Summit Midstream (SMC) Q1 2026 Earnings Transcript

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DATE

Tuesday, May 12, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President, Chief Executive Officer, and Chairman — J. Heath Deneke
• Chief Financial Officer — William J. Mault
• Chief Commercial Officer — Christopher H. Tennant

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TAKEAWAYS

• Adjusted EBITDA -- $54.2 million, which management described as "generally in line with expectations despite lower volumes and realized residue gas prices in the Arkoma."
• Full-Year Adjusted EBITDA Guidance -- Management reiterated expectation to trend toward the $245 million midpoint of its $225 million to $265 million range.
• Distributable Cash Flow -- $26.9 million for the quarter, as reported by the CFO.
• Free Cash Flow -- $11.4 million for the quarter, with $19.3 million in total capital expenditures, including $3.7 million of maintenance capital.
• Balance Sheet Position -- Ended with $43.4 million in unrestricted cash and $116 million drawn on the revolving credit facility, leaving $381 million in available borrowing capacity after accounting for $2.7 million in undrawn letters of credit.
• Rockies Segment Performance -- Adjusted EBITDA of $26.4 million, a $1.5 million decrease due to non-cash imbalances, a 3% liquids volume reduction, and lower gas prices, partially offset by a 4.4% increase in natural gas throughput and higher prices for crude oil and NGLs.
• Permian Segment Performance -- Adjusted EBITDA of $8.7 million, unchanged from the prior year, with Double E pipeline volumes averaging 805 million cubic feet per day.
• Piceance Segment Performance -- Adjusted EBITDA of $9.6 million, down $0.4 million sequentially, attributed to a 7.3% throughput decline and shut-ins (8 MMcf/d temporary shut-ins, 20 MMcf/d currently shut-in due to low gas prices in the White River hub).
• Mid-Con Segment Performance -- Adjusted EBITDA of $19.3 million, a decrease of $2.1 million from the previous quarter, driven by natural production declines and offset by 6 new Arkoma well connections.
• Operational Activity -- Connected 37 wells in the quarter, including 4 Williston wells under a new 10-year crude gathering agreement.
• Well Inventory and Forthcoming Activity -- 5 rigs running and approximately 80 drilled but uncompleted wells across the system, with plans to connect about 40 new wells in the second quarter, including 20 in the Mid-Con segment.
• Double E Pipeline Commercial Progress -- Signed an additional 10-year take-or-pay agreement for 100 MMcf/d of firm capacity, bringing total contracted Double E volumes to just over 1.7 Bcf/d; open season underway for further expansion.
• Preferred Dividend Payment -- Fully paid $45 million of accrued Series A preferred stock dividends, flagged as a milestone toward reinstating the common dividend.
• Equity and Financing Actions -- Completed a $42 million private placement to Tailwater Capital and closed the Summit Permian Transmission term loan refinancing for additional flexibility to fund Double E capital growth and deleverage.
• Macro and Customer Sentiment -- Management highlighted producer plans to accelerate activity in 2026 and 2027 in the Rockies, citing improved crude economics and visibility for further pickup in Arkoma and Barnett as well.

SUMMARY

Summit Midstream Corporation (NYSE:SMC) emphasized ongoing momentum in signing long-term capacity contracts for the Double E pipeline, including a recent 10-year, 100 MMcf/d firm agreement that increases contracted volumes to over 1.7 Bcf/d. Management described strong customer interest in further expansion opportunities, referencing potential projects tied to evolving LNG export and power market demand. Payment of all accrued Series A preferred dividends and a $42 million equity raise with Tailwater Capital created organizational flexibility supporting both balance sheet improvement and capital return objectives. The company outlined accelerated customer drilling intentions in both the DJ and Williston basins, supported by a constructive commodity price environment for crude oil. Segment-level performance was mixed, with growth in Rockies natural gas volumes partially offset by declines in Piceance and Mid-Con and continued shut-ins from weak regional gas pricing.

• Management noted, "we see our EBITDA growing, you know, from roughly 35 up to the mid-$60 millions here just with what we have contracted to date. And then if you look at, you know, with the expansion that we have announced, we think that could grow up to $90 million."
• The CFO identified unlevered rates of return of "20% to 30%-plus" on organic growth opportunities, which influences capital allocation prioritization ahead of reaching the long-term leverage target of 3.5x.
• Management stated that Rockies is the region with "the most near term opportunities" for bolt-on M&A, with targeted acquisition multiples in the "5x to 7x" LTM EBITDA range, while observing that larger, more complex opportunities exist in the Permian.
• Substantial throughput and margin expansion in Rockies was projected, with the CEO stating, "You can see the Rockies growing from, you know, roughly around $85 million of contribution today to upwards of $160 million, you."

