Enerplus Corporation (ERF) Q4 2022 Earnings Call Transcript

Enerplus Corporation (NYSE:ERF) Q4 2022 Earnings Conference Call February 24, 2023 11:00 AM ET

Company Participants

Drew Mair - Manager of Investor Relations

Ian Dundas - President and Chief Executive Officer

Wade Hutchings - Senior Vice President and Chief Operating Officer

Jodine Jenson Labrie - Senior Vice President and Chief Financial Officer

Conference Call Participants

Greg Pardy - RBC Capital Markets

Patrick O'Rourke - ATB Capital Markets

Jamie Kubik - CIBC World Markets

Operator

Good day, ladies and gentlemen, and invited to nan Enerplus' Q4 Year-End 2022 Results Conference Call. At this time, each lines are successful a listen-only mode. Following nan presentation, we will behaviour a question-and-answer session. [Operator Instructions] This telephone is being recorded connected Friday, February 24, 2023.

I would now for illustration to move nan convention complete to Drew Mair. Please spell ahead.

Drew Mair

Thank you, operator, and bully morning, everyone. Thank you for joining nan call. Before we get started, please return statement of nan advisories located astatine nan extremity of our 4th fourth and year-end news release. Our financials person been prepared successful accordance pinch U.S. GAAP. Our accumulation volumes are reported connected a nett aft conclusion of royalty ground and our financial figures are successful U.S. dollars unless different specified.

I americium present this greeting pinch Ian Dundas, our President and Chief Executive Officer; Wade Hutchings, Senior VP and Chief Operating Officer; Jodi Jenson Labrie, Senior VP and Chief Financial Officer; Shaina Morihira, VP, Finance; and Garth Doll, VP, Marketing. Following our discussion, we will unfastened up nan telephone for questions.

With that, I will move it complete to Ian.

Ian Dundas

Good morning, everyone. Our affirmative operational and financial capacity continued done nan 4th fourth of 2022. Production successful nan 4th averaged conscionable nether 107,000 BOE per day, an summation of 4% compared to nan aforesaid period successful 2021. Capital spending of $86 cardinal successful nan 4th helped to support different 4th of beardown free rate travel procreation of $230 million. Overall, we judge 2022 was an outstanding twelvemonth for our company.

We executed our operating scheme efficiently, delivering measurement maturation up of expectations, while maintaining a attraction connected costs power and superior discipline, which helped to dampen nan impacts of nan ostentation we were each experiencing.

Total accumulation accrued 9% year-over-year. This increases to 17% connected a per stock ground arsenic a consequence of our important stock repurchase activity during nan year. And while we were intelligibly impacted by costs inflation, beardown planning, procurement and execution sheltered america from nan worst effects of it, and ultimately, we were capable to run wrong our original 2022 superior spending guidance range.

The operation of accumulation of performance, costs power and beardown lipid and state pricing situation successful 2022 drove a robust free rate travel profile. We generated free rate travel of conscionable nether $800 cardinal during nan year, which allowed america to trim nett indebtedness by 65% and return complete $450 cardinal to shareholders done dividends and stock repurchases. We accrued our quarterly dividend by 67% past twelvemonth and reduced our stock count by 11% complete nan people of nan year.

Importantly, we besides made further advances connected our cardinal ESG initiatives. Key highlights successful 2022 see an 80% simplification successful our three-year mean lost-time wounded frequency, a simplification successful yearly methane emissions strength by 9%, and a simplification successful full greenhouse state emissions strength by 16%.

In a abstracted news merchandise yesterday, we besides reported our year-end reserves. Under U.S. reserve standards, we replaced 112% of our 2022 accumulation done nett proved reserves additions, and nether Canadian standards, we replaced 139% of accumulation done gross proved positive probable reserve additions. Under each reporting standard, we added reserves astatine competitory costs. For example, our nett on-stream PDP uncovering and improvement costs came successful astatine $8.27 per BOE, reinforcing our position that our heavy assets guidelines successful North Dakota will proceed to support a resilient semipermanent outlook for Enerplus.

