YPF SA (YPF) 2013 Q1 法說會逐字稿

Welcome to the YPF Sociedad Anonima First Quarter 2013 Earnings Conference Call.

My name is Hilda and I will be your operator for today.

At this time all participants are in a listen-only mode.

Later we will conduct a question-and-answer session.

(Operator Instructions)

I will now to the call over to Mr. Alejandro Chernacov.

Sir you may begin.

Great.

Thank you, Hilda.

Good morning, ladies and gentlemen, my name is Alejandro Chernacov, Investor Relations in YPF.

I would like to thank you all for joining the YPF's Earnings Webcast presentation where we will during our first quarter 2013 results.

The presentation will be conducted by our CFO, Mr. Daniel Gonzalez, our head of Investor Relations, Mr. Gabriel Abalos, and our senior management are also here with us.

During the presentation we will rely the main aspects and events that explain our results.

And finally we will open the call up for questions, okay.

Before I hand the presentation over to Daniel, I need to let you know that we will be making various forward-looking statements.

So I ask you to carefully review the cautionary statement of slide two.

Mr. Daniel, go ahead.

Thank you, Alejandro.

Good morning everybody and thanks again for joining us today.

During my presentation, I will go through the YPF results both on the aggregate and on the business level for the first quarter of 2013, business description of our financial situation and update on the La Plata Refinery incident and then we will open it up for questions.

To begin with all the financial figures are stated in Argentine pesos and in accordance with IFRS.

Also as a consequence of the we are seeing and now managing our downstream business, we have decided to consolidate refinery marketing with chemical businesses all together under the downstream segment.

Regarding the 2013 first quarter results it is worth highlighting that we have revenues of ARS18.6 billion which represents 25% in comparison to the same quarter of last year.

EBITDA was up 20% reaching ARS5.4 billion.

However operating income was ARS2.5 billion, only 1.3% higher than the first quarter of 2012.

And net income was ARS1.25 billion which was actually down 2.8% including the approximately half a billion pesos negative impact coming from the deferred income tax.

And I would try to explain then later on why we were not able to fully translate this healthy increase in revenues into a comparable increase in earnings.

However and to put things in context, this quarter's net income was 23% higher than that of the last quarter of last year and was actually the best income of the last four quarters of the company.

Investments reached ARS4.3 billion representing a robust increase of a little bit over 100% compared with the first quarter of last year.

In line with our aggressive CapEx program for the year that was outlined when we came out with our five-year business plan last year.

In relation to production figures, crude oil reached 226.3 thousand barrels of oil per day in first quarter of 2013, which was 0.7% below that of the same quarter of last year.

As for natural gas, production was 31.4 million [three meters a day], 3.7% lower than the first quarter of 2012.

Total hydrocarbon production dropped 1.9% to 478 thousand barrels of oil equivalent per day, but was approximately flat with our last quarter.

On the downstream side, when we compare the first quarter of this year to the first quarter of 2012, we processed 8.7% more crude thus reaching a 90% of rate of utilization of the refineries and as a result of this, our share in the gasoline and diesel markets has reached 56% and 58% respectively.

Finally and before we move to a more detailed explanation of quarterly results, I'd like to mention that we continued to successfully raise financing in the local markets, maintaining our liquidity reserves in the order of $1 billion.

This quarter, this was done through the issue of ARS2 billion in the local financial markets.

As we do every quarter, let me show you the main drivers of the variations on one quarter to the same quarter of the previous year.

Sales increased by ARS3.8 billion or 25.5%.

This is mainly driven by an impressive improvement in both price and volumes of our fuels sold in the local market.

However, there are two items that almost fully offset such varied increase.

Purchases, which were up ARS1.8 billion and is mostly linked with our downstream business and cost of sales, which increased by ARS1.3 billion and is mostly linked to our upstream business.

Depreciation was higher by ARS339 million as a consequence of increased investments and SG&A was ARS323 million higher in line with price increases across the Argentine economy.

When we break it down by business segment, we can see that the slight increase in the quarter-over-quarter comparison of operating income was delivered by higher downstream results coupled with lower negative results from corporate but this partially offset by lower results from our control companies and our upstream segment.

It is important to note on this slide that we have shown on this slide that we have shown in this graph the results of our upstream and downstream businesses free from the effects of the results of our affiliates which we consolidated them into that (inaudible) showing an increase of 11% compared to the first quarter of 2012.