INDUSTRY GLOSSARY

• Double E pipeline: Summit-operated interstate natural gas pipeline transporting residue gas from the core Delaware Basin to the Waha hub, with ongoing expansion projects and commercial contracting efforts.
• DUCs (Drilled but Uncompleted Wells): Wells that have been drilled but are not yet producing, representing near-term production potential when connected.
• Take-or-pay agreement: A contract in which a buyer commits to pay for a specified quantity of pipeline capacity regardless of actual usage, securing stable cash flow for operators.
• POP (Percent of Proceeds) contracts: Contracts where revenue is shared based on the sales proceeds of commodities, exposing operators to commodity price fluctuations.

Full Conference Call Transcript

Randall Burton: Thanks, operator, and good morning, everyone. If you do not already have a copy of our earnings release, please visit our website at summitmidstream.com. You will find it on the homepage, events and presentations section or the quarterly results section. Me today to discuss our first quarter 26 financial and operating results is J. Heath Deneke, our president, chief executive officer, and chairman William J. Mault, our chief financial officer and Christopher H. Tennant, our chief commercial officer, along with other members of our senior management team. Before we start, I would like to remind you that our discussion today may contain forward looking statements.

These statements may include, but are not limited to, our estimates of future volumes operating expenses, and capital expenditures. It may also include statements concerning anticipated cash flow, liquidity, business strategy, and other plans and objectives for future operations. Although we believe that the expectations reflected in such forward looking statements are reasonable, we can provide no assurance that such expectations will prove to be correct. Please see Summit Midstream Corp.'s annual report on Form 10 k for the fiscal year ended December 31, 2025, which the company filed with the SEC on March 16, 2026, as well as our other SEC filings for a listing of factors that could cause actual results to differ materially from expected results.

Also note that on this call, we use the terms EBITDA, adjusted EBITDA, distributable cash flow, and free cash flow. These are non GAAP financial measures, we provided reconciliations to the most directly comparable GAAP measures in our most recent earnings release. And with that, I will turn the call over to Heath.

J. Heath Deneke: Thanks, Randall, and good morning, everyone. Summit reported first quarter 26 adjusted EBITDA of $54.2 million, which was generally in line with expectations despite lower volumes and realized residue gas prices in the Arkoma. The underperformance in the Mid Con segment was partially offset by gains in the Rockies segment driven by higher than budgeted crude oil.

So based on the current activity levels, the recent well performance and our visibility in the second half of the year, volumes, we continue to expect results to trend towards the midpoint of our original 2026 adjusted EBITDA guidance of $225 million to $265 million Before I get into the operational highlights, I wanted to spend a moment on the macro picture, which we see becoming increasingly constructive for Summit. Crude oil prices are obviously much higher than the lows we saw earlier this year, And for a business like ours, where roughly 80% of our well connects in 2026 are expected in crude oil oriented basins.

A more constructive crude environment translates directly into improved producer economics and an incentive To accelerate and increase activity levels. Some of our Rockies customers have communicated that they are actively working on plans to attempt to accelerate activity into 2026 and increase overall activity levels in 2027. We are also seeing benefits from higher crude oil pricing on our field condensate sales and our optimization activities in the Rockies segment. At the same time, the natural gas outlook remains favorable as well. Henry Hub has remained constructive. LNG export demand continues to grow rapidly.

And the long term demand outlook from data center growth and electrification is increasingly supportive of the natural gas infrastructure we operate in our Mid Con and Permian segments. For our Mid Con segment, there is a great backdrop to see activity levels pick up in the coming years in both the Arkoma and the Barnett. These assets are very well positioned on the natural gas pipeline grid, to feed LNG and power markets along the Gulf Coast.

The macro outlook is also very supportive of increasing demand for our Double E gas pipeline in the Permian that transports residue gas from multiple processing facilities throughout the core of the Delaware Basin to the Waha hub which then connects to more than 20 Bcf/d of eastern bound gas infrastructure that serves the East Texas and Louisiana Gulf Coast markets. Turning to operations. We connected 30-7 wells during the quarter, including the first 4 Williston wells under the new 10-year crude gathering agreement that we announced last quarter in Divide County. Early production results from those wells have been encouraging.

