Panoro Energy ASA

OSE:PEN

Earnings Call Analysis

Panoro Achieves Production Targets Amid Increasing Shareholder Returns

In Q3 2024, Panoro successfully achieved a daily production of 9,400 barrels, with revenues of $36 million and EBITDA of $23 million. Year-to-date, revenue reached $180 million, alongside EBITDA of $101 million. Capital expenditures rose to approximately $95 million, mainly due to expanded drilling programs. Shareholder returns included a NOK 50 million capital return and active share buybacks. Looking ahead, expected capex for 2025 is guided at $40 million, signaling higher free cash flow. The company anticipates fourth-quarter liftings to represent 40% of its 2024 total, positioning itself for further growth as production levels stabilize around 35,000 barrels per day.

Revenue Growth Amidst Challenges

In the third quarter of 2024, the company reported production of approximately 9,400 barrels per day, contributing to a total revenue of $36 million and an EBITDA of $23 million. The year-to-date revenue reached around $180 million, with an EBITDA of $101 million. Despite softening oil prices, the firm has maintained a stable revenue stream, bolstered by production achievements and successful shareholder distributions.

Shareholder Returns and Financial Health

The company has reaffirmed its commitment to shareholder returns, announcing a return of paid-in capital amounting to NOK 50 million. The firm has also made significant progress on its share buyback program. As of the end of Q3, the company holds $19 million in cash and maintains a net debt position of about $51 million. This positions the firm to navigate potential financial volatility in the future effectively.

Production Targets and Capacity Expansion

Achieving a production target of 13,000 barrels per day marks a significant milestone for the company. This growth was facilitated by new wells coming online in Gabon and Equatorial Guinea. Additionally, the announcement that 40% of the anticipated 2024 liftings will occur in Q4 highlights a robust quarter ahead, with expectations for operational momentum to continue.

Capital Expenditures and Future Outlook

The company had initially guided capital expenditures (CapEx) at over $75 million but has adjusted this expectation to approximately $95 million due to expanded drilling activities in Gabon and unexpected rig changes in Equatorial Guinea. However, projected CapEx for 2025 is expected to decrease to about $40 million, suggesting a decreasing trend in capital spending while production capabilities are set to enhance further.

Exploration Initiatives and Resource Development

The firm's ongoing exploration activities include the drilling of the Akeng Deep well and the upcoming Bourdon well in Gabon, both pivotal for increasing production capacity. The Akeng Deep well has a significant potential upside, with a 25% chance of success, which could add substantial reserves if exploration proves fruitful. Moreover, the company holds over 29 million barrels of 2C resources, a strong position for future development.

Strategic Expansions: New Venture Acquisitions

The recent award of Block EG-23, with no drilling commitments for three years, allows the firm to analyze and prepare for potential partnerships, significantly reducing financial risks associated with exploration. The objective is to enhance the asset base and utilize existing infrastructure to optimize production should discoveries be made.

Stable Financial Strategy and Future Distribution Plans

The balancing act between maintaining ample cash reserves for operational flexibility and rewarding shareholders through distributions will continue to be a priority. The company aims to navigate the complexities of market conditions while optimizing financial health. The Board remains committed to a shareholder-focused strategy, with more specific plans for 2025 anticipated as the company moves past this operational phase.

Earnings Call Transcript 2024-Q3

[John Hamilton, executive]

Good morning, everybody. This is John Hamilton. Thank you for joining us this morning. We're here to talk about our 3Q results for 2024. I'm joined today by a number of colleagues who will assist me in answering any questions.

As a reminder, today's conference call contains certain statements that are maybe deemed to be forward-looking statements, which include all statements other than statements of historical fact. Forward-looking statements involve making certain assumptions based on the company's experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances.

Although we believe the expectations reflected in these forward-looking statements are reasonable, actual events or results may differ materially from those projected or implied in such forward-looking statements due to known or unknown risks, uncertainties and other factors. And for your reference, our results was also announced this morning and the materials are available on our website.

Next slide, please. As a reminder, we're using the same technology that we normally do. There'll be a time for Q&A at the end. You can either type your question in or you can raise your hand if you want to be unmuted. We will endeavor to answer all the questions that we get, if some are duplicated or if some are perhaps not. For the individual questions, we can better answer on an e-mail. Please reach out to us also directly through our investor e-mail address.