There was an increase of 15.5% of revenues, which was a consequence of two factors.

First, the higher natural gas price as we had a full quarter effect of the price increase at the oil head to $7.5 million per million Btu which resulted in an averaged price of $3.7 per million Btu in the quarter, and second and of the crude prices were mildly down in dollar terms, they were up in pesos as a consequences of the valuation of the currency.

This revenue increase was offset by an increase of ARS1 billion in production costs mainly linked to the current provisions which started during the second quarter of 2012 and that we also mentioned in our calls during the previous quarters.

We should not continue to see this increase in a quarter-to-quarter basis in the next few quarters as the basis of comparison will have already included these increases of last year.

There was also an increasing activity in the construction, repair and maintenance contracting which increased costs and is not yet translated into higher production.

Besides high amortizations for ARS280 million as well as higher crude oil royalty state of provinces for ARS222 million also generated a negative impact on the operating income.

The royalties have to do with the price effect of the crude oil just referred to and to the increase in the royalties for the province of Santa Cruz as a consequence of the recent 25-year extension of concessions.

Finally the results from our upstream control entities such as YPF Holdings, YPF International, and YPF (inaudible) were down by ARS58 million compared to the first quarter of 2012.

In terms of production figures, crude oil was at 226,000 barrels of oil per day, which represents a slight decrease of 0.7% compared to the same quarter of last year.

This quarter started slow but improved towards March where in March we were already producing 228,000 barrels of oil per day, which is well above the monthly production rates over the last few months.

These quarterly figures however were 0.5% higher than the last quarter of 2012.

On the natural gas production we were at 31.4 million cubic meters per day.

This was 3.7% below the same quarter of last year.

Reverting in natural gas decline in our fields has proven to be a challenging task.

If we look back the previous three years until the first quarter of 2012, the average inter-annual quarter-over-quarter natural gas product showed a decline of 8.6%, that was the three years average in the past.

During our high impact plan that we started last year, we took care of the low-hanging fruit I'd say and we're able to maintain production approximately flat and we believe that during the next quarter, so we'll start to show the results of increased activity that we move from one drilling rig to five rigs as of today and in corporation of new natural gas projects like [Lahaas] for the type of gas which we will continue on a solo risk basis.

That should allow us to reach this 1% increase in natural gas production for the year.

As for the overall drilling activity, we ended 2012 with 46 drilling rigs.

By the end of March we were already at 52 and as of today we are at 54.

We should end 2013 above 60 drilling rigs.

So this increase in activity should definitely show increases in volumes in the quarters to come, which we have already experienced in the crude oil part of the equation and we still need to deliver on the natural gas part of the business.

As for downstream operating income increased from ARS 1.1 billion last year to ARS1.2 billion this quarter, this is the hike of 13.8%.

Such increase was mainly driven by much higher revenues of almost ARS3.2 billion or almost 24% compared with the first quarter of 2012.

Most of the revenue increase was explained by ARS1.9 billion which were generated by higher average prices for gasoline, 26.8% and for diesel at 20.9%.

And secondly as a consequence of higher volumes delivered to domestic markets again both in gasoline as well as diesel and which it all had a positive impact of ARS424 million in the case of gasoline and ARS225 million in the case of diesel.

In the sales, it is also worth mentioning that the stronger volume of fuel oil sold for our duration which accounted for ARS305 million of additional revenues this quarter as well as higher exports of LPG and higher exports of flour and seed oil derived from our agri segment all of them contributing with an overall ARS450 million of additional revenues.

On the cost side, the largest impact was at ARS2.3 billion increase in purchase of crude and fuels, more crude to increase our processing activity and increase price in pesos, not in dollars though and more fuels to solve the stock rates at our service ratios network that we had experienced in the first quarter of 2012.

This increase in fuel was mostly imports of Euro diesel and premium gasoline.

The volume of crude oil processed in the first quarter of 2013 was 288,000 barrels per day.

This was 8.7% higher than that of the first quarter of 2012 and in line with our objective of higher utilization rates in all of our refineries.

Later on I will spend a few minutes to go through the incident in the La Plata Refinery.

As a consequence of a strong demand of our refined products in the local markets, sales increased by 7.4% against the first quarter of 2012 driven by higher volumes of gasoline of 12.8% and higher volumes of diesel of 1.9%.

