Teck Resources Ltd (TECK) 2008 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the UTS ENERGY Second Quarter 2008 Investors' Conference Call. (OPERATOR INSTRUCTIONS)

I will now turn the conference over to Jina Abells Morissette, Corporate Secretary. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us this morning for our call. My role today would be the Chair the conference call.

But first, I'd like to advise that the company may make forward-looking statements during this call. These statements are based on UTS's expectations and are subject to a variety of risks and uncertainties and other factors, which are inherent in a pre-development stage oil sands mining and extraction enterprise that can materially affect UTS's results. No representation can be or is being made with respect to the accuracy of the projections or the ability of UTS to achieve the projected results. The company assumes no obligation to update any forward-looking statements.

Having said that, good morning, everyone. I'd like to advise that I'm joined today by Will Roach, President and CEO of UTS; Wayne Bobye, Vice President and Chief Financial Officer; Howard Lutley, Vice President, Mining and Extraction; Martin Sandell, Vice President, Engineering; and Daryl Wightman, Vice President, Resource Development and Business Strategy.

Let me now turn the call over to Will to discuss our second quarter results. Will?

Thank you, Jina. I'm going to go through the presentation that's on the web site, and I hope all have access to that. And the title of the presentation is Conference Call August 6, 2008, Q2.

Going through the -- slide two is the forward-looking information that Jina has just referred to, and then I'm going to start on slide three, which is just a high-level summary of some of the highlights of the quarter.

Basically, the big challenge we have in front of us is completing the FEED study, getting the approval for the Upgrader and the mine amendments, and then hopefully getting a finalized cost estimate allowing us to sanction the project by the year-end.

In addition to that, we've been extremely busy in the background, analyzing all of the 353 wells I think it is that we drilled in the 2007/2008 winter season. We've pretty well done the core analysis, and we're getting some good indications in resource levels, and that should be in earmarked in the first quarter of next year, and Daryl will talk a little bit more about that.

And indeed, the news of the quarter, which has been relatively quiet on news but very, very busy internally, is the acquisition of some new lands around a discovery that we made last year. This now gives us about 230,000 acres outside -- or 360 sections outside Fort Hills, Frontier & Equinox, which is significant land package.

Moving on to slide four, the big highlight, of course, is the Fort Hills project moving now towards the end of the FEED study work because the Petro-Canada, the operator, pretty well got that done now and extensive review work is going on in the 13 silos, a silo-by-silo approach, trying to go through exactly what's in those FEED studies and put the cost estimate together in a consistent way. That process should be broadly on track for completion in the end of September.

In parallel to that, there's a lot of work going on in the field and there's a significant amount of activities in the --.

Oh, no. Operator, are you there?

Yes, I'm here.

Will, are you there? All right, maybe we should move on to the next slide, then. Yes, go ahead, Daryl.

All right, this is Daryl Wightman. Thank you, very much, Will. Moving on to slide number six, then, five was the heading, "Exploration and Delineation Assets." Slide number six, the 2007/2008 drilling and exploration Program, it was very successful. As Will mentioned, we drilled 353 core holes. Our core analysis was completed at the end of July, which is right on schedule. There have been no surprises, so we are looking at coming up with our resource estimates at the end of this year.

Moving on to slide seven, as Will mentioned, at the July 9th land sale, we purchased leases 22 and 23. They're shown on slide seven. Lease 22 is immediately north of the lease 421, which we acquired previously. Lease 23 is immediately to the west of lease 22, and this land position is just to the northeast of the Synenco Northern Lights project.

Moving on to slide number eight, the Fort Hills project is really in the center of the new mining hub to the north of Fort McMurray. Currently existing and currently producing projects are Syncrude Aurora North immediately to the south of Fort Hills. Immediately south of that is the Shell Muskeg River Mine. To the west, across the Athabasca River from the For Hills project is the CNRL Horizon project. You can see the other projects that are listed there, Total, Horizon, Imperial Oil Kearl Lake, Shell Pierre River Mine. You can see that the acreage that UTS/Teck Cominco has outside of the Fort Hills project is in this area that has become the new hub of the mining interests to the north of Fort McMurray.

Slide number nine is a listing of the surrounding mining projects, the projects that surround the Fort Hills and include the Fort Hills in this new hub of mining activity. I won't go through all of the projects, but they add up to approximately 3 million barrels a day of production when they're all coming on, and they're coming on from CNRL Horizon this year out to Shell Pierre River Mine, which is scheduled for 2018.

