Delek US Holdings Inc (DK) 2022 Q4 法說會逐字稿

Good day, everyone. Welcome to the Fourth Quarter 2022 Delek U.S. Earnings Conference Call. My name is Jamie, and I will be your operator for today's call. Please also note, today's conference is being recorded.

At this time, I'd like to turn the conference call over to Rosy Zuklic, Vice President, Investor Relations. Rosy, you may begin.

Good afternoon, and welcome to the Delek U.S. Fourth Quarter Earnings Conference Call. Participants on today's call will include Avigal Soreq, President and CEO; Todd O'Malley, EVP and Chief Operating Officer; Reuven Spiegel, EVP and Chief Financial Officer; Mark Hobbs, EVP, Corporate Development; as well as other management members. Today's presentation material can be found on the Investor Relations section of the Delek U.S. website.

Slide 2 contains our safe harbor statement. We'll be making forward-looking statements during today's call, and actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filings.

With that, I'll turn the call over to Avigal.

Thank you, Rosy. Good afternoon, everyone, and thank you for joining us today. 2022 was the best year ever for Delek U.S. Market conditions were strong for Refining and Midstream, and we were able to capture opportunities along that. Fully adjusted EBITDA was $1.2 billion. During the fourth quarter, total results were strong. Adjusted EBITDA was $221 million despite unplanned downtime, mainly at the Big Spring Refinery. Third, we give more color around operation and the action we are taking to ensure safe and reliable operations. As I said in the past, shareholder returns is a key priority for us. During the year, we attained $236 million to shareholders, with $172 million in the second half of 2022, close to 10% of DK market cap. We reinstate the regular dividend this year, and we are pleased to announce an additional 5% increase in the quarterly dividend to $0.22 per share.

Looking forward, we are very excited about our future. On the corporate structure, we are actively evaluating strategic alternatives, on logistics and retail to achieve the sum of the parts objective. On the operations side, we launched the 0-based budget to improve our competitive position on cost structure. We are proud of the Tyler Refinery team. The team finished the turnaround on time, on budget, and we are on the process of starting the plant. This mark an important milestone for Delek's turnaround history. With this, we do not have any significant planned downtime schedule until late 2024. So we are well positioned to capture market opportunities during that time.

And now I will hand it over to Todd to speak about operation.

Thanks, Avigal. Fourth quarter crude throughput across the system was approximately 258,000 barrels per day. The reduced rate was primarily driven by unplanned downtime at the Big Spring Refinery during the fourth quarter. Unplanned incidents make us regroup and reassess. We take steps to improve when and where we see opportunities and focus on the areas of the business that we can control. This is a priority for us, not only for the well-being of our employees, contractors and communities in which we operate. But because we know that a safe and reliable operation leads to financial stability and protects the environment.

A good example is our Krotz Springs Refinery, where our employees and contractors recently achieved a safety milestone of over 5 million man hours worked without a lost time injury. As Avigal mentioned, we have just finished a significant turnaround at our Tyler Refinery. The refinery successfully completed the turnaround with 0 process and safety incidents, on time and on budget in difficult weather. This is a fantastic achievement for Delek, and I would like to thank our employees for their hard work and our contractors for their partnership.

Our Logistics segment ran extremely well this quarter. Our record earnings reflect this, and a big driver was the successful integration of the 3bear Delaware assets. While DKL sees benefits from its base business, we see continued growth opportunities in the Permian and Delaware footprints. Delek Logistics is well positioned to continue its strong track record of growth and to be a long-term sustainable midstream player.

With that, I will turn the call over to Reuven to go through the quarterly results.

Thank you, Todd. For the fourth quarter of 2022, Delek U.S. recognized adjusted net income of $61 million or $0.88 per share. Net loss for the period was $119 million or $1.73 loss per share. During the quarter, we only -- also returned $104 million to shareholders in the form of share repurchases and dividends. On Slide 4, we highlight that we had adjustments this quarter of $243 million. The largest impact was relating to FIFO inventory impacts, which we began adjusting for this (inaudible). We believe presenting this adjustment better align our EBITDA results with RPS. Adjusted EBITDA was $221 million after factoring in these adjustments.

On Slide 5, we provide a waterfall of our adjusted EBITDA by segment from the fourth quarter 2021 to the fourth quarter of 2022. The significant improvement period -- of the period was primarily by higher results in Refining. Compared to the fourth quarter of 2021, the Gulf Coast market [spreads] were 76% higher in 2022, which primarily drove the large (inaudible).

