W&T Offshore, Inc. (WTI) Q4 2017 Earnings Report, Transcript and Summary

Greetings and welcome to the W&T Offshore Fourth Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Elliott with Dennard Lascar, Investor Relations. Thank you, Ms. Elliott. You may now begin.

Thank you, operator and good morning everyone. We are glad to have you join us on W&T Offshore’s conference call to review financial and operational results for the fourth quarter of 2017. Before I turn the call over to Company, I would like to remind you that information reported on this call speaks only as of today, March 1, 2018 and therefore, time-sensitive information may no longer be accurate as of the date of any replay. Also, please refer to the fourth quarter 2017 financial and operational results announcement that W&T released yesterday for a disclosure on forward-looking statements and reconciliations of non-GAAP measures. At this time, I would like to turn the call over to Mr. Tracy Krohn, W&T’s Chairman and CEO.

Thanks, Lisa. Good morning, everyone and thanks for joining us today. With me this morning as usual is Tom Murphy, our Chief Operations Officer; Danny Gibbons, our Chief Financial Officer; and Steve Schroeder, our Chief Technical Officer. They are going to be available to answer questions later during this call. So, yesterday, after the market closed, we announced solid results for fourth quarter and full-year 2017 and provided our year-end proved reserves showing that we replaced slightly more than 100% of our production. We think this is a pretty good feat on a modest capital expenditure program. We also reported positive earnings and strong cash flow. Production averaged 37,526 barrels of oil equivalent per day, which was within our guidance range. It was up about 3% sequentially from the prior quarter. We estimate that production would have far exceeded the guidance this quarter and then above fourth quarter last year if we hadn’t been impacted by substantial downtime and deferrals associated primarily with weather, pipeline outrages and unplanned platform maintenance by third parties that collectively resulted in deferred production of almost 6,100 barrels of oil equivalent per day. You may recall with the beginning of the fourth quarter, we experienced production deferrals as a result of Hurricane Nate. This, deferred production quite a number of days while many of these downstream pipelines and platforms were enabled to resume normal operations and that was like a few days to few weeks. It’s not at all unusual for us to experience downtime but fourth quarter may have set record for outrages. Fortunately, the production was deferred and not lost. So, if not produced in the fourth quarter, we will produce in next, the following quarters. So, oil and liquids represented about 58% of fourth quarter production, which is up from 55% a year ago. Mahogany, Ewing Bank 910 and Virgo fields, all oily projects delivered the largest production increases in 2017. And if you will recall, we completed three new projects in Mahogany in 2017 as we started the year with the highly successful A-18 and followed that with A-16 well, then the A-8 well and finally finished the year working on the A-17 well. That will add to production in 2018. Two projects completed on our Ewing Bank 910 field in 2016 also added the production to 2017 and recompletion of well at Virgo field in late 2016 also added production to 2017. Revenue continued to climb in 2017 as commodity prices recovered. And with unhedged production, we were able to fully benefit from that increase. The combined average realized sales price was 36.79 per Boe in fourth quarter compared to 30.83 per Boe in the same period of 2016. That represents an improvement of almost $6 per barrel oil equivalent or 19.3%. So, another thing we saw in the fourth quarter and that has continued so far into 2018 is positive crude oil price differentials. You may recall that before the collapse in crude prices in mid-2014, spiral down in 2015, we used to enjoy some very positive crude oil differentials because many of our crude prices like LLS, which prices like Brent rather than WTI. So, in 2015, our crude oil differentials became negative and at times nearly $6 per barrel negative. So, fast forwarding to fourth quarter 2017, in the months of November, December, our crude oil price differentials turned positive and we were also positive again into January 2018. What we have experienced in these last three months is a widening of the Brent WTI differential and the narrowing of the light, heavy crude differential. We suspect that lighter dip phenomenon is due to the turmoil in Venezuela and the decreased exports of the heavy sour crude to the U.S. So, adjusted EBITDA for the fourth quarter was $72.9 million, up $3.3 million compared to the fourth quarter of 2016. Adjusted EBITDA for the full year of 2017 was $268.4 million, up $89.3 million over the full year 2016. Our adjusted EBITDA margin was 55% for the full year 2017, up from 45% in 2016. Our net cash provided by operating activities for the year 2017 was a $159.4 million which is an increase of $145.2 million over 2016. Yes, let me repeat that. That’s an increase of a $145 million over 2016. The increase in cash flows in 2017 was primarily due to higher realized prices, lower operating expenses and lower interest payments. OpEx decreased by $11.3 million and interest expense decreased $46.4 million. We have continued to have a keen focus on bringing our expenses down