Whitecap Resources (OTC:SPGYF) Inc. (WCP) discussed its third-quarter results and the 2025 budget in a conference call on November 8, 2024, showcasing strong financial and operational performance. The company's president and CEO, Grant Fagerheim, highlighted an average production that exceeded expectations, reaching 173,302 barrels of oil equivalent (BOE) per day, and a substantial funds flow of $409 million. Whitecap also announced plans for a capital budget between $1.1 billion and $1.2 billion for 2025, aiming for a 5% production growth to reach 176,000 to 180,000 BOE per day.
Key Takeaways
- Q3 average production exceeded forecasts at 173,302 BOE per day.
- Funds flow for the quarter reached $409 million, with free funds flow of $136 million.
- Over $200 million returned to shareholders through dividends and share repurchases.
- 2025 capital budget set at $1.1 billion to $1.2 billion, targeting a 5% production growth.
- Unconventional assets in Montney and Duvernay to grow by 10% to 15% annually.
- Net debt stands at $1.4 billion, with a debt-to-EBITDA ratio of 0.6x, expected to improve post-PGI transaction.
Company Outlook
- Whitecap Resources plans to maintain conventional production between 110,000 to 115,000 BOE per day.
- The company anticipates a 2025 funds flow of $1.6 billion to $1.7 billion, assuming projected commodity prices.
- Plans include drilling 30 wells in the Montney and Duvernay regions and 190 wells across Alberta and Saskatchewan.
- A facility at Lator is expected to commence production by late 2026 or early 2027.
- Over $400 million in dividends is projected to be returned to shareholders in 2025, with a focus on share buybacks and debt reduction.
Bearish Highlights
- The company expects a slight decrease in the liquids ratio from 64% to 63% in 2025 due to capital allocation strategies.
Bullish Highlights
- Robust performance in 2024 sets a positive precedent for the upcoming year.
- Recent infrastructure developments, including the Trans Mountain pipeline expansion, boost long-term sustainability and profitability.
Misses
- There were no specific misses mentioned in the earnings call summary.
Q&A Highlights
- Whitecap Resources emphasized its strategy to prioritize share buybacks due to a 7% yield and share price performance.
- The company plans to return 75% of free cash flow to shareholders and utilize 25% to strengthen the balance sheet.
- A shift in well allocation favors the Montney formation over the Duvernay, due to better economics and infrastructure.
Whitecap Resources Inc. reported a strong quarter in 2024 and is positioning itself for strategic growth in 2025. With a clear focus on operational efficiencies and capital allocation, the company is poised to enhance shareholder value while maintaining a robust balance sheet. The emphasis on both unconventional and conventional assets, along with significant infrastructure projects, underlines Whitecap's commitment to sustainable growth and profitability.
InvestingPro Insights
To complement Whitecap Resources Inc.'s positive outlook and strategic growth plans for 2025, let's examine some key financial metrics and insights from InvestingPro for Whitecap's parent company, Starlight Private Global Real Estate (SPGYF).
According to InvestingPro data, SPGYF boasts a market capitalization of $4.42 billion USD, indicating a substantial market presence. The company's P/E ratio of 8.25 suggests that it may be undervalued compared to industry peers, aligning with Whitecap's focus on creating shareholder value.
One of the most notable InvestingPro Tips is that SPGYF "pays a significant dividend to shareholders," which is consistent with Whitecap's commitment to returning capital to investors. This is further supported by the impressive dividend yield of 6.96% and a robust dividend growth of 20.1% over the last twelve months. These figures underscore the company's strong cash flow generation and shareholder-friendly policies, mirroring Whitecap's plan to return over $400 million in dividends to shareholders in 2025.
Another relevant InvestingPro Tip highlights that SPGYF "operates with a moderate level of debt." This aligns well with Whitecap's reported debt-to-EBITDA ratio of 0.6x and its plans to further improve the balance sheet, demonstrating prudent financial management across the corporate structure.
The company's profitability is evident from its operating income margin of 30.72% for the last twelve months, reflecting efficient operations and cost management. This efficiency is crucial for supporting Whitecap's ambitious growth plans and capital expenditure budget for 2025.
It's worth noting that InvestingPro offers additional tips and insights beyond what we've covered here. Investors interested in a more comprehensive analysis can explore 5 more InvestingPro Tips available for SPGYF, providing a deeper understanding of the company's financial health and market position.