Next slide, please. So this is our slide where we show the 3 months of Q3. We also show in the orange the year-to-date financials. Third quarter saw us producing about 9,400 barrels a day with a revenue of $36 million and an EBITDA of $23 million. It was a quiet quarter in terms of liftings as was broadcast. So that's entirely in line. On a 9-month basis, we're looking at about $180 million of revenue and $101 million of EBITDA. On the balance sheet, we ended the quarter with $18 million -- $19 million of cash and a net debt position of around $51 million.

Next slide, please. We also today have announced another shareholder distribution in the form of a return of paid-in capital of NOK 50 million, which has been very, very steady. We have also made good headway on our share buyback program with still some room left to go on that one. We're very, very happy to continue to follow our shareholder distribution framework that we announced about a year ago. Oil prices have been a little soft, obviously, recently. But despite that, we've continued on this track. And we still have the final quarter to go in terms of the shareholder distribution for the 2024 cycle.

Next slide, please. So our production target of 13,000 barrels a day has been achieved. It's been, at times, a bumpy road, but we've gotten there. Very, very happy about it. It was achieved recently as wells are starting to come online in Gabon, which we'll touch on a little bit more, and also importantly, in Equatorial Guinea.

Next slide, please. So our liftings were more or less as guided. We had one small lifting in Tunisia, which kind of just slipped into October. So it kind of missed the Q3 revenue recognition and slipped into Q4, where we anticipate lifting or we have lifted, I think, a long way through this already, about 1.4 million barrels. Something like 40% of our 2024 liftings are occurring in the fourth quarter. Our average price realization year-to-date has been around $80, which is pretty good. Obviously, oil prices have subsequently dropped. So we're keeping a close eye on that one. But nonetheless, it's a very busy quarter for us that will see us in terms of full year financials, obviously, that's going to be a big contribution in the fourth quarter.

Next slide, please. So our debt profile, RBL facility at $70 million. Post period, we took advantage of a little headroom in there just to manage some working capital through this heavy CapEx period that we're in. But the real story, I guess, is around the CapEx this year, which we've guided back in August that was going to be higher than $75 million, and we've recently announced it's closer to $95 million now.

And that's largely as a result of the 2 things. One is the expanded program in Gabon. We drilled a couple of extra wells, which obviously have been very good for the company. It's given us more production, more reserves. But equally, the amended work program, the change-out of the rig in Equatorial Guinea has unfortunately given us an additional capital expenditure that was not forecast at the time.

The good news, from our perspective, certainly is that indicatively, CapEx next year should be around $40 million. We will -- once the rig leaves Gabon after drilling the Bourdon well in February, we will not have a rig on any of our assets during 2025 based on what we see at the moment. And so we're kind of at that cash flow inflection point, hopefully, where the increased revenue starts coming through against lower CapEx.

Next slide, please. I'm not going to go through this in great detail. It's there for the workings for people that like to look through these, but we always produce a reconciliation of cash flow and how we got from the cash position at the beginning of the year to where we currently are.

Next slide, please. So Gabon has obviously been a source of great attention for the company. It's been a tricky year with our ESP issues. I'm happy to say now and touching wood that the current ESP, we do not have any of the old retrievable ESPs in the field anymore. We are now either putting in pumps on wells that don't have an ESP on them yet. So for instance, Ruche and one of the Hibiscus wells or we're producing under the new ESPs. So it's been a bit of a journey, but things are working extremely well.

We and BW announced last week that we had achieved greater than 40,000 barrels a day of production, which is a key thing for the company. The Adolo has the capacity to go above its nameplate. So we do get a lot of questions around how high could production be and all that. I would say it's still early days, but obviously, with the additional 2 wells that we brought online, so that being Hibiscus northern flank and the Hibiscus South, those 2 discoveries we made earlier that have been brought online, we've now gone from a position of having originally planned for 6 wells in the initial phase of this development to 8 wells. So we still have 4 slots left on the platform for a future phase of development, but we really have put ourselves in a position where we have a great inventory of wells that should allow us to produce oil, extend the plateau out here for longer than originally planned. So this has really recently been a great success in here.

We do have the Borr Norve all the way through February, at which point it leaves Gabon. The last thing that we'll do after just finishing up a couple of workovers and the final pump installations is to drill the Bourdon prospect, which we'll touch a little bit more on about, but that is a well that we will drill in January, February.