to getting back to EBITDA margins that are necessary to resume normal activities in Gulf of Mexico for all intents and purposes we’re there. Net income was $23.4 million or $0.16 per share. Excluding special items, our adjusted net income for the fourth quarter of 2017 was $24.2 million that represents a $16.5 million increase over the fourth quarter of 2016. Total liquidity at the end of 2017 was $248.7 million, made up of cash balance of $99.1 million and revolver availability of almost $150 million. So, with the pickup in drilling activity, we have been spending more but our free cash flow has improved a great deal from last year. So, during 2018 we expect to receive $65.1 million federal income tax refunds, related to specified liability losses associated with our P&A activities, allowing us to capture net operating loss carrybacks. By ending 2017 with a strong cash balance and building cash throughout 2018, we expect to be in a good position to be able to either pay off the upcoming 2019 debt maturities during 2018 or refinance them or do some combination of both. So, to provide additional financial flexibility, as we have previously reported through 2017 and now into 2018, we’ve been working to establish a drilling joint venture with private investors. We’re in the final stages of establishing that joint venture that’s going to allow us to drill and exploit assets on a promoted basis and with reduced capital outlay. We’ve completed negotiations with an initial group of investors but are subject to funding at an initial closing expected to occur by mid-March. More investors may join the joint venture before or after the initial closing. It’s important to note that establishing an investment vehicle with these outside parties that allows us to drill our wells on a promoted basis, will enable our announced 2018 capital spending plan to be much lower. But once all conditions from the initial closing of this joint venture are met, we will announce the final terms and revise our 2018 capital budget. So, additionally, this joint venture could position us in the future to participate in high quality prospects that we may not otherwise have been able to participate in. So, our 2017 CapEx, was only about $130 million and despite that replaced over 100% of our 2017 production. And we saw total proved reserves increase slightly. Our year-end 2017 SEC proved reserves were 74.2 million barrels of oil equivalent 445.3 Bcf equivalent that’s comprised of 46% crude oil, 11% NGLs and that’s a total of 57% liquids. About 74% of our 2017 improve reserves were classified as proved developed producing. 10% is proved developed non-producing and 16% as proved undeveloped. So, I think we are doing a pretty good job of converting categories of reserves. So compared to last year, our proved developed producing reserves increased 15.2% with significant contribution coming from the A-18 well at Mahogany. Present value of our reported SEC proved reserves, discounted at 10% was $992.9 million that’s up 32% from $754.9 million at the end of 2016. And of course that’s driven by higher commodity prices used with the SEC calculation but also because total proved reserves were slightly higher as well. If we utilize the NYMEX forward curve on the last day of 2017, PV-10 value would have been $1.1 billion. So, it was a good year with strong improvement in the value of our asset base. With that let’s talk a little bit about 2018. Our plan is to continue to unlock the value of our substantial drilling inventory. We’re focused on a group of oil-focused projects, comprised of a few that are lower risk and high return combined with some others that are higher risk and higher return potential that assuming success will be placed on production very quickly. Our inventory of high quality, exploration drilling and field extension projects in the Gulf of Mexico are based on advanced seismic and processing that’s amid our growing understanding of some of our key fields. So to build shareholder value, we want to balance the use of that cash generation to strengthen our balance sheet by reducing debt as well as reinvest at more high-return projects. Currently, we have established a 2018 capital program of a $130 million that includes completing three wells that we started in 2017 and commence and complete seven additional wells. Three of the wells are in the deepwater and the rest are on the shelf. We are or will be the operator on a majority of these projects. The budget also includes 12 recompletes that are expected to cost around $7.5 million. So additionally, we estimate that we will spend approximately $24 million on plugging and abandonment activities in 2018, which is way down from what we spent in 2016 and 2017. We’re pleased that we aggressively addressed our asset retirement obligations at a time of low service costs and lower commodity prices and that allows us to now concentrate on more of our drilling and acquisitions plans. So, walking through the 2018 program, let’s start with projects that were commenced in 2017 but are not yet on production. Currently completion operations are underway on the A-17 well Ship Shoal 349, Mahogany. This well is expected to be online in the middle of March. This well found a previously undiscovered deeper sand, resulting in proved reserve additions with significant upside. This well was originally targeting what we thought was the T sand, but instead we discovered a deeper sand which we are calling the V sand. We’re also able to