Full transcript - Whitecap Resources Inc (SPGYF) Q3 2024:
Operator: Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources Q3 2024 Results and 2025 Budget Conference Call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]. And I would like to turn it over to Whitecap's President and CEO, Grant Fagerheim. Please go ahead.
Grant Fagerheim: Thanks, Sylvie and good morning, everyone, and thank you for joining us. There are five members of our management team here with me today. Our Senior Vice President and Chief Financial Officer, Thanh Kang; our Senior Vice President, Business Development and Information Technology, Dave Mombourquette; and our Senior Vice President of Production and Operations, Joel Armstrong. Our Vice President of the West division, Joey Wong; and our Vice President, East Division, Chris Bullin. Before we get started today, I would like to remind everybody that all statements made by the company during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release issued earlier this morning. I'm once again very pleased to report that we had another strong quarter, both operationally and financially, achieving average production above our forecast at 173,302 BOE per day and generating funds flow of $409 million or $0.68 per share. In particular, our liquids production continues to outperform our expectations as condensate production for our Montney assets at Musreau and Duvernay assets at Kaybob has held in better than we had expected, and we continue to see strong production from our Southeast Saskatchewan Frobisher drilling program. We invested $273 million to drill 67 wells, 63.8 net wells resulting in $136 million of free funds flow generated in the quarter and $350 million of free funds flow generated for the nine months of 2024. We returned over $200 million to shareholders during the third quarter including $108 million of dividends and $117 million of share repurchases on our normal course issuer bid. Our asset level performance and operational execution has exceeded our expectations through the first nine months of 2024. At present, we are tracking above our previous annual guidance of 167,000 to 172,000 BOE per day and now expect to average 172,500 BOE per day. And our third production guidance increase for the year. Turning to 2025. Our budget plan incorporates our current well designs and development strategies that have led to operational success so far in 2024. The budget includes capital investments of $1.1 billion to $1.2 billion to achieve average production of 176,000 to 180,000 BOE per day, representing 5% per share growth at the midpoint of the range. Our capital allocation process is integrated in the regions compete for capital across both of our divisions, focusing on capital payout and profitability. Our 2025 capital investments spread evenly between our unconventional and conventional assets reflect the highly economic inventory of both types of assets and is optimized for long-term sustainability. For 2025, our focus on our conventional assets is to maintain production between 110,000 to 115,000 BOE per day, 75% to 80% liquids, while improving capital efficiencies and expanding our inventory duration. Historically, we have had great success planning ways to improve our conventional inventory through updated drilling designs, longer laterals, refined development plans or simply better operational execution. As such, we expect we will continue to be successful with our inventory enhancement initiatives and extend the duration and contributions from our conventional assets for many years to come. On our unconventional asset base, which includes our Montney and Duvernay assets, in 2025, we are focused on maximizing throughput of our operated facilities at Musreau and Kaybob as we build out our next phase of growth at Lator for start-up in 2027. We have achieved initial success in our approach to the unconventional development and customization of drilling and completion design, including both horizontal and vertical inter-well spacing across each of our Montney and Duvernay assets and expect this to continue in 2025. These assets are forecasted to grow at an annual rate between 10% to 15% well into the future. Joey and Chris will provide additional details on our 2025 plans for each division. I will now pass this on to Thanh for further discussing our financial results and our 2025 budget. Thanh?
Thanh Kang: Thanks, Grant. Third quarter funds flow was strong at $409 million or $0.68 per diluted share. WTI prices averaged over CAD $100 per barrel during the quarter as the low Canadian dollar continues to benefit Whitecap's revenues. AECO natural gas prices averaged $0.65 per GJ in the quarter and contributed to less than 3% of our revenue. We realized hedging gains of $14.9 million in the quarter, of which $12.6 million was attributed to our natural gas hedges. Current tax expense of $53 million was 48% lower than the previous quarter as we recognized $33 million in capital gains on the partial disposition of our Kaybob and Musreau facilities in the second quarter. In addition, the lower commodity price outlook for the remainder of the year prompted a true-up to taxes paid in the first half and resulted in an overall decrease to cash taxes paid. As Grant mentioned, we expect to now exceed the top end of our previous guidance to average 172,500 BOEs per day in 2024, which puts our Q4 production at approximately 170,000 BOEs per day. This takes into account the lower CapEx spending in the fourth quarter of $200 million and timing of production additions. For 2025, our production guidance of 176,000 to 180,000 BOEs per day is forecast to generate $1.6 billion to $1.7 billion in funds flow at $70 per barrel WTI and $2.50 per GJ AECO. Our main cost assumptions for 2025 include royalties of approximately 16%, operating cost of approximately $14 per BOE. Transportation cost of $2.10 per BOE and cash tax equating to 11% to 12% of pretax funds flow. Our G&A per BOE at $1 per BOE is one of the lowest in the sector. We'll also attract approximately $40 million to $45 million on abandonment and reclamation activities on our assets in 2025. Our balance sheet at the end of the third quarter is in excellent shape with net debt of $1.4 billion, which equates to a debt-to-EBITDA ratio of only 0.6x. Upon closing of the PGI transaction, which is pending regulatory approval, pro forma net debt is expected to be approximately $1 billion or a debt-to-EBITDA ratio of only 0.5x. With our bank credit facility now unsecured and a public investment-grade rating of BBB low by DBRS, this positions us well to issue bonds in the near-term to diversify our debt structure and reduce our cost of borrowing. I will now pass it off to Joey for more remarks on our West division results and 2025 plans.