Slide number ten, at year-end of (inaudible) Frontier Project, which is on the west side of the river and to the -- it's in our -- what we formally called the lease 311 area. We will probably have a discovered resource to the north of that on lease 610 and 840 where we have some wells drilled but a lower density. And we'll have an initial evaluation of our in situ potential. Our in situ acreage is located up on the Birch Mountains to the west of our mining area.

At year-end 2009, we'll have a contingent resource on lease 610 and 840, which is the continuation of the Frontier project to the north of the lease 311. We'll have preliminary evaluation of leases 421 and the two leases that were just acquired, 22 and 23, on the east side of the river, of the Athabasca River close to -- adjacent to the Northern Lights project, and we'll have an initial evaluation of other lands.

Moving to slide number 11, the [Synpost] project -- we have project sanctioning scheduled for the last quarter of 2008 that will give a combination of reserves and resources that will be on the books at the end of 2008 after project sanctioning.

Looking at our other acreage with Teck Cominco, lease 14, the Equinox project, we do have a contingent resource there now with a drilling that we did in the past years. So that has been completed for now. The Fort Hills project, a combination of reserves and contingent resources after project sanction. Lease 311, an area of the Frontier project, we'll have a contingent resource at the end of this year. The report will be coming in, in the first part of 2009.

Leases 610 and 840, which are the extension of the Frontier project, we'll be drilling those this winter, and we'll have a contingent resource there at the end of 2009 where the report will be in, in early 2010. Lease 421 area, we'll be doing some drilling there this year and the next year. The contingent resource that we'll be getting there will be coming in at the end of 2010. A report will come in actually in early 2011, but the date is at the end of 2010. Over the next several years, we will be having significant additions to our resource base.

Now, we're going to switch -- this is Howard Lutley, VP, Mining and Exploration, and I'll just spend the next minute providing a little bit of context over the resources and the development of the resources that Daryl just described. Now if you'd like to switch to slide 12, and we can summarize the activities that have been taking place on the engineering and development side beyond the Fort Hills project.

So early in 2008, we announced and released our public disclosure document regarding the development of the Equinox and Frontier projects. And this is the very first step in the regulatory process that makes public or intentions to develop those lands with Teck Cominco, and that has been received by government agencies and the stakeholders, both in the local area in the province and nationally, and it alerts everyone that we are intending to develop these projects.

In parallel, we have, with a number of service providers, put together a Froth Treatment Pilot Plant up in the Fort McMurray area, and the purpose of this is to allow us to develop the froth treatment technology that we will utilize in the Equinox and Frontier projects. Now we already have rights to froth treatment technology as a member of the Fort Hills partnership, and this pilot is to further develop that technology for the use of Teck Cominco and UTS.

On the Equinox side, we've developed the DBM Engineering, and we have awarded contracts to Fleur and SMT to advance that process engineering so that by the end of this year we will have a good assessment of the costs and schedule for the development of the Equinox projects.

In parallel, our consultants, Norwest Corporation, have developed a mine and tailings plant so that by the end of this year or early next year we will have a good assessment for the cost and schedule for the development of the Equinox project. For those of you familiar with our story, Equinox is the name for the project that is being developed on the lease 14 acreage.

And finally, on Frontier, as Daryl mentioned, we're defining the resource size to a contingent level by the end of this year. And at that point, we will start an initial mine planning process so that we can get a picture of how this very large deposit, potentially large deposit, can be developed in association with our other lands on the west side of the Athabasca River.

I'll now turn it over to Martin Sandell for some other comments.

Good morning, everyone, this is Martin Sandell, Vice President of Engineering. I'm going to provide a status update on environmental studies that we're carrying out in parallel with the Equinox DBM. I don't propose to discuss the scope of the studies in detail, as we reviewed those at the first quarter conference call, and suffice it to say that the activities are proceeding in parallel with the Equinox DBM.

The key activity over the next few months will be the study of optimizing carbon dioxide emissions at an oil sands mine. This will commence after the Equinox DBM has material to a point that we can use it as the baseline for that study, and we expect to have results from that study during the first quarter of 2009.

I'm now going to hand off to Wayne Bobye, who'll talk about financing initiatives.

Good morning. Wayne Bobye, Chief Financial Officer, I'm going to run you through quickly some of the financing initiatives that we're working on right now.

