Permian Resources Corp

NYSE:PR

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, and welcome to Centennial Resource Development Conference Call to discuss its Fourth Quarter and Full Year 2021 Earnings. Today's call is being recorded. A replay of the call will be accessible until March 3, 2022, by dialing [phone] and entering the conference ID number 2597505 or by visiting Centennial's website at www.cdevinc.com. At this time, I will turn the call over to Hays Mabry, Centennial's Senior Director of Investor Relations, for some opening remarks. Please go ahead.

[Hays Mabry, executive]

Thank you, Justin, and thank you all for joining us on the company's fourth quarter earnings call. Presenting on the call today are Sean Smith, our Chief Executive Officer; George Glyphis, our Chief Financial Officer; and Matt Garrison, our Chief Operating Officer. Yesterday, February 23, we filed a Form 8-K with an earnings release reporting fourth quarter and full year earnings results, as well as operational results for the company. We also posted an earnings presentation to our website that we will reference during today's call. You can find the presentation on our website homepage, or under Presentations at www.cdevinc.com.

I would like to note that many of the comments during this earnings call are forward-looking statements that involve risks and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors and forward-looking statements sections of our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2021, which we expect to file with the SEC later this afternoon. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and actual results or developments may differ materially.

We may also refer to non-GAAP financial measures that help facilitate comparisons across periods and with our peers. For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure can be found in our earnings release or presentation, which are both available on our website. And with that, I'll turn the call over to Sean Smith, our CEO.

[Sean Smith, executive]

Thank you, Hays. Good morning, and welcome to Centennial's fourth quarter earnings call. I will start off by saying that 2021 was an outstanding year for Centennial, both operationally and financially. We generated over $200 million of free cash flow and repaid more than $300 million in borrowings under our credit facility. As a result, we overwhelmingly achieved our primary goal for 2021 of significantly reducing our leverage and total net debt.

We also delivered oil on the high end of our increased guidance range, due to strong well results and solid execution in the field. Additionally, we accomplished our ESG goals for the year and continue to look for ways to advance our already strong track record. These achievements are a testament to the focus, hard work and talent of our employee base. The year-end 2021 results, combined with a robust multiyear outlook, have provided us with the confidence to announce a meaningful first step in Centennial's commitment to return capital to shareholders.

As we evaluate the shareholder return landscape, we believe that returning capital in the form of a measured share repurchase program will deliver the most value for our shareholders over time by enhancing the per share ownership and per share financial and operational metrics of the company. As such, we are excited to announce that our Board has authorized a $350 million share repurchase program over the next 2 years to enable us to deliver that value, which equates to approximately 15% of our current market cap.

Our intent is to begin executing this repurchase program once we have achieved our leverage target of approximately 1x or less, a level that we believe is optimal for our business and provides resiliency through the inherent cyclical nature of our industry. After achieving this leverage target, which we anticipate will occur during the second quarter of this year, we will initiate the disciplined execution of our repurchase program.

For us, disciplined means being in the market on both a regular basis, as well as an opportunistic basis in moments of more pronounced market dislocation. We believe this strategy will ultimately deliver enhanced returns for our shareholders as we continue the consistent execution of our development plan.

Coincident with our share repurchase program, we will also remain disciplined regarding our rig cadence and capital deployment. Our current 2-rig program will deliver over 10% oil production CAGR over the next 2 years, and significant free cash flow that will ensure that we can execute on the share repurchase program, grow production, as well as continue to de-lever the company. We believe this 3-pronged game plan will be resilient through commodity price volatility, which gives me the confidence that we can successfully execute.

We expect that today's announcement will be a first step in a longer-term shareholder return strategy that is supported by the company's fundamental asset quality, inventory depth and track record of execution that will deliver value to shareholders over time. With that said, I'll turn it over to George to review our financial results, 2022 guidance and provide additional details on our buyback program.

[George Glyphis, executive]

Thank you, Sean. During 2021, our 2-rig program drove steady quarterly oil production growth, which coupled with recovering commodity prices generated significant free cash flow and the rapid de-leveraging of Centennial's balance sheet. As you can reference on Page 9 of the earnings presentation, debt repayment totaled approximately $260 million for the year, and net debt to LTM EBITDAX declined to 1.4x at December 31 compared to 4.1x at year-end 2020. While we're pleased with the progress we've made, we are committed to further balance sheet improvements.

