Expand Energy Corporation (EXE) Earnings Call Transcript & Summary

Keep rolling on here. And delighted -- I think for those of you, who heard me speak yesterday, we tried to make a little bit of a focus on gas this year. So we are delighted to have Chesapeake here. Obviously, Chesapeake -- I guess I can't remember if you guys came down in 2019. But certainly, the last 2 or 3 years, there have been a lot of changes in the company, obviously. And we've seen them reemerge from bankruptcy. We've seen significant acquisitions, completely reshaped the company. And Josh is going to, hopefully, tell us a little bit about how some of that is playing out. So basically, we have Josh Viets, EVP and COO of Chesapeake. Josh used to be at ConocoPhillips. I guess, how long were you at ConocoPhillips?

20 years.

20 years. So today, I'm joined by Gregg Brody, who's going to walk through some of the more topical balance sheet [ issues ]. But Josh, I guess I'm going to come sit here with you. Perhaps the burning question for me right now is you're going through your Eagle Ford sale. This will kind of kick off discussion. And I know there's limited you can say about that. But I am curious about what that then leaves you as predominantly a natural gas obviously levered company. So can you walk us through the extent you can? Any updates on the Eagle Ford? And then how you feel about greater overall exposure to the gas market?

Yes. So as Doug mentioned, we somewhat muted on the comments around Eagle Ford. Obviously, we're in the middle of the process, and we want to respect that process, as it's run its course. But what I would say is we've been really pleased with the interest that we've seen in the asset to date. So I think we're going to remain optimistic. I mean, I think it's a great question because clearly, with the sale of the Eagle Ford, where we produced just over 50,000 barrels a day of oil, it's leading to us as a pure natural gas company. And so that was something we talked a lot about and thought about what are the implications, are we comfortable making this move? And I think what I would say is we remain bullish on the outlook for natural gas. There's no doubt we could see some volatility in the near term. But as you get out into 2025 and you see this next wave of LNG come in, you're talking about maybe another 5.7 bcf a day of incremental demand coming in through with this next wave of LNG, we simply see a shortfall of gas in the markets to be able to fuel that. And so as such, we see ourselves extremely well positioned with our portfolio, to be able to meet that demand need and such, be very successful going in the future with the portfolio we have today.

So I know you don't want to talk about Eagle Ford process, but I think Nick has been pretty candid about the fact that you had significant incoming. So it seems that there's a significant amount of interest. So assuming there is a sale at some point, what would be the plan for the proceeds?

Well, with that, we do expect to have some tax leakage. The basis on the asset is relatively low. And so we do expect some of that to go back as part of the tax payment. Beyond that, we are going to look at paying down a little bit of debt. We think it's really important that we maintain our leverage ratio. So I think the next use of proceeds would be will be to mature some -- retire some debt. And then beyond that, we are going to be primarily focused on buying back additional shares. And so that's something that we'll monitor how our equity is trading and as those proceeds are coming in, and we'll be opportunistic about using the proceeds towards buybacks when we can.

Is it coincident that the warrant situation has -- there's obviously been an attempt to buy -- monetize some of those warrants or at least cancel them out. Would the buyback be an offset to that? Was that part of the intent on the timing of the warrant buyback by now?

No. We really looked at the warrant tender outside of any sales process. We really didn't link the 2 together. As we were just simply looking at the fundamentals around how our shares were trading, there were some elements to it that stood out to us. And it was pretty apparent that the warrants were creating a problem. And so through the warrant tender process, we've been able to reduce our short interest equity flow by 55%. And where we see that short interest flow today is well within where the peers were. Where it was previously, it was in the 15% range. So we do believe that we were effective in that process. And yes, we did issue some additional shares to make offset the holders of the warrants. But again, I would just say I would decouple the 2 processes.

Okay. I don't want to stray too far into Gregg's line here, so I'm going to go back to some of the operational items. So obviously, the 2 acquisitions that you've done, Vine and Chief, where has that left you in terms of running room inventory depth? And I guess I always like to ask these kind of look-back questions. What have you learned since you acquired those, good and bad, from both assets?