Next slide, please. At Ceiba and Okume, it's been also very active. We've had a tricky year with the swap-out of the drilling rig, but I'm happy to now report that we have now completed both wells, the Ceiba infill well, so the red dots on the screen and the Okume infill well. Those are both completed and hooked up, and we're starting now to see the benefit of the additional production coming from there. The drillship, the Noble Venturer, has actually left the production blocks, Ceiba and Okume, and moved over to Block S, which is a Kosmos-operated exploration well called Akeng Deep, which we have another slide on. And that well is currently drilling. We expect results in December on that well. I'll touch a little bit more on that one.

Next slide, please. And in Tunisia, we continue to work. Production has been soft this year. The country has been going through some political change. It has resulted in delays in various regulatory approvals, which impact not just Panoro, but the industry more widely. And that has simply resulted in less activity. So you'll see actually on our CapEx, although the group CapEx has gone up, Tunisia actually has been lighter than originally budgeted for that reason. And nonetheless, there are activities going on now. We're currently working over a nice-looking well. We're hoping the first part of 2025 to get after a Rhemoura well, which is a nice well and contribute nicely to production. So this is a little bit goes slow at the moment, but continues to produce well with good opportunities for us in the coming years.

Next slide, please. So one of the things we are starting to talk about a little bit more is where does the company go? We've achieved 40,000 at Dussafu. We've kind of reached our group target of 13. What does the hopper look like? What does the future look like for Panoro looking across its asset base? And one of the things we've been very proud of is being able to continue to add contingent resource and obviously, development resource opportunities. So these will be infrastructure-led opportunities that can continue to feed that 2P reserve, which is so important to have.

And so we're looking at reserves in the high-30s at the moment, which is a very good, strong position to be at. We have 29 million barrels net of 2C resources, and that will continue to -- not every one of those will migrate itself necessarily to 2P, but certainly a large portion of them should. We've recently announced and we'll talk a little bit more about it, the Block EG-23 license award that we have. And then looking on top of that, we have a number of infrastructure-led opportunities, Akeng Deep and Bourdon being the ones that are right in front of us. But we've got so much more to do in Dussafu, and we have also through some of our other exploration blocks, further opportunities to add both the contingent resource and then ultimately to the 2P reserves.

So we think on a portfolio basis, zooming out of the business for a second now, we put the company in an excellent position organically, leaving any M&A to the side to continue to grow the business over the coming years. And that's been very much part of the strategy to put ourselves in a position where organically, we can continue to grow this business.

Next slide, please. So just a couple of thoughts around the current exploration program. We're drilling, as we speak, in Block S, the Akeng Deep well. This is operated by Kosmos Energy. It is something like a 25% chance of success. So it is properly exploration and its aim is to test the deeper Albian. So this is kind of an unproven play, but quite compelling, because if we do find oil, there's a very short tie-back distance to the FPSO. So this is what we mean by infrastructure-led exploration. And it would -- in a success case, would have a very positive read across to our other block that we have with Kosmos called EG-01. We should have results on this in December.

And as a reminder, Panoro's financial exposure to this is quite modest. We have a small stake in it, which could be meaningful in the case of a discovery. But in the case of no oil, it is partially cost recoverable through our production sharing contracts. So this is a fiscally and economically very attractive well for us to be drilling together with Kosmos.

In Gabon, we have the Bourdon well, which for those of you who followed us for many, many years, this is the old prospect B. And it's one of the nicest looking objects we still have. We have lots of other prospects and leads on the block, but this is the one that really has always jumped out as being potentially quite interesting. It's got a sort of mid-case estimated recoverable in the success case of around 29 million barrels, again, adding to that great Dussafu story. We'll drill that in January-February. The chance of success on that is higher than it is in Block S, but nonetheless, it's still exploration. So it does have some risk on it. We will hopefully have some good news, though, to share on that in the early part of next year.

Next slide, please. And just something about some of the recent press releases that we've made and around the strategy about what we're doing here. We recently announced the award of Block EG-23. EG-23 sits right there at the toe thrust of the Niger Delta. So it's a very, very geologically interesting area to be in. And that petroleum system that's in this area has been extremely prolific. To the west of us, we have the Zafiro field, which was operated by ExxonMobil. It has produced over 1 billion barrels of oil. Just below us, the Alba field, which is a gas and gas condensate fields operated by Marathon has produced well over 1.2 billion barrels as well.