Additionally, even though commodity prices are strong today, we operate in a highly cyclical industry where balance sheet resiliency is critical. Therefore we will continue to focus on driving leverage metrics to below 1x, which we expect will occur during the second quarter of 2022. Additionally, last week we closed on a new 5-year $750 million revolving credit facility. The transaction was well oversubscribed, and we were pleased to welcome several new banks into the syndicate.

Under the new facility, our borrowing base was increased by nearly 65% to $1.15 billion, which is a significant cushion relative to the $750 million of elected commitments and the $25 million of revolver borrowings outstanding at year-end. Importantly, the terms of the new facility will allow for our new share repurchase program and provide flexibility to manage our long-term capital structure.

As illustrated on Slide 14, the refinancing also improves our maturity profile, as our nearest debt maturity is now scheduled for January of 2026. While we anticipate that the credit facility will be largely unused, we are pleased to have a low-cost source of debt capital to maintain liquidity and financial flexibility.

Turning to the share repurchase, which is summarized on Slide 6. As Sean mentioned, the Board has authorized a $350 million program, which represents approximately 15% of our market capitalization. We conducted a thorough evaluation of various shareholder return alternatives and concluded that the share repurchase program was the most compelling way to deliver free cash flow to our investors in today's environment.

There are several reasons for this. First, while commodity prices are strong and Centennial's operating and financial fundamentals are healthy, valuations in the E&P sector, particularly for small and mid-cap companies, remain at multiyear lows. While our program is not predicated on improving valuation metrics for the sector or for Centennial specifically, we do see value in acquiring our shares. Second, we like the concept of delivering higher ownership and value on a per share basis to our shareholders. While we are generating solid absolute production growth from our 2-rig program, a share repurchase can enhance multiyear compounded annual growth rates for cash flow per share and production per share metrics.

This accretion is intended to drive returns for shareholders while maintaining differentiated inventory depth, which we believe will underpin a sustainable returns program over the long haul. Third, a share repurchase provides good flexibility, particularly when coupled with a strong balance sheet and investment discipline. Looking over a 2-year time period in which we expect to generate over $775 million of free cash flow, assuming strip pricing, we can comfortably execute the program. Additionally, at mid-cycle prices, we believe we can execute the full $350 million program and still maintain our leverage target of less than 1x.

From an execution standpoint, while we expect to be in market on a regular basis, we will remain nimble to repurchase shares opportunistically in periods of market dislocation. In summary, we believe the share repurchase program is an important first step in returning cash to shareholders, and is the most impactful option for our shareholders today. We will continue to evaluate the full range of alternatives to drive value going forward.

I'll now touch briefly on historical results before providing 2022 guidance. As highlighted on Slides 4 and 21, Q4 production, cash flow and costs came in as expected. We posted approximately 34,500 barrels per day of oil production, which was 3% higher than Q3 and 14% higher than the previous year's period. For the quarter, we spud 12 wells and completed 9 wells compared to 13 and 10, respectively, in the prior quarter.

The 9 completions were all brought online in late October and early November. We also generated $85 million of free cash flow during the quarter, another company record, and used that cash flow plus proceeds from the asset sale to repay $180 million of credit facility borrowings. LOE, GP&T and DD&A during Q4 came in as expected, and therefore we were within our guidance ranges for the year.

Q4 cash G&A per barrel was higher than budgeted because of increased anticipated bonus payments as the company exceeded essentially all of its 2021 corporate objectives, which included targets tied to balance sheet improvement, corporate returns, capital efficiency, costs and ESG among other items. Net income for Q4 totaled approximately $160 million, which included a $34.4 million net gain from the asset sale.

Finally, Q4 CapEx was in line with expectations with the exception of facilities CapEx, which came in higher than anticipated as we made the operational decision to pre-spend capital for wells that will come online during 2022. As a result of the incremental facility spend, full year CapEx of $321 million came in slightly above the upper end of our guidance range. A summary of full year 2021 free cash flow and leverage targets compared to actuals can be referenced on Slide 8 of the presentation. Having positively revised our original guidance estimates twice during the year, we ultimately delivered very solid results.