Joey Wong: Thanks, Thanh. 2024 has been an exceptional year for our Montney and Duvernay assets on both execution and performance. While results have exceeded expectations across the board, and we are realizing the benefits of our technical analysis on our operational efficiencies. Since our update at our Investor Day in June, we have continued to realize better efficiencies on our Montney and Duvernay operations with improvements on our key performance indicators, including drilling meters per day, completions tonnage per day and completions water intensity. 2025 will see us building on these successes as we plan to drill 30 wells across our Montney and Duvernay focus areas of Kaybob, Kakwa, Musreau and Lator with 34 wells expected to come online in the year. Growth associated with this activity is expected to be 10% year-over-year, or 20% exit to exit meeting our expectations of 10% to 15% annualized growth over the next five years and beyond. In Kaybob, we are about to bring online another five-well pad, which will mark 15 operated wells online. We're seeing results of our efforts and technical work since acquiring the asset in the third quarter of 2022. Adjustments to our development plans have included longer laterals, larger casing size and the introduction of a vertical inter-well offset otherwise known as wine racking or benching. 2025 will see us spud an additional 20 Duvernay wells, which will have our 15-07 gas processing facility running at full capacity and we will look to, at that point, to offload excess production to a nearby third-party facility, which will occur sometime in the second half of the year. At Musreau, our 05-09 battery is operating at full condensate capacity and approximately 80% to 90% of gas compression capacity, resulting in overall area production around 17,000 to 18,000 BOEs per day. Excluding three days of downtime in Q2 associated with brief unplanned third-party interruptions, run time at the facility has exceeded 99%, and we are very pleased that everything is running as expected. Initial condensate to gas ratios have come in on the higher end of expectations, currently in the range of 330 barrels per million standard cubic feet of gas as compared to a facility design of 250 to 300. With the initial pads also showing stronger-than-expected overall inflow, we are currently full with three pads, which is ahead of schedule as we had anticipated to be full with our fourth pad. That fourth pad is expected to come online later this year, at which point we will evaluate performance of the individual wells and prioritize throughput through the battery to maximize overall value. We have also received regulatory approval to commence injection at our adjacent water disposal well, which is expected to handle the water from our new wells and save on operating costs moving forward. In 2025, we'll see the drilling of one more four well pad expected to come online later in the year. AFO performance throughout subsequent development programs. We'll give consideration to either moderating the pace of development or expanding our facility, both of which would be compelling options and provide excellent economic returns. For 2025, we forecast our Musreau asset to generate $150 million of free operating income after capital expenditures, a significant achievement considering we spud our first well into this asset just over a year ago in late 2023. At Kakwa, we're planning to drill another four-well pad in the Southeast portion of our acreage in 2025, which is a follow-up to our two successful three-well pads at wider spacing of six wells per section versus the offsetting precedent of eight. Approximately 20 kilometers to the Northwest, we've just spud a three-well pad targeting the D3, D2 and Lower Middle Montney in a triple bench configuration. This portion of our acreage lends itself to this approach, given the observed high porosity in each of the three benches. Results from this pad are expected in mid-2025. At Lator, progression of technical due diligence, planning and design work is well underway. Everything is coming together as expected, and we still expect to bring the facility on production in late 2026 or early 2027. Well activity has been and will remain targeted until we're ready to drill start-up wells beginning sometime in 2026. Information gathered along the way will inform our overall development plans in both the near and longer term. Lastly, we have just spud two Montney wells at Berlin [ph] as follow-ups to our successful 2023 results. While the economic returns of these wells fit nicely within our portfolio, the limited running room has the area limited to smaller programs at this time while we evaluate a potential expansion of a larger equity set in the years to come. These wells produce into available capacity at third-party infrastructure, and we expect these wells to come online sometime in early 2025. With that, I will now pass it over to Chris Bullin, Vice President of our East division to talk about our conventional assets.
