Good day, ladies and gentlemen, and welcome to the SM Energy Company's 2015 Outlook and Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, today's conference is being recorded. I would now like to introduce your host for today's conference, Brent Collins, Senior Director of Planning and Investor Relations. Sir, you may begin

Thank you, Amanda. Good morning, all, joining us by phone and online for SM Energy Company's 2015 outlook and fourth quarter and year end 2014 earnings conference call and operations update. Before we start, I'd like to advise you that we will be making forward-looking statements during this call about our plans, expectations, pending divestitures and assumptions regarding our future performance. These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements. For a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday afternoon, the presentation posted to our website for this call, and the Risk Factors section of our Form 10-K that was filed earlier this morning. We'll also discuss certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of those measures to the most directly comparable GAAP measures and other information about these non-GAAP metrics are described in our earnings press release from yesterday. The company officials on the call this morning are Jay Ottoson, President and Chief Executive Officer; and Wade Pursell, Executive Vice President and Chief Financial Officer. I'll now turn the call over to Jay. Javan D. Ottoson - President, Chief Executive Officer & Director: Thanks, Brent. Good morning, everyone. Thanks so much for your interest in the company. We did have very strong fourth quarter and full year 2014 results. We've recognized, however, that most of the interest we really have from Investors Day is about how we're responding to the current down cycle in oil prices. We have a number of slides in our deck this morning with useful information on them. But we're not going to run through all of them in order to…

Thank you. Our first question comes from Mike Kelly with Global Hunter Securities. Your line is open.

Thanks. Good morning. Jay,... Javan D. Ottoson - President, Chief Executive Officer & Director: Hi, Mike. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Hi, Mike.

Hey, guys. So, the well results in the Eagle Ford and the Eastern North, real impressive on the 1,000 lateral foot basis. Just seeing when you guys will have enough confidence to maybe take type curves up in that region? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, Mike, I don't know exactly when we'll push them up, and a few more wells I think. Obviously we're outperforming the type curve in most of those areas and that's certainly the position we want to be in for the type curves. When we show you economics, we want to be conservative about those.

Okay. Great. And as it pertains to maybe having multiple laterals possible in the Eagle Ford here, maybe can you expand upon that, I mean, you got the 300 locations in the East, 500 in the North, what could that ultimately go to in your eyes if you're successful on this front? Javan D. Ottoson - President, Chief Executive Officer & Director: We have almost 300 feet of pay in some big sections of our acreage there. And so, if you start to think about how many stacks stagger, and that's the way we refer to it, as stack and stagger type program, there's areas there we could potentially triple our well count over time and that's certainly our target, is to aim at that. We'll be running some large pilot area programs where we're going to drill things at closer spacing and stack and stagger them in this year, so that we can see how they perform when they're producing next to each other. We have some data that indicates that wells in other landing zones will perform okay, but we don't have enough data yet to be able to say that we can really push them together in that stack/stagger thing, so that's a 2015 objective.

Great. I'm going to sneak one more in, Wade, you made the comment that debt-to-EBITDA by the end of 2016 shouldn't look too much – too dissimilar to what you're going to have end of 2015. I imagine you can only get there by having some sort of assumption of what production growth will look like in 2016, and any color from you guys on 2016's program, as it stands today, I think would be well received too. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Yeah. Thanks, Mike. That's a good question. I don't think we're prepared to give a lot of color or a lot of details with respect to what we're planning for 2016. I just thought it would be useful to know that – obviously we're running several scenarios and one of the biggest things of the 2015 business plan was to see what the impact on 2016 was. So it's comforting to me that under various scenarios we could end up with leverage metrics very similar at the end of 2016, at the end of 2015, and that's a very similar program, slightly higher program, but nothing materially different and really nothing specific we can say more than that right now.

All right, fair enough. Best of luck, guys. Great quarter. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Thanks. Javan D. Ottoson - President, Chief Executive Officer & Director: Thanks, Mike.

Our next question comes from Jeb Bachmann with Howard Weil. Your line is open.

Good morning, guys. Javan D. Ottoson - President, Chief Executive Officer & Director: Hey, good morning, Jeb.