Turning to slide 15, UTS is funded until the end of 2009 with the partner earn-in contributions from Petro-Canada and Teck and UTS's available cash. From that point on, in 2010, UTS needs to raise 1.6 billion in funding excluding fees and capitalized interest.

Turning to slide 16, we've got a number of financing options available to us. Just briefly, we have the two earn-ins that I mentioned, the 1.4 billion contributed by Teck and Petro-Canada. And we need to raise between 1.8 and 2 billion including capitalized interest and fees.

Our intent is, in order of play, is to put a bank syndicate together, and underwritten bank debt at sanction, which will be approximately between 1 billion and 1.5 billion, and then look at the term loan and high-yield market to possibly tap another 300 to 800 million in funding. And with project sanction -- Daryl has already mentioned this, we have project sanction. We'll have some reserves -- and we could have reserves between 300 million and 600 million barrels, our share of the Fort Hills, as well as contingent barrels of 1.4 to 1.7 billion.

This helps us a great deal in the financing because barrels are something that we need to do the financing. And this should happen if we get the sanctioning, and we will have the contingent barrels and some discovered barrels, so a lot going on that will hopefully lead us to a successful financing plan.

Turning to slide 17, just to go over this again, in terms of the ideal financing scenario, we'll have a cost estimate available this year, project sanction to be received in the fourth quarter, a bank facility committed at sanction of up to 1.5 billion, reserve and resource reports completed for Fort Hills and our other exploration areas, Daryl's touched on this, by first quarter 2009.

Then, with all that information, we'll go to the Moody's and Standard & Poor's and get a debt rating in the first quarter so that we can do the other tranches of debt in the high-yield or the term loan B market. So we've got a lot of alternatives here, and really the order of play is going to depend on the price of oil and market sentiment.

Now I'd like to turn it back to Will Roach for the year ahead and summary.

Thanks, Wayne. And the next slide is slide 18, and this really summarizes pretty well what Wayne and Daryl have been talking about in terms of coordinating the resources in parallel with going through the sanction process and defining the final cost estimate, and also adding, hopefully, to the expiration portfolio with some more and contingent and discovered barrels over the next year, after seeing the other projects. So a pretty busy time, but really the highlight's going to be around the Fort Hills cost estimate, and then moving into, in short order, the financing and sanction of that project.

So in summary, slide 19, Fort Hill finance, I still think we're financed to the end of '09 in both parts of the portfolio. I think a key, as Wayne alluded to, is the build out of the resource and resources into the balance sheet, and a significant amount of resources coming in from Frontier, as well as a significant amount of resource in the Fort Hills project.

And then, you know, we really do have a good pipeline of projects now for probably the next 15 years, and that doesn't really include the latest discovery around the 421 area on the -- east of the river. So it's going to be about financing and execution and environment performance over the coming years, and we think we're reasonably well placed.

With that, Jina, I'd like to hand it back to you for any questions.

Thank you, Will. I'd now like to open the floor for a question and answer session, and ask the operator to come back on and explain how questions may be asked.

Thank you. (OPERATOR INSTRUCTIONS)

Your first question comes from Mark Friesen of TD Newcrest. Please go ahead.

Good morning. I just have two questions about the budgeting process and the FEED process. Will, with the FEED process being roughly 90%, more than 90%, done at this point in time, you must have a good sense of where you've had positive or negative surprises. Can you maybe address that a little bit and also what's remaining with the FEED process?

Yes, good morning, Mark. I (inaudible), and I think the first thing to say is that the whole FEED process is being done in -- silo-by-silo, and I think there are 13 silos, and I'm going to hand this to Martin and Howard afterwards to try and give you a bit more color.

So what's happening right now is there's a detailed review on a silo-by-silo basis by the operator and also the partners to make sure the engineering is exactly what we wanted and that the estimating parameters used in those silos are appropriate and also that they're consistent across silos, and where there's any duplication that that's cut out or any gaps, those added in.

So on scope, my understanding is there's very little that's been missed out. There's been one or two things, and I think that's things like the camp and cogeneration facilities, may come back into the scope, which were previously thought as third party, but that's not fully decided.

So the general tenor of the estimating process is that there is significant pressure on the costs, and that's reflected in the efficiencies assumed and also some of the label rates associated with -- and costs associated with indirects.

