Permian Resources Corporation (PR) Earnings Call Transcript & Summary

Well, I'll kick it off. So on behalf of the Barclays Energy Research Team, we're delighted to have you join the 38th CEO, Power Energy Conference. My name is Betty Jiang. I cover the integrated and the earth. So this track is dedicated to the upstream companies of global [indiscernible] the next couple of days, you'll be hearing a lot from companies. We -- let me quickly talk about the 3 things that we're looking for [Technical Difficulty] get started. One of the things -- the key theme topic to discuss is really about power. It's less consensus -- the debate is less about how much power growth is coming, but how are we going to power that into growth. We are of the view that we need both conventional and new energy -- specifically. So certainly, gas macro and development [Technical Difficulty] The second thing we're listening for is capital efficiency, like we're hearing a lot about companies continuing to do more with less equipment as a tailwind in 2025, so other [Technical Difficulty] listening for on how that [indiscernible] with the company continue to focus on cash returns and prioritizing that, which has been a theme. And lastly, certainly, M&A is very topical as we get through a record wave of consolidation, what's next in the industry because buyers are now [Technical Difficulty] sellers and as we think about portfolio rationalization, where does that go from. So with that, really delighted to have Permian Resources to kick us off on E&P upstream track here. Permian Resources is a pure play Delaware E&P that has grown significantly through M&A over the last few years. And from the company, we have Will Hickey, Co-CEO; and we have Guy Oliphint, CFO EVP and CFO. So with that, I will hand it off to Will to have some prepared remarks, and we'll go for there.