Turning to hedging. The company's hedge position is illustrated on Slide 17. As a reminder, we hedge to protect cash flow, the balance sheet and capital program. We also attempt to strike a balance between downside protection and the retention of upside exposure. For 2022, our hedge positions cover approximately 35% of our average annual oil production at the midpoint of guidance, with a weighting towards the front half of the year. We have swapped approximately 10,000 barrels per day at an average price of $65.30 per barrel. We have also hedged approximately 2,250 barrels per day utilizing collars, at an average floor of $68.60 and ceiling of $80.39 per barrel. Approximately 82% of our hedges for 2022 are in the form of fixed price swaps.

For 2023, we have hedged a total of 3,750 barrels per day, split fairly evenly between collars and swaps. The collars have an average floor of $70 and a ceiling of $80.90 and the average swap price is approximately $73.25 per barrel. We expect to continue to build our 2023 hedge book as the year progresses.

I'll now turn to 2022 guidance, which you can reference on Slide 16. As announced in our release yesterday, we plan to continue operating a 2-rig drilling program this year, which will allow us to spud and complete approximately 50 gross wells at the midpoint. Efficiency gains continue to reduce cycle times, so we are pleased to generate solid production growth from a flat rig cadence for the year. 2022 drilling completions and facilities capital is estimated at $375 million at the midpoint, with an additional $20 million allocated to infrastructure, land and other capital.

We expect this capital program to generate midpoint oil production of 35,000 barrels per day. Additionally, we expect this plan to generate over $400 million of free cash flow, assuming current strip pricing. As discussed, we will utilize free cash flow to first de-lever the balance sheet to 1x or below, which will provide flexibility to execute upon the share repurchase program.

Finally, we expect oil as a percentage of total production to remain relatively similar to Q4 levels or around 53% to 55%. This is a notable increase compared to the first half of last year, which is primarily driven by a higher capital allocation to our oilier New Mexico assets.

In terms of production cadence, it is important to note that we expect the first half of 2022 to be relatively heavy in terms of drilling and completion activity levels and capital. This is due to the timing of pad development in addition to the completion of DUCs that carried over from last year. As a result, we expect Q1 oil production to decrease roughly 1,000 to 2,000 barrels per day from Q4 before rebounding in both the second and third quarters. Given these dynamics, the first quarter is likely to be our lowest in terms of free cash flow.

Turning to 2022 unit costs. At the midpoint, LOE is estimated to be $4.95 per barrel, which is in line with both Q4 and fiscal year 2021. Additionally, midpoint DD&A is estimated at $13, GP&T at $3.70 and cash G&A at $2.10 per barrel. With that, I'll turn the call over to Matt to review operations.

[Matt Garrison, executive]

Thank you, George. Q4 rounded out a transformative year for Centennial. On Slide 11 of the earnings presentation, you can see we are as operationally efficient as we have ever been as a company. Our drilling and completion cycle times are at all-time lows, while developing the longest average lateral length program in our 5-year history. We had demonstrable success in both our Texas and New Mexico development programs, as we tested co-development scenarios in the Wolfcamp C and Third Bone Spring in Texas, and larger-scale development of the Bone Spring in New Mexico.

Turning to well results. On Slide 10, our operations team brought online some outstanding wells in the fourth quarter, including 3 of our top 10 wells in the company's history. Located in the southernmost portion of our Lee County acreage position, the Juliet&Sheba/Solomon package was a 4-well grouping targeting the second Bone Spring sand. This development averaged just over 7,100 foot in lateral length and the average IP-30 for the package was over 3,000 barrels of oil equivalent per day, roughly 82% oil. Said another way, 2,500 barrels of oil per day. These wells demonstrated strong 90-day rates of almost 1,700 barrels of oil per day.

Additionally, the Solomon 505 saw single day production numbers that exceeded 5,600 barrels of oil per day, while the Sheba 506 and Juliet 514 each boasted single-day production numbers exceeding 4,300 barrels of oil per day. These are fantastic wells, and I'm extremely proud of our operations and asset teams for delivering these results.

With the current commodity price environment driving inflationary pressures for the entire industry, capital efficiency and continued emphasis on cycle time reductions have never been more in focus for the company, and we remain at the forefront -- and remain at the forefront of our operational goals. More specifically, we have challenged our operations team to be creative and thoughtful in our efforts to drive further cost savings and efficiencies in every element of the business.