Yes. I'll start with Vine. Of course, we closed the transaction with Vine in November of last year. We really feel like that's helped to bolster our portfolio there. It did help us solidify a position in the southern part of the Louisiana play, again, just offsetting our acreage. And probably one of the things that's most material is really the prospectivity of the Bossier formation itself. We -- Chesapeake, through the year, have dabbled in that a little bit, but really didn't have as much data that Vine had with it. And so one of the things that's allowing us to do is to actually look at opportunities to extend the Bossier play outline further into the legacy Chesapeake position, which would only be accretive to the overall location count there. So as we look at the Haynesville today, we're sitting with roughly 15 years of inventory that we feel pretty good about in terms of where the breakeven sit. In the case of the Marcellus with the Chief transaction, again, we're sitting right out or maybe just above 15 years of inventory. And I think what was so beneficial on that was not just the locations themselves, but with the Chief transaction, we all shared a common gathering system. And so as you think about maximizing the return on the well, if I go drill a well into a spot of the field where it's pressured up, because an offset operator has also been drilling, I now control that. And that allows us to really be methodical about how we plan our developments. We're going to go drill in places where there's available gathering space, and we influence that outcome. That creates value for the company.

So I guess you've touched on gathering and takeaway, I guess, is a logical question that follows. So maybe we could address that on both basins, then we'll get the productivity because obviously, you were the first to come out really with your Upper Marcellus comments recently. So as things stand today, are either basin planned to be material growth? Or is it more of a stay flat? You're adding a rig, obviously, in the Haynesville. But is the general strategy still to be an X growth outlook? In which case, what does that say about your takeaway capacity?

Yes. So let me start with the Marcellus. I mean we do expect the Marcellus to be somewhat constrained for the foreseeable future. And so our expectations with that asset are to run roughly 5 rigs. We think that holds us flat in the 1.92 bcf a day range. And until something changes from an export standpoint in that basin, we expect that's where we're going to be. As we look at the Haynesville, it is a little bit different story. We've seen that program this year for us fluctuate between 5 and 7 rigs. We started the year at 6, we went down to 5 in the second quarter, and now we just brought in a seventh rig. That is really driven by how we see the gathering and treatment within the field and also transport out of the basin. And so we do think that's going to continue to be a bottleneck. But why we're so bullish on the Haynesville is we do believe infrastructure will get expanded there. We do believe that additional gathering treatment will be built. We do expect additional transport to be built. It's proximal to the U.S. Gulf Coast, and so that creates another demand center to be able to pull an additional gas. And so we do see an opportunity to grow the Haynesville. I think for us, our conversations are centered around timing. When does it make sense to start growing? Again, long-term prospects, 2025-plus look great. Where does 2023 and '24 play out? There's likely going to be some pressure on that. And so really, for us, it's about retaining flexibility. Yes, we brought in the seventh rig, but we are prepared to go to 8 if we see prices remain steady, if we see a cold winter. If we see prices soften further, we're not afraid to get back to 6 or maybe even to 5 rigs, if that's what we need to.

But to be clear, there -- and I don't want to put words in your mouth, but my understanding was when you sold the Eagle Ford, there was additional capital flexibility to put activity back into the Haynesville. But then you -- the original plan was to have an eighth rig, and then that seemed to get dropped. Is that a takeaway issue or...

It is not a takeaway. It's purely a view of how we see gas prices shaping up just with the softness that we'd expect. And it's just -- if we start seeing prices that are down around $4 in next year, we're going to think really hard about how much activity we want to run given the current outlook on service cost.

Forgive me for this next one, but one of your -- it's a competitive business. One of your peers likes to point a finger and say, "Well, the acquisition we did had the ample takeaway, the acquisition they did, Chesapeake, didn't have takeaway." What's the true story?

Well, there is some truth that we needed to rebuild an FT portfolio. Of course, one of the downsides -- I mean you say it's a downside in retrospect. But through bankruptcy, we essentially eliminated all the FT that we had. And so there is an element to rebuild some of that. But I'd also say we like the flexibility that we retain right now. We're able to go out into the market, and we're able to contract transport space. We've been doing so. We've added over a bcf just in the last quarter. So we're able to do that. And what we really like about it, again, as you think about the near-term prospects of gas, is we have the flexibility if we need to ramp down and allow production to fall just a little bit. I'm not stuck with a take-or-pay. And so listen, you love FT when you really need it, and you hate it when you don't need it. And so we will continue to maintain some flexibility. I mean, as we think about over the next 5-year time frame, so we'll target 50% to 60% FT. It's not 100%. Now as I look out a year or maybe 2 years, that number is going to creep higher, but that's going to be done through short-term sales agreements and FT deals, much like we just did with Golden Pass. So we're really happy with where we sit today, and we were going to take advantage of the flexibility that we have.