And entering Block EG-23, we come in with existing discoveries on the block. Our commitment on this is very, very light. So we have a 3-year license to reprocess data. We have no drilling commitment on this. And ultimately, we then have the option to convert that into a drilling commitment in about 3 years. And it's clearly a situation where we would seek to partner with a larger oil company on this one. We would not be carrying a large piece of equity on this one, but we think that we can certainly incubate the block and hopefully bring in some partners in due course if we're encouraged by the work that we do. And again, this is infrastructure led. If we make discoveries here, it can tie into the Alba facilities and ultimately into the LNG facilities on Bioko Island. This is -- Equatorial Guinea is a very, very large LNG producer run by Marathon Oil.

And we recently announced together with BW Energy and VAALCO, the award of 2 blocks. These have been pending for a little while, but we finally got them done. As you can see on the right there, we have the Niosi permit, which is in yellow and clearly is just following the fairway between Dussafu, which we've talked about, and Etame, which is a series of fields that have already produced 150 million barrels and are continuing to produce and have plenty of reserves on them. So we think combining the subsea -- subsurface expertise of Panoro with the development expertise of both VAALCO and BW, we've really got a great joint venture here, a joint venture with the state on this one as well.

And we're looking at just kind of gathering this area, working on reprocessing data, working up the prospects and leads, and probably drilling the well certainly in the yellow license, Niosi, sometime in the next few years. But again, Panoro's exposure to this financially has been kept at a modest size, but we're clearly in a very, very prolific oil area here. In the event of a discovery, oil can be delivered either to the Etame production facilities or into the Dussafu facilities. So a very, very sensible piece of long-term business for us to do on both these assets.

Next slide, please. So a little picture on -- and the key messaging. Really, we have had a few years now of heavy investment, 2024 being a record investment, which is now starting to yield those results. I think we're coming into more of a harvest period now. Through all this development activity we've done, we've managed to grow production from 2020 at around 2,000 barrels a day to 13,000 barrels a day, at the same time, guiding CapEx in and around the $40 million mark next year. So this really -- 2025 is looking to be a strong year for Panoro.

We have very good visible production growth, we think, with long-life assets. We believe we have nice infrastructure-led catalysts as well, which continue to hopefully add to the resource base, reserve base that we already have. And we're continuing with a very shareholder-focused distribution plan where the Board and the management team are all aligned to reward shareholders as we go through -- as we have been doing in the past and as we move through this harvesting period, where we expect to continue to deliver both through return of paid-in capital, which again might have certain advantages to certain shareholders and obviously, through the approved buyback program.

So next slide, please. Again, if you'd like to ask a question, raise your hands using the little hand icon there. And if you’ve got a question, type it in. Again, we'll endeavor to answer questions as long as they've already been answered or if they're very, very specific, we will ask you if your question is not asked to send us something, and we'll endeavor to respond to it by e-mail. Good. So -- and my colleague, Andy, our Head of Corporate Development, is kind of going to chair the Q&A. But over to you, Andy.

[Andy Scott, executive]

The first question is from Stephane Foucaud. Stephane you're self-muted. Can you please unmute yourself and ask your question? Stephane?

[Stephane Guy Foucaud, analyst]

Yes. Can you hear me?

[Andy Scott, executive]

We can. Please go ahead.

[Stephane Guy Foucaud, analyst]

I was -- so my first question is around capital allocation next year, balance sheet and so forth. So CapEx will be much lower, much more cash flow. What in your view is the ideal cash you would keep in that period and particularly in the context of the debt? And I saw the announcement this morning about the fixed income meetings. If you could talk around that within that context about what you're planning to do with that with the RBL, that would be great. And my second question is more straightforward. Where -- once the second EG well is on stream, where would you see gross production stabilizing at in EG?

[John Hamilton, executive]

Thanks, Stephane. Yes. So this morning, we announced that we are commencing a series of fixed income meetings over the coming days. The logic behind that is that we believe our business has evolved. We believe examining the bond market is a natural progression for us to diversify our sort of capital structure, access to capital. Many of our peers make use of this market as well. We've had an excellent RBL, we feel, really supportive lenders over the years, and those relationships will continue. But we felt that the time was right for us to put a longer-term piece of capital in place that's subject to market conditions, obviously, that sort of better reflects the maturity of our current business.