On Slide 6, we present the cash flow waterfall. We drew $313 million in the -- in cash during the quarter, largely driven by 2 events that occurred late in the quarter. First, we had $180 million unfavorable timing effect associated with the closing of the transition of an inventory intermediation agreement with Citibank. This full amount was resulted in a favorable cash flow in the first quarter of '22. The second item was an unfavorable working capital cash flow impact associated with unplanned downtime at the Big Spring Refinery. $60 million of this amount was a cash timing event and resulted in a favorable cash flow in the first quarter of 2022.

On Slide 7, capital expenditures for 2022 were $343 million on a consolidated basis. For 2023, we have capital program of $350 million. The Tyler Refinery turnaround is the single largest capital expense and makes up a large portion of the 80% of CapEx dedicated towards maintaining and sustaining the integrity of our assets. The remaining 20% is dedicated for both projects primarily in Logistics.

The last slide covers outlook items for the first quarter of 2022. Before we move to Q&A, I wanted to give an update on our cost reduction and process improvement effort. We're executing changes in the organization and expect about $30 million to $40 million of P&L improvements in 2023 and an additional $50 million to $60 million in 2022. Annually, we expect the run rate to be approximately $90 million to $100 million. These improvements may be lower cost or improved margins.

I will now open the line to questions.

Ladies and gentlemen, at this time, we'll begin the question-and-answer session. (Operator Instructions) And our first question today comes from John Royall from JPMorgan.

So maybe we can just start with an update on just a little more detail on how you're thinking about the sum of the parts unlock? How do you kind of thread the needle between needing to -- needing steady streams of cash flows to pair with the refining business, but potentially needing to separate out some portion of logistics and/or retail in order to realize that valuation uplift?

John, this is Avigal. Good afternoon and thank you for joining our call. Our number 1 consideration, obviously, is to be a friendly investor company and share. We demonstrated during the second half of the year with returning just over $170 million of cash to investor, which is 10% of the market cap. And that's -- sum of the part is a subset of debt. So as we said on the press release, we are evaluating both opportunities in the retail and in the logistics side. Each one of those opportunities look a bit different or should I say completely different. So we cannot go too much into details but we're obviously looking how to be able to manage the asset we need and to maintain the EBITDA we need and to maintain the cash flow we need. With that, I -- it's a good opportunity for me to introduce a new colleague, important colleague here on the table, EVP of Corporate Development, Mr. Mark Hobbs, maybe you can say a few words.

Sure, Avigal. Thanks. And John, look, that's a good question. We've obviously been very vocal about focusing on sum of the parts. And since I joined, in October, the company, my focus has been solely on evaluating and looking at options and opportunities across all of our business segments to unlock the value kind of inherent in our businesses. I know, Avigal mentioned midstream and retail. But look, what I would say is, as we're thinking about this, one of the things that we want to make sure that we saw for us doing something that goes without question that's additive across our businesses and positions, our businesses across all the segments for future growth to drive additional value for our shareholders. That's really the sole focus here.

So you make a good point about cash flow and those types of things, but we really want to position all of our segments for additional growth. And anything that we do will be focused on accretive growth of the business. I'll leave it there. At this point, we don't have anything to announce, but obviously, when we do, we'll be very transparent with everybody.

And then maybe just switching to capital allocation. Good to see there's a bump to the dividend, but I don't think we saw a quarter ahead guide on the buyback. Should we read into that, that you won't be guiding going forward? Or should we think that maybe there may not be one in 1Q? How should we read into that?

So we'll elaborate on that just a little bit. So our intent is (inaudible) conditions stay where it is to a -- be balanced between debt reduction and buyback. Our goal for the remainder of 2023 is to be on the buyback between $75 billion to $100 billion. We will -- we demonstrated in the second half of the year that we could be prudent around that. And we did do the buyback that we guide for with a total return of again, over $170 million. We -- our intent is to keep doing to be a friendly investor share, and that's the benchmark that we put in front of ourselves.

Our next question comes from Neil Mehta from Goldman Sachs.

I'd just love some perspective on where you feel you are from a refining operational perspective? And maybe you can go through each of the assets, Tyler, El Dorado, Krotz and Big Spring and where do you think there are opportunities to continue to improve, capture and drive profitability higher as the last quarter was a tougher one than I think people would have expected a couple of months ago?