Total investments were ARS4.3 billion, that's 100% increase compared it with the first quarter of 2012.

This increased investment stems from a boost in the upstream development activities mainly in unconventional areas and also advances in the downstream projects.

As for upstream development activities, investments made in the innovation especially in Loma La Lata, Aguada Toldo, Sierra Barros, and Octogono areas are worth mentioning.

On the other hand, in the Gulf of San Jorge basin, investments have continued in the Manantiales Behr and El Trebol areas in order to increase the recovering factors of such areas.

As for exploration activities in the Neuquina basin, investments have been made mainly in the areas of Las Tacanas, Pampa de las Yeguas, and Chihuido de la Sierra Negra.

Additionally, noteworthy investments were made in the Escalante-El Trebol area in Golfo San Jorge and finally investments were also made in the Bolson del Bermejo basin in the province of La Rioja.

Now in the downstream business, investments in this first quarter were ARS596 million which was 41.8% more than the first quarter of 2012 and this increase was mainly driven by the progress of the different multi-annual projects intended to increase our gasoline and diesel production capacity as well as the quality of the products that we refined such as the implementation of a new coke unit at the La Plate refinery and the executing activities related to the Continuous Catalytic Reformer at our chemical complex in Ensenada.

The financial activities of the quarter shows a strong cash flow from operations which allowed us to finance almost 80% of our CapEx in line with what we had announced in our five-year business plan last year and maintaining this cash cushion and also improving our debt profile.

Additionally we continued our successful activity in the local debt capital markets with three new issues during the quarter and another four trenches after the end of the quarter actually between last week and this week.

The first Bond issuance of the quarter was a reopening of our -- of ARS500 million of an issue which had originally been done in December of 2012 and we obtained that in BADLAR plus 279 basis points which was 200 basis points less than the original issue of December.

And at that same time we issued a dollar link trench with maturity of 21 months and a yield of 2.5%.

The last bond issued during the quarter was ARS300 million fixed rate bond which was only re-entered to the retail market.

All these issuances plus part of our trade finance activities, renewed reached -- sorry of our trade finance activities renewed during the quarter reached net financing for the period of ARS542 million and we are still, as I said are having a very strong cash position of precisely ARS850 million as of March 31st of this year.

Now the reason no issue activity which was not included in this first quarter numbers of course consisted of $2 link trenches for a total of $150 million with maturities in two and four years and interest rates of 0.1$ and 1.29% respectively and then a peso bond of ARS2.2 billion with a finer maturity of seven years, average life of 6.5 years and a verbal interest rate of BADLAR plus 225 basis points.

So as a result of this financing activity, we continue to lengthen debt maturities which as of today have an average life of four years while reducing our financing costs and we are showing average interest rates of 5.1% in dollar terms and 18.5% in peso terms.

As everybody knows on April the 2nd of this year, our facilities in the La Plata refinery were hit by a severe and unprecedented storm which caused a flooding in all of the region and the fire in our facilities which affected the Coke A and Topping C units in the refinery.

These incidents temporarily affected the crude processing capacity of our refinery which actually had to be stopped entirely.

Seven days after the event, the processing capacity was restored to about 100,000 thousand barrels per day through the commissioning of two distillation units which are the Topping IV and the Topping D units.

As of the date of this report, technical evaluations are being carried out with the objective of determining exactly the date of commissioning of the Topping C activity as well as the reduced operational capacity of the Coke A facility which as we have expressed unfortunately will not be recovered.

Our preliminary estimate is that processing capacity will be approximately 150,000 barrels per day in approximately 30 days with a Coke A, again, no in operation.

And we are accelerating the build up of the new Coke A facility which we started back in December and it's already under construction and is expected to be commissioned by 2015.

Also in terms of numbers our preliminary estimates show an impact in the refinery production for the whole year of 2013 of approximately or up to 1.4 million cubic meters of reduced production which will be composed mostly by 70% of high value products, 20% of light products or 10% of heavy products.

Approximately 65% of the volume reduction will occur in the second quarter where we had four days with the refinery which was fully shut down and an expectation of about 60 days of the refinery working around 100,000 barrels of oil per day as I just described.

So we might be importing some of these products to make up for the reduced production but we may also be able to export some crude oil services from time to time.

To conclude, I would like to make a brief summary of our first quarter milestones.