I want to come back to some of the productivity issues and so on, but I want to be respectful to my colleague here, so I'm going to pass it to Gregg for a couple.

I'll keep it short since you're left that levered -- actually, really low levered. So you talked about the flexibility, clearly having a stronger balance sheet, great flexibility as well. I know you're looking at potentially divesting the Eagle Ford. You've commented about how you're thinking about deleveraging some with the proceeds. But what is the philosophy internally as to -- do any initial investment grade, the 1x target or less, where does that come from? And does that change if you get slightly smaller by selling Eagle Ford?

The 1 times is really ingrained in us. I think that is a nonnegotiable is the way that we do think about that. And I think that will continue to guide us through any -- what we saw a downturn in commodities. We want to maintain that flexibility. And also, we think about that onetime as being really important, as we think about doing any incremental M&A transaction. Clearly, are there aspirations for investment grade? And so that's something that we continue to work with the credit agencies on. We think all of our metrics that we have satisfy the requirements. But again, we are just about 2 years beyond bankruptcy, and it will be a little bit of timing now before we achieve that. But we're going to remain diligent and patient and continue to work towards that.

Does the need to get to investment grade -- or the desire, excuse me -- is there a need to do some of the things you want to do downstream? Or you don't think you need it?

No. What we're finding is, it would definitely be of a benefit but is not a necessity. And so I wouldn't say that's necessarily our motivation is to allow us to use the IG status to achieve some form of a commercial arrangement with an international buyer. We don't see that, but it would definitely help.

Actually, that's a great segue because Brad, before he left, articulated that your LNG strategy, the management mindset had completely changed. LNG was going to be next great thing, and Chesapeake needed to position itself to participate in that. Can you elaborate as to what that's meant strategically? So how does -- how do you position the company to -- along with everybody else, which is trying to do the same thing, to be the incremental molecule that can get that, let's say, international pricing exposure?

Well, I mean, first, I think we just have to acknowledge, the world needs more energy. And that's, of course, what's creating the demand for the LNG. The way we tend to think about it and strategically why we think it makes sense is purely related to pricing diversification. We believe that there is benefits in selling gas in basin, moving it out of basin, move it into an international pricing index. And so we're not necessarily going to jump in and start talking about 75% of our gas is indexed to international price. Instead, it's 15% to 20%, which we think is a pretty good balance in order to maintain this diversification. Because we all know, though, that arbitrage exists today, it will disappear. And there will be times where gas being sold internationally from the U.S. is underwater due to...

[indiscernible]

That's right. And it will happen again. And as good as things feel right now, that will happen. So again, as a diversification strategy, we think it makes an awful lot of sense. And we believe that roughly 15% to 20% is a pretty good fit to fit into our existing portfolio.

Just to be clear, you haven't contracted anything yet, right?

No. That's correct.

Okay. So what gives you the confidence that -- well, maybe I'll ask the question differently. Are you talking about Gulf Coast flange pricing? Or are you talking about actual international price exposure?

It is international price exposure to the 15% to 20%.

How do you get that? How do you negotiate that?

Well, I mean, there's a number of commercial structures in which we can make that happen. But we are actively discussing with international utilities and international traders through sales agreements. And of course, there's a tolling mechanism in between. And again, the specifics of that, there's a number of ways it could happen, but that's what we're working through right now. And so we continue to make progress on that. We've had multiple trips to Europe, again, talking directly to purchasers.

I think we're taking you in January, if I'm not mistaken.

I think that is the goal. And so we think those opportunities are there. People are interested in Chesapeake because of the size of our inventory that we have. We have depth to be able to support a longer-term agreement. And they also like our -- the fact that all of our gas is responsibly sourced as well, and that's definitely of interest to them.

I'm curious there's been some situations that we've become aware of where that responsibly sourced gas or green gas, whatever you want to call it, attracts a premium. Is that entered into your thinking?

Not necessarily. As we think about responsibly source gas, I mean, I think we tend to think about it. It's just simply the right thing to do and very much aligns with our core values as a company. We do get asked a lot is our premium. It's a premium that's not worth modeling, and I think that's probably we know where I would lead that.

Moral high ground.

Yes. That's right.