Yes, hi Neil, it's Todd. Thanks for the question. Look, we're on a journey here in terms of getting to the place that we ultimately want to be. We know, as I said in my prepared remarks, that the key to success is being safe, reliable and environmentally responsible in operating our assets. I think we've done some good things during '22, and I think you and the rest of the folks on the call, were able to see that reflected in the capture rate improvement throughout the year. As we've talked about, we've had a number of different initiatives across the fleet to make improvements. We've seen creep at a number of the facilities. We've done some catalyst reformulation and some of the others. That's definitely bumped up yields even in Q4 and Krotz in particular. So making that -- continuing to make that asset a sustainable long-term viable asset in our mix.

Unfortunately, in BSR, we had a planned -- semi-planned outage. And honestly, we didn't do a great job coming out of that. We've taken the lessons learned. We've incorporated that into our operating structure, and we won't make that mistake again. So I'm not going to go into specifically around each asset because a lot of that stuff obviously is proprietary. But it's something we're very, very highly focused on. We're looking at product mix every day. We're looking at crude slate every day.

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And we're looking at the Tyler facility, setting the standard for turnarounds. Again, we're just coming out of a major turnaround there, and the first turnaround at that facility in over 8 years. We've done it safely, no safety events, no process safety events, challenging weather conditions and the team has done a phenomenal job. And I think that lays a very solid blueprint for what we're going to do on a go-forward basis.

And I think the other thing I'd mention is we don't have any real major plan work now until Q4 of '24. So that gives us a really long, nice runway to be able to capture the strong macro environment that we see out there.

That's a great perspective. And how much of the challenge around captures has been more operations driven, as you talked about versus market conditions? Because if we think about the period where Delek refining profitability was outsized from 2011 to 2018, a lot of it was about the Midland differential, which is now inverted. And so I think the investment community is trying to figure out what the mid-cycle refining environment looks like in an environment where the crude markets are less favorable. So I would love your perspective on the go-forward crude markets and how that environment sets up for your kit.

Yes. No. Thanks again, Neil. I'll take kind of the first half of the question, then I'll let Avigal weigh in on market views. Look, I think we've demonstrated over the last year where Midland traded at a premium relative to TI, the earnings power of the company, right? So I think that's pretty well established at this point. Again, we've obviously done things throughout the system to improve yields by a catalyst reformulation. We've done some things throughout the system looking at product mix changes that give us better netbacks and we'll obviously continue to do that. But again, I think given the synergies between our logistics system, the strength in the Permian Basin just from a demand perspective and how well albeit outside of Q4, we ran during the year, we're in a good place as we come out of the Tyler turnaround.

I'll let Avigal comment on what our views are on the Midland differential on a go-forward basis.

Yes. So hey Neil, how are you?

Good Avigal, thank you.

Yes. So the Midland Basin is obviously the one -- the prolific basin in the world, not just in the U.S., and we have invested and demonstrate a lot of commitment to that. And I think for the long term that the investment was able to prove itself and will be -- prove itself in the future. Today, Midland is around -- start of the year with around 5.7 million barrels a day of production rights. And we see a nice increase in our footprint of production, and we forecasted that's going to go all the way to 400 to 600 million this year. So it's going to put us at 78% -- close to 90% capacity of the pipe that we have out of the Permian.

Over time, the Permian Basin is going to perform and going to demonstrate the right differential and going to fit to our configuration. We are obviously in 2 of -- actually in 2 to 2.5 of our refinery, we have more optionality. So this is something we are always looking on that, how we can improve and flex our crude slate. But over time, I think that -- probably the second half of 2023 and the beginning of 2024, going to be incremental year for Permian Basin.

Thank you, Avigal.

Yes.

Our next question comes from Doug Leggate from Bank of America.

This is Kalein for Doug. My first question is a follow-up to John's question. And I want to understand how you guys view the cash flow and the free cash capacity for detailed refining when it's fully burdened for all the corporate costs. If you're able to walk us through those assumptions, I think it would help the [Street] to understand whether the core business can stand by itself or not and whether a separation of retail and/or logistics makes sense.

Thank you for the question. And so it really depends what's the outcome going to be, but we are not going to do any transaction that will put us in a risk for the total cash flow of the company. So let's make it clear. We are not going to make any transaction that we jeopardize the mother ship. We're going to do some -- any transactions that we're going to perform going to be (inaudible) a transaction that is well thought out. And we'll think about the different scenario and we'll take into consideration the downtime in the refinery business, which we know it's a volatile business.