Chris Bullin: Thanks, Joey. On the conventional side of our business, we're also building on the strength of a very successful 2024 operational year that has delivered outperformance relative to our expectations across our focused plays along with advancing inventory enhancements initiatives. In 2025, we plan to drill 190 wells across Alberta and Saskatchewan. This low decline, high netback asset base is a key differentiator for us as it provides 70% of our corporate free cash flow and provides Whitecap with a strong foundation for long-term sustainability and profitability. Thanks to our active capital programs and exceptional technical teams, progression of efficiencies has continued and is expected to continue in the years to come, boosting the already strong economics and extending the lifespan of these assets. In Alberta, we'll drill 30 wells next year, mainly targeting the Glauconite in Southwestern Alberta and the Cardium at West Pembina. Our momentum in the Glauconite play continues with the successful drilling of three monobores, reducing costs by 10% per well, a key enhancement initiative. Following a detailed operational and geological review, including analysis of our recent operating results, we plan to utilize monobores on the majority of our 2025 locations. Success from our 2025 program would give us enough confidence to apply this approach on the majority of our remaining inventory, resulting in improvement in NPV-10 and lowering our development costs as part of our five-year plan. This is another example of continued efficiencies gained on our operated assets and is a testament to our commitment and culture of continuous improvement. In addition to these improvements, we're also seeking to expand our prolific Glauconite inventory set with targeted delineation wells, along with advancing secondary plays, including the Elrose, [indiscernible] River and Belly River given our enviable land position. In Western Saskatchewan, we have planned 100 wells, 79 of which target light oil in the Viking formation with the balance targeting our low decline and has oil recovery prospects in Southwest Saskatchewan. In the Elrose area, we're continuing to test extended-reach horizontal wells with laterals up to 1.5 miles as a key enhancement initiative to improve upon capital efficiencies by reducing overall development capital. At current prices, we expect these wells to pay out in only 11 months, making this program highly efficient. In Eastern Saskatchewan, we're targeting the Frobisher formation with 39 planned wells. As discussed at length, the economics of these wells are top decile and we're always looking for ways to expand our inventory on this asset. One such enhancement initiative has been to target the State A formation via open-hole multilateral drilling design. The State A is a much tighter part of the upper Frobisher formation and therefore has not been targeted historically. Our first open-hole multilateral targeting this zone is showing promising early results. And if successful, could significantly extend the lifespan of this asset with the potential to add approximately two to three years of highly economic wells to our inventory set in our Eastern Saskatchewan region. At our world-class CO2 enhanced oil recovery project in Weyburn, Saskatchewan, we'll drill 21 wells next year, which includes a mix of new phase rollouts and infill wells within the Weyburn unit. We've seen strong results from our CO2 flood rollout programs over the past four years with this property being a significant contributor to the free cash flow generation of the company. With that, I'll turn it back over to Grant for his closing remarks.
Grant Fagerheim: Thanks, Chris and Joey for your remarks. Looking back at our accomplishments over the past several years, we're pleased with the strong foundation we've laid for 2025 and for years to come. The asset base that we've assembled, combined with the technical rigor and analysis that our teams contribute to the planning, execution and analysis bases of our programs has yielded a very strong result. Our 2025 budget is a reflection of this, and we're looking forward to executing on our plans. The backdrop for Canadian oil and gas is positive. There's the recent completion of the Trans Mountain pipeline expansion and the initial flows through the Coastal GasLink pipeline to the LNG Canada facility will provide access and pricing, better pricing to global markets. Whitecap is committed to responsible development of our resources while providing strong returns to our shareholders. Again, in 2025, we will return a minimum of over $400 million in base dividends back to our shareholders in addition to sustainable production per share growth. Our budget will remain flexible to changes in commodity prices as we're able to quickly scale back our programs at lower prices or increase our program spending with higher prices. We are committed to balance growth with enhanced returns to shareholders at higher prices. Our priority is to generate long-term sustainable and profitable growth and are excited to build upon the success that we've achieved to date. I would also like to provide a huge thank you to our employees and contractors for your relentless efforts to bring success to Whitecap. Not only do these individuals prioritized results, they place an even greater rate emphasis on safety and the betterment of the communities in which we live and operate. In addition, our employees have also been very involved in various community fundraising initiatives and volunteering initiatives through the summer months and now into the Fall. We're very proud of this initiative that our employees take on to pass good fortune on to what they enjoy with others. With that, I'll now turn the call over to the operator, Sylvie for any questions. Thank you.