But overall, the process is going very well. It's very thorough, and we think it's premature to do anything until you see the whole picture, and then you can apply the appropriate contingencies over the whole lot.

I'll hand that now to Martin and Howard to add any color to that if they see fit.

I think you've given a very good summary there, Will. As Will said, Mark, it's a very rigorous process in which the partners are fully involved. We're having a lot of insight into these numbers. And it's going to take some considerable time to rationalize everything and bring everything to the same basis, and then consolidate the estimate so we can have a full project budget.

And during that process, there will be quite a lot of optimizing and elimination of duplication between the silos and ensuring that essential cost savings are taken across the silos, determining the right level of contingency and escalation. And so we'd expect it's going to take at least two or three more months to generate a consolidated budget for the process.

It's Howard here, and I don't think there's much to add other than that we consider this a very normal part of the process. We've all been involved, on this side, in major projects before, and this is just a normal part of the process as you bring it together. And as Will said, it'd be premature to talk about numbers until we've gone through this scrubbing process.

Sure, okay. My follow up question is just with respect to the third-party capital number of -- I think it was 3.6 billion. How has that changed, and have you increased the use of third-party capital or, as you made a reference to, Will, maybe bringing some of those items back into the partnership control?

Well no firm decisions have been taken there, and the operator is evaluating the proposals for the third-party -- or the items that were considered likely to be third-party. However, there's quite some debate around what's going to happen in the cogen, the cogeneration facilities, and also on some of the camp facilities.

So those are the only two, so I think if there was any movement in any direction, it'd be likely to be more into the capital budget other than the other way, but nothing is certainly decided yet.

Okay. And just for clarity, the capital cost numbers and the financing numbers that Wayne laid out, that's on the current budget estimate, correct, of 15.2 billion?

Yes, really -- yes, that's absolutely correct, and one of the observations I'd like to make is that, when we firmed down last year to 20%, we did that in the [manage] that there was probably a need for some financing cushion so that we would be able to finance perhaps slightly higher than that budget at that time. And I think that over the next three to four months, we'll see that that was probably a very wise decision.

Okay, thanks for the update on that.

Thanks, Mark.

And your next question comes from Richard Wyman of Canaccord Adams. Please go ahead.

Hi, good morning, everyone. I do have a couple questions. First of all, as it relates to the hearings in [Sturgeon Counting], last month, is there anything that was presented by concerned stakeholders that may pose some unusual conditions or delays on the approval from the regulator?

Richard, thanks. Not that I'm aware. Obviously, I don't want to get ahead of any regulatory approval process, but I think that the hearings went very well and the arguments were presented and the [data] was made. So I think now we're just waiting to see how the regulator moves forward with this, but I don't think we expect anything unusual.

All right, thanks. And with regard to the mine amendment, there were some objections. Can you comment on the nature of those objections and whether that poses anything unusual in the approval process that's looming?

Yes, the mine -- the objections to the mine, and I think there were five that were received. Some of the were of a generic nature. Petro-Canada, I believe, has responded to them in a [first] fashion. We now await the regulator's view on what has to happen next, and there appears to be three courses of potential action. One is to approve the amendment. Another one is to require what's called a written hearing where the objections are received in writing, and then Petro-Canada's asked to respond to those in writing. And then, the third option is to have another set of hearings on those objections if the regulator thinks that's fit.

In one case, you get approved in relatively short order, and in the last case, case three, we believe that the approval would be delayed until probably the April/May timeframe of next year.

And what do you think are the odds of the third option coming to play?

I don't know. We're waiting to hear, and again I don't want to go ahead of the regulator. And I think that maybe Howard can put color on that.

Yes, I mean experience -- it's very difficult and, as Will said, you really don't want to speculate. But we believe that Petro-Canada has done a good job of providing all the information. In general, there have been no issues, no new issues, raised in the mine amendment that could or should lead to a further review of the current approval beyond the issues raised in the amendment. So from an objective point of view, we would think this should be sooner rather than later.

But as we know, the regulators have generally become a bit more responsive to stakeholders' concerns in the last 12 months. So if they see necessary to go to the public hearing, they'll do that. But we're optimistic that this could be resolved by the end of this year.

Okay, just a couple more questions. In the quarterly there, you comment a bit on the possibility of modifying the base plan to address labor shortages and cost escalations that are related to that. At what point do you start to move off of your base plan and consider phasing the coking and so on so that you can address some of the spikes in demand for labor and probable cost and productivity issues that relate to that as this project unfolds?