extend known limits of one of the field pay sands, which we have seen in earlier wells. We are very encouraged by these two new signs. So, this is very interesting data that we will use to more fully understand the large subsalt reservoirs which continue to provide exciting opportunities. So once we complete the A-17 well and we get it online, we’ll get the rig over to commence the A-5 side track. That well shouldn’t take that long. We plan to get it online in the next few months. We have another well planned at Mahogany after A-5 side track but haven’t fully vetted out location, exact location of the target. We should reach some conclusion on that here in next few months. We also have some remedial work plan that will increase production as well. So, with that we also drilled an exploration well at Main Pass 286. In mid-December, the well reached TD of 14,562 feet and logged 112 feet of gross hydrocarbon interval. That resulted in new field discovery for the Company. This was an open-water exploratory location, which means it was not drilled from an existing platform restructure. We are currently doing front end engineering design, so called P design, and thus evaluating what we think is going to be our optimal development solution. We have a couple of development alternatives available to us including producing this field back to W&T owned and operated infrastructure at our Main Pass 283 platform. We’re also looking towards having this field online in early 2019, pending our sanction time with details. W&T holds the 100% working interest in this well. We recently mobilized drill rates to our deepwater Viosca Knoll 823 Virgo platform and spud the A-10 side track well in late January. We are the operator and have 80% working interest. The A-10 side track marks the beginning of what we expect to be a mostly [ph] well drilling program in our Virgo field, the first drilling to occur since the initial development of the field. The A-10 side track well was drilled up dip to known pay in an adjacent wellbore and recently reached total depth of 16,770 feet following over 300 feet of measured depth hydrocarbon column. We are moving in the completion mode of the well. We expect to have it online during late Q1, maybe early Q2. Following the completion of the A-10 side track, we anticipate moving to drill the second well in our drilling program. So, another one of our 2018 drilling programs involves Ewing Bank 910 field. If you will recall we also had a successful drilling program there in 2016 where we drilled two wells that are currently on production. Two wells planned for this year are the South Tim 311 A-2 and A-3 wells. South Tim 311 and 320 are part of the Ewing 910 field. Platform modifications are beginning on the South Tim 311 platform preparing for rig mobilization. That rig will mobilize the platform in the first quarter with a likely spud date sometime in the second quarter. So, we believe both of these wells are low risk exploration opportunities with multi-stacked pay sand potential. And assuming success, these wells could be brought online pretty quick with existing infrastructure. So, as is often the case, we have multiple recompletion opportunities, as lower zones deplete, we move up the wellbore to recomplete upper stack pay sands. These provide low cost and moreover low risk production initiatives. As we look back on our recomplete plans for 2017, we anticipate we will perform a good deal of more recompletes than we actually did. Part of that estimating process relates to when we think particular sand will deplete so that the well can be recompleted to another zone. So, in a number of cases, in 2017 the sands that we thought would deplete lasted longer and delayed the process. That’s a good result of the production reserves and cash flow, it doesn’t help providing in accurate timely guidance for this group, kind of the quality problem. As I discussed early, in order to provide additional financial flexibility, we are in the final stages of establishing a drilling joint venture be formed with private investors that allows us to drill and exploit assets on a promoted basis and with reduced capital outlay. We have completed negotiations with that initial group of investors but are subject to finding an initial closing expected to close on or before mid March. Again, more investors may join the joint venture before or after the initial closing. Once again, all conditions to the initial closing are met -- once those are met, we’ll announce the final terms and revise our 2018 capital budget. However, this will not have an impact on our drilling plans, just our ownership percentage. It’s expected that entities owned and controlled by me and my family will invest on the same terms as are negotiated with unaffiliated investors to acquire approximately 4% interest in the drilling joint venture. As it relates to our production guidance, our estimates not yet reflect what we believe are viable acquisition opportunities to increase both production and reserves. We continue to evaluate these opportunities and are confident that we can execute on some of them as they arise. Reduction in capital dedicated to drilling wells could be put to use for either acquisitions or debt reductions or both, it’s our intent to reduce debt further over the next several months. So, with that, stay tuned. Operator, we can now open the lines for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Richard Tullis with Capital One Securities. Please proceed.