Just some few questions, Jay, on the completion backlog, looking at the 45% to 50% you had at year end 2014 and then kind of looking – you're going to add another 45% or so throughout this year, kind of where that breakdown is between Eagle Ford and Bakken and maybe some in the PRB? Javan D. Ottoson - President, Chief Executive Officer & Director: Most of that backlog we're building is going to be in the Bakken, and a lot of that is because we're ramping down activity. We had five rigs running coming into January, and as I said, we're drilling these wells in less than two weeks. So, you can pile up quite a few opportunities for completion pretty quickly. So, we're drilling a number of wells there and basically putting them in the bin to be completed later, that's the majority of the build. We'll complete most of our Eagle Ford wells within a few months of drilling, really on the Powder side, not building a big backlog there.

Okay. Great. And then, just kind of looking at the bigger picture with the crude price, at what level do you guys need to see they get back to where you start burning off some of that backlog? Javan D. Ottoson - President, Chief Executive Officer & Director: That's – we haven't really come up with a number like that, yet. Our view is that, when we get into 2016, we're going to be back to growing our business. So, we'll have a number of opportunities to complete wells at lower costs. I would say around here, we don't talk a lot about needing price to recover, what we're really focused on is getting costs down. And when we get costs to where they need to be, we can make good returns and we can grow this company. and that's what we're all about.

Okay. Great. Thanks, Jay.

Our next question comes from Welles Fitzpatrick with Johnson Rice. Your line is open. Welles W. Fitzpatrick - Johnson Rice & Co. LLC: Hey, good morning. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Hi, Welles. Javan D. Ottoson - President, Chief Executive Officer & Director: Good morning. Welles W. Fitzpatrick - Johnson Rice & Co. LLC: You guys talked about being able to hold together the PRB position with the other budget, can you talk a little bit about how we should think about East Texas or Permian acreage as we go through the year and how much you might lose there, how much you have to spend to save it? Javan D. Ottoson - President, Chief Executive Officer & Director: Yeah. Let me start with the Powder, and just say that our guide, the reason we can hold all that acreage is because we form three big federal units, and we can hold a lot of acreage now there with very little drilling. So I give tons of credit to our land staff up in the Rockies for doing that and a lot of great work to get it done. In East Texas, right now, we're really doing some long-term production test on wells. We got our pipelines in place, and we're producing the wells. Our look at that is that, with the drilling we've done, we'll be able to hold, the acreage that we really think has value for quite some time without drilling – without spending a lot more money. And then in the Permian, the acreage we have, that we've really got that we see is significantly economic right now, essentially all HBP. And it just doesn't make sense to drill HBP to acreage in the Permian right now with cost falling as fast as they are. Welles W. Fitzpatrick - Johnson Rice & Co. LLC: Okay, perfect. And then, thanks for the updates on the well costs in the Bakken and Eagle Ford, and the PRB is still looking in that kind of $15 million range? Javan D. Ottoson - President, Chief Executive Officer & Director: No. We're below that. We're well below that at this point. But we have more things to do and really what we're focused on there is completion design. How are we optimizing. We've pumped some white sand, completions up there, which are significantly less expensive. And frankly, we just made, I think the best Shannon well ever drilled in that basin, and really excited about that. So there is significant opportunity there. We are slowing down relative to our other areas, it isn't – it doesn't quite meet the standard we need to make to keep drilling it in this environment, but we're going to hold that acreage, it's going to be a valuable position over time. Welles W. Fitzpatrick - Johnson Rice & Co. LLC: That's perfect. Thanks so much.

Our next question comes from Michael Hall with Heikkinen Energy Advisors. Your line is open.

Thanks. Good morning and congrats on the nice update. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Good morning.

I guess, one thing I just wanted to get a little more color around, is the implied efficiency improvement within the 2015 program versus the 2014 program. If we kind of look at how much you've spent to add production last year versus this year is a pretty dramatic improvement implied in the 2015 program. I understand obviously costs are coming down, but just kind of curious on what other additional type of efficiency improvements you guys are pushing through the system and whatever sort of color you can provide around that. Any type of – ? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, certainly we're ramping our exploration program down substantially.

Sure. Javan D. Ottoson - President, Chief Executive Officer & Director: And as you might expect we typically risk volumes associated with exploration much more highly than we do volumes associated with developments. So the improvements you're seeing, A, we're ramping on exploration, B, we're cutting – we're reducing costs and we're seeing costs come down faster than we expected almost everywhere across the whole portfolio. And certainly we're drilling the best parts of our portfolio when you look at those type curves and we talked about this earlier, we're clearly going to the portions of the area where we think we can do above type curve wells and all those things combined in just generate higher capital efficiencies.