Operator: Thank you, sir. [Operator Instructions] And your first question will be from Travis Wood at National Bank. Please go ahead.
Travis Wood: Yes, good morning and thanks for the detailed remarks there guys. Two areas I want to focus on, first at Musreau. Is growth there limited by infrastructure? Or is it inventory based as you think about kind of the five-year plan expansion possibilities?
Joey Wong: Yes, I can take that one there, Joey Wong here. So the answer to it is it's going to be a little bit of both. When you build out a facility, you have to take into account what kind of a runway you're building for? What kind of a horizon you're looking for. In the Musreau area, somewhere in that range of 50 to 60 inventory locations. We were figuring the facility right now at its 20,000 BOEs per day capacity is about that right duration to have us not overcapitalizing and not also pinch. Again, that said, as I mentioned in the remarks there, we do have some pretty impressive results here. So we would give consideration to, like I mentioned, either drawing out that capital cadence and thereby just improving capital efficiencies, which is great. Or doing some targeted debottlenecking which could marginally increase. But we're not talking about like a doubling or anything like that on the facility.
Travis Wood: Okay. Okay. Perfect. And then just shifting to Lator. Obviously, it's kind of within the longer-range plan from a growth perspective. But you talked about some due diligence through 2025. What are those? And kind of what types of things should we be looking for as you go through that in 2025? And how will you benchmark those?
Joey Wong: Yes, Travis, it's Joey again. Thanks for that question as well. Yes, so it's going to be a mix of observation of technical data that we see off of our lands. Of course, there's operators around us and then operations on our land. So as you're aware, we're drilling the two wells this year and the two wells next year. And those are very intentional wells where we're going to be -- trying to ensure that we have a full understanding, not just aerially like throughout the land base, but then within that vertical stack of how the performance is going to be. And to us, it's not just the performance on a well delivery point of view. It's also on execution. So making sure that as we look to develop this area pretty materially as we're in our full fill-up mode there with a couple of rigs running in the area specifically that we're running in a pretty narrow range of expectations, like you say, on both the inputs and the outputs. So it's going to be a mix of everything from a technical point of view there, Travis.
Travis Wood: Okay, appreciate the color on both of those. I'll turn it back.
Operator: Thank you. Next question will be from Patrick O'Rourke at ATB Capital Markets. Please go ahead.
Patrick O'Rourke: Hey guys, good morning and thank you for taking my question. I guess, first thing I'd just like to understand is with the 2025 budget, you talked about $400 million maybe a little bit more than that in dividend payments. And if you take the midpoint, you probably have a bit of excess free cash flow beyond that. Can you maybe speak to your priorities on that excess free cash flow between continuing to whittle away at the debt, share buybacks? And then perhaps what the parameters around dividend growth would be? And what sort of time frame investors would be thinking about you evaluating those on?
Thanh Kang: Sure. Thanks, Patrick. It's Thanh here. With respect to the dividend, we're certainly comfortable around the sustainability of it. And what I mean by that is we look at it being fully funded both the dividend and our maintenance capital down to $50 WTI and $2 gas. Longer term, we do want to increase the dividend consistent with our targeted growth rate, in that 3% to 8% production per share growth. At this time, though, given the yield at about 7% and where Whitecap is currently trading at, our focus would be on share buybacks. When we look at our return of capital framework being 75% of our free cash flow, this would be after our capital spending of that $1.1 billion to $1.2 billion there. So 75% back to our shareholders in the form of either dividends or share buybacks, we think that's a healthy return back to our shareholders there. So it's important for us to continue to improve our balance sheet. I mean, it's in excellent shape right now. But we'll still continue to direct 25% of our free cash flow back to the balance sheet. And this will allow us to capture future opportunities including a more aggressive share buyback program as we think about the business going forward here.
Patrick O'Rourke: Okay. Thank you. And then just on the operational side, maybe just a little bit further on some of the questions that Travis was asking. But I look back to the 2024 budget and the well allocation between the Duvernay and the Montney favored the Montney in terms of the number of spuds that were forecast there. This year, it's sort of reversed and almost completely flipped in terms of the ratio. And I'm wondering what is the key driver there? Is that -- is this an economic view? Or is this more about managing kind of the infrastructure and timing of infrastructure additions and/or the inventory as you spoke to before?