Hey, thanks. Good morning, Tracy. It seems like you gave good bit of detail where you could on the JV that’s coming together. So, just to get a total understanding of it. So, it sounds like the list of projects that are provided in today’s or yesterday’s release, would still be the same ones that you would plan to drill when that JV structure is announced. So, no expansion there, it would just change your ownership interest in those same projects, Tracy?

That’s correct.

And then, the proceeds would mostly go toward paying down debt this year?

Well, that and/or acquisitions or both also subject to refiing the entire facility. What it does is it gives us a lot more options.

So, I know you talked in the release about the 2019 maturities. How are you looking at the 2020 maturities as well, Tracy. I guess, it comes up in May of 2020.

Right.

How are you looking those? Would you try to expand a JV or other type of vehicles like that to help with that effort as well?

Well, with the ability now to have this flexibility with this joint venture program, we see that as less problematic as it was before. We expect to pay down some debt. We expect to drill more wells, we expect to have pretty good success based on this. I mean, I’ve taken the rare and unusual situation of also investing in this personally to help attract some of our capital in this joint venture solution that we have. So, I believe in it. The Company is going to put its own money into it; I’m going to put my own money into it. We see this is a positive development for the Company. Going forward, we think that it gives us several more options as far as managing the debt going forward. We recognize that we need to lower the debt. I mean that’s what we’re going to do. I’m perfectly confident that we can actually take care of the short-term maturities with cash if need be. This just gives us some more opportunities to do things that might come up in a way of acquisitions and/or additional wells we might want to drill.

Thank you, Tracy. That’s helpful. Second question, you talked a little bit about the acquisition potential. What is the landscape looking like right now? And is the -- how is the impact in commodity price impacting the kind of the asking price by the sellers? What’s the total landscape looking like right now?

Clearly, price is going up, going up helps to everybody. It makes it easier to pay a price that others might accept, makes it easier to do financing where it’s necessary. So, it’s all positive from that stand point. I mean, most of what we’re looking at right now are going to be cash purchases. So, that’s important to us and it’s important to the sellers.

Our next question is from Patrick Fitzgerald with Robert W. Baird & Company. Please proceed.

I have a couple on capital structure as well. Would you draw or can you draw on the revolver to pay down the 2019 notes?

That’s a double sided question actually, Patrick. Under certain conditions we would. That’s not our intent. I think, what we would rather do is just pay down debt rather than exchange -- essentially exchange debt for debt. We think that there is a combination factor for both paying down debt and refiing the rest of it.

So, you have the notes due ‘19 and also the 1.5 lien due ‘19, right?

Correct.

So, you are saying you would use cash to pay down 2019 notes and then refi the 1.5 lien?

No. What I’m saying is that we have the ability to do both. And that as a result of all this it leaves us with the opportunity to refi in different ways. So, now, we have a little bit more flexible financial ability and we have a possibility of making some debt pay down and refiing and also doing acquisitions.

So, the JV, in theory I think kind of understand that it would allow you to spend a lot less on CapEx. But wouldn’t it also hinder your operating cash flow from the new wells that you are drilling with the partner?

Well, there’s a whole lot more that I need to give you in detail that I’ll be able to give you in just a few more days. So, rather than go into more details this time, I’d like to defer on that. But, the short answer is, Matt, I think you’ve seen what we’ve posted as guidance for 2018. And I don’t expect that to go down anymore. So, I think, we’re okay from that aspect of it. Actually, I think we are being pretty conservative on our guidance and that you will see some pretty good answer by the end of the year.

So that guidance takes in to some extent a JV or it doesn’t take that into account?

It does.

Our next question is from Jon Evans with SG Capital Management. Pleased proceed.

This maybe redundant. So, I’m just trying to understand. But, I wanted to unpack the production guide that you gave. So, you basically went into the Q4 that you had a little over 6,000 a day from shut-ins and you did 3.5, but you guided 3.1 to 3.5, so the midpoint would be down again. So, were there more issues with pipelines in Q1 or is this just you are building in the JV which…

Yes. There were more issues with pipelines in Q1, also there was another couple of extraordinary items. There was a fire at one of the structures where we send product across -- well actually downstream. So, yes, all these things are what I would call one-off occurrences, unfortunately just happened at a not very good time for us.

