additional work completed between now and year-end. So, it won't necessarily exactly on time with wells that are being completed, but it will be shortly thereafter.

Well, that's great. Thank you, again. I'll turn it back.

Thank you. Our next question comes from the line of Nick Copeman with GLG. Please go ahead with your questions.

Hey, guys. I think my questions have all been asked. Thank you. From – okay. Cheers.

Thank you.

Okay. It seems that we have no further questions at this time.

Okay, operator. Well, we appreciate your time and to all listeners, we continue to let you know – want to let you know that please continue to follow because things are going to get exciting and we appreciate the support. Thanks for taking the time this morning. We know you have busy days. And with that, operator, we'll conclude the call.

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