In Arkoma, while we did experience lower than expected well performance from 2 pads during the quarter, which was the primary driver of the volume underperformance in that segment. But both of these pads were drilled in the outer edges of our dedicated acreage footprint. In an attempt to further extend the boundaries of proven but undeveloped locations in the Canyon Woodford formations. Recently, though, we have brought on a new 3-well pad in the dry gas area of our Arkoma system and we are seeing these wells significantly outperform our internal expectations.

These 3 wells continue to ramp up, but have already averaged approximately 50 million a day combined over the past couple of days since being turned in line, which is a very encouraging and it really gets us excited about future growth in the Mid Con segment. We currently have 5 rigs running behind the system with approximately 80 drilled but uncompleted wells. And we expect approximately 40 new well-connects in the second quarter. Including 20 in the Mid Con segment. That second quarter activity and well results from some of the wells already connected in the second quarter sets up a very meaningful volume increase as we move into the back half of the year.

The Double E front, subject subsequent to the quarter end, we executed another 10-year take or pay proceeding agreement for a 100 million a day of firm capacity. which is slated to start in the 2027. That brings our total contracted volumes on Double E to just over 1.7 Bcf/d. And we continue to build momentum in our ongoing open season to secure additional commitments to support the previously announced 800 million a day midpoint compressor expansion project. Given the market interest that we have seen thus far, we remain very optimistic about securing additional contracts that are necessary to help make a final investment decision on the project this summer.

We also made meaningful progress to further simplify and improve the balance sheet this quarter. We were paid all $45 million of accrued series a preferred stock dividends. Which clears the key milestone on the path to reinstate a common dividend. We completed a $42 million private placement of common stock to an affiliate of Tailwater Capital, our largest shareholder, which will help us fund high return organic growth projects across our operating footprint. And finally, we closed the Summit Permian Transmission term loan refinancing which provides the financial flexibility to fund Double E capital growth while we continue to delever Summit's corporate balance sheet.

So with that update, let me turn it over to Bill to walk through the details on the financials.

William J. Mault: Thanks, Heath, and good morning, everyone. Summit reported first quarter 26 adjusted EBITDA of $54.2 million, distributable cash flow of $26.9 million and free cash flow of $11.4 million Total capital expenditures were $19.3 million for the quarter, inclusive of $3.7 million of maintenance capital. With the majority of the growth capital directed towards pad connections in the Rockies and Mid Con segments. With respect to Summit's balance sheet, we ended the quarter with $43.4 million of unrestricted cash and $116 million drawn on our revolving credit facility. With approximately $381 million of available borrowing capacity after accounting for $2.7 million of undrawn letters of credit. Now moving on to the segments.

The Rockies segment generated adjusted EBITDA of $26.4 million a decrease of $1.5 million relative to the 2025 primarily due to a $1.2 million non-cash imbalance, a 3% reduction in liquids volumes, lower realized residue gas prices on our percentage of proceeds contracts, lower fresh water sales. This was partially offset by a 4.4% increase in natural gas volume throughput and improving crude oil and NGL prices that really started in March 2026. We connected 18 wells in the DJ Basin and 13 in the Williston, including the first 4 3-mile lateral wells under the new crude gathering agreement. That we announced last quarter.

5 rigs are currently running with approximately 60 DUCs behind the systems, and several customers are working to try to accelerate their programs given the improved crude oil price environment. The Permian segment reported adjusted EBITDA of $8.7 million flat relative to the 2025 and double volumes averaged 805 million cubic feet per day during the quarter. The Piceance segment reported adjusted EBITDA of $9.6 million down $0.4 million from the fourth quarter primarily driven by volume throughput declines of approximately 7.3%, which included 8 million cubic feet per day of temporary shut-ins as well as natural production declines. With no new wells connected during the quarter.

Customers currently have approximately 20 million cubic feet per day of volume shut in as a result of low regional gas prices. Primarily in the White River hub And based on current forward prices in the region, we would expect that production to resume beginning in the 2026. Finally, the Mid-Con segment reported adjusted EBITDA of $19.3 million a decrease of $2.1 million from the fourth quarter, primarily driven by natural production declines partially offset by 6 new Arkoma well connections during the quarter. 3 additional Arkoma wells were connected subsequent to quarter-end, and we have 17 Barnett DUCs expected to come online in the second quarter.