Maybe we could just go back to the M&A question again. And again, in these kind of situations, there's only so much you can say, but you have been quite acquisitive. You've proven to be good at it, meaning you've absorbed, you've executed, you've identified opportunities. We're also aware that there's a number of private companies, particularly in the Haynesville, that had pursued processes or maybe still be pursuing processes. To the extent you can frame the M&A backdrop for the industry in your core basins and your appetite to continue to grow through acquisition, how should we be thinking about it?

Well, as far as the backdrop, I mean, we have seen through the course of the year, and I think the sentiment still exists. I think there's just simply a disconnect between the bid and ask price.

Still?

Still. And we still see that today. There's a ton of uncertainty on the back end of where we see the strip going. I think that's creating a problem. I think the other issue that we've seen, at least with some of the more recent deals that have come forward, people publicly talking about marketing their assets is they've built up a really big business, a lot of PDP. And it really kind of starts coming down to -- of what's left on the bone. Well, first of all, am I comfortable buying that PDP at the pricing that's sitting out there on the strip? And then the second thing is there are enough meat left on the bone that I could create incremental value from it? And when you have a large asset, especially in the Haynesville with higher decline rates, there's just some risk. And so we're going to be very, very disciplined in that approach. And as we talk about our M&A nonnegotiables, our goal is not getting bigger. We've got to get better. And we're also going to ensure that we don't over lever up. And we're also going to ensure that if we do a transaction, it's going to be accretive on all the key financial metrics. And so in other words, the bar is really high. And when you do a transaction or transactions like Vine and Chief that you look back and think those were great. They really are. It's hard to supersede that and overcome and find a deal that's attractive. So we feel like we can be patient. We don't feel the need to go out and grow. But instead, we're going to be opportunistic. We're going to leverage our strong asset base. We're going to leverage our balance sheet position. And if we find ourselves at a time where we see an opportunity, we're in a position to go act upon that.

Okay. I want to come back to the macro just for a second, and it's a bit self-serving, the question. But our understanding is when those privates -- and I think we don't know who we're talking about, we're in the process of pursuing an exit strategy, if you want to call it that, but they had also slowed down significantly activity levels. I'm just curious on your view on the in-basin growth both in the Marcellus to a lesser extent, but particularly in the Haynesville. Is that a reasonable framing of what was happening volumetrically in the basin? Or is it back to growing again?

I think, generally, you'll see a little bit of a slowdown. I don't think you see the same 2-plus bcf level of growth that we've seen this year heading to 2023. I think there's a couple of dynamics. I do think the larger privates are slowing down. They're realizing their PDP base has gotten too big. I think also service costs remain very high. And if you're running a subscale program, it gets really tough to stomach the high service costs that we're -- we experience, we all experience. And I think with the potential for a softening gas market coming next year, I mean, anecdotally, we're hearing that if an operator starts seeing $5 an Mcf or right around there, they start slowing down activity.

Really? Got you.

And amazing to think about it but...

Pretty good number, right?

$5 is a really good number, but think about the holders of the core acreage in the basin. It's companies like us. And so a lot of times, the smaller operators are left drilling on the fringes. And so if you're drilling fringe acreage and you're seeing high -- all-time high service cost, your breakevens don't look great and why not just sit on this a little bit if I think the prospects of gas prices are going to recover in the next 2 years. So I think that's the dynamic, and I think that's why we wouldn't be surprised if growth slow down a little bit in the Haynesville.

Okay. Well, that's good color. You did mention the cost comment. So of course, we've got to ask you about inflation. I guess I'm learning as we go here because my impression was that the Permian is the hot as we -- it's the worst possible inflationary environment. But we heard from Range Resources yesterday that even the Marcellus, they're seeing 20% inflation. So across your 2 basins, what's your experience of going into 2023? What are your expectations?

Yes. So I mean year-over-year in aggregate, I mean, I think we're thinking that somewhere in the 10% to 15% range. We did take on inflation. I'm going to start talking about '21 to '22. And then -- I think that's important to kind of set up how we think about '23. From '21 to '22 in the Marcellus, we were probably in the 15% to 20% inflationary range, again, year-over-year. In the Haynesville, it was probably double that. It was probably looking at anywhere from 30% to 40% inflation. Eagle Ford would have been something similar to that as well. As we look at the contracts we have, the activity we're planning to run, the type of program, just looking at the cost per foot metric, we expect to be within a couple of percent in the Marcellus of well cost year-over-year, '22 to '23. So very little inflation. Some of that is based upon the program that we're executing, some longer barrels, more wells per pad. So our -- actually, our well cost on a per-foot basis in Marcellus is going to be relatively flat. We are anticipating somewhere in the 10% range, if not a little bit higher, in the Haynesville next year.