Yeah, okay. And that's helpful. That makes sense. And then, on the Divide versus McKenzie County well costs. Can you just remind me what the major differences are there? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, there's a big difference in depth. And a lot shallower wells up in Divide County. And that's why those wells are half literally half the cost now well maybe not quite half now, but they will be in that $4 million range we think by year end. I think the total depth is about 8,500 feet in Divide County. So you know. considerably shallower than the others. And I think it's a great point, because I think this is what people have missed about Divide County. People consistently underestimate these wells, part of that is because a lot of our competitor show map, showing Divide County is being – all of Divide County is being kind of the same and kind of Tier 3, just not true, okay. Our portion of Divide County has significant shale thickness, has significant maturity and we're making great wells and we make them for little more than half of the cost of a typical McKenzie County, Bakken/Three Forks well. And so the economics here are strong and we probably – we're a little reluctant to talk about that too early on, because we were actively buying acreage in the area, but this is a great development and we have a ton of acreage with a lot of upside in it.

Okay that's helpful. Thanks and then I guess last on my end. Just coming back to the backlog a little bit maybe just any additional insight you can provide into how are you guys planning to pull that down, I guess number one, is there some sort of baseline typical backlog per rig that we ought to keep in mind, as we think about modeling that getting drawn down in 2016 and it should be biased, our thinking towards drawing that down first as opposed to ramping rigs back up, just there were additional color you can provide that will be great? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, clearly, what we're doing is we're setting ourselves up here to be able to do some to take advantage of completion cost reductions and as soon as we see those cost at a point where we can look forward to say, hey fabulous returns on these and we'll pick back up, so I think generally we would start completing wells before we'd necessarily start picking up rig count again.

Okay. Javan D. Ottoson - President, Chief Executive Officer & Director: Part of what this gives us and lot of this is in the Bakken again, because again we drilled these wells really quickly. What it really gives us is a ton of flexibility as we look at how things play out into 2016. And so, I think it's a really positive thing that we're basically able to keep production pretty flattish this year and still build the backlog. I think that speaks to the strength of our underlying inventory that we're – the wells that we are completing.

And sorry, just one last, if I can. How long it will take roughly on average to drill the Eagle Ford wells these days? Javan D. Ottoson - President, Chief Executive Officer & Director: Ah, boy. 10 days.

Okay. Javan D. Ottoson - President, Chief Executive Officer & Director: I don't want to oversimplify it, because the depths are a little different from one side to the next, but we've drilled some of these wells as low as 9.6 days, and most of them in the southern areas are probably more like 15-day to 16-day wells, and the longer laterals obviously take a little longer than that. Typically, our lateral lengths are going to average between 6,000 feet and 8,000 feet during this next year.

Great. That's very helpful, and congrats. Thanks, guys. Javan D. Ottoson - President, Chief Executive Officer & Director: Thank you. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Thanks.

Our next question comes from David Tameron with Wells Fargo. Your line is open.

Hey, good morning. I would echo, congrats on the nice update. Javan D. Ottoson - President, Chief Executive Officer & Director: Thank you.

And I'm just starting to think about 2016. A lot of people, a lot of your competitors I guess seem to be developing a capital budget for 2015 that allows them to ramp going into 2016, and I know you guys have shown growth this year where a lot of those players aren't, but can you just talk about how you think about – I mean, so I think about the completion backlog being the toggle and assuming everything in that happens, happens and we're down 20% and that will provide that ramp going into 2016 or how should I think about, I'm just thinking about the 16 rigs to 6 rigs and then ramping back up? I know it was easier to add than takeoff, but I was trying to think about how you toggle that in backend? Javan D. Ottoson - President, Chief Executive Officer & Director: Yeah. David, all those things are come into play, right. We're building the backlogs, so we have an opportunity to go in and just start completing wells, really whenever the time comes and we can be very flexible about doing the starts. I think it's important when you think about everybody's 2015 plans and certainly ours, this is really just a snapshot in time of how we see this playing out and we can be very flexible in the back half of 2015, give you a specific example. So we show in drop in Bakken rigs all year long. Well, if things pickup in the back half, we don't have to drop those rigs. We can keep right on driving through that and just start completing wells. So there's a lot of opportunity here for flexibility and getting back to a steeper growth ramp. We've mentioned it as really important. Our focus in on debt adjusted per share growth. Well, we want to get back to as quickly as we possibly can is growing EBITDAX faster than we're growing debt and that is exactly what we're targeting in 2016. We're going to build a program that gets us to debt adjusted per share growth in all the key metrics. And I think one of the quickest ways to do that obviously is to complete that backlog of wells and then start taking that rig count as the opportunities present themselves.