In 2021, we built and utilized our own internal data science applications that helped us to optimize our completions design. Many of those tests were commenced in Q3 and Q4 with positive results. In fact, the wells just discussed were a part of that trial. We believe our new completions design will allow us to realize an approximately 10% to 15% improvement in completions cycle times when compared to 2021. More importantly, we have been happy with the production results across all the wells with the new design.

Turning to Slide 15. One of the big changes in Centennial's development program in 2021 was the implementation of larger development units, where we simultaneously or sequentially completed larger packages of wells directly adjacent to one another. This style of development does a few things. First, it allows us to utilize our water recycling infrastructure more efficiently, providing significant cost benefits across larger swaths of wells.

Second, it materially reduces the effects of depletion related to offset-producing wells. And third, it reduces the downtime, as we can effectively and efficiently develop larger portions of the acreage at 1 time, reducing the number of times that older wells are shut in due to offsetting operations. For example, in 2021, approximately half of our program consisted of development packages with 3 or more wells per development.

In 2022, over 80 (sic) [ 40 ] % of our program will consist of 3 or more wells in a development package, with approximately 40 (sic) [ 15 ]% of our completions coming from 5 or larger well packages. With bigger development packages, we can also ramp up the usage of centralized tank batteries or modular expansions of existing CTBs. In 2021, our facilities were comprised of 60% newbuild facilities, while the remaining 40% flowed into lower cost expanded tank batteries.

In 2022, we expect the number of newbuild facilities to decrease to around 30% of our program, while the number of wells flowing into expandable facilities will increase to around 70%.

Turning now to 2022 capital allocation. We remain committed to our 2-rig program, as we feel that it strikes a balance between moderate production growth and maximizing free cash flow. We expect to spud and complete around 50 gross operated wells during the year. Additionally, our capital allocation will be split roughly 80/20 between New Mexico and Texas, with the preponderance of activity being focused in the Northern Delaware.

Like 2021's development program, the development makeup will be primarily Second and Third Bone Spring in New Mexico, and Third Bone Spring and Wolfcamp C in Texas. Lastly, we expect average lateral lengths to be similar to 2021.

Before I hand the call back to Sean, I'd like to spend a couple of minutes highlighting last year's achievements on the ESG front, which can be found on Slide 12. In March of 2021, we published our Inaugural Sustainability Report with a team of committed employees across multiple disciplines. Our Inaugural CSR was met with positive reviews, but like anything we do at Centennial, we believe in continued improvement.

In late 2021, we created the position of Vice President of Sustainability and Business Development, as we believe the 2 components of the titles are intertwined. We believe this puts the much-needed emphasis front and center within the company and allows us to work collaboratively with other departments to bring forward new ideas.

Shifting to our performance for the year, we reduced flared natural gas volumes by 75% year-over-year. This was a direct result of increased corporate focus and investment in gas gathering infrastructure. Also, I'm proud to report that routine gas flaring doesn't exist on Centennial properties. And additional investments were made throughout the year to provide alternative midstream solutions wherever possible in the event of third-party outages.

Water recycling was up 15% year-over-year and we will remain focused on increasing the usage of recycled water throughout our operations whenever possible. In 2022, we have earmarked approximately $14 million towards the projects that will benefit both our operational costs and efficiencies, as well as the environment where we live and work.

These projects include investments related to water recycling and handling capabilities, improvements in natural gas infrastructure, natural gas flare and emissions monitoring, and VRU and tank pressure monitoring equipment. We are excited about the quality of our 2022 program, and I'm confident our team of talented employees is up for the challenge.

With that, I'll hand the call back over to Sean.

[Sean Smith, executive]

Thanks, Matt. In closing, consistent with our message from day 1 of Centennial, we recognize that our fundamental value creation starts with our high-quality asset base and inventory, our differentiated technical team and our consistent track record of operational execution. We have set the company up to be in a position to generate significant and sustainable free cash flow that is supported by over 15 years of economic inventory in the most productive oil basin in the United States.

Additionally, with the significant financial and operational improvements we have made over the last 18 months, we now have near-term line of sight on a balance sheet and capital structure that is resilient through commodity price cycles, and provides significant financial flexibility to return a meaningful portion of our anticipated free cash flow to our shareholders. Thanks for listening, and now we'll go over to Q&A.