Thank you. Okay. Thanks for having me. I've got -- we've got about a 15 slide deck here, we'll try to get through, and then we can do the fireside chat. Guy and I will split up this deck. But to kick it off, I thought this is our place mark first slide, we always show investor presentations. And for us, it's a little bit unique this year. Barclays is actually the beginning of PR. If I went back 2 years ago, we formed Permian Resources. It was a merger between Colgate and Centennial, and the company's kind of first day was September 1 of '22. So this almost to the day, 2 years, I remember this was the first conference we came to and we were here getting questions about co-CEOs and all sorts of kind of unique to PR questions that I think we've since answered at length, and it feels like the questions are a lot different today. But it's fun to look at the stats. I mean if you think about the business when we first went public, we were -- I went back and looked at this exact slide from 2 years ago. It was 180,000 acres and 155,000 barrels of oil equivalent per day. So I'd say more than double depending on which metric you look at is the size of the footprint. And it's really not just the growth that we've had over the last 2 years. It's really the way we've done it. I think we've done it the right way. We've been very, very focused on creating value on a per share basis, trying to grow the business on a per share basis, not just grow the business with kind of no value in mind and the equities performed because of that. I think this has been a very good story, a story of a Delaware-based and focused company, a highly aligned management team, conservative leverage through M&A and really trying to find where the value is. In some years, we're doing big deals, some of years smaller deals, but always really focused on cost leadership and trying to drive value for shareholders in the Delaware Basin. One thing that I think has come together, and I probably have a better answer today than I had 2 years ago is really what is our corporate identity or what is our strategy. And this flywheel on the side, I think, is a good example of how we think about the business. I'd say, first, we're a Permian Basin pure play, but really Delaware Basin is the focus. We've got -- that's where the overwhelming majority of our rigs will be over 90% of our capital be allocated to the Delaware, and I really don't see that changing in the short term. And really that focus on one basin allows us to be a cost leader. We are -- we built this company to be a low-cost operator. We are based in Midland. We are hyper focused on trying to drive cost out of the business, drive the synergies that we talked about earlier every day. And I think having a single basin because really allows us to be an expert in that basin. We mind kind of our cost leadership, our focus on one in the relationships we have there and our understanding really all those 3 together, the understanding of the rock, the relationships in Midland and the cost leadership allows us to do very accretive M&A. We are -- we know no rock is left unturned. We kind of know who owns every section, who's likely to sell, when they're likely to sell. We run into them at lunch time, sometimes in the Petroleum Club, et cetera. And that's a big part of our M&A strategy. I wouldn't say M&A is something that we have to do. It's more opportunistic, but it's something that's been a big part of our story to date. And then last but not least is kind of our financial strength. I'd say this is a cyclical business and we've learned over the last 10 years out here in the Delaware Basin doing this, that having the balance sheet strength in a downturn is more valuable than you could ever imagine. And that flexibility allows us to do things that we otherwise wouldn't be able to do. And so you'll see kind of through the M&A we've done for example, our Oxy acquisition was a deal that easily could have kind of taken down all on the balance sheet or done it all out of cash. But instead, we financed about 50% equity and 50% debt. And that's really just a long-term strategy to make sure that we keep our balance sheet very much kind of in check and conservative in nature. The right section of what this is driven, I'd say more than just the production growth, it's driven a 1.5x production per share growth over the last 2 years. You see free cash flow per share up 65% and doubled liquidity, all still kind of while maintaining less than 1x leverage. So this is the strategy. I don't really don't see this strategy changing, and we think there's still plenty to do in the Delaware. Speaking of the Delaware, just kind of high level, I'd say, I mean this is -- you all know the Delaware Basin, but this is a unique chart to kind of really help visualize the magnitude of how big this basin is. It's not just big early. It's a huge footprint from just a square mile perspective. But if you look at it in 3 dimensions, I mean, this is with over 4,000 feet of stacked pay. This is just a meaningfully amount more oil in place and more resource to go capture than the rest of the onshore U.S. basins. And kind of, so what does that mean? It means it's got 13 producing intervals. I'd say it means there's over 30,000 remaining kind of enveloped locations. Those locations historically have driven the most productivity per foot of any oil well in onshore U.S. And so this is a huge basin. I'd say we still have work to do on the cost side. There are other basins that are cheaper to extract the oil, but from a per well basis and future running room, this is the place to be. And PR, this is where we are. We showed 12 rigs a year, those 12 rigs on any given day will be kind of 10 to 12 that are on the Delaware side of the basin, and this is where they will stay. We think there's still plenty to do and kind of plenty of value to go capture on the Delaware side. I mentioned this earlier, but just from a cost perspective, I guess, is really, really key to who we are. If we're going to continue to be successful, this is our sustainable competitive advantage. We've got to continue to drive cost out of the system. This is really how we built the team. Like everything we did when we built the company was around how do we manage costs and how do we continue to drive efficiencies. A lot of that based in headquartered in Midland, A lot of that's the people we've hired. It's our approach to Well development. it's really a big part of everything we've done. I think it's worth noting that this kind of cost reduction that we've driven over the last couple of years has been in spite of a lot of big M&A. On the LOE side, we integrated an Earthstone acquisition, which is a $2 billion acquisition. It was meaningfully higher operating costs than we were. And just 4 to 5 months later, we were able to kind of revert back to legacy Permian Resources cost metrics. And I think that's a big testament both to our team, kind of our strategy and that is the recipe that we've kind of laid out is working and working well. M&A, so we mentioned we talked about M&A, this is kind of how we think about M&A. Obviously, it's been a big part of our story backward looking. What it will look like forward looking, I think, is a little bit TBD. But everything we're doing, I think, fits pretty clearly into 1 of 3 buckets. The first being kind of corporate M&A. This is the Earthstone deal. This is buying businesses. I'd say, typically, these are opportunistic in nature and needs to have a willing buyer, willing to sell or kind of stars up to align. I think the Earthstone deals a unique one to talk about. I'd say that's one where we early on identify value. We thought that was a significantly undervalued business that we could drive value both via the rock that was already in place, but also our ability to execute on extracting that oil, drilling those wells meaningfully cheaper. This is one that like when we signed up the Earthstone to us, our Board and our team were extremely convicted. This was a home run deal. But I'd say it took the market a little time to get there. Like first reaction was, really Earthstone. And how do you feel about this, et cetera? And this is one, I think, over the coming months and quarters, we were really able to demonstrate the value proposition and kind of hindsight looking back now, I think everyone can clearly see that why this made so much sense for PR. On the bolt-on side, we've done 6 bolt-ons over the last 2 years for about $1.4 billion of total value. The most recent being the Oxy deal, which should close sometime in the end of this quarter. And really, those are I'd say much easier to do. They don't involve people as often, it's the last kind of pro forma financials and all the tough integrations of accounting, but you can really still drive scale here. There's -- we're doing now deals that are almost upwards of $1 billion calling on bolt-ons is kind of a new world to us, but I think that's the way we treat them. These are assets that share 20, 25-mile lease line. These are assets that we typically have a cost advantage in the underwriting. And I think the go-forward prospectivity on bolt-ons is still good, albeit the kind of big wave of them probably has kind of already passed over the last couple of years. And then the last slide is grassroot. I don't want just to be kind of overlooked. This is something that -- this is how we built the business and we started the predecessor company in 2015. This is how we got started. It was small-scale running brokers, really small deals that added up. And typically, these help get a foothold in an area before a bolt-on or these are additive to an asset after a bolt-on, kind of this is the stuff around the edge that I think really drives that incremental outperformance and will continue to be a big part of the business going forward. With that, I'll finish it up.