Okay. Now, that's helpful. How do you guys think about potential acquisitions, I mean, obviously you have the balance sheet? I mean, should we look for you to, I mean, obviously everybody wants to do bolt-on to the right price, but how do you think about that over the next – or how should we think about that over the next three months to six months? Javan D. Ottoson - President, Chief Executive Officer & Director: Typically, we're interested in assets that complement our existing footprint in that, we think have unrecognized value or inventory in them. We're seeing – we see a lot of deals, but right now, you don't see a lot that don't have some kind of hair on them, but it actually is a really high bar for an acquisition to get into our portfolio. The best opportunity we have right now, I think and probably the easiest way to answer is that, if you look at the inventory in our existing assets, these are things we already own. There are low cost opportunities for us and that we're extremely focused on.

Okay. And then last question, what – Jay, what kind of – what's your take on – what does the recovery look like, I know it's a million dollar question, but does 65 become the new normal type price? Can you just talk about how you think maybe not SM's view, but and you guys gave your plan this morning, but just think about how you're thinking about the back half for 2015 and into 2016, what the landscape looks like as far as the pricing environment? Javan D. Ottoson - President, Chief Executive Officer & Director: David, I think we mentioned earlier, I don't know what the price is going to be, what I can tell you is that we've been outperforming our peers on a lot of key metrics over the last couple of years because our assets are high quality and they're getting better all the time. As costs fall, we're going to be extremely competitive. And that's the focus, we're not sitting around here thinking about what we do when prices go up. What we're doing is focusing on driving costs and outperforming our peers on those kind of competitive metrics. So, price is going to go where it goes and we're going to continue to focus on having the kind of assets they can outperform our peers.

Okay. I have already kind of answered my question, so I appreciate the other color. Thanks.

Our next question comes from Scott Hanold with RBC Capital Markets. Your line is open.

Thanks. Good morning. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Good morning. Javan D. Ottoson - President, Chief Executive Officer & Director: Good morning, Scott.

Hey. Jay, on the stack potential in the Eagle Ford, can you give us a sense for some more finance or into the guidance more of a layman's terms. In terms of the geology in the upper and lower part of the Eagle Ford compared to what you were drilling before. How – what kind of compares and what you all expect at this point, I know it's really early. But what are your expectations? Javan D. Ottoson - President, Chief Executive Officer & Director: Sure. I want to go back just a second and you forgive me for giving a somewhat long answer here. But I think what we and many other people have found in a lot of these shale plays is that there is a lot more vertical heterogeneity in these reservoirs than we originally thought. And in fact, there is a number of different facies within the Eagle Ford shale especially in this thick section that we didn't really account for in our early work. We kind of thought well we'll put a completion sort of in the middle of this thing or below the middle and we'll get it all. And what we found through both core work and modeling is that, that doesn't necessarily work that way. These fracs may – you may frac up into the Upper Eagle Ford, but you may not keep it open. And then the fact there is other facies that in which you can make good completions. So that the areas you're draining vertically are smaller than we thought, which probably tells you, you're getting higher recoveries than you actually thought in the facies that you were actually completed in. So what it opens up for all of us and you've seen is not only from us and but from others is this opportunity then to complete wells across the vertical section of these reservoirs and potentially push them considerably closer together, because they may not communicate in a vertical sense. So that's where the real opportunity's at. And I will tell you, we don't just see this in the Eagle Ford. We've seen it in these thick sections in the Permian as well. We've done some specific modeling there where we had some core work and learning a lot across our whole portfolio on this issue. I think it just speaks to the fact that the Eagle Ford in particular is an enormous resource. The benefits of that should accrue more to people with thicker pay and we have some of the very thickest pay in the trend on our acreage.