On the results front, operating income was higher due to higher gasoline and diesel average prices and also stronger volumes delivered which shows a very healthy business which was almost fully offset by these heavier operating cost purchases for the quarter which I already explained.

EBITDA was up 20.7% which also stands as a very solid indicator.

You're starting to see important income generated by the increase in natural gas well head price which was actually the effect on the quarter was initial ARS432 million and the average price of natural gas during the quarter was $3.7 per million Btu versus $2.7 per million.

But in the same quarter of last year that's 36% increase.

And that also generating the conditions to profitably develop the unconventional gas.

This year that we will be targeting not only the Vaca Muerta shale gas but also the Lahaas type gas formations in Loma La Lata.

The production down train from the previous years keeps being reverted and we can reaffirm that we have our annual target of growing natural gas production by 1% this year and crude oil production by 4%.

Vaca Muerta final project is in line with our plan.

Today we have 12 active rigs drilling simultaneously in the North Loma La Lata moving to multi-part drilling generated efficiencies often drilling and frackin and it's significantly reducing a total well costs, so we're making progress there also.

Financially we feel totally comfortable with our funding strategy for the rest of 2013 and we have identified, we believe all necessary sources of funding and again refunding most of our needs over the next few quarters.

As of today we hold the cash crucial of our own ARS5.3 billion.

Finally on May the 3rd, we announced the purchase of [Bridge Gas' stake and Metro Gas ] for a total price of a little bit less of $10 million, reaching with this transaction a controlling majority of 70% of Metro Gas.

We expect to work very closely with administers of finance and of planning to turn around Metro Gas in the near future.

So with this, I'd like to conclude the presentation but open it up for questions.

Thank you, we will now begin the question-and-answer session.

(Operator Instructions) Our first question comes from Frank McGann from Bank of America, please go ahead.

Yes, Good morning.

Just two things if I could.

One is just in terms of cost, the cost pressures obviously are real and as you look forward, I was just wondering how you expect those to perform particularly with regard to labor cost, what types of or what's the timing for any renegotiations of some of the union contracts that you have?

Want what shall we expect as we go forward with that?

And then secondly in terms of import cost for products given the need that you'll have to import products, will you then sell those at the loss or do those get -- that's somehow reimbursed via agreements that you have with the government?

Hi, Frank.

Thank you for the questions.

On the labor cost question, as we know we negotiated with the union last year, an 18-month agreement and therefore that should take us until the end of 2013 and therefore we should not be seeing any additional labor cost additions in the rest of the year.

However when you compare first quarter versus first quarter and you see the same thing second quarter versus second quarter because of the lower base in the first two quarters before this renegotiation, you will continue to see that increased.

But going forward for 2013, we are not expecting any meaningful labor cost increases.

As to the imports, maybe I should make a statement here which I didn't make during the presentation and I should have and that has to do with the insurance coverage.

We are fully insured both for material damage or physical damage to our facilities as well as business interruption.

So we expect that in the medium to long term as we collect on our insurance, there shouldn't be any meaningful effect coming from the incident in refinery.

However in the second quarter, you will be seeing some kind of effect.

In terms of the products that we need to import, that depends on the diesel.

We can tell you that we continue to have a margin importing diesel.

So that shouldn't be an issue.

On the gasoline, it depends on the kind of product, we may have small losses in some of our imports, but again, nothing which is meaningful to the company.

Okay, thank you very much.

Thank you the next question comes from [Andre Sabaria] from Credit Suisse.

Hi, good morning everyone.

Thanks for the call.

I have a couple of questions, Daniel.

First, I would like to understand financing and cash position a little bit better in two points.

One, working capital has been increasing quite significantly over the past two quarters.

I'd like to understand if that will continue to go in forward as you increase activity?

And second, how do you see your cash position by year end because if the local debt markets are getting increasingly more saturated, you could be running out of cash in a year and a year and a half, and you'd have to repay the debts that are raised in the last year.

So that's on the financing part.

One of the FX part, I'd like to understand better, what type of cost you have in dollar and what -- and if you pay those cost in the official exchange rate or if in the blue exchange rate, I'm just trying to understand the impact of the discrepancy between the two rates there.

Thank you.

Okay.

Well, first thank you for the question.

On the working capital question, I think that the quarter was affected by a couple of factors which we believe will be reverted in the next few quarters which is therefore we shouldn't be seeing again any deterioration in working capital.