Thanks, Will. Moving to the balance sheet. An important part of the PR story has been a consistent, disciplined financial strategy going back to the days of the Colgate predecessor. With our management team's significant PR ownership, we want to drive value through cycles and make sure we derisk the balance sheet to thrive in these down markets. We have investment-grade credit metrics today. We are putting for investment-grade credit ratings, working really closely with the agencies. We've received upgrades from all 3 in the last several months. Today, we're rated BAA to BB, BB+. We're on track to receive those ratings while we've executed on a really accretive M&A strategy because we haven't compromised our financial strategy and priorities. A great example of this is the Oxy transaction. We announced that deal was $800 million Concurrently with that, we announced a $400 million equity offering and a $1 billion bond offering. That allowed us to finance that really accretive acquisition with about 50% equity and at the same time, maintain leverage within our target fully repay our RBL and repay 2026 maturities. We don't think there's another story like this where somebody has executed on this sort of free cash flow per share growth while maintaining and strengthening our balance sheet. Where does that put us today? We're in awesome shape on the balance sheet side. We've got a borrowing base of $4 billion. We have an elected commitment of $2.5 billion is undrawn. We had a strong hedge book in place that's consistent with our historical hedge policy with -- percent hedged in '24, at $74 a barrel and we're over 40,000 barrels a day hedged in 2025 at $73 per barrel. We've got leverage at 1x and we've got a long-dated maturity profile. So in short, we are in a position to play [indiscernible] throughout the commodity price cycle. We really covered kind of what we've been focused on since the formation of PR and this slide kind of really distills what the results of that were. Slide 11 is third-party research. It's '24 production and cash flow growth for debt adjusted share for us versus our peers. We'll notice this, this is really our focus. We want to build per share growth either with our existing assets and team and through acquisitions. And to date, this focus has translated to leading total shareholder return. This slide only shows this year. Our focus is really on long-term free cash flow per share growth. I'd say, duration of accretion is really important to us. We aren't going to focus on short-term accretion for acquisitions that don't make our business better. And I'd say we've really demonstrated this on both Earthstone and Oxy, we laid out both our near-term and long-term accretion estimates. How do we keep this up? Really just by keeping on doing what we're doing. We're going to work to continue to develop our high-return inventory. We want to extend our cost leadership and we want to continue to identify accretive consolidation opportunities. In short, we have a lot of paths to continue our leading shareholder return track record. Throughout of core slide just to kind of hopefully brought all together, what we've accomplished. I think simultaneously driving really high free cash flow per share growth with not compromising the balance sheet. It's been important. That's what Will talked about. And we've shown we've been able to do that. We do think that's unique in the E&P space where our peers have either had less growth or [indiscernible] more growth through acquisitions that have been more leveraged financings. We did make an announcement this morning on kind of updated shareholder return policy. I think before we get into what that is, we kind of wanted to step back and talk about the drivers of the increase of our base dividend. I'd say we do and have thought the base dividend is the best form of cash return for our shareholders. It's visible and predictable, allows our investors to underwrite that portion of the shareholder return thesis for PR. Once we came to that conclusion, we really just selected a base dividend that our business could support it below $50 oil or oil for 2 years. And we kind of looked at the company and the foundation we have today where we've noted we have much meaningful -- more meaningful scale, much more meaningful free cash flow per share, all the while having a really strong balance sheet. In short, we have a really high-quality, durable business. Why change at all? When PR forms Will alluded to this 2 years ago, we had a lot of priorities. Our priorities were getting a merger done, continuing to execute in a really efficient manner and demonstrating we could drive leading shareholder return as a company. Really, we're trying to improve our capabilities and our value proposition in the market. At the time, we knew we had to have a meaningful dividend payout, just like all of our peers. And the formula was pretty standard. It was pay out somewhere between 50% and 100% of free cash flow. The thing we did feel strongly about was paying out 50% instead of 75% to 100% because we saw the consolidation opportunity in front of us. And luckily, that played out how we hoped. Today, we're just moving to a policy that's consistent with our belief that the base dividend is the most important and efficient mechanism for returning cash to our investors. So here's what we're doing. We're increasing the base dividend by 150% to $0.60 per share, that increases our base dividend yield to over 4%, which compares favorably to our peers and the S&P 500. We're eliminating the variable component of our dividend, and we're increasing the buyback authorization to $1 billion from $500 million. The bottom line is we're keenly focused on total shareholder return for PR, and we think this gives people a clearer view of the cash return portion of that equation. We have lots of routes to drive value and share price appreciation with the same smart capital allocation that we've demonstrated to date with which our new dividend policy is a great combination for our shareholders. Last, just to kind of reemphasize the value proposition for our investors. Since we were formed in '22, we've delivered best-in-class returns both for our sector and outpacing the S&P by over 2x. Our performance has really been driven to date by low-cost execution, financial discipline and accretive acquisitions. There's still a lot of room on the valuation side for our stock compared to peers. What we want to do is to continue to build on our track record quarter-by-quarter, we think there's a really clear path for us to continue to drive shareholder return.