We expect second quarter activity and recently connected wells to drive an increase in Mid-Con volumes as we move throughout the remainder of the year. And with that, I will turn the call back over to Heath for closing remarks.

J. Heath Deneke: Thanks, Bill. So to summarize, we are still tracking towards the $245 million midpoint of our EBITDA guidance for 2026 and we continue to see a lot of momentum building across the portfolio in response to the improving commodity price outlook. We remain excited about the growth outlook for the business and believe the current macro outlook supports more than $100 million of organic EBITDA growth from our existing portfolio by 2030. We continue to be active on the M&A front evaluating opportunities that could further scale up the business in a value and credit accretive manner.

Also taken meaningful steps to further simplify and improve the balance sheet, by cleaning up the accrued preferred dividends, completing the Tailwater common stock placement, and closing the Permian transmission refinancing to score Double E growth. And finally, as we execute the business plan, we continue to have a line of sight on achieving our long term 3.5x leverage target and being in a position to reinstate a common dividend in the near future. We believe there is a pretty simple and achievable path forward to drive a lot of shareholder value in the coming years. We are excited to get out on the road in the coming weeks as a management team.

To continue to tell the Summit story and continue to build momentum with investors. So with that, I would like to thank everyone again for joining the call today and supporting the business. And, operator, I think, we can open up the call for questions now.

Operator: Certainly. And as a reminder, if you do have a question at this time, please press Our first question comes from the line of Mark Reichman from Noble Capital Mark. Your question please.

Analyst (Mark Reichman): Yes. Would you please discuss the competitive positioning of the Double E pipeline? Are you seeing increasing demand for incremental takeaway capacity tied to LNG export growth and could Double E ultimately require additional expansion phases beyond what is currently contemplated.

J. Heath Deneke: Yeah, you bet, Mark. Hey. This is Heath. Look, as far as the competitive position, I think, you know, Double E is in a pretty good shape on that front, honestly. If you look at what is occurred with the build out of the Delaware in terms of rig activity and where we have really seen volumes grow. They kind of started in Texas and kind of migrated their way up to New Mexico. And a lot of the in fact, I would say the vast majority, if not all, of the other pipelines that we compete with have really kind of filled up their existing takeaway capacity.

In many cases, they have kind of gotten past the cheap, easy-to-expand compression type projects and have for them to materially expand capacity, they are looking at, you know, laying brand new greenfield or big loops, if you will, to their system to get existing capacity. I think we are well positioned, having, you know, the recently just filled up our latent our free flow capacity. I think this expansion that we are in the midst of, on an open season, adding another call it, 8 to 190 8 to 900 million a day of capacity.

I think, you know, we are really 1 of the only options in town, frankly, that we think can be available by the 2028 to meet a lot of this, incremental residue gas growth that we see in the Permian Basin. So we feel strongly about that. But I will say just looking at our rates relative to you know, other tariffs and the like, we are we are certainly at market rates with what we, you know, what we sell our capacity for on Double E. I think what really kinda gives us the advantage is the low cost expandability that we still have remaining on the pipe. The ability to bring that to market in fairly short order.

And then, you know, how does the On the LNG-- yeah. So-- oh, go ahead. Go ahead. Yeah. Well, I was going to address the second part of your question, I think you were asking LNG growth. And I look, there is no doubt. If you look at, you know, the amount of infrastructure that has been built out and it is in the process of being built out to move gas from over to East Texas to kind of feed the LNG facilities in Texas and, frankly, across into Louisiana as well. Definitely been the primary catalyst of new infrastructure development.

You know, I think there is upwards of over 20 Bcf/d of capacity that know, can originates, frankly, from that Waha area that has access to those growing markets. So clearly, you know, I have been kind of a near-term catalyst. will not say what is been interesting to watch particularly develop on Double E, is that, you know, that market is kind of getting maybe a little bit saturated. In that, you know, there is been a lot of projects going in that direction. there is gonna be a lot of LNG growth. But I think we are starting to see additional markets attract interest from, you know, from our shippers.