Low end than compared to your peers, though?

It would be. And again, a lot of that is just how we've tried to position the program, taking on a little bit higher cost in 2022 by blending and extending contracts to provide ourselves a little bit more surety on pricing as we head into 2023.

Is -- I mean I'm curious if you try to other rig tomorrow, we heard earlier from discussion with Ovintiv that the way Greg described, which I thought was a pretty interesting way of putting it was that the flexibility the industry used to have to add and subtract rigs and add and subtract people and add and subtract frac crews just isn't there anymore. Would you concur with that? And if so, how come you're able to hold your inflation at those low numbers?

Well, we -- again, we've been pretty successful. We've just added a rig just in the last month. And clearly, we're seeing higher rig rates than we were the year before. But again, what we're able to do is to leverage the full portfolio where today, we're running 14 rigs. And in situations where we can -- we feel comfortable signing a rig up, let's say, for a longer contract, that's going to bring back with at a lower day rate.

So there are still -- I mean, can you put up -- not to be too specific, but can you put some kind of number around that? I mean let me start it for you. So our service team [indiscernible] earlier this year that rig rates were capping out in the 30s, and then we go out to Midland and -- a month or 2 ago and they were saying, "Oh, if you want a rig today, it's $45,000 a day." So blend and extend, what does it get you?

Yes. We're going to be in the lower to mid-30s and now great for the program.

And if you weren't blending, what would it be?

We have seen prices in the $40,000 for quotes on rigs. So that data prospects you have is valid. And again, a lot of it will depend on the tenor. If I wanted a well-to-well contract, you can guarantee you're going to be paying in the mid-40s. If you have the flexibility within your fleet to take on a new rig today, that's maybe a year or 2 years long. That's where you're able to protect yourself from some of the inflationary pressures.

Okay. So let's talk some of the offsets to inflation. And it's not necessarily the cost but more the activity level. Productivity is better. You don't do as much activity sometimes. So let's talk about productivity trends in the Marcellus relative to the Haynesville, and this is really my Upper Marcellus question. So I think you came out and talked about 70%, more or less, productivity in the upper relative to the low...

Yes. It was just over -- it was 22%.

So basically, when you talk about 15 years of inventory, is that combined?

Yes, it is. And so if you think about the Marcellus specifically, there's roughly 1,400 locations. And it's about 55% of that inventory is in the upper, 45% is lower, as we characterize the inventory today.

Right. Okay. But the 15 years combines both?

That is correct.

And when did you delineate the upper inventory?

Well, so we have roughly 100 Upper Marcellus wells that are online and producing today. And so we feel like we have a number of data points. And then, of course, as we develop the lower, we've drilled through it. And so that's allowed us to characterize it from a subsurface standpoint and have an understanding of where is it prospective or where is it not. And actually, one of the more important questions is, how do I need to develop that Upper Marcellus? And one of the really important components of the upper versus the lower is how much of a barrier do I have between the 2 zones? And it's what we refer to as the Cherry Valley. And as that Cherry Valley thins, which it does, as you move out to the western part of our acreage, that's where we start talking about co-development of the lower with the ever. And we think we need to do that simply to optimize value of the asset to optimize longevity. And at the end of the day, it optimizes returns of the whole program.

So when you talk about inventory depth, you're talking about consistent. I don't want to oversimplify it, an average -- is there anything changing in the productivity trend? You've obviously heard about the issues in the Permian or some of the single zone versus co-development and so on. What's your trend productivity look like?

Well, I mean, I think we try to take an average well that we would model throughout to generate NAV for any asset. But I mean, as you think about industry as a whole, and you referenced the trends in Permian, clearly, operators are having to move outside of the core, which generally do have lower productivity. And in most basins, the cores have been to develop. And that's what the focus was, as you can look back over 2019, 2020 and 2021 where activity was low. If I'm running 2 rigs in the Marcellus, all I'm drilling is core Lower Marcellus wells. If I'm running 5 rigs, I can't put all 5 rigs in the same spot. And so as programs expand, that requires me to look at different spots to drill because in these gas basins, what really matters is where do I have a gathering space. And so sometimes, it's just the nature of my development that is going to force me to go drill outside, which when you look at the basic plot of year-over-year productivity trends will show a decline, but a lot of that is just going to ultimately driven by where are my drilling within a given year.