Okay. I mean, that certainly is helpful. And maybe if I can push a little bit more, is there, like when you look at the upper and lower sections and you did say, it does look a little bit more consistent you thought. Is there any kind of variation between the upper and lower section from a geological perspective? Javan D. Ottoson - President, Chief Executive Officer & Director: There is I believe nine different facies, we've identified across that Eagle Ford, like that 300 foot section and there are portions of that in the uppers and lowers that look very similar. I mean typically, we used to think that the upper was not sourced and the bottom was and the upper was maybe storage. There is some good facies, good-looking facies in the upper to be completed in, it was just our assumption early on that we were probably completing that whole thing when we completed a frac well in there. And what we found is that we don't believe that to be the case and we're not the only people who think that. So I think there is a number of different facies that we can look at in which we can put wells that potentially don't talk to each other at closer spacing than we originally thought. That is the test we need to run to really be definitive, is to run a significant pilot which we're building, we'll be building in 2015, where we really stack and stagger some wells and complete all of them at the same time, so we can see how they talk to each other. Until we get that data, it's not going to be a definitive test, but we're really encouraged about what we've seen so far just in terms of landing wells in kind of different – in different facies.

Okay. And so, which part of your Eagle Ford acreage are you going to do this pilot in, and when would you expect to have results, should we expect some time by the end of the year or is that still too soon? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, we're really focused on that western area, where – the western area, like the north area, where we had a lot of thickness and we're doing one of – we'll be doing a pretty good size pilot there in 2015. And then we're also testing some uppers in the Eastern section obviously, because it's a terrific area for us. I think we were relatively conservative about the way we initially spaced those wells. So we have that opportunity to put in some uppers there. So those tests will be this year. I don't expect – well, I don't want to be negative. We could have results fairly early in 2015, I think on some wells, some one-off kind of wells that we put in various facies, but we won't have significant pilot results probably till year end or so.

Understood. Thanks a lot, guys.

Our next question comes from Subash Chandra with Guggenheim. Your line is open.

Yeah. Thanks. So I was hoping you can help me think about a number from the K, that I really have not looked at before. But it's part of – and when you talk about the number of wells discussion, I guess what's in there is about 130 net wells, that as of I think the Feb date, were still in the completion process or about to be completed. So – which is considerably more I guess than the prior year's 10-K. So when I think about I guess that number being above a trend line or a year ago, and that gets worked through. So you get – so you may not get the benefit of that heading into 2016, but then you do get the benefit of the completions, the deferred completions as you talk about throughout the course of the year. So, I guess a net sum of that is what I'm trying to think of is, do we end up in the same place that where you have more deferrals, but less momentum from the 2015 carryovers versus the current period where you got a big momentum from the 2014 carryovers, but fewer ducts? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, that's quite a question...

Sorry about that. Javan D. Ottoson - President, Chief Executive Officer & Director: Yeah. And I understand, it's a modeling question. Let me make one comment, I think maybe it's helpful. I think everybody knows that we were – we underperformed a little of our expectations in the third quarter last year, because we had a lot of wells shut in, waiting on completion or associated with SIMOPS. In the fourth quarter, a lot of those wells came on and we had very little simultaneous operations downtime in the fourth quarter, so we outperformed really well in the fourth quarter, which carries us well into 2015 with some really outstanding performance. I think we show in our data there how many wells we think we're carrying in and how many wells we think we're carrying out. So that's – our model's based on that. I guess for more detailed modeling questions, I'll ask you to follow-up with Brent and James later on, because I'm not sure I can completely follow the question you were asking?

Yeah. No, I will Jay, and I think it goes back to Dave's question earlier on, I'm thinking about 2016 as being a function of maybe a number of things – base depletion, ducts, but also possibly a carryover momentum from the prior year. So that piece of it is something among operators, I was trying to figure out. And then as far as the Northern Eagle Ford, in your best guess right now, you still think I guess the entirety of your new completion techniques will apply, but practically speaking, what portion of it do you think is – would be effectively economic at a 65, 350 deck that you've run? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, let me go back to your question on carrying momentum. And I think no question, when we think about 2016, what we're thinking is that we'll come into 2016, because that we've ramped down and we'll be ramping throughout 2016. So, the back half of 2016, we're growing. We think we can be growing. And that's – I think that relates to somewhat to your momentum question. On the – I'll talk specifically about the north area in the Eagle Ford, and we think a lot of this acreage is going drill out. We have a type curve there, that's an average for the whole area. It's very – you start to look at, getting our costs down and the strip and where price is going to go over the next few years. And we think a lot of this is economic. We've already spud a 12 well pilot there in the North District to test the stack and stagger idea. So, I think there is an enormous amount of potential in that North area for a lot of oily wells. And we're not discounting any of it at this point. I think the type curve we present is a very reasonable type curve and all the evidence we have so far is that the Western portions of this acreage are good.