So as an example, energy transfers Desert Southwest project is all about getting gas west into Phoenix to serve some incremental power generation demand growth. We have also seen additional markets pointed towards the Mid Continent or up into the Midwest. On the north end of our system, really start to attract interest from shippers to kind of diversify the access that they have to market. So thematically, I think what we are seeing is this massive, call it, 6 Bcf/d to 7 Bcf/d of incremental supply growth over the next 3 to 5 years.

And we are finding a lot of new projects, if you will, that are that are, you know, getting that gas distributed to the right point in the market. So absolutely is what is fueling the current compression project open season. You know, to your other point about, you know, do we think we are we are done after that? I think the short answer to that is no. I think that, you know, as those markets develop on the northern end of our system, we will have a lot of backhaul capacity, if you will, to move gas potentially from Waha or other processing plants located south of that really would not require much additional build out.

It would just be effectively maybe making that compressor station that we are we are trying to get FID bidirectional to be able to push gas north or south depending on in the aggregate, which direction flows want to occur. There are also some markets developing around our pipe. You know, we are in discussions with multiple data center slash power gen customers that are looking to take advantage of the low gas price in the Permian Basin, you know, that are that are in close proximity to our pipe.

So, you know, that is an area that, you know, I think the majority of our customers today are more supply-push getting supply out to the marketplace, predominantly producers or gathering and processing companies that control residue. But, you know, we could start to see some actually demand side guys come in and, you know, pay to have us expand our system to reach you know, multiple processing plants to be able to buy gas directly from hubs. So we really like how this asset's positioned.

I think what we have kind of articulated in the market, you know, we see our EBITDA growing, you know, from roughly 35 up to the mid-$60 millions here just with what we have contracted to date. And then if you look at, you know, with the expansion that we have announced, we think that could grow up to $90 million. And I think beyond that, I think there is ample room to see that EBITDA continue to grow over the next several years.

Analyst (Mark Reichman): Well, that is very helpful. Now how sustainable is Rocky's throughput growth over the next several quarters? and, you know, what level of producer activity are you seeing in the DJ and Williston Basins and on that, you might discuss the commodity mix and margin profile of the Rockies.

J. Heath Deneke: Yeah. I will let Bill kind of handle the you know, the details. That way, a lot of momentum in both segments as you can imagine with you know, the improving crude strip. We have seen producers in some case look to pick up additional rigs, and we have seen you know, additional wells even kinda finding their way into the back half of 2026. I think we have got a lot of momentum. Bill, why do not you kind of fill them in on some of the details here?

William J. Mault: Yeah. Good morning, Mark. And so a couple things going on, and I will start in the DJ, Mark. So we there is a large integrated, kind of public shipper in the DJ that is a customer of ours. We have actually got 16 wells expected to come online from them here in the second quarter. That is really just the start of a broader program, call it, over the next 2 to 3 years that they intend to execute on. that is 1 that we have been around and probably talked to you about in the past that, we are starting to see actually come to fruition here you know, starting here in Q2. So excited about that 1.

And there is also a lot of large private in the DJ. They have been drilling behind our Hereford Ranch processing plant. You know, we have seen outlooks from them that could fill up that processing plant. We will we will see how active, they get, but they are picking up a second rig in the basin, which, again, I think is just dovetailing off of this, you know, supportive commodity price environment and trying to take advantage of that. The only other 1 I would add in the DJ you know, Peoria resources, acquired Verdad. A few months ago.

I think we mentioned this during our Q4 earnings, but that did create a little bit of a stall in activity for them in 2026. But, you know, we are we are excited just given the environment we are in and what they are doing that, you know, I would expect them to kinda pick back up activity here late 2026 into 2027. Which we are really not getting the benefit of here in 2026. Up in North Dakota, Mark, you know, we have had several customers. They are trying to figure out how to accelerate development. Obviously, you know, that takes coordination of completion crews and being able to actually execute on it.

But there is a push from several customers up there to try to accelerate timing. 1 thing that, and really in the third quarter, we have had a customer that has been somewhat inactive behind our acreage up in North Dakota the past couple of years. They are actually bringing on a pad focused in the crude oil and produced water gathering area. The services we provide them. The first set of wells is coming on in the third quarter. We have had conversations with them about additional activity in 2027, and Mark, as you know, with you know, the crude and water cuts up there, you know, those pads are meaningful. For volumetric growth behind the system.