So we are not going to make just transaction to check the box. I've said this in the past, we're going to do the right one. Luckily enough, we are grateful to have a -- the -- probably the one if not the, the best in the industry to perform those deals, and we are confident we can get one that we can all be proud.

Would you guys potentially look at this as a multistep process. So in the case for DKL acquire something to get bigger through M&A, would you consider selling some of the refining assets back to DK corporate?

Yes, hi. This is Mark Hobbs. Thanks for the question. Look, we would look at things as a multistep process. But anything we do, as Avigal said, there's a lot of different options on the table for us right now. But anything we do, as I mentioned in my earlier remarks, it will be done in such a way that it sets up all the different businesses to be -- to continue to succeed, continue to have the ability to operate effectively through the cycles. And so that involves moving assets, strategic assets between a midstream company back to the refining company, and we're going to evaluate all the different ovens.

For my second question, I think we'd appreciate some details on your cost-cutting plans, for example, how much from each bucket, the buckets being gross margin, OpEx and corporate? And should we understand the cost cuts as being an EBITDA expansion? Or are there any offsets to revenues?

Yes. Yes. Good. So I think let's talk about the 0-based budget we performed. Hope you (inaudible) want to take it?

No, absolutely. I just missed the last part of the question. Sorry?

The second part of the question was, should we understand the cost cuts to be an EBITDA expansion. So for example, if you're talking about $100 million in cost cuts, does that translate into $100 million of higher EBITDA? Or are there any offsets from lower revenues because you're getting rid of certain cost centers that might be revenue generating?

No. Actually, as we see the plan right now, even though there could be a onetime restructuring cost, we're going to see the EUR 100 million are supposed to be sustainable. Just want to make it clear that it's on a run rate basis. So we're going to recognize $30 million to $40 million this year, most likely $50 million to $60 million next year on a run rate basis, around $100 million, which will be a direct contribution to EBITDA.

I'm sorry, Kalei, just to make sure, it's not just purely cost in the sense that it's going to come out of the G&A line. It could be in the form...

I mentioned on the prepared remarks that it's both margin improvement and cost redundancy.

Yes, that's right. I just don't know that Kalei. I just want to make sure Kalei picked up on it because he specifically asked costs. So just to be clear, it is not going to just be purely coming out of the G&A line. It could be coming out of the form of improved margin as well.

And if I could sneak one very last one in. Can you offer some color on the onetime items that hit cash flow this quarter and which one of those items will reverse if they will or not?

Well, on the G&A, we had $17 million of onetime of which $13 million are already part of the restructuring costs that I've mentioned to your previous question. That will allow us to be on track and our goal for the fourth quarter is for the G&A, corporate G&A -- I mean, company G&A to be in the mid-70s.

I was thinking more about the items that affected cash flow here in the fourth quarter. It seems like there is about $400-some-odd million dollars of what looks like onetime impact.

Well, $240 million of them were a timing issue, and we received the $240 during the -- I mean, actually, in January. The other $200 million are really the FIFO impact or the inventory impact. So if you compare all that together, it would have put us in a positive number.

. I appreciate it. Thanks guys.

Thanks Kalei.

And our next question comes from Paul Cheng from Scotiabank.

Can I just maybe go back into the earlier question. I think will it be possible that you can separate out the $100 million by different major bucket like how much is on the headcount reduction saving? How much is from the margin improvement and where the margin improvement you expect that kind of separation?

Yes. hi Paul, it's Avigal. So I would just ballpark number, 30% to 40% of the G&A and 60% -- 50% to 60% -- actually, 60% to 70% in the OpEx ballpark.

So G&A is about 30%, 40% and 60%, 70% you see in the OpEx or margin improvement. And [how all of this] that are you reducing your headcount and if you do by how many?

Paul, we are not going to get specific around that. You probably understand that is a sensitive discussions, but we want to have the most smart, efficient and obviously, a certain reliable company. So we are not going to (inaudible) reliable on that. We're going to do it the right way. And we get advice from best-in-class. We want to have a great company going forward.

Okay. I want to go back into the refinery reliability. And [part] if you look at where you are, do you think the reliability issues we see not necessarily just to Big Spring, but overall, is it onset base issue means that you need to spend CapEx or is a process issue or cultural issue or that you're just not having sufficient of the (inaudible) or the skill set way that you may need to get some help from outside?