So we're comfortable with the Marcellus, the productivity. I want to check even, Gregg, and you get -- let me know if you want to jump back in. What about Bossier, Haynesville?

I mentioned earlier that one of the things from the Vine transaction was understanding the Bossier better than what we did. The Bossier though, though we found the productivity to be better than what we thought, it is a very challenging target to drill and to frac. And so the costs are always going to be a little bit higher. And so when we look at the overall return profile between the Haynesville and the Bossier, the Haynesville will generally map out and show a better return profile. So I do think we're going to be biased towards the Haynesville. We have this year -- we have about 70% of the wells this year of the Haynesville. Next year, we'll probably end up being a little bit higher than that, 75% to 80%, in the Haynesville. But we still see that as a very valuable resource. And as I mentioned earlier, we see opportunities to actually extend that play outline and add potentially incremental inventory. And if it's not adding incremental inventory, that inventory looks more attractive than what it probably did a year or 2 ago.

And again, the 15 years does or does not include Bossier?

It does, yes.

But a small?

Yes. Well, it would be referenced in there, but it probably represents maybe 40% or so of our overall inventory, yes.

I seem to recall -- and I know we've got a few minutes left, but I want to get on to cash return. I'm going to ask cash returns on hedging but...

Actually, I thought we were going to avoid that.

No. It's the most interesting part of the discussion. Vine had a very sparsely drilled inventory, as we recollect, because we covered buying Vine back in day. Whereas I believe your inventory was similarly positioned in having been very lightly drilled because you backed away from it with all the issues going on before you joined basically. So how would you characterize that, the combined portfolio today in terms of the risk of productivity degradation through over drilling, if you like, which we've seen from some of your peers?

Well, I think -- I'm not sure I actually am concerned about that. And I think when we talk about over drilling, I think about well spacing. And if you look at the trends -- and this is -- really applies to the Marcellus and in the Haynesville. We generally have been less aggressive than our peers have with well spacing. In both plays, it's generally between 1,100 to 1,400 feet. And we don't see any reason to change that. Even as we've seen gas prices run up, we've looked at opportunities, should we be drilling more wells in a given section. And we don't see that opportunity to do that. Now what's one thing that is unique about the Vine acreage, it was less developed. And so one of the things that we are mindful of is anytime I go in, I drill my first well, that's always going to be my best. As I go and I start infill drilling, you will see some degradation from that original parent well. But by and large, we're really happy with the inventory that we have there. It's deep, it's high-quality, and we're excited about what the future holds.

Okay. So this is -- what you've articulated is great because it makes our job really easy, we think. We've got to make sure everybody knows it's a really difficult job, but -- that is actually. To try and articulate valuation, it's pretty simple. You tell us what your sustaining capital is, you tell us what your break-even economics are, you tell us your inventory debt, which is how long you can do it? And what drops out the other end is a discounted cash flow calculation depending what gas price you assume. So my got-you question, which you know I like to go after all the time is, does management and the Board at Chesapeake believe that your stock is undervalued?

I think most companies would agree that...

Got your question, right?

Yes. And I think that's the case. We do. And I think, again, most companies would. And we just simply look at where we see our intrinsic value relative to how it trades. That is true. So carry on, next question.

So to get to the way I just articulated my definition of value, you have to have an assumption on gas price to make that statement. What is your gas price view?

Well, I would say it's definitely changed from where it was, let's say, a year ago. And that mid-cycle price maybe historically was in that $2.50 to $2.75 range. I think today, with the outlook on the macro, I think we feel comfortable saying it's above $3. Whether that's $3.25, $3.50, I think that's anybody's guess at this point. But there's clearly been a reset of where we see the mid-cycle pricing.

And your balance sheet is in great shape?

It is, absolutely.

So why not buy back more stock?

Well -- and I think we have this debate...

I know. It's the variable dividend, buy back...

And I still -- I think back to our time in the car in New York running around with you and having this philosophical debate. But at the end of the day, we really do believe that our shareholders are interested in all of the above return framework. We are returning more cash than any of our peers. Year-to-date, it's about $1.9 billion that we returned to shareholders through both buybacks and a variable dividend or dividend in total. And $1.1 billion of that was through share buybacks. That's a lot to do within the course of the year. And so we go out and we constantly engage with our shareholders and we ask them, what do you prefer? What do you think about it? And by and large, the majority it's, we like the all the above. And we understand your argument. We respect your point of view. It's...