Those factors have to do with the income tax payments which in the first quarter of this year were higher than in the first quarter of 2012.

And remember the impact of the increasing prices in natural gas, that we have not yet collected on that because it's still running its administrative times at the government level.

And that we are expecting to fully collect everything in the next few weeks, so that shouldn't be an issue in the future.

In terms of the cash position, we -- so at the end of this year, we hope to be again at between $500 million to $1 billion of cash because following this strategy of trying to always refund the next of the few quarters because of all the uncertainties regarding Argentina, we are not concerned about the maturities during the next year.

Most of the funding that we raised, I'd say significantly all on the funding that we raised is long-term funding.

Actually we only did one trench which was 270 days which will mature during the second quarter and these three trenches which are smaller trenches for the small investor which was ARS750 million in total and that will mature in a year.

So the maturity, so the short-term maturities are not a concern for us and we believe that between what we have done in the second quarter and a couple of things we are working on and we cannot disclose in much more detail at this point, we are fully funded for 2013.

In terms of your question regarding the cost composition and this is a very approximate estimates just to give a sense of the ball park, approximately two-thirds of our costs are denominated in pesos and a third is denominated in dollars which doesn't mean that we have to pay actual dollars for that unless what's important it's mostly bought locally with pesos and of course at the official FX rate.

So you would say most of your dollar or your dollar related costs are paid at the official rate and not at the blue rate?

All of our dollar are paid at the official rate.

That's the only rate that exists.

Okay, perfect.

Thanks very much.

Thank you.

The next question comes from Gustavo Gattass from BPG.

Please go ahead.

Hello.

I have three questions here.

The first one puts again with Andre's point on the -- on the gas receivables, I just wanted to understand two things.

The first one, on the calculation that we were running for the fourth quarter, it seems to us that you have probably cautiously accounted for the revenues on the fourth quarter.

I just wanted to understand if during this quarter, you guys built all the receivables that you're expected to really have.

And if I could have idea of just how do you expect this process to go?

Is it going to be one payment made for the government or is it something to be paid slowly so that we're going to seeing this working capital improved only overtime?

So that's the question on the gas kicker.

The second thing that I just wanted to touch based on was really Vaca Muerta if you guys could give us an update of just how things have progressed over the course of the last quarter.

And that if this was possible at all to give us an idea of the kind of contribution that unconventionals and general might be having already in the production numbers.

Thank you.

Thank you, Gustavo.

On the gas (technical difficulty) question, we are fully accounting for the revenues derived from the price increase, okay, which we also did in December and December a much shorter period.

So we are expecting to recover all of the December receivables and hopefully all of the first quarter headquarters receivables are at least the meaningful part of that in one installment.

And I said, next question -- I can honestly tell you exactly when that is going to be because again it's going through the democracy of the different approvals within the Argentine government, but we fully expect that as of the end of the second quarter, we will have any meaningful receivables coming from the increased of natural gas.

In terms of the unconventional contribution to production it (inaudible -- audio gap) Vaca Muerta formation.

And as you know in terms of natural gas, we've just drilled our first couple of wells, so we have those in probably like 100,000 cubic meters per day and I am looking at Alejandro.

Guys, Gustavo, today we are producing around those 10,000 Daniel talked about, 60% of that, a little bit more of that, 60% or 70% of that is total liquids and the rest is natural gas.

Thank you.

Alejandro, could you just repeat the number because when he was answering the line, at least suddenly went down.

I don't if it went down for everybody.

We are producing 10,000 barrels of oil equivalent per day of which 60% approximately liquid and the rest if natural gas.

In any event, Gustavo, we're talking about for the time being a very small contribution of the current production coming from the unconventional.

That's perfect.

Thanks.

Just to give you some a bit more clarification from those liquids around almost 1.700 barrels are [MTL], okay, so around 5000 to 5.500 are crude oil.

Thank you.

Does that answer your question?

That does, thank you.

Thank you.

Our next question comes from Anish Kapadia from Tudor, Pickering, Holt.

Please go ahead.

Hi, good afternoon.

I have three questions as well please.

First fully, I was wondering how much of an issue is the threat of legal action from reps all against any party that forms into blocks?

I'm just wondering how much of an impact is that having in terms of preventing deals getting done?