[Operator]

[Operator Instructions] And our first question comes from Scott Donald (sic) [ Hanold ] from RBC Capital Markets.

[Scott Hanold, analyst]

A question going on to the stock buyback. I know, Sean and George, you did a lot of conversation around how you think about that, and plans on how to execute it. But just a couple of things. One, it sounds like maybe you'll have some sort of like a 10b-5 plan in addition to some opportunistic buybacks. But like as we sit here and try to model what kind of return we could be looking at going forward, I mean is there a specific sort of percentage of free cash flow that you're looking to deploy to this? Just give us a sense around some of the upward and lower boundaries of what to expect for this program.

[Sean Smith, executive]

Sure. Yes. Thanks, Scott. I appreciate the question. First of all, I'm very pleased that we're having this discussion. I think it's been a long time coming. It's been certainly something that the company has always looked forward to, is to returning capital to our shareholders, and the day is nearly here. So look forward to executing [ about ] that.

As a percent of free cash flow, that is not an input that goes into our equation. I know some folks have talked about a percent of free cash flow back to their shareholders. For us, it's an output. We look about executing our program as several different steps. We put that forward on Slide 5 of the earnings presentation, but it goes through a series of items that we are executing against that generates what, if you just did simple math, is approximately a 45% free cash flow return to shareholders.

But it all starts with an investment, utilizing the capital discipline that we have in place around a 2-rig program generating high rate of return results that generate meaningful free cash flow. So that's where it all starts. And then we've continued to focus on our balance sheet. That has been our #1 goal last year, and even the first part of this year is still our primary goal, is getting to a leverage target that we think is the right place for a company of our size to be, which we believe is 1x or less. So those are the first aspects of our business plan. And then the free cash flow above and beyond that will be put towards this $350 million share repurchase program. So we are solving for that, not so much as a percent of free cash flow.

I think, obviously with today's prices, it's -- it may likely swing one way or the other as a percent of free cash flow. So again, it's not something we focus on there. But I do think that we have a very solid plan that we can execute against. And should prices go our way, maybe that gets accelerated even further. You mentioned the 10b-5 scenario. That is something that we are -- we recognized it as an option out there. We haven't committed to that type of disclosure yet.

But we have a team in place that is evaluating how we're going to fully implement this, again, disciplined and measured approach to buying back shares. We also want to make sure that we remain opportunistic, as George mentioned in his portion of the script, that when there is severe market dislocation, whether that's on a daily, weekly, monthly basis, we want to be in market and take advantage of that above and beyond just our measured approach. So it's kind of a two-pronged attack on executing against the $350 million share repurchase program.

[George Glyphis, executive]

Yes, it's George. The only thing I would add to that is, part of the reason we like the share repurchase program is it does provide a lot of flexibility. But it's not as easy to target a payout ratio like you would have with a dividend, where you know there's kind of a set amount of cash going out the door and so it's just easier to quantify. With a share repurchase, there are more variables that go into it, including where your share price is, and obviously commodity prices and so forth. So it's just more difficult to do that. And so we like the flexibility of the program and didn't want to put any boundaries on it, given the reasons I mentioned.

[Scott Hanold, analyst]

And I would assume then the flexibility is sort of, I guess, skewed you to this versus variable or fixed dividend returns. And maybe -- and that's sort of a subtle question, but like my next line of question is just sort of looking at your thoughts on your inventory depth. I mean, you obviously had very -- some very strong wells this quarter. Can you give us a sense of what the duration of what you think your Tier 1 inventory is? And thoughts on like further consolidation to bolster that, or just corporate scales as other options for free cash flow usage?

[Sean Smith, executive]

Sure. Yes. I appreciate that. It's kind of a 2-part question there. I would say we've continued to message around our 15-year inventory. That again assumes a 2-rig cadence throughout the life of that inventory. And I would say that our inventory is extraordinarily high quality and that we expect to have very strong results for the majority of that time. So it is a -- it's hard to say that a small portion of that is Tier 1. It's a high proportion of that is Tier 1 inventory that will get developed and even much lower commodity price environments.