Okay. And the final one from me, and I apologize if I missed it in the release, but do you have a commodity mix for 2015 production guidance? Javan D. Ottoson - President, Chief Executive Officer & Director: Yes, we do, and essentially the same as 2014. A. Wade Pursell - Chief Financial Officer & Executive Vice President: It's not in the release, it's in the deck. Javan D. Ottoson - President, Chief Executive Officer & Director: It's in the deck. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Slide 12. Javan D. Ottoson - President, Chief Executive Officer & Director: Slide 12. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Subash, shows you the mix and it's essentially the same. Javan D. Ottoson - President, Chief Executive Officer & Director: Yeah, I think.

Okay. Javan D. Ottoson - President, Chief Executive Officer & Director: Oil is exactly the same percentage of production. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Right. And Subash, just wait, the other comment I'll make on the – on your question on the ducts as you call them, I mean slide 10 is pretty clear that we're showing an increase from year-end 2014, a 45% to 95% by the year-end 2015. And as Jay said, give Brent and James a call, and they'll help you reconcile those numbers – to the numbers you're looking at in the 10-K.

Sure. Absolutely. And a final one. The non-op Eagle Ford, my suspect, maybe that numbers usually in there, if I missed that, I apologize again or maybe it was because, Anadarko provides that after they update next week or do you have a sense on timing of when you might have the number? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, we put a capital number in there based on our best guess of what their activity level is going to be. And we have gotten some feedback from them later last year that they were going to be shifting some of their activity to areas in which we have somewhat lower working interest as well. And so, what we did is, we assumed that they're going to cut their activity about in half, and that we're going to be going to lower working interest areas. So, we have a budget in there for it. They will be releasing here in a few weeks and certainly we're as anxious as anybody to see what they actually say about their activity level.

Okay. And your fourth quarter production from Anadarko?

This is Brent. It grew 23% in the fourth quarter.

Okay.

APCs (42:17) production, so it's about right under 3 million barrels equivalent.

Great. Thank you all very much. Javan D. Ottoson - President, Chief Executive Officer & Director: Yep.

Our next question comes from Pearce Hammond with Simmons & Company. Your line is open. Pearce W. Hammond - Simmons & Co. International: Good morning, and thanks for taking my questions. Javan D. Ottoson - President, Chief Executive Officer & Director: You bet. Pearce W. Hammond - Simmons & Co. International: Hey, Jay, I'd love to get your big picture thoughts on the Permian and in SM and the Permian. The reason I ask you is, I know you've got some good acreage there at Sweetie Peck, I know it's small, but seems like you generated some very good rates of return there, and the well count based on slide number nine, to me the rig count based on slide number nine, it looks like you drop that Permian rig in May. So, just kind of big picture thoughts, how it fits within your overall portfolio and that acreage there at Sweetie Peck? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, I think scale in the Permian really needs to be measured by well count, not by acreage. We have a very large economic well count there, most of – essentially all of which at this point is held by production. And when well costs are dropping this fast on HBP acreage, it just doesn't make sense to us to continue a program and we need to wait, and we're going to wait there, we can afford to do that, we can hold all the acreage, we've got acreage held and we'll wait till our costs come down and our returns improve. That's just good present value – a good present value approach to your business. In terms of the long-term in the Permian, no, I'm not sure it's even worth having a conversation about right now.…