Great. Thank you very much for that. All right. So let's kick it off. So well, the company changed a lot in the last year. So I want to start the conversation with how do you think about the long-term vision for this company? What type of company -- what do you want to be? Do you want -- you're already one of the most cost-efficient operator in the Delaware. So do you want to get bigger? Do you want to look beyond the Delaware? How do you think about this company long term?

I really think it's kind of similar I said in those prepared remarks around like we have -- I think we have a core strategy with a competitive advantage and have kind of formed our identity around low-cost leadership in the Delaware. And I don't want to put a hard line and say we would never leave the Delaware. But I do think as we look at M&A, we think about kind of why should we be the owner of these assets, what value can we drive for our shareholders. And it's really anchored in our understanding of the rock and our ability to execute low-cost operations in the Delaware. And as such, I feel like that's probably where we'll stay. I think what's less predictable is the pace of M&A. The last 2 years have been frantic as probably a friendly word for it from our perspective. It feels like we've been in the middle of dining or closing a deal for 2 years straight. And my crystal ball said that pace should slow slightly just given the opportunity set on the horizon seems to be less, the uniforms in the Delaware are not in a hurry, as I can tell and the kind of typical private equity sales. I think a lot of that backlog has been flushed out, and there's less to be done. So my expectation is you'll naturally see it slow. And I think, frankly, we're okay with that. We have a great business plan. We're going to continue to execute on our business plan. And opportunistically, I think the ground game piece of that M&A strategy will maintain its speed and it won't change much, but the corporate M&A or the bolt-ons may slow down. I think we're fine with that. And I could be wrong. You never know, M&A is an interesting cut where it takes both sides and so you never know how it's going to shake out.