I'll have a bit of that, Richard, and then I think the best one to get at that is, then, again, the double team of Martin and Howard.

But pretty clearly, the partnership is looking very closely at all of the engineering results and pulling this cost estimate together. And Petro-Canada is doing has been a really diligent operator in looking at all of the options, and I think that it would be -- there isn't a magic number that everyone has in their mind that I'm aware of, certainly UTS, if (inaudible) over this, will do something else.

I think what we are looking for is to understand the cost and understand what the likely range of outcomes are, and then look to Petro-Canada and the partnership to understand what the appropriate way forward in the most risk-matriculated fashion is to yield the highest-value project. And that's -- so what I'm trying to say is I don't think there's a hard and fast line. I think it's more a sense of what the best thing to do in the circumstances are, and I think that piece of decision-making will be taken over the next quarter.

Martin and Howard?

Hi, this is Martin. I don't think there's much I can add to that, really. I think, as Will said, the strategy will be developed over the next quarter, and clearly one has to balance the risk of changing an overall execution strategy versus the potential benefits of that.

And we also have a number of initiatives in place, which were to address the labor issue, which we've talked about before such as the use of temporary foreign workers. So all of those have to be taken into account. And as I said, I don't think -- as Will said, I don't think there's any hard and fast number that we can give you, at which point, we would switch to a different strategy.

Yes, I think -- and all I need to add to that is that there are -- there is substantial progress in the ordering of equipment for both the north and the south site. Excuse me. So our contractors and the operator are quite far along that road. So we're beginning to make commitments, which are tying or firming up the cost of some of that equipment and taking us out of the risk of escalation. And those activities are quite advanced.

So to some degree, we're able to be a bit more -- sort of have a bit more certainty around the cost of equipment as we go forward. The north site lends itself to a certain amount of flexibility because we have the two trains, two extraction and two froth treatment trains. So if they wanted to tweak the timing of that and stretch it out a little bit to reduce the peaks, that's an opportunity that naturally lends itself with the kind of execution we have in the north. But at the moment, the focus is still on executing the plan as designed with the mid-2011 [specimen] completion.

Yes, I'm going to add one other thing there that there's obviously two other pretty important agreements in place that really predicate moving forward with the mine into production by 2011, it's the (inaudible) potential, really, but also the partnership agreement that Teck has kind of and UTS is (inaudible) this resource. I'm pretty confident we're moving ahead.

Okay, and the last question relates to the expiration on the new lands that you just acquired. What rough level of activity do you think you'll have in '08/'09 in those new lands?

Daryl, can you answer that?

Yes, Richard, thank you. The lands that we just acquired -- we're scheduling a drilling program for lease 421, which we had previously acquired, and we are now in the process of getting the data together to submit and OSE, and oil sands exploration permit for our new lands and so that we hope to get those in place, and if we get those in place, then we will be drilling -- probably it'll be in the order of somewhere between 15 and 30 wells on the new land that we have acquired. So we are proceeding along the path to drilling the lands that we have just acquired.

Okay, thanks.

I'll try and decode that a little bit. I think the total number of wells, Daryl, is around 80, isn't it, on the east over the river, around there?

Yes, it'll be somewhere between 80 and 100 in total on the east side of the river for 421 and 422, 423, and 22 and 23.

Okay, thank you.

Your next question comes from Andrew Fairbanks of Merrill Lynch. Please go ahead.

Good morning, guys. It sounds like you're feeling pretty comfortable with the initial phase of the bank financing. And I guess perhaps related to Richard's question, I wanted to ask about phase two, Fort Hills, and is there some portion of the capital to be spend on phase two included in the current financing, or will that be something completely separate? And given the kind of cost pressures that are prevalent in Fort McMurray, do you think there's any reevaluation of the view that phase two will start up fairly rapidly, two years behind phase one?

I'll start that, Andrew. Thanks for the question, good question, and then I'm going to ask Wayne for color around it on the financing stuff.

But very clearly, we're 100% focused on phase one right now and working out exactly the best way to do that. And I think that's occupying quite a lot of Petro-Canada's time and also Teck's. So to some extent, there is an expenditure this year on the phase two engineering route, making sure all of the things are in place in the phase one build, design and build, that we need to have there to execute phase two properly. And I think the spend on phase two this year is about $60 million in the partnership. So that is continuing.

