Participants

Tom Fitter; Investor Relations; Magnolia Oil & Gas Corp

Christopher Stavros; President, Chief Executive Officer, Director; Magnolia Oil & Gas Corp

Brian Corales; Chief Financial Officer, Senior Vice President; Magnolia Oil & Gas Corp

Neal Dingmann; Analyst; Truist Securities

Oliver Huang; Analyst; TPH&Co.

Unidentified Participant

Zach Parham; Analyst; JPMorgan

Noah Hungness; Analyst; Bank of America

Neil Mehta; Analyst; Goldman Sachs

Presentation

Operator

Good morning, everyone, and thank you for participating in Magnolia Oil & Gas Corporation's Fourth Quarter 2024 Earnings Conference Call. My name is Megan, and I will be your moderator for today's call. (Operator Instructions) Our call is being recorded.
I will now turn the call over to Magnolia's management for their prepared remarks, which will be followed by a brief question and answer session.

Tom Fitter

Thank you, Megan, and good morning, everyone. Welcome to Magnolia Oil & Gas' Fourth Quarter 2024 Earnings Conference Call. Participating on the call today are Chris Stavros, Magnolia's President and Chief Executive Officer; and Brian Corales, Senior Vice President and Chief Financial Officer.
As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on risk factors that could cause results to differ is available in the company's annual report on Form 10-K filed with the SEC. A full safe harbor can be found on Slide 2 of the conference call slide presentation with the supplemental data on our website.
You can download Magnolia's fourth quarter 2024 earnings press release as well as the conference call slides from the Investors section of the company's website at www.magnoliaoilgas.com.
I will now turn the call over to Mr. Chris Stavros.

Christopher Stavros

Thanks, Tom, and good morning, everyone. We appreciate you joining us for our discussion of our fourth quarter and full year 2024 financial and operating results.
I plan to briefly speak to our full year results in fourth quarter, which closed out another year of strong, reliable performance and execution aligned with Magnolia's business model and helped by some conscious actions taken around reducing our field level operating costs. I'll briefly highlight how our business model and core principles continue to deliver results that compound per share value and is evidenced through Magnolia's performance since its founding. Finally, I'll conclude by providing an outlook of Magnolia's 2025 capital and operating plan, which is expected to deliver moderate growth with a similar level of capital spending while providing additional capture of low-cost resource opportunities. Brian will then review our financial results in greater