And so, the question I have for you is just you mentioned before that it’s not lost production, it just kind of gets moved to the right. So, should we think about that production from Q4, Q1, just showing up in Q2, or how should we think about that?

It’s a little bit hard for me to project right now, because of the nature of the third-party structures that we are having to deal with. So, yes, it will. I just can’t give you an exact timing on the guidance. Like I said, we try to be as conservative as we can. I am tired of telling people that there is things that are going to happen that I can’t control. So, we’ve taken a very what I think is a very conservative stance here. And I realize that market is probably going to beat us up a little bit for, but there’s -- it’s better to under-promise and over-deliver.

So, I guess a better question is, can you give us a sense of kind of where you are running then? You may not be selling at that rate, because the pipelines et cetera. But, where’s kind of production on a daily basis, is it 40,000 a day, 41,000, what’s kind of that number, rough number?

Well, currently, right now, we are at 220 million cubic feet equivalent per day.

Our next question is from John Aschenbeck with Seaport Global Securities. Please proceed.

First one is just a follow-up on 2018 guidance. And thinking of the potential production contribution from, call it, your higher risk exploration type project scheduled for this year, I suppose this is a two-part question. First, if those projects are successful, you mentioned you could get those on pretty quickly. Could you get some of those on during the year? And then secondly, how risked is that expected production from those higher risked projects? I suppose, I am trying to get a feel just generally for the potential upside to 2018 production in regard to those higher risk projects?

So, the answer to your first question is yes, we do expect to get these things on production fairly quickly. As a function of how risked it is, I don’t really have an answer for that. And what we try to do is build in a kind of a worst case scenario, and some acknowledgement in fact that yes, we have taken a lower percentage in some of these wells, but we’ve taken a promote. And it’s kind of hard for me to give you these answers until such time that I really report all the details of it.

And then, lastly, hate to belabor the JV topic, but I suppose I am going to try a few more questions. And I apologize if I missed this detail too. But, just thinking about of the promote, how substantial could that be just thinking of the capital, would your partners effectively carry all the capital there for you, or…

Once again, John, I would ask you to defer for a just a little while longer until we can disseminate that to all the market and have everything buttoned up. I think, you will be quite pleased with what we’ve done here. I think, everybody is happy with it. Recognize that I’m on both sides of this transaction, personally. So, I think it’s a very fair deal for everyone. We spent longer trying to get this done that I thought that we would. For all the people listening that are in the business of raising funds, I have a newfound respect for what you do. Having said that really the timing on this for closing was just unfortunately right at the time where we needed to report everything. We deferred as long we could on fourth quarter but we just got caught up in little bit of time bind here. But I think when you get the rest of it, you will have a pretty good about it.

Understood, we will just wait and see. That’s it for me.

I appreciate. I’m sorry to be so nebulous. But, I don’t really have any choice at this point.

Our next question is from Vance Shaw with Credit Suisse. Please proceed.

Yes. This is Vance Shaw with Credit Suisse asset management. Tracy I just want to get a quick question on -- you could see what’s going on at Fieldwood and their kind of odd financial situation they’re in where they are going bankrupt and making acquisitions at the same time. This seems to be a lot going on in the offshore Gulf of Mexico, consolidation, a lot of people are interested in buying companies. Can you just like give us your thoughts on sort of what you think is going on and how W&T is going to sort of address that environment?

Sure. This is fairly typical late market change. And I have been through about six of these downcycles now. Unfortunately I’m afraid that dates me a little bit. But, what I see is very typical of what we see in these late market turnarounds where the market begins to turn around and investors start to pay a great deal of attention to things that have high cash flow. And so, that’s why I think you’re seeing some -- a little bit of increased interest in the Gulf of Mexico because the high cash flow characteristics of the properties.

Got you. Do you see big oil continuing to sort of sell, especially in the deeper water and for the independents to be buying in and the private equity guys to be more aggressive, is that one of the things you’re seeing?