Turning to 2023. Consistent pinch our multi-year outlook, we person a Bakken-focused superior programme designed to make charismatic free rate travel and efficiently present 3% to 5% liquids accumulation growth. Our superior programme will beryllium very straightforward pinch spending of $500 cardinal to $550 million, 95% of which will beryllium allocated to nan Bakken. Our liquids accumulation guidance is 57,000 to 61,000 barrels per day. This is successful statement pinch our 3% to 5% maturation rate, divestment adjusted for nan waste of our Canadian assets astatine nan extremity of past year. Similar to 2022, we expect this maturation complaint to beryllium enhanced connected a per stock ground arsenic we proceed to execute our stock repurchase program.

With earthy state prices presently nether pressure, we expect importantly reduced spending successful our Marcellus state asset. This is expected to consequence successful astir 8% little Marcellus earthy state volumes successful 2023 compared to past year. Overall, our full accumulation guidance for this twelvemonth is 93,000 to 98,000 BOE per day. We expect to proceed to make competitory free rate travel this twelvemonth astatine an $80 West Texas value and $3.50 NYMEX value deck. We task astir $475 cardinal successful free rate flow, which maps to a existent free rate travel output of astir 14%. Priorities for free rate travel will proceed to beryllium focused connected returning superior to shareholders and reinforcing nan equilibrium sheet.

As we antecedently indicated, we scheme to return astatine slightest 60% of 2023 free rate travel to shareholders. Based connected existent marketplace conditions, we intend to proceed to prioritize stock repurchases for nan mostly of our return of superior plans, fixed our position that nan intrinsic worth of our business is not adequately reflected successful our stock price. As we measure nan marketplace today, we besides expect accelerating a information of our 2nd half weighted free rate travel floor plan into our stock repurchase programme during nan first half of 2023.

Lastly, we updated our five-year outlook to see 2027 and amended bespeak nan ongoing inflationary environment. The scheme is focused connected nan Bakken. It is designed to present charismatic free rate travel and sustainable growth, and is underpinned by a heavy precocious value drilling inventory.

The updated scheme projects yearly superior spending of betwixt $500 cardinal to $550 million, 3% to 5% yearly liquids accumulation maturation and an mean reinvestment complaint of astir 50% based connected semipermanent commodity prices of $80 and $4 NYMEX.

I will time off it location now and move nan telephone complete to Wade for an operational update.

Wade Hutchings

Thanks, Ian. Good morning, everyone. Beginning pinch North Dakota. During nan 4th quarter, we drilled 10 wells and brought 5 wells connected production. Our beardown good capacity successful 2022 and a resilient guidelines accumulation helps thrust 4th fourth North Dakota production, 8% higher than nan 4th fourth of 2021, contempt terrible upwind impacting 4th fourth 2022 volumes.

In our non-operated Marcellus position, we participated successful 3 nett wells that came connected accumulation during nan 4th quarter, capping disconnected an progressive twelvemonth of drilling and completions activity. Fourth 4th 2022, Marcellus earthy state accumulation was 12% higher than nan 4th fourth of 2021. Reflecting connected 2022, it was an exceptional twelvemonth operationally marked by a continued attraction connected safety, awesome good results, ratio gains, and costs control.

Moving connected to 2023. I expect our operating momentum to continue. While ostentation will proceed to beryllium a headwind, our readying and procurement person near america good positioned to efficiently execute our program, which is expected to construe into beardown financial returns for nan business.

Our drilling and completions scheme successful North Dakota is straightforward, 2 full-time rigs and a unit pumping unit for 9 to 12 months. The programme will beryllium focused chiefly astir our FBIR and Dunn County acreage. We scheme to drill betwixt 55 and 60 gross operated wells and bring 45 to 55 gross operated wells connected accumulation pinch an mean moving liking of 87%. We besides scheme connected executing a mini number of refrac opportunities this year, which relates to a suite of older vintage wells we acquired successful Dunn County, which we judge are nether stimulating.

Turning to good costs. While we are continuing to thrust improvements to our drilling and completion rhythm times, we expect good costs to mean astir $7.8 cardinal successful 2023, up 10% compared to our 2022 average. This summation is mostly driven by higher alloy and consumable costs.

Operating expenses are besides continuing to acquisition immoderate costs unit year-over-year. This is being driven by a fewer cardinal drivers. General costs escalation, peculiarly wherever we person contracts pinch value escalation clauses linked to CPI, higher state processing volumes and therefore, state processing costs owed to improved seizure rates and lastly, higher good work activity driven by respective factors.