Yes, Paul. Look, I think if you look at everybody in the industry, right, we all struggled during COVID. There were obviously cost cuts rationalization on staffing across the industry. We, like everybody else, are coming out of the back-end of that now. I think, obviously, we've just conducted a major turnaround at Tyler, we've done that successfully on time, on budget in challenging conditions. So I think we really have the people in place. It's just really kind of playing catch-up to some of the issues that were caused by COVID in terms of the poor margin environment.

So you look at what we did throughout the majority of the year, other than the Big Spring event that we had. And we ran the system very, very well, all-time record high utilization, above nameplate capacity. So I think you should treat this more as a one-off on a go-forward basis as opposed to something that's systemic in the company.

So you -- basically that you believe if there's a reliability issue, yes, [really just] because during the pandemic, you guys may be postponing and delaying some of the maintenance activity as such that now you're paying catch up on that?

I think everybody in the industry experience all that's not unique to us, and I think I'll leave it at that.

And I think a final short one. This is probably for Reuven. Can you share that what is the RVO on the balance sheet at the end of the year? And also if there's any meaningful impact on the fourth quarter results due to the market-to-market on that liability?

Yes. Paul, this is Robert Wright, Chief Accounting Officer. As you know, we don't disclose that level of information within our financial statements.

Can you tell us that what does any meaningful impact on the fourth quarter P&L due to market-to-market or that liability?

Yes, there was no impact beyond market rent price volatility.

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(Operator Instructions) Our next question comes from Jason Gabelman from Cowen.

I wanted to ask the first one on the sum of the parts unlock that you're going through. And the main question is I want to understand if the contours of the kind of the -- the goals I should say, are the same, which is really to deconsolidate DKL from DK? I know on the last earnings call, you -- the management has suggested that was a driving force of why you want to do this, sum of the parts valuation unlock. Is that still the case? And additionally, on the prior call, there wasn't any mention of the retail footprint being part of the potential options that you're exploring. So did something change between that time and now, where now retail is in play?

Thank you, Jason. So our end goal is to be a good share and a good company for investor. And as I said in the past, there is more than one way to go about it. Obviously, we said in the previous call that we believe that with some actions around DKL, we can get there, and we still believe that that's the case. We did put in the press release a comment about retail. And our belief in retail is either you go -- can go big all the way or you are almost not relevant. So obviously, we are always thinking ourselves what is the best asset base we should hold and how do we bring the best return to shareholders. So you need to be very happy that everything is on the table. And we are hope -- and we are certain that you will be very proud and happy with the deal that we're going to end up showing you.

And then my follow-up, there's 2 quick ones, I'll ask them together. On the cost cuts, the 60% to 70% OpEx reduction, is any of that related to energy costs? Or is that all underlying? And then separately, last quarter, you guided to, I think, $100 million to $150 million in debt reduction. It doesn't appear like that materialized this quarter. Can you discuss why that was and where you see gross debt levels going over the course of the year?

Yes, sure. So regarding the energy, if it's -- if there is an energy component to that, so it's the consumption of the price. So we are not going to tell you that we're going to reduce the cost by $100 million and bet on the natural gas goes down. So that's not the (inaudible). So that's not -- that's what the market gives us, and that's what we can do ourselves. So that's to answer the first.

So we are trying to be a steward, this possibly can with the information we provide [street]. And if there is an energy component around it, it's about the consumption and not about the natural gas price. So let's (inaudible). Reuven has a lot of -- and speaking of energy, Reuven has a lot of energy around the debt reduction, and probably wants to give more color around that.

All right? So actually until the end of November, when you're on track to execute both the debt reduction of $100 million and the buyback of $100 million as a result of the unplanned events and the timing events that I've mentioned, it kind of disrupted our plan. We did end up doing the buybacks, but we have to push the debt reduction. We will go back and Avigal mentioned it before, to focus on debt reduction and buyback as we go forward.

Our next question comes from Roger Read from Wells Fargo.

I'm going to beat the dead horse here of restructuring, but I'm going to ask the question with a little more put into it. So I was curious, as you're looking at the overall process here and opening up value, how do you see some other things such as the biofuels business and some of the equipment, let's call it, assets like Wink to Webster that are still inside of DK that were originally planned to be dropped down to DKL. Is that a complicating factor or an enhancement when you think about improving the overall value of the 2 entities.

Mark can start and I can finish.