As the ex-CFO, I have -- but you raise a great point because at the end of the day, we asked the exact same question, I wouldn't names of other companies, and some of them say, they must have a different set of shareholders because they're saying, well, they don't -- they quite like the buyback and so on. But at the end of the day, it's a nice problem to have.

It is.

We're just a bit a bit focused on the fact that there is still a big dislocation in valuations, where we see the gas market, and maybe the market just hasn't caught up with that yet. I do want to raise a point in the 4 or 5 minutes we've got left, and it's actually something I should have bought up at the beginning. And it's about the role, the interaction between the Board and the management team in a post-bankruptcy situation. Because you're right, we did spend some time together in New York, which was a great opportunity to get to know the team again. But the Eagle Ford was defined in those discussions are still poor, 2 weeks later, the sales announced. What changed?

Well, I mean, I think the bottom line is, as you are the owner of an asset, externally, you're going to say, "I love the asset." And I think we were working through a process to really define how it best fit into the portfolio. We had to make a decision on how do we see the outlook on the macro. We had to get through the integration of 2 assets -- 2 large assets into the portfolio. And so that all really start to come together for us over the course of the summer. And as we assessed where the Vine transaction, the Chief transaction was going to leave us, we recognized that we felt really comfortable moving forward. And if we were going to truly be a holder of premium assets and be able to talk about a material amount of inventory depth and high-quality inventory debt, the Eagle Ford didn't fit that build for us. And so it was a tough decision, but we think it's the right decision, and we think it's going to create the most long-term value for our shareholders.

It's a strong loan market, no doubt.

That's right. Yes, that's absolutely right.

So I guess the last thing to finish off on then is you put 4 -- 3 companies together and you're selling one large asset. One assumes that when you do that, there's a portfolio of a high-grading exercise that follows that we probably haven't heard about yet. So to what extent do you expect that there will be monetization of additional assets?

At this point, that's not nothing that we're -- nothing we're planning on. We're really happy with the assets that we hold in the Marcellus and the Haynesville. And again, we are planning as if there will be a successful divestiture of the Eagle Ford. And so at that point, we're really well positioned. We like the acreage that we have there. We all -- we consider it all to be core, and we're anxious to get out and develop it.

Okay. Last question. Fourth quarter or first quarter, Eagle Ford?

It will be some time within the foreseeable future.

I got a couple of more if you...

Sure. Please, go ahead.

So selling the Eagle Ford make your investments in downstream and possible CCS. What's the logic there? And is that -- it's obviously a big opportunity, but help us think about that when you're selling something that's fairly large.

Well, I mean, I would say there's really no linkage between the 2. I'll maybe just kind of focus my comments on the Momentum pipe, which you referenced. I mean that was purely opportunistic. And we think that is -- it aligns so well with who we are as a company, which is we're going to be a major player in the Haynesville. We need to transport. It provides us with that. On the back end of that pipe is a CCS project. That supports our endeavors to be net zero by [indiscernible]. And so we're really excited about it. We have an opportunity to take up to 35% equity in that project, which includes the CCS element. And so there's going to be opportunities to take advantage of the 45Q tax credits as part of it. And so it just fits all the bills of what we're attempting to do, and we're extremely excited about the project.

How do you -- I appreciate that helped the downstream. When you think about a return on capital, is there -- was there some return that made sense? Or does it also fit with, look, hey, we're trying to have cleaner natural gas, get into net zero, whatever your targets are?

Yes. I mean the primary driver was we need to transport and we want to transport at a rate that we thought it was at market, and that's what we got. We got extremely competitive rates on that. Again, we obviously can't discuss that, but that was the primary value driver. The CCS component of it was that was a tack on, if you want to think about it that way, that really fit nicely into what we're doing as part of our low carbonate ventures.

We could see more of that? Or if that was just an opportunity to...

I think it's opportunistic. We keep a pretty tight eye on that. Again, we have a net-zero ambition, and so we need to be mindful of what are going to be the mechanisms in which we achieve those goals.

Right. Josh, thanks very much, indeed. Appreciate you being here.

Yes. Thank you.

Thank you.