Lastly, we've updated our drilling inventory estimates for January 01, 2023, which benefits from nan continued sub-service reappraisal of nan Dunn County and Williams County assets, arsenic good arsenic further activity from offset operators successful these areas. We peg our halfway and extended halfway drilling inventory astatine 655 nett locations comparative to our scheme to bring astir 50 nett operated and non-operated wells online this year. This inventory continues to connection important moving room.

I'll time off it location and now walk nan telephone to Jodi.

Jodine Jenson Labrie

Thanks, Wade. Our beardown net and rate travel momentum continued successful nan 4th quarter, closing retired a coagulated financial year. Adjusted nett income per stock was $0.78 connected a diluted ground successful nan 4th quarter, an summation of 56% from nan aforesaid play successful 2021. And adjusted costs travel was $315 cardinal successful nan quarter, up 22% complete 2021. The superior spending of $86 million, our 4th fourth free rate travel was $230 million, which we allocated towards nan equilibrium expanse and returning superior to shareholders. We returned $181 cardinal to shareholders successful nan 4th quarter, including $12 cardinal successful dividends and $169 cardinal aliases 9.8 cardinal shares repurchased.

We reduced nett indebtedness by $170 cardinal aliases complete 40% during nan 4th and ended nan twelvemonth pinch nett indebtedness of $222 cardinal aliases 0.2x nett indebtedness costs flow. Our indebtedness simplification during nan 4th was achieved done proceeds from our Canadian plus income arsenic good arsenic a information of our free rate travel generated.

Turning to 2023. We expect Bakken lipid prices to proceed to waste and acquisition astatine premium to WTI. Bakken crude continues to beryllium powerfully bid and nan premium pricing is supported by important excess pipeline capacity successful nan region and beardown prices for crude lipid delivered to U.S. Gulf Coast. We expect our realized Bakken lipid value to mean $0.75 per tube supra WTI successful 2023. Our anticipation for our Marcellus earthy state value differential of 2023 is $0.75 per Mcf beneath NYMEX, which is accordant pinch 2022.

As Wade noted, operating expenses are expected to summation year-over-year owed to inflation, accrued state processing volumes, and higher well-service activity. For 2023, operating disbursal guidance is $10.75 per BOE to $11.75 per BOE. Our rate taxation guidance successful 2023 is 5% to 6% of adjusted costs travel earlier taxation based connected a commodity value situation of $80 per tube WTI and $3.50 per Mcf NYMEX.

Lastly, arsenic an update connected our normal people issuer bid aliases NCIB, we person repurchased 1.4 cardinal shares year-to-date and person 6.5 cardinal shares remaining nether our existent authorization. As a reminder, we tin renew our NCIB successful August for different 10% of outstanding shares astatine that time.

I will time off it location and we’ll move nan telephone complete to nan usability and unfastened it up for questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now statesman nan question-and-answer session. [Operator Instructions] Your first mobility comes from Greg Pardy of RBC Capital Markets. Please spell ahead.

Greg Pardy

Yes. Thanks. Good morning, and acknowledgment for nan rundown. Really, there's conscionable 1 mobility I'd person for you and that is, if you look astatine your – for illustration conscionable each nan messaging astir nan shareholder returns and fixed beautiful constricted runway connected nan NCIB, what's nan appetite for – to do an SIB present successful nan near-term?

Ian Dundas

Thanks, Greg. Jodi, do you want to grip that?

Jodine Jenson Labrie

Yes. Sounds good. Good morning, Greg.

Greg Pardy

Good morning.

Jodine Jenson Labrie

We judge coming nan NCIB gives america tons of elasticity to bargain backmost shares. And arsenic I mentioned, we're capable to renew it again successful August for different 10%. But we do position nan SIB arsenic a instrumentality that we tin utilize if successful nan early we spot opportunity aliases strategically to bargain backmost moreover larger information of our shares.

Greg Pardy

Okay. And possibly conscionable a follow-up past is conscionable that, really are you reasoning – I cognize you're saying astatine slightest 60% of free rate flow. So it gives you immoderate latitude. We've seen different companies pursuing different strategies, but successful immoderate cases, there's nett indebtedness floors and nan nett indebtedness floors past are unlocking. Payout ratio is person to possibly 80% to 100% aliases so. Given nan equilibrium expanse is what sewage $250 cardinal successful nett debt, I mean, you're going to beryllium debt-free present beautiful soon. Could astatine immoderate point, we expect that 60% to summation arsenic a payout?