Yes, sure, Roger. I appreciate the question. Mark Hobbs here, EVP Corporate Development. As we said earlier in the call, I mean, we're looking at all the options on the table. I am specifically across all of our business segments and looking at ways to unlock the value that's inherent in those businesses as well as to set all of our business lines up to be successful kind of going forward, right? And so when you think about other areas for us to consider whether that's on the biodiesel plants or whether that's decarbonization of our business, what we're evaluating as well around our business, just in general, from a corporate development standpoint, is looking for opportunities where we can leverage our existing kind of assets appropriately where we have competitive advantage from a location, from a configuration sort of, et cetera, to seek opportunities, whether it's around decarbonization or low carbon fuels in the future. And so that's something that we're constantly evaluating and looking at organic opportunities around that.

As we think about the midstream in particular, and think about kind of Wink to Webster and kind of how that fits in the overall scheme of things. I mean that's obviously not a captive kind of Delek U.S. refining-related asset. And so it's more of a traditional midstream kind of third-party asset. And so when we think about where assets should be longer term and where the best value proposition is for those assets, that's something that we're obviously thinking about as well.

Yes. Just to add on that. So every deal that we are looking, obviously, Roger, we are looking to make it accretive to the cost of capital that we have. We are not trying to make a deal that biodiesel market suggested a 12% return or something like that. That's something with -- it's off the table. So every deal that we are -- if we are exploring, it should be accretive to our shareholders. So that's the main area.

We've kind of thought of Wink to Webster is generating roughly $50 million a year EBITDA. I don't know if you're willing to comment on that, but is that a reasonable range at this point?

Hey Roger, it's Todd. Thanks for the question. Look, as we've said in the past, we don't speak for the consortium. And therefore, that type of information is not something we can be at liberty to disclose. I think suffice it to say that Wink to Webster is running at planned rates, we're obviously a part of that. We get the benefit of distributions coming off of that. But I think we'll leave it there.

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Thank you.

Thanks, Roger.

And our next question comes from Matthew Blair from Tudor, Pickering.

First question is, do you have an update on the potential RV project in terms of timing and there's been any sort of update on the EBITDA contribution and whether Delek would be likely to invest in that project.

Hey Matthew, it's Todd. Look, again, kind of much like my answer to Roger, we're not yet invested in the project. As you're aware, we've got a -- an option $13 million -- a little over $13 million option for a 33% interest in the actual physical plant. As we said in previous earnings calls, the company has filed some SEC documentation that would lead us to believe that it's probably not online until the second half of this year. I think it's safe to say that as Avigal laid out a minute ago, we will evaluate the benefit of us exercising our option vis-a-vis our capital structure when the time is appropriate. And we'll obviously make sure that you guys are well informed when we make that decision.

And then the corporate segment at negative $60 million EBITDA this quarter. Was that pushed up by like year-end comp? And if so, what's the good run rate for corporate going forward?

Yes. A large percentage of that is -- a large amount of that is the onetime cost that Reuven had mentioned earlier, at G&A response. We had about $13 million of restructuring charges that hit through that segment. And then there was other onetime costs as well.

The onetime costs are still in the adjusted EBITDA figure?

Yes, that's been clear. So the $60 million is an adjusted EBITDA number. But what we're really talking about is that there is at year-end, we have the annual incentive plan. And so that's really the cost that you're seeing. That's why little bit elevated [in this quarter]. It's just the accrual that happened in the fourth quarter. So that's why the fourth quarter is a little bit higher. So that kind of accounts for areas are that you're seeing versus the third and -- versus the fourth quarter of last year.

We did it [being] the second and the fourth quarter.

Yes.

We did not do it every quarter.

Right. Exactly.

We're changing that going forward, but that's the way we did it at the best.

Okay. And so maybe like negative $40 million to negative $50 million a quarter would be reasonable going forward?

Yes. So I would say, yes, probably closer to the yes, 40% to 50% (inaudible). Yes, it is the way I did it in my head is that once you kind of -- the variance between the third quarter and the fourth quarter is largely attributable to that.

And obviously, they are a bit higher than what we anticipate going forward. So I would guess, like $30 million to $40 million.

Yeah.

So that's also a number that will come back.

And ladies and gentlemen, in showing no additional questions, I'd like to turn the floor back over to the management team for any closing remarks.

So I want to thank the management team, (inaudible) to the investor, to the sell-side, buy-side community. Thank you for believing in us and being with us with our strategy. Thank you for the Board of Directors (inaudible) at the company and first and foremost to our employees that are running and operating the assets day and night, rainy and sunny.

So thank you, everyone, and we'll meet again in the next quarter.

If you have any questions please feel free to reach out. Thank you. Bye-bye.

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.