Second question is just on the service market, I was wondering if you could talk about what the market is like in terms of the cost and availability for rigs, for fracking fleets within Argentina kind of particularly thinking about the unconventional and, again all service company is a bit more weary about doing business Argentina at the moment?

And the final question was on your international operations I'm just wondering what priority they are at the moment?

Are you looking at monetizing your international operations?

And if you kind of take your entire international portfolio of assets, what kind of value do you see in those?

Thank you.

Thank you, Anish.

Let me answer two of the three questions.

I'd like Alejandro to cover the third one.

On the fleet of legal action, it has not prevented us from getting our agreements done where the parties that we wanted to get those agreements done and that's actually progressing as planned.

So it has not had any effect as we it.

Now if it does have or doesn't have an effect on how potential partners other than those are directly dealing with us, if it does have that potential, it's difficult for me to know, okay?

All I can tell you is that we are negotiating transactions and those are progressing nicely and that those potential partners do not seemed to be concerned at all with these legal threats.

On the third one, on international operations, A, it's clearly not our focus in the next couple of years which doesn't that we are not going to be pursuing potential opportunities from time to time, but clearly it's not the focus of our development.

We could decide to monetize some of our international operations but they are not really large and would not have any meaningful impact on our results or on our asset base.

Anish, okay, going back to your second question regarding rigs, fracking fleets and service companies in Argentina, what we encountered here is that we were able to grow and save rigs at the pace as we need it for the time being.

As we said on the call today we are actually running on 54 rigs and we intend to end the year over 60.

Part of that should come from imported rigs and the other one should come from the end of the capacity that you can tackle here in Argentina, so that is what we are targeting this year.

Regarding fracking fleets, today we have one fleet which goes from part to part doing the total -- the total fracks of those four wells all together and then it moves to the other one.

So we started getting more efficient so we started having, I'd say, less fleets towards the short term even though by the second half of the year, we expect to have a second frack fleet that will be coming down to Argentina.

So as far as we are seeing it for at least I'd say the total of this year and I'd say almost the beginning of next, we wouldn't have any trouble with service companies increasing the activity we've got here in Argentina.

On the other side of course, you will see that rate if you compare them to LATAM, they are close to what you pay for a rig in different countries here in South America, maybe a little bit higher sometimes, but not dramatically.

Of course compared to prices you see in the states, they have quite a differential.

And is that—

The good thing Anish, from Alejandro's words is that, and again focusing on the unconventional is that we are significantly reducing our cost per well, I was going to say quarter over quarter, but I can say month after month.

So that is definitely good news.

We have seen the ability of equipment that we needed and the grades which are coming on a little bit in line or lower than what we were expecting on this time of the development.

Well, just to follow up on that, just in terms of your total well cost, the drill drilling to complete the wells, can you just update kind of where you started out, where you're at the moment and where you see yourself potentially being able to get to it with drilling efficiency?

Well we are not disclosing exactly what's our cost per well, but just to give you a sense, currently cost per wells in dollar terms are approximately 20% below what they were in average during the second half of 2012.

Okay, thank you.

Thank you.

Our next question comes from [Santiago Weissmac] from Raymond James, please go ahead.

Hello everyone and thanks for taking my question.

Just the quick ones if I may, the first one relates to total production.

I mean the last couple of quarters we have seen the decline rates had been slowing down, so what should we expect for the rest of the year maybe?

And the second one when you announced the [Habiba Plant], you stated that you expect an annual average of oil production of about 290,000 barrels a day.

So where you do think 2013 will extending, over or below that?

Thank you.

Thank you, Santiago.

On total production, what we are expecting for the year, it's 1% increase in natural gas and 4% increase in crude oil production.

As I said in March, if you took March as a proxy and I am not a friend of taking just one month as a proxy, but because of the composition on a month-to-month basis during the quarter was kind of different from January to March.

We like to show that in March we are already producing in line with these estimates of these targets for 2013.

So we affirm or reaffirm this target that we came up with a few months ago.

We are checking on that number of 290.

We believe that that number, it's the production of crude oil for 2017, okay?

And again if we continue to deliver as we are at this point with our production targets, hopefully we should be along those lines.

We have not redone five-year projections, so that continues to be our best estimate for 2017.

Okay, that was really helpful.

Thank you.

We have no further questions at this time.

Okay, thank you very much everybody.

Ladies and gentlemen, this concludes today's conference.

We thank you for participating.

You may now disconnect.