So it's -- I'm very pleased with what we have and which is why we said on previous calls, from an M&A perspective, inventory is not something we are after. Any acquisitions that we would bid on successfully would need to compete with that very high-quality 15-year inventory as well as be accretive, particularly now on a cash flow per share basis. So it would be a combination of those things if we were successful in the M&A side of things. And I would add that the -- it doesn't preclude us, it actually enhances our shareholder return program if the acquisition is, again, cash flow per share-positive. So all of those things would have to come into place for us to make a successful acquisition. And there are some opportunities that we are always out there looking at. There's very few deals that happen in the Basin that we haven't at least taken a look at to see if it fits within our framework. I hope that covered your question, Scott.

[Scott Hanold, analyst]

Yes, I'm sorry. Yes.

[Operator]

[Operator Instructions] And our next question comes from Neal Dingmann from Truist Securities.

[Neal Dingmann, analyst]

For you, George, just a bit of a different quick shareholder return question. I'm just wondering what you all would need to see or what would have to happen for you all to consider it. I know this is probably quite a ways down the line, but adding variable dividend to that mix of shareholder return.

[Sean Smith, executive]

Yes. Thanks, Neal. I appreciate the question. I think that we're excited about this first step of shareholder return. I think it is a meaningful first step. We aren't just dipping our toe into it. A $350 million share repurchase as it sits today or at least as of yesterday, is approximately 15% of our market cap, which I think if you look at what's been published so far over last year and first part of this year, puts us in top quartile from a share repurchase program versus other E&P companies.

So I think it's a meaningful first step to a longer-term shareholder return program that we will plan to implement. We are very much committed to giving capital back to our shareholders over time, and we will continue to look for ways to do so. At this present time, we very much feel like the best way, the best value for our shareholders is through this repurchase program, so that's what we're going to focus on. So I'm not going to comment as if we'll do a variable or special or fixed down the road. We will always look for ways to benefit our shareholders through a capital return program. And -- but first is the execution of this buyback program.

[Neal Dingmann, analyst]

No, fantastic plan so far. I think you guys laid out exactly, from what I've heard from investors, exactly what everybody was looking for. And then just quickly second, maybe Sean, just on ops specifically, you guys had some stellar. I was just looking. I think it's on -- I don't remember. Slide, I think, 10 here. Just shows some of those stellar Second Bone Spring wells that you all had. So I guess my question is, when you look at the plan this year, maybe could talk a bit about -- just kind of curious on the formational mix. How much majority continue to be Second Bone Spring? And given that mix, do you all anticipate to have some variability variation between as you hit different zones or not necessarily too much. It just seems your efficiencies are really accounting for a lot of this, so I'm just wondering maybe we don't see a whole lot of variation as you start knocking out some other zones.

[Sean Smith, executive]

Yes. In fact I'll let Matt, our COO, handle that question, Neal.

[Matt Garrison, executive]

Yes. Good question, Neal. Yes, 2022's mix of wells, in New Mexico particularly, is going to remain focused primarily on the Second and Third Bone Spring. So I would say there's going to be some additional testing of shallower horizons, other Bone Spring zones sprinkled throughout the program, as we've started to efficiently develop over the top of existing units. So much of the facilities discussion around expandable facilities really allows us to do that because we can move into existing drilling units, add additional wells to the known central tank battery, and continue to develop over the top.

So it's been very helpful from an operations standpoint. And so yes, we're going to remain focused in '22 on the Second and Third Bone Spring, and we have a high degree of confidence in that -- in those formations, primarily because we've been testing the Second and Third Bone Spring across the entire position for the last couple of years. And so we have it pretty much zeroed in on the targets, the spacing and what we want to do. Now we're going to start to take advantage of some of the facility expansions, and really try to get after it in 2022.

[Operator]

[Operator Instructions] I am showing no further questions. I would now like to turn the call back to Sean Smith, CEO, for closing remarks.

[Sean Smith, executive]

Thank you. I hope what everyone took from the call is that we had a tremendous 2021, very pleased with the results, both operationally, financially as well as on the ESG side of the business. I think we've set the company up very well. I look forward to carrying that momentum as we've already done getting into 2022. I think the game plan that we've put forth, which we've mentioned is kind of a 3-pronged approach that allows us to grow the business annually over the next 2 years at a 10% CAGR, allows us to de-lever the company further and returning a meaningful amount of capital to the shareholders, is one that I think we can execute across and I think drives value for all of our existing shareholders. So look forward to implementing that plan and executing against it. I think it's going to be a very promising year for Centennial, and thank you all for participating in the call.

[Operator]

And thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.