Joey Wong: Yes, I can take that one there as well. It's Joey here. So yes, the answer to that one is pretty simple and actually right contained in your question there. It's both economics and infrastructure. As we're all aware, we've seen some really compelling results from the area on our operated lands. And as we've noted, we found some pretty good efficiencies along the way on the execution side. So with respect to that available capacity, as it stands right now, we have a plant that's currently putting through about 110 million a day of gas on a raw basis. So by the time we then utilize that available offload that we spoke to at the nearby third-party plant we have the ability to get up to about 200 million a day out of the area. So that will take our production from in and around that 20,000 BOEs a day that we're seeing right now to something in the range of 30,000 to 35,000 BOEs a day or slightly higher than that. So really, it's just, like I said, a matter of taking advantage of really good inventory and available infrastructure.
Patrick O'Rourke: Okay, thank you very much.
Operator: Thank you. Next question will be from Luke Davis at Raymond James. Please go ahead.
Luke Davis: Yes, thanks. Good morning guys. Just had a quick question on the 2025 guidance. The run rate on liquids ratio within corporate bonds is about 65% as of Q3, couple of points drop into 2025 and you kind of know outperformance across the board on the liquid side of things. So is that a function of a higher weighting to drilling in the West part of the business? Is it a function of facility constraints or something else that I'm not thinking about?
Joey Wong: Yes. Luke, Joey Wong here. Yes, that's just going to come as a result of the balance of the capital program like you indicated there is nothing that's holding us back on a facility or infrastructure side. When it comes to allocating that capital right now, of course, given the commodity prices in front of us. You can kind of see that in how we prioritize specifically our unconventional development is targeting those liquids anchored inventory sets there. And then, of course, like we identified there with a healthy amount, roughly half going to the conventional side to keep that roughly flat and including the 75% to 80% liquid that we're seeing on that side.
Thanh Kang: Yes. And the only thing I'd add there, Luke, is that this year, we're averaging about 64% liquids and there's a slight decline to that, obviously, as we continue to build out the Montney and the Duvernay, and that's expected to average about 63% in 2025.
Luke Davis: That's helpful. Thanks. And I guess just beyond that, would you expect any material changes through the back end of 2025 or 2026?
Thanh Kang: You mean in terms of the liquids weighting there, Luke?
Luke Davis: That's right. Just given how the growth is structured.
Thanh Kang: Yes. As we look at our five-year plan, that decreases to somewhere in that 60% at the end of the five years. So still the majority of our production as well as our cash flows are driven by the liquids portion of it. So it will go from 64% currently to 63% as an ultimately to about 60% at the end of the five years.
Luke Davis: Great, it's helpful. Thank you.
Operator: Thank you. [Operator Instructions] And your next question will be from Michael [indiscernible] at HTM Research. Please go ahead.
Unidentified Analyst: Good morning guys. Thanks for taking my question. Congrats on your performance this quarter, you'll have to see it. I just have a question on 2025 capital budget in the unconventional business unit. It looks like you guys are planning on spending about $575 million at the midpoint to drill and complete around kind of 32 wells. Do you guys have any color just around the balance of that allocation towards infrastructure projects and half cycle spending sort of drilling and completion spending and what kind of, I estimate kind of $200 million, $250 million to go towards full cycle spending? And what projects that will tackle? Thanks guys.
Thanh Kang: Yes. I'll take a first crack at that here. It's Thanh and then Joey can comment more on the details there. So within our $1.1 billion to $1.2 billion, there's about $165 million or 14% of our budget that we're allocating towards infrastructure spending there. And that's split between about $95 million on our unconventional, which is really around compression and water handling. And then the remainder, $65 million on our conventional assets. And that's really just normal course optimization initiatives. So pretty similar, I would say, to what we allocated in 2024 at about $150 million. So that would be where the bulk of the capital and the infrastructure is being allocated towards.
Grant Fagerheim: Any other question, Sylvie?
Operator: Michael, did you have any further questions?
Unidentified Analyst: No, no. Thanks.
Operator: Thank you. And at this time, Mr. Fagerheim, we have no other questions registered. Please proceed.
Grant Fagerheim: Okay. Well, thank you, Sylvie. And I want to thank everyone for joining us and listening in today. Wishing you all the best, and we look forward to continued success and coming back to the success that we've been having to date. Thanks very much for listening in.
Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
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