Our next question comes from Matt Portillo with TPH [Tudor, Pickering, Holt]. Your line is open. Matthew Merrel Portillo - Tudor, Pickering, Holt & Co. Securities, Inc.: Good morning, guys. A. Wade Pursell - Chief Financial Officer & Executive Vice President: Good morning. Matthew Merrel Portillo - Tudor, Pickering, Holt & Co. Securities, Inc.: You mentioned the increased activity in the Middle Bakken and Divide County potentially rolling through in 2015, and I was wondering if you could talk about relative well performance you've seen to date versus your Three Forks type curve in that portion of the play? Javan D. Ottoson - President, Chief Executive Officer & Director: Yeah. Thanks for asking that. Actually we showed data on that in our December presentation. We drilled a number of – I think it was three or four Bakken wells on the north side of our acreage and they actually are outperforming our Three Forks type curve. Admittedly, those wells are on the north and we need to get some more wells on the south. We'll be drilling some of those this year, but very, very encouraging early results, and wells drilled like – I think we drilled those wells right around $5 million – a little more than $5 million. So, if you put a 400,000 barrel type curve on that at $5 million, this is very economic drilling. If we can get our costs down there even lower that's going to be terrific. We need to show – again, we don't include any of those Bakken completions as part of our current inventory. So this is a huge upside on a very large acreage position. Matthew Merrel Portillo - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. And then just a follow-up question. I know that you're testing enhanced…

Our next question comes from Paul Grigel with Macquarie. Your line is open. Paul Grigel - Macquarie Capital (USA), Inc.: Hi. Good morning. Javan D. Ottoson - President, Chief Executive Officer & Director: Good morning. Paul Grigel - Macquarie Capital (USA), Inc.: Just focusing on the rig plan going forward here, how much was that influenced outside of the Powder River, you guys touched on lease exploration, but in other plays on lease exploration or in midstream commitments throughout the year? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, our plan meets all our midstream commitments. And really, if you look at I think the question, the question I would ask when I look at this is, why didn't we slow down faster in some of these areas and the real reason is, we have rig commitments, we didn't want to have to pay big penalties to lay down rigs earlier. So, our approach rather than do that was to go ahead and drill those rigs where we are drilling very efficiently like we are on the Bakken and then just backlog the completions. And that was the approach we chose to take. Paul Grigel - Macquarie Capital (USA), Inc.: Okay. Thanks. And then just on the M&A realize, it's an ongoing process, but could you give any color on what the early response has been on the Mid-Con sale? Javan D. Ottoson - President, Chief Executive Officer & Director: Really, an enormous amount of interest in the package. I want to say one thing about this. The Mid-Cont sale is about two things really. One, it's about, getting us out of what we considered to be not necessarily strategic assets for us going forward. And we're not going to sell these assets in a prior sale,…

Our next question comes from Joe Allman with JPMorgan. Your line is open.

Thanks operator. Hi, everybody. Javan D. Ottoson - President, Chief Executive Officer & Director: Hey Joe.

So Jay, a couple of questions on your D&C cost. So in your slides, when I look at the type curves in this new presentation versus the presentation in December, it appears that your D&C cost for about Eagle Ford and the Bakken are down 12% to 13%, so have you realized those actual D&C costs that you're putting with those type curves? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, there is a difference, when we look at forward inventory as – of course we're using that, I think a 25% number, when you look at those slides in the back of the deck. I will tell you, we're way ahead of where we expected to be already on cost reduction. We've seen a 25% type cost reductions on completions already pretty much across the board in all areas at this point. I'll give you a specific just comment, we rebid a job recently in one of our areas, the frac job came in 67% below the original bid and there is some enormous discounting going on out there for people to stay busy. I feel sorry for the service company folks who were having to do that, but that's just the nature of our business in this time. So we are well ahead of where we expected to be. Now in our budget, when we built the 2015 budget, I think we were really pretty conservative about what we saw cost being at year-end. So it was 15% to 20% type assumptions by year-end, so I think there is upside actually in that we can either have more activity than we expected or potentially come in below what we project on CapEx. So I still think – I think we've made some fairly conservative assumptions about cost. If you look back, we did some work, looking back at the 2000, 2008 and 2009 correction. In the Permian for example there, I mean our costs were down 35%. So, I think there is opportunity here to drive cost even lower than what we have showed here.

Got you. And I can do it offline but when I look at, I guess one thing I want to figure out is what's the base. So when you say in your slides that, you are assuming a 25% reduction in completed well costs, that seems to be related to the IRR, but when I actually do the math on what you had in your December slides versus these slides, the actual reduction area-by-area, I mean without fail is 12%, 13%. So, when you talk about a reduction, like what is the basis, the average for 2014 is at sort of a peak?