But the question about how we would finance it, I think we will finance phase one on its own merits. And then, the timing of phase two will really be determined I think largely by the successful delivery of phase one. And I think that that's something the partnership will look very carefully at as we go through the phase one execution.

So it's not something that's really bothering us right now, but we're looking at it pretty carefully and keeping a wary eye on it, and we'll have a pretty good understanding of the scope and the cost estimate as we go through building phase one.

Wayne, do you want to talk about the financing of that?

Yes, we're primarily focusing on phase one, and we are looking at some of the phase costs and are aware that there could be impact there. But I think that what we would do is we do have other barrels on the other side of the river, and if we needed to use those to finance that's certainly an option. We were really going to only pledge partnership units but do have a lot of flexibility inside of the company because we're not one-dimensional and we do have these options available to us. I think that's how we would try to approach that.

Well that's great. And I think is it your sense that, as you go through the phase one construction process that -- would you wait until completion of that process before a sanction would occur for phase two or sort of by definition, the way it's arranged now, you'd have to sanction phase two in the midst of the latter portions of the construction of phase one? Is the sense that --?

Yes.

That may not be the way it works out?

Well I think that if there's any pressure it will be pressure pushing that date out realistically, Andrew. I can't see it coming earlier. And I think one of the big challenges across all this space is making sure that the resources are in the field to be able to deliver these projects.

Speaking from a UTS perspective, I can certainly say we'll want to see a lot of good progress and good deliver to budget, and we may even need to see some production before we're in that position to be able to pull the trigger on phase two. I know that nobody use has pulled the trigger on phase two until they've actually gone into production in the oil sands.

All right, that's excellent. Thanks, Will.

Thanks.

(OPERATOR INSTRUCTIONS)

And your next question comes from Robert Plexman of CIBC World Markets. Please go ahead.

Hi, good morning, everybody. You're talking constantly about the funding being in place through to the end of 2009. But could this happen sooner if we get an initial cost estimate or revised cost estimate that's higher than the $50.2 billion that we're looking at right now?

I don't think the likelihood is that the spend would go up in the first year if the budget goes up. I think the spend goes up in the 2010, '11, and '12 period rather, if that occurs. So I think the probability of that is low.

But as you heard Wayne saying, we're going to try and get the majority of this funding done by the end of the first half of 2009. So we're hoping to be pretty well isolated from that.

Wayne?

Yes, I think, Robert, we're working on that now, and if we get that done by then, then I think we'll have more than adequate coverage on the debt side I think.

And what we have today, to reiterate, we've got the two earn-ins and we've got the cash available. And to put a -- we are putting the banking facility in place, and some of the high-yield, and it'd definitely be done in the first half of 2009. We should be covered if the costs were to go up, but I can't see that they would go up that much in that year, and it's really going to be in the latter years when you start doing the heavy spending, 2010 and onwards.

Okay, thanks. And I want to -- had another one, and I guess I'm thinking about how you reconcile the strategy between the continuous expansion. I mean, you had some additional land holdings, and sort of reconciled that with the overhang of -- overhanging markings, certainly, about the company's ability to finance its share of the project, and that seems to be a bigger factor than oil prices right now impacting the shares. And so I mean, do you try to reconcile those two interests?

Yes, thanks. And we (inaudible), and I think that the key bit is -- the balancing act is firstly we've got to know when the (inaudible) process is done, when the project can be sanctions and what the budget for phase one is.

At the same time, I think we're doing the right things, which is very quickly establishing how many barrels, variably, we've got in the two discoveries and now the new discovery area on the east and getting those quickly into the (inaudible) process and, thereby, taking them, then, as rapidly as we can up the value chain.

That, then, allows us two or three different opportunities. One is to increase our debt capacity to [bear] against additional barrels. And then, too, which I don't like, is sell those assets in the events we have to. That's quite tax inefficient to do that kind of (inaudible), and we haven't built tax coverage for that yet. And also, if you do it early, you don't get as good a value.

So the whole idea here is to manage that tension to our advantage. So it's an excellent question.

Yes, thanks, Will.

Gentlemen, and Ms. Abells Morissette, there are no further questions at this time. Please continue.

Thank you very much, operator. I think that's everything for this conference call. Ladies and gentlemen, this concludes our conference call for today. Thank you for joining. Goodbye.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.