So capital allocation for next year, I think you'll see us continuing the trend that we have previously announced is we are looking at being very much on the front foot in terms of shareholder -- allocation towards shareholders. I'd say the difference next year as compared to when we're in our development phase is obviously, given that we're -- CapEx is coming down, our free cash flow is higher, we can withstand lower oil prices than perhaps in prior years. We're perhaps much more sensitive to oil price. We're going to be a lot less sensitive to oil price, barring a complete crash, of course, which we're not anticipating, but we're much less sensitive to oil price.

So I think you'll see the capital allocation continue between shareholder distributions, retaining cash for working capital and of course, keeping a lot of the opportunity for further business growth. We are always evaluating opportunities. And as our portfolio matures and depending on the outcome of some of the wells that we're drilling, that could create some opportunity to look at some other things that will be probably more 2026 activity, frankly. But we'll continue to try and keep that nice balance between keeping the company well-funded and being on the front foot in terms of shareholder allocation.

The second well in EG, it's just coming online. We don't like to count chickens before they hatch. So I'll probably just stick with what we've always said about this program. And the program has been meant to take production from around 24,000, 25,000 barrels a day to somewhere around 35,000 barrels a day, perhaps a little bit higher. I don't want to count our chickens quite yet, but that's the intention is kind of get us back up to more or less so that, that block, Block G, is doing somewhere around what Dussafu is doing, maybe slightly less, but in that range, which is a good, good place for it to be. I hope that answers your questions.

[Stephane Guy Foucaud, analyst]

Yes. Perhaps back on the first one, so ideally, if we look at some sort of absolute number on the cash and the debt, what is the sort of number you have in mind? What do you think you need to always keep on your balance sheet in terms of cash?

[John Hamilton, executive]

Stephane, it's quite a specific question. I think what we always try and do is we do have working capital needs within the business. We produce oil every day. We don't sell it every day. So we always try and keep a nice cushion there to deal with working capital swings. We do have a facility that we use with Trafigura at the moment, which allows us to manage those very short-term working capital swings. And so we'll continue to make sure that we are running a very sensible business, not over-levered. But that working capital facility is around $25 million, maybe the best way to answer your question.

[Andy Scott, executive]

The next question is from Teodor Sveen-Nilsen. Teodor, you're self-muted. If you could please, unmute yourself and go ahead. Teodor?

[John Hamilton, executive]

Should we come back to him?

[Andy Scott, executive]

Yes. We will come back to Teodor. The next question is from [ Chris Aristidou ]. Chris, you're unmuted.

[Unknown Analyst]

So I've got a couple. I guess the first one, what's the entitlement production for Q3?

[John Hamilton, executive]

I'm sorry, can you just say that again?

[Unknown Analyst]

Sorry, is that better?

[John Hamilton, executive]

I think so.

[Unknown Analyst]

Yes. So what was the entitlement production in Q3?

[John Hamilton, executive]

Entitlement production in Q3. Andy, can we get back to Chris on that? I don't have that number exactly at hand.

[Andy Scott, executive]

Yes. Chris, we put the 9-month entitlement in the presentation. We'll get back to you with the Q3 3-month entitlement.

[Unknown Analyst]

Okay. The other one that I had was on Niosi and Guduma. Is there existing seismic there or are you going to shoot new seismic? And then you mentioned a well maybe in Niosi at some point. I assume that's not '25. Is that how you're thinking of bringing a rig back along with Phase 2 Dussafu? Can you talk a bit about that?

[John Hamilton, executive]

What I'd like to do is ask my colleague, Richard, to answer your first one and tell you a little bit about kind of data on that block. Yes, I mean we do have a well commitment on the Niosi block, not on the other one. And we've got quite a long period to do that. So I think you're absolutely right. I think the time to drill it would be when the drilling rigs in the area, either one that VAALCO bring down for the Etame development or perhaps when we do our next phase in development, which is probably a 2026 number in Dussafu. So we don't have any current plans to drill it. It would certainly be drilled as and when there's a rig in the area doing development drilling for one of the 2 blocks. Richard, do you mind asking -- answering Chris' question on what kind of seismic we've got on the blocks?