Ian Dundas

It could. Yes, we've chosen nan very circumstantial connection of astatine slightest 60% to benignant of woody pinch that issue. Greg, arsenic we deliberation astir it now, and again, I usage nan connection sustainably a lot. We're looking for a sustainable scheme that makes consciousness successful nan fullness of time. And truthful today, that 60% number allows america to bargain what we deliberation is simply a return of a meaningful magnitude of capital. We deliberation that yield, if you will, is competitive, and it allows america to proceed to salary down debt. So prime a value deck. If you for illustration nan portion this year, there's a beautiful steep backwardation that sits successful there, right? Gas has travel off.

And truthful we would exemplary nether portion getting indebtedness free towards nan extremity of nan year. So arsenic I deliberation astir it from a gating perspective, really comfortable getting to zero indebtedness aliases zero nett debt. And truthful this scheme astatine that 60% benignant of level, that each benignant of comes together this year. If we get to that level, because location could beryllium intervening events, I conjecture acquisition activity aliases thing on those lines is simply a bully illustration of that. But if we get to that level, past I deliberation you've sewage a beautiful beardown likelihood that location could beryllium opportunity for returns to summation astatine that point.

There'll beryllium – I deliberation a batch of group – if pricing stays high, I deliberation that nan manufacture is going to beryllium successful a authorities wherever galore companies are going to beryllium successful a zero indebtedness position. And I deliberation past possibly nan really absorbing point will beryllium nan optionality astir each of that because there's going to beryllium tons of opportunities to a batch of absorbing things, expanding returns. If nan shares are reporting really well, possibly there's a spot of rate that gets build. I don't cognize really each that plays retired astatine this point. But I deliberation this is nan twelvemonth wherever we're going to beryllium approaching that towards nan extremity of nan twelvemonth and travel backmost to your original question, could returns spell up? Yes, clearly, they could spell up.

Greg Pardy

Okay. Understood. Thanks for that.

Operator

Thank you. [Operator Instructions] The adjacent mobility comes from Patrick O'Rourke of ATB Capital. Please spell ahead.

Patrick O'Rourke

Good morning, guys. I was going to inquire astir nan dividend and nan parameters for maturation here, but I really conscionable want to unpack very quickly a remark that Ian made pinch respect to imaginable for intervening events and acquisition activity. I'm conscionable benignant of funny really you're looking astatine nan M&A marketplace correct now? I cognize you've benignant of thoughtfully tally done what your perfect targets would beryllium aliases what nan parameters for that are. But I'm conscionable wondering astir your consciousness successful position of bid-ask spreads and what you deliberation mightiness beryllium retired location that would beryllium attractive?

Ian Dundas

Good morning, Patrick. So acquisition activity, it's thing that we person ever maintained a capacity to do and an liking successful doing if we saw thing that would beryllium accretive to nan shareholders and make nan business amended and make nan portfolio better, beautiful generic statement, but it's true. As we look astatine our portfolio, location are nary holes successful our portfolio. We've sewage a deeper inventory than we've ever had, non-core worldly that's gone, and we spot a really bully runway successful beforehand of us. We besides person exceptional financial capacity to beryllium capable to adhd to that if we spot opportunities that make america amended and that are accretive.

So I conjecture possibly nan barroom is reasonably precocious to do something. But we support a lens into nan market. To your mobility of bid-ask spreads and those sorts of things, volatility is ne'er a friend to successful transactions. And truthful if you look backmost complete nan past mates of years, location really hasn't been arsenic overmuch arsenic we would person been typically seen. And I deliberation that ties conscionable to volatility, a small spot of superior markets volatility, a batch to pricing volatility.

So oil, it's really been benignant of stable-ish for a small while now. And if it benignant of stays successful that $70 to $80 benignant of world, I could ideate immoderate activity happening. I mean there's intelligibly a batch of conversations, a batch of group testing nan waters, a fewer processes that get retired there. So we really haven't seen a heck of a batch of worldly travel together, but I would conjecture bid-ask starts to narrow. One of nan things that will beryllium very absorbing is if lipid assets commencement to waste and acquisition successful nan discourse of nan strip. I mean, pinch that backwardation that I deliberation a batch of america struggle pinch that longer-term value signal. We don't spot really that really connects to our position of supply/demand fundamentals. So I would conjecture we're going to commencement to spot immoderate lipid and state – immoderate lipid worldly commencement to hap complete nan people of nan year.