I’m not sure quite how to evaluate it. I will tell you that managers are tasked with the idea of replacing reserves and increasing production. So, where can you do that reliably is kind of leads you to the shale resource basins and what not. So, but when you’re faced with the idea that you’re going to making cash flow, it kind of makes you think about the Gulf of Mexico as well.

Our next question is from Hassan Ahmad with Serengeti Asset Management. Please proceed.

Just thinking about the priorities in terms of -- you mentioned acquisitions, you mentioned some debt reduction, obviously, there is a production decline as well. So, how do you kind of balance those three concepts, and what is sort of the path toward one, two and three in terms of priorities?

Well, we have our priorities in making sure that we meet our obligations. We also have a priority in try and to grow the company. Sometimes, you need to shrink a little bit to grow it. And that’s kind of what we’ve looked at here with regard to this joint venture project. We also wanted to develop something that we thought was repeatable. So, that’s an encouragement as well. I think that you will see a much stronger company in W&T in the future. I’m pretty sure that we’ve put ourselves in a good position to make sure that that occurs. We’re still making great cash flow. I mean even though the production is down, you need to figure out are we making more money than we were before, and of course we are. We had a great deal of deferred production. And there are several other things that occurred along with that. And I don’t want to create a list of excuses because at the end of the day, production was down, it’s just a fact. So, it doesn’t matter really why. What matters is what you are going to do going forward. So, part of what we are doing is making sure we protect the Company and meet all of our obligations and have flexibility. And that requires us to look at it slightly different way. We are very confident of our ability to pay our debt down and also refi whatever stubs may exist. Similarly, we’ve created a path forward and also given us flexibility to make acquisitions as well. We also have a goal of creating a larger entity or larger fund to make acquisitions, and we’ve announced that in the past. So, that’s where we are going.

I’ll take a stab at the JV. Most JVs we’ve seen in energy space, it’s either cash and carry, so you get some cash, upfront, and someone carries you on CapEx, or there’s assets contributed into there and there’s some sort of promote that the partner receives and then the Company starts to receive better economics on the backend. So, what is the structure? Is it the first or is it the second type of structure?

Let me tell you this. We’re going to give you all the details in the next 10 days or so. I think, you’ll be very pleased what you see. It will be different from what you’ve been looking at.

We now have a follow-up question from Richard Tullis with Capital One Securities. Pleased proceed.

I knew, you were going to come back and ask another question, Richard. Go ahead.

Maybe even two, Tracy. When you look at some of the big offshore deepwater projects you are involved in, are there any requirements that you foresee, say for 2019 for drilling that Big Bend and Dantzler?

No not at this time.

Okay. And then, second, you’ve mentioned in the release about the upcoming substantial tax refund. What’s the current status of the judgment from last summer, somewhere up, if I remember correctly, around $40 million? How is that working on the opposite end of the spectrum, money -- potential money going out the door?

That judgment’s being appealed right now. So, that’s just in due course. But, we’ve already made approvals for that and everything. So, anything that happened on the other side, would be [indiscernible]

We also have a follow-up question from Jon Evans of SG Capital Management. Please proceed.

This might be for Danny. But, I am just curious, I know it’s the government, but do you have any kind of timing of when you think you’ll get the tax refund? And then, just the other question with that is, do you think -- could you just help us understand, if you do some of this plugging amendment work, how much it would lessen potentially the tax refund, and it would be pushed out to ‘19?

The tax refund, Jon, is supposed to be -- we’ll get some of it probably in the second quarter, some of it in the fourth quarter. And that should be the end of it, because of the change in the tax law.

And then, the last question I have just for you, Tracy, the A-17 well, you said it’s going to start producing in March. Can you give us any kind of sense of what you think it’ll do per day or do you have any kind of range you can give us?

I think, what we are going to do is we are going to take it on very gently at first. We have had some issues in the past with regard to fines migration in some of these wells. And we treated them and they come back, but it’s a continuing source of aggravation for us. But, we believe we would come up with different theories. So, yes, it will come on at a predetermined rate. And I am not going to give you that just yet because I haven’t fully vetted it with everybody. But, what we would expect to do is gradually increase it over time as we stabilize the wellbore, for newer wellbore fines migration.

Mr. Krohn, there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

Very good. Thank you, operator. And we appreciate everybody’s participation this morning. Stay tuned. We will have more for you in a few days.

Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.