[Richard Morton, executive]

Yes, sure. So yes, thanks, Chris. Good question. So that area has been explored for a number of years and has got some vintage seismic data covering it, various different surveys. We see ourselves acquiring a little bit of new 3D seismic over the Niosi block, which is the south of the Etame area. We've got some good prospectivity there that requires some fresh seismic data. There may also be an opportunity to acquire a little bit more data over the Guduma block, what we're discussing with the joint venture. So as those plans evolve, we'll keep you guys informed.

[Andy Scott, executive]

John, a question online submitted. Could you share any early thoughts on how you think the 2025 shareholder returns framework will evolve?

[John Hamilton, executive]

Sure. And I think it's a very good question, and I'm sure other people have the same question. I think we're busy formulating that at the moment. And again, I think the best thing I can kind of say is I think that -- while 2024 has been, to date, a year where we've continued to pay a dividend despite oil price being substantially lower than the framework, we have our complete focus now on getting through this 2024 cycle. We've got 1 more quarter to go. And we'll certainly articulate in the near future more of our plans around 2025. But like I said, I think we aim to be -- looking at our peer group, we aim to be right at the top in terms of expectations, in terms of shareholder return yields.

We -- again, like I said, I think the positives are, I think next year, we are a lot less sensitive to oil price. And we continue to have debates on the Board. We had a Board meeting yesterday. I think everybody is committed to being very, very proactive in keeping a really good balanced approach between shareholder distributions and continued growth within the company. But we will come out with more specifics on that in due course.

[Andy Scott, executive]

And just a couple of questions have come in with shares -- just asking if the shares purchased under the buyback scheme, what the intention is for them and whether they will be canceled?

[John Hamilton, executive]

Yes. So yes, the intention is to cancel those shares. Those shares, I think from a legal perspective, they can't be canceled until the general meeting. So we hold them in treasury, and we -- the full intention is to cancel the shares, but they don't get canceled as soon as they're bought. They -- we have to wait for the general meeting.

[Andy Scott, executive]

And another question submitted online, just asking for a bit more of an idea on potential debottlenecking scope of the FPSO Adolo and potential time lines.

[John Hamilton, executive]

Sure. So the official line is that the FPSO Adolo has a 40,000-barrel-a-day nameplate. I think the common wisdom, and that's articulated by BW Energy as well, obviously, it's a BWO FPSO, is that, generally speaking, the nameplate capacity can be exceeded by approximately 10%. Obviously, if you spent a lot of money and put new topside facilities on, you could greatly expand the Adolo. But in terms of the kind of the easy quick fixes, debottlenecking as the term was used, there is -- there does appear to be upside potential.

And I think that the common response between us and BW at the moment on that is that it can probably do up to 10%. As these new wells are coming online, I think anybody can do the math, you can see that we hit 40,000 barrels a day, and we still have wells to bring online. So clearly, the productive capacity at Dussafu on paper, if I can put it that way, assuming these wells come online at decent rates, is going to be in excess of that nameplate capacity.

And I think what's actually happening right now is I think we're now seeing that stronger production come through, seeing how the facilities are working, how that debottlenecking is working. So it's a little early to come out with something definitive on it, but I think it is recognized that we do have well productive capacity beyond the 40. How much the vessel can handle on a sustained basis? I think we're still figuring it out. I think the main point that we try to make on this is that, that excess well capacity, if I can put it that way, above the 40, at the very least, what it does is it helps extend out the plateau of that production for longer.

Does it mean we can exceed it? Yes. Does it mean similarly that we can extend out that plateau, kind of keep the decline on a measured basis by having the ability to hold back on wells, or maybe if we're waiting for a well workover that we have some redundancy to maintain that production? I think that, that is probably the most important foundational point to make. Well, let's see. Let's see. I mean we're -- it's a luxury problem to have at the moment. Let's see how we do as we bring these other wells online.

[Andy Scott, executive]

Thank you, John. And that concludes the Q&A for today.

[John Hamilton, executive]

Super. Well, thanks, everybody, and thanks for continuing to follow the company. Hopefully, we've come through a very busy 2024. And hopefully, it will be a smoother sailing into next year. But very happy to have hit our production targets. And hopefully, things will be good from here on in. Thank you very much.