So, this is Brent. So when you look at the December slides, those included a 15% discount off of – that we're anticipating. Javan D. Ottoson - President, Chief Executive Officer & Director: Right, based on 2014 costs.

Right. Javan D. Ottoson - President, Chief Executive Officer & Director: Yeah. And we were already seeing cost coming down even in December, when we put those numbers.

Okay. Javan D. Ottoson - President, Chief Executive Officer & Director: Again those are forward inventory numbers, so when – we were looking forward a year, and saying, hey we think we'd be down 15%. Now, we think we'd be down more than that.

Okay, okay. That's helpful. Okay. And then just – just a question on inventory, you're doing various tests this year, so you are doing enhanced completions – even more enhanced completions, you're doing some down spacing, then you are doing this, the stagger stack. Could you give us just the timing on when you're going to give us some somewhat definitive results from those? And which of those can really be most impactful to your inventory? Javan D. Ottoson - President, Chief Executive Officer & Director: Well, I think there is two big tests, that really drive inventory for us. The stack stagger is a huge impact, because it could literally double or triple our inventory in certain areas of the Eagle Ford. The problem with these tests, it takes a long – we spud the wells, but it takes a long time before you actually have it completed online, because you've got to drill a number of wells in one area and then essentially complete them all at the same time or within a very close proximity to one other. So if you look at that particular example. that 12 well pilot we have in the north, we're spudding the wells now. We don't complete them till almost September. So it takes a quite a long time, and then after that, you'll have to have production results to see how they talk to each other. So it takes a while to do this, and it's a big project. So it will take a while for us to get the answers. We will have some insights I think into just how wells are performing in different landing zones, things that we completed last year or earlier this year, a little earlier than that, and it might help us give people…

And Jay, is the down spacing in the Eagle Ford East to 900 foot inter-lateral spacing, that's separate from the stack stagger program you're doing, right? Javan D. Ottoson - President, Chief Executive Officer & Director: That's what we – you mentioned that, we completed those wells at 900 feet to 1,000 feet initially. What we are hoping and what we think we can probably do is squeeze wells in in the upper, those wells are generally completed below the upper, lower interface. What we're hoping to be able to do is, put another row of wells essentially in the upper and change that spacing to tight – to get tighter. And that's an opportunity, potentially to double on that Eastern area, if it's successful. So big upside in areas that we know have substantial economics, and where the infrastructure is already in place.

All right. Very helpful. Thank you.

Our next question comes from Mike Scialla with Stifel. Your line is now open. Michael S. Scialla - Stifel, Nicolaus & Co., Inc.: Yeah. Good morning, everybody. I apologize if these have already been asked. I've missed a portion of your prepared remarks. But, I think you just answered, Jay, my first question or at least part of it, you talked about building inventory with opportunities you see within your existing asset base. Any of those opportunities also include potential acquisitions? I know you were asked about that to some extent, and the $185 million that you've allocated for non-drilling, I'm just wondering if any of that is planned to target any sort of potential bolt-ons? Javan D. Ottoson - President, Chief Executive Officer & Director: Mike, we don't budget acquisitions. So that $185 million doesn't include anything other than some minor land acreage just in places where we need to renew a few things. As I mentioned earlier, acquisitions – we see these deals, people bring us things all the time, companies, properties, whatever. It's just hard for us to find acquisitions that will really – that are as good or better than what we have internally as opportunities. And so, we look at a lot of things, but we don't take a lot of interest in a lot of them. Really, it's got to be core area to us, we really want to stay within our footprint, and we really want things that are as good or better than what we own. And in this environment in particular, I think to do a major acquisition, we would have to have some real thought process on how we manage the balance sheet associated with that. So when you go back to that $185 million, just to be – I…

Thank you. This concludes our Q&A session. I'd like to hand the call back to Jay Ottoson, President and CEO for closing remarks. Javan D. Ottoson - President, Chief Executive Officer & Director: Well, thank you very much for your time and attention today. We know it's an incredibly busy day and we really do appreciate your time. I just want to say again, this is the company with a strong balance sheet, significant liquidity and a lot of inventory that makes sense to drill. And we're going to come out of this transition year, a strong company and we're going to be beating people and that's what we're all about here. Thank you.

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