Right. You did talk about how you think about the quality of doing quality M&A. And wondering what's your assessment? Like what's your criteria when you look at the opportunities that presented you, whether that's on the corporate side or on the ground game side? And maybe a follow-up to that is feels like a lot of high-quality assets have already transacted. So based on your criteria, is there even not many really attractive packages that will put your interest?

Yes. I think typically, when we say quality, it's to balance out the kind of near-term accretion side of the equation, and quality of us typically is focused on the inventory. It's kind of the balance being you need enough long-term inventory to drive long-term accretion, but you also want to have that kind of cash on cash this year, next year short-term accretion. And those are typically kind of the 2 ends of the tool to help me kind of balance out what I'd call good M&A. I don't necessarily think that we are short quality businesses in the Delaware to acquire. I think maybe the total flow of businesses that are going to transact over the next 2 years will be less than what we saw over the last 2 years. But I think from a quality perspective, the percentage of those are of high quality will be the same. And frankly, a lot of the high-quality businesses were ones who didn't sell over the last 2 years. And so time will tell. But we're not looking to do M&A to get bigger and make the business worse. It's kind of fairly simple that if for deals we want to do, we want to make sure it has the duration, the durability of the inventory and enough kind of near-term free cash flow to make -- kind of make sense across the whole span of what we look at. And if that's not what we can find, and we're happy to just kind of continue doing what we're doing with our own business.

Makes sense. And probably speaks volume to the Delaware Basin as a whole, just given the deep bench of resources that's available and then the scale of the basin. Maybe just on the bigger philosophy, balancing organic growth with cash return. I think you guys talked a lot about focusing on growth per share and times or at least in the past, a lot of that comes with some organic growth. And just given the speed of growth that the Permian Resources has already seen, that's been an area that has differentiated you guys as well. So how are you guys thinking about balancing that against cash return and other priorities.

I think the way we think about development pace implicitly kind of embeds cash return. We're really looking forward to figuring out paces, how fast is the next development pay out. And we're focused for incremental development on a very short-term payout, 12 to 18 months. So we're not doing a -- our model, not a 3-year investment to go hit oil in 2028. And the levers for us for increasing free cash flow organically are -- could be -- or production growth, but it could also be continuing to take cost out of the system over the same barrel that costing us. And so that's why I go back to -- we have plenty of ways to go grow free cash flow per share, both through acquisitions and through our organic business.

Great. Let's talk about the latest acquisition, the Barilla Draw, how do you see that fitting into the portfolio today? And any lessons that you have learned from all the deals that you have integrated in the past, what's the best way to extract value for new assets that you're just about to acquire?