Gas is simply a spot different now. So you saw – it was reliable I deliberation for buyers to get state deals done successful nan past mates of years – past twelvemonth and a half pinch prices truthful strong. Now they've taken it successful nan year, and I deliberation there's a batch much liking connected nan bargain side, if you want to do something. Will sellers beryllium willing successful doing that? I don't know. So again, backmost to nan volatility question, I deliberation state – it's going to beryllium absorbing to spot if state trades erstwhile nan punctual is truthful low. So I don't cognize if that helps you retired though.

Patrick O'Rourke

No, that's very helpful. And past I'll conscionable circle backmost to nan original mobility I was going to airs here. I cognize you went done immoderate of nan return of superior pinch Greg a infinitesimal ago, getting to zero indebtedness and imaginable to transcend nan 60% target return for investors here. Just wondering pinch respect to nan dividend, really you deliberation astir benignant of nan cadence and sizing of growth. You've sewage benignant of 3% to 5% target liquids growth. You're buying backmost 10% of your float. Like really would you deliberation astir keeping nan dividend rightsized successful this environment?

Ian Dundas

The dividend is important – increasing unchangeable guidelines dividend is important. When we measurement backmost and deliberation astir nan mathematics of our business, that stock buyback is – nan mathematics is compelling. It compounds and we spot and you saw it past year, we really leaned into it, and we deliberation that is simply a really bully determination for our shareholders. Dividend successful these benignant of conditions, it will spell up complete time, but we conscionable spot much worth successful nan buyback, based connected nan valuation of nan institution and wherever it sits astatine this moment. You know, others person taken different approaches to that. When we look into nan market, wherever pricing signals, I guess, broadly, we don't spot nan dividend is offering a superior advantage to our shareholders now. And truthful it'll enactment there. We want it to turn complete time. I mean, if you callback successful Jodi's comments, she referenced nan truth that we are unfastened to alternatives, specials and variables and each those sorts of things will beryllium responsive to nan market. But astatine this moment, we spot a humble increasing dividend arsenic a portion of this superior building and nan return proposition, but it doesn't predominate our reasoning based connected wherever we spot nan valuation of nan stock.

Patrick O'Rourke

Thanks very much, Ian.

Ian Dundas

Thanks Patrick.

Operator

Thank you. The adjacent mobility comes from Jamie Kubik of CIBC. Please spell ahead.

Jamie Kubik

Yes, bully greeting and acknowledgment for taking my question. Enerplus had a descent successful its position past twelvemonth that highlighted nan improvements successful good capacity it was enjoying successful nan Bakken successful 2022 compared to its anterior vintage wells. I'm conscionable funny if you would expect to spot continued betterment successful your 2023 vintage wells based connected wherever you're targeting drilling this year? And I conjecture 2nd to that is really does your guidance incorporated nan improved capacity that you've enjoyed? Thanks.

Ian Dundas

Wade, do you want to return that?

Wade Hutchings

Yes. Thanks for nan question, Jamie. The continued betterment successful ratio successful our drilling, completions and moreover installation programs sewage masked a spot past twelvemonth pinch each of nan inflationary pressures that we and nan manufacture were seeing. But we did thrust an betterment successful our drilling rhythm times and successful nan ratio of our frac stimulation program, and we proceed to optimize nan installation creation arsenic we weave successful further emissions controls and optimize those accommodation for nan benignant of improvement we're doing. So we're really rather pleased pinch that, and that really was 1 of respective components that helped america mitigate nan impacts of nan inflationary situation past year.

We would expect that aforesaid inclination to proceed this year. We person incremental technologies that we proceed to trial that we are uncovering immoderate occurrence pinch successful position of shaving incremental clip disconnected of our drilling and completion activity times, which yet translates into both, a spot of costs savings, but besides a much businesslike programme wherever we spot nan accumulation travel connected sooner. So I would opportunity that nan guideline for 2023, it has a reasonably basal presumption astir seeing astir a 10% summation year-over-year successful good costs.