So excited to kinda see that. Upcoming and as it relates to kinda margin profile, you should think about the 35% kind of commodity-price exposed. And that is primarily our pop contracts in the DJ as well as we retain all the condensate drip. That falls off of our system and our compressor stations. And when you break that down a little further, Mark, I would think about it as, you know, between NGLs and crude, that represents roughly 75%, and then residue represents the remaining 25% of that kind of product margin breakdown.

J. Heath Deneke: And, Mark, just 1 thing to Bill, just add to what you know, Bill was talking about with the Rocky segment. I mean, clearly, it and the Permian are gonna be the 2 largest drivers of growth for us in the out years. As we have kind of, you know, talked about and provided in some of our investment materials, you know, we see, roughly, you know, upwards of $100 million of EBITDA growth organically. 2025 and into the 2030 time frame. And so if you think about that, you know, what does that mean from the Rockies?

Well, the things that Bill has kind of articulated that we are seeing early signs and maybe even accelerating from what we you know, thought when we actually published that. Yeah. You can see the Rockies growing from, you know, roughly around $85 million of contribution today to upwards of $160 million, you know, over that over that through 2030. So substantial amount of growth there. And, you know, like I said, we are probably seeing signs that potentially that growth may even get further accelerated from what we thought. The ramp up would be between now and 2030.

Analyst: Yeah.

Christopher H. Tennant: Jumping on into that, Heath. This is Christopher H. Tennant, Mark. We are having conversations with all of our major customers in that area. Really thinking about the next cycle of growth and infrastructure needed. To really plan accordingly. So it gives us a lot of confidence when we look forward in those areas.

Analyst (Mark Reichman): Now are there any bolt on acquisition opportunities in your operating regions, particularly the Rockies and Permian where you are seeing the stronger operational momentum?

J. Heath Deneke: Yeah. Certainly, I would say the Rockies is probably where we see the most near term opportunities. there is still a fair amount of privately owned, privately backed systems that need to find a you know, a liquidity or an exit point here fairly soon. So we are we are pretty active identifying and working, having conversations around some of those assets. And, you know, you should you should think of those kind of fitting that historical profile that we have executed over the past 3 years. And these are gonna be you know, roughly kind of in that you know, let's call it 6, you know, somewhere between 5x to 7x purchase multiples on an LTM basis.

You know, accretive levels or that we would be able to capture a lot of accretion from a value perspective and from a leverage perspective in the out years. I think the Permian is a little different. I do think there are some larger opportunities that we are kind of looking at. You know, I think that is 1 of the differentiators between you know, there is probably more actionable items that we see in the Rockies that are kinda fit more of that call it, 30 to upwards of $100 million of EBITDA.

When you start getting into the Permian, the type of opportunities that we are seeing are probably, you know, north of that, maybe closer to the $150 million to $200 million. Not completely out of reach, but, obviously, they are ones that take, you know, going to be more complex, you know, to execute on and something that you know, I would not I would not rule out in the out years, but I think near term, I think we are more focused on the Rockies opportunities at this point.

Analyst (Mark Reichman): And then my last question is just what are the remaining plans and objectives in your broader capital structure optimization strategy? And how do you prioritize the capital allocation between debt reduction, organic growth, acquisitions and return of capital to shareholders?

William J. Mault: Yes, Mark. So I would say you know, over the next couple of years, Mark, 1 thing that we have talked about, particularly when we did the refinancing of the Double E refinancing here last quarter. We set that up whereby and call it that 2028 time frame, you know, we have got the flexibility to kinda clean that up, bring it up on balance sheet, in the recourse borrower group. that is probably the next kind of item on the list.

You know, I do not think as we sit here today, Mark, you know, we have been prioritizing post growth capital, you know, the remaining free cash flow prioritizing debt repayment to get to our kind of long term leverage target of 3.5x. So I think you will see us prioritize that, Mark, until we get to that long term leverage target. And it is a balancing act as it relates to M&A and organic growth.

You know, we I would tell you a lot of our organic growth projects you know, are commanding very, you know, call it 20% to 30%-plus unlevered rates of return, which are obviously very attractive and you know, we would make the long term decision, you know, to focus on reinvesting in growth you know, to the extent additional opportunities arise on the organic side.

Analyst (Mark Reichman): that is great. that is very helpful. Thank you very much.

J. Heath Deneke: Thank you, Mark.

Operator: As a reminder, ladies and gentlemen, we do have a question, time, please do ask 1 on your telephone. This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. Have a good day.

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