Yes. So I mean Barilla Draw an asset that we have -- we've been buying all around it for a long time. So I'd say it's not that we've had our eyes on for a long time and it's kind of the timing finally lined up where we had a willing seller at the same time that we want to be a willing buyer. Look, I talked about where that fits in just like general M&A, that's a typical bolt-on for us. I mean that is -- I don't want to oversimplify what integrating that asset will look like. But on the grand scheme of things, that is a simple integration. We don't inherit a lot of people. We don't -- we share lease signs with it on. I think it's about 20 miles of lease sign. Like this is an asset that we're running kind of on any given day, 2 to 6 rigs directly offset. And so for us, kind of from a capital perspective, this is just as simple as take our well development process, move the rig 2 miles and drill the same package on what used to be Barilla Draw assets and now will be our assets. The LOE side will take a little more time like you saw with the Earthstone integration, LOE kind of changes in downhole rod pump ESP design, take time to flow through the system, same with kind of water disposal strategy, et cetera. One thing that's unique to that asset that gets us to most excited is it has a a very robust midstream system like they've got their own crude gas gathering system, water disposal system and a lot of surface acres. So whether that is something that we opportunistically employ across our legacy position to kind of drive cost down or ultimately decide to monetize, I think, is yet to be decided. But either way, that is a, I think, something unique that we'll be able to drive some value that essentially other buyers didn't value as much as we did. And then yes, like I think our integration of M&A strategy has definitely become more refined. I'd say all deals are different. The hardest part of corporate M&A is always going to be the people. The people side of this business is the most important and the hardest for more asset-level deals like this, I think we're able to really tease out where the risks and where we need to focus our time in the underwriting, everyone is different, but some assets you buy are gold-plated and very nice and there's less kind of operational change you have to make. And there's others that you really have to go kind of spend some money back behind the previous operator to do things the Permian Resources way. But no, I think that Barilla Draw is a great example of a large and Delaware side, but very easy in ability to integrate. I may not say that in front of my ops team because it will be a lot of hard work for them. But I think, generally speaking, it's a low-risk integration.

That's great color. And just the -- maybe shifting gear on the cost side of things. I've been really curious to see how Delaware costs just -- well, Permian Basin overall costs had just been trending down really rapidly. And the Delaware has always been a bit more expensive than Midland. It's a bit more complex drilling, deeper, et cetera. How far, given you guys are already leading edge on the cost side, like how far much more type of improvement could we see in the Delaware? And is there any best practices that you can extract from Midland that you see from Midland that can be utilized in Delaware as well?

Yes, it's a great question. I'll answer in the reverse order. I'd say, absolutely, we can learn from what the Midland Basin is doing. I mean, the Midland Basin is call it, a 5- to 6-year older basin. It's 5 to 6 years further down development, 5 to 6 years further down drilling what used to be Tier 2 rock and having to do it at lower cost. And I think what they've done over the last 2 to 3 years is still relatively new to employee in the Delaware. So the answer is, for sure, we watch it closely. I do think there's some amount of gap that will always be there, just use it on a few, and I think geologically, the Delaware Basin, what we view as an opportunity with the depth, the overpressured nature and how much oil is in place also comes with some challenges as well as it's just, fundamentally, it's a little further away from Midland and a lot of service companies keep their equipment in the line when you're 30 minutes away from the yard, typically costs are a little less than 1 year or 3 hours away from the yard. But no, I think if you think about specific to Permian Resources, we've kind of continued to see a stair step decrease in well cost or increase in efficiencies over the last couple of years. Some quarters, it's flat in the quarter before and then you had these breakthroughs like we had in Q2. Q2 was primarily on the drilling side. There's a lot of work we've done with kind of downhole motors and BHAs, specifically in New Mexico, and I've seen meaningfully less failures, meaning for the less bit trips and a lot more kind of tune up more hole per day. And I think it really showed up. We were able to turn online more wells than we typically would in the quarter at lower cost per well. I think what the big step change is coming the Delaware side is going to be following what the Midland Basin has done on the frac side. Like they've done a lot of great stuff on fracking 2 wells at the time with 1.5x the equipment on location. Simo fracs with true number of pumps on location or a number of blenders on location being reduced. And I think if we can replicate that on the Delaware, which we are and lots of companies are, but I do think kind of the amount of cost the Midland drove out of the system relative to the Delaware on that side of the business is there's still a pretty big gap there. And so I think we'll continue to follow in their footsteps on that side. And then you mentioned this on the opening, but like all of us have the same problem on power. Like if we can -- we still run a lot of gas-powered generators in New Mexico. And I think ultimately, if we could get that on grid power, whether that's microgrids fueled with our own WAHA gas, which is effectively free or worse than free today. that would be a huge synergies to kind of overall LOE reduction. But even if it's not our own microgrid or own gas, if it's just kind of the state in general and people of industry working together to kind of get more grid power in the area, less generators in the field. I think those are a lot of things we can do on the Delaware Basin that they've had such successes on the Midland Basin side.