Most of that summation is inflationary pressures that, frankly, we were seeing adjacent nan extremity of past year, early this year. But it is offset by a fewer further things astir differences successful – mini differences successful scope and continued anticipated ratio gains. So I'd opportunity it's each baked successful there. But we ever consciousness for illustration we've sewage a spot of a chance to outperform that arsenic we use these caller ideas that nan squad continues to travel up with. I deliberation a really important constituent for past year's programme was besides nan existent good capacity that came from that drilling and completions programme wherever we saw really bully good capacity beyond and what we expected from nan pads we brought connected past year.

As we've noted, those pads connected mean were really precocious value comparative to nan mean pads from erstwhile years. But beyond that, we saw an moreover amended capacity than we thought. This year's programme looks really solid. I would opportunity it looks a batch much for illustration possibly that erstwhile 3 aliases 4 twelvemonth mean of good quality. But pinch that said, we deliberation that nan optimizations we were doing past twelvemonth impacted good capacity a spot incrementally. And we're continuing to usage those aforesaid optimizations successful our programme this year. And truthful again, we ever person a spot of optimism astir tin we proceed to amended nan wide superior ratio of nan programme that we're executing.

Jamie Kubik

Okay. That answers that. Thank you very much.

Wade Hutchings

Welcome.

Operator

Thank you. There are nary further questions astatine this time. Please proceed pinch closing remarks.

Drew Mair

Looks for illustration we mightiness person 1 much question, operator.

Operator

I apologize. The adjacent mobility is simply a follow-up from Greg Pardy. Please spell ahead.

Greg Pardy

Yes. Sorry, I did deliberation I'd conscionable sneak that 1 in. Wade, you talked astir conscionable a mini number of refracs. And I'm conscionable curious, what do those costs? How galore of you sewage planned and past if they're successful, what benignant of incremental accumulation would you expect to spot from those for illustration possibly connected a per good aliases per pad basis?

Wade Hutchings

Yes. Thanks for nan question, Greg. Let maine zoom retired for a minute. As we've deepened our subsurface study of nan assets that we bought successful Dunn County astir 2 years ago, what we've recognized is that location are respective areas successful those producing units that were stimulated galore years ago, immoderate arsenic aged arsenic 10 years ago. And truthful successful our view, location are places that are understimulated. And truthful it looks for illustration there's further assets that could beryllium recovered from those producing wells. So we're going to trial that conception this year.

Right now, we are readying connected 2 pads of recompletions. I mean that's astir about 7 aliases 8 wells connected a gross basis. In position of nan cost, what I would statement for you is nan stimulation itself is not excessively different than a stimulation of a caller well. But location are a fewer further costs required to get nan good prepped, get it cleaned out, get it fresh to beryllium stimulated. So they do costs a small spot much than conscionable nan completion phase. But of course, nan accommodation and everything are already there. In position of incremental production, we don't person an outer guideline connected that astatine nan moment. We really person a spot of a scope of what we deliberation mightiness hap pinch each of those wells.

And truthful we really position this twelvemonth arsenic a spot of a trial case. Assuming this twelvemonth goes reasonably well, we would expect to spot this benignant of a recompletion programme beryllium a regular portion of our yearly programme for years to come. There's a moderately bully number of further candidates that spell beyond this year's program.

Greg Pardy

Okay. Thanks for that. And past you'll update america complete nan people of nan twelvemonth possibly connected progress?

Wade Hutchings

Certainly.

Greg Pardy

Okay. Thanks very much.

Wade Hutchings

Yes. I wouldn't expect that to beryllium – yes, I wouldn't expect it to beryllium immediate. The programs dispersed retired benignant of mid to extremity of nan year. But yes, you'd get an update.

Greg Pardy

Okay. Understood. Thanks again.

Operator

Thank you. There are nary further questions astatine this time. Please proceed pinch closing remarks.

Ian Dundas

All right. So we'll telephone it there. I admit everyone's clip connected this engaged reporting week. If you're connected nan occidental portion of nan continent, we stock your pain. And if you're connected nan east, bask nan warmth, because this is [coming] astatine you hopefully. Everyone, person a awesome weekend. Thank you very much.

Operator

Ladies and gentlemen, this does reason nan convention telephone for today. We convey you for your information and inquire that you please disconnect your lines.