Yes. We've been really surprised by how the frac efficiency improvement just how quickly that materialize in Midland. How much of it is scale in the Delaware like is it like bigger chunkier block that you need to have that acreage to be in and the size of operation to be able to park an e-frac and just be able to plow through that inventory very quickly?

Yes. I think scale, especially if you think of scale and form of like pad size really does make a difference. Like if you're going to go spend the time to line up the logistics to frac 2 or 3 wells at the same time and just the sheer amount of water you need to do that kind of all the logistics, you really need to make sure the juice is worth the squeeze. So if you're doing that over a 6-well pad, it's probably not worth your time and if you're doing it over a 36-well pad, it's definitely worth your time. And I don't think that's necessarily something that unique that only larger operators can prosecute development of that size and scale. But typically, as you look at just how they do to it, larger operators drill larger pads, they can handle the it's big pads are less lumpy over a bigger base, the kind of the upfront capital expenditures relative to total capital budgets are smaller percentage for companies of that size and scale. And so yes, I think it's probably a fair conclusion that the larger companies drill larger pads, larger pads make doing extra work to line up multiple fracs at the same time and all the logistics of doing so makes sense. And yes, I think what we've seen from savings is -- there's a huge amount of just acceleration of production, which I think there's clear kind of NPV value in doing so. But we're starting to see now that there's also real kind of cost per foot savings and just less people on location, backing more feet per day, et cetera.

All right. Maybe a basin overall, just you talked about water and logistics and things like that. That's Delaware is an area that we've seen from bottlenecks in the past. Do you think we're past that now or is that something you still need to stay ahead?

We always have to stay ahead of it. Anyone saw past it, we will be one gas pipeline or one oil pipeline short. So no, we will have to continue to stay on it. I think that's a big part of us who are in Delaware Basin kind of to continue to scream from the rooftops, if we need a new gas pipeline every single year. Having said that, I think the specific one that you're probably referencing is WAHA pricing today. It's been about as bad as it's ever been over the last few weeks. But Matterhorn is online, moving a little bit of gas and coming online in a real way over the next month or 2. And so I think although it continues to get delayed more than we would hope, I feel like I've said it will be online a month from today, 2 or 3 times over the last 2 or 3 months. that is going to be online and moving a real amount of gas over the next couple of months. And so hopefully, that we'll see at least WAHA turn positive. I don't think this is going to be the big game changer for gas. Like ultimately, we have a lot more work to do, I think, with logistics of how we move gas around the nation and really the other countries to solve the supply/demand side of the gas part of the equation. But generally speaking, that would be a nice relief. It's not a super meaningful amount of Permian Resources revenue or EBITDA, like even on a good day, gas isn't more than 5% of our revenue. But if you think about the marginal nature of free cash flow, like that 5% of revenue accretes right to our bottom line, and frankly, we'd like to sell gas to more than 0. So yes, I think that's the big challenge. I do find a lot of comfort for us specifically is we've never had bottlenecks, so to speak, affect our operations. Like we have great midstream counterparties who are able to take and process our gas, take and dispose of a recycle or water. And so we allocate capital where we think debt capital is best fit. It's not driven by constraints. And even in the toughest of guest takeaway markets you've seen us been able to execute quarter-over-quarter. So I think it's less of an operational concern and we're just taking -- being 50% of our gas price is at spot WAHA and that's not -- hasn't been a fun place to sell gas over the last few months.

Hopefully, that debottlenecking is right on the horizon. Unfortunately, we're out of time, but a lot more to listen out for and then improvements you see in the Delaware. But thank you for kicking us off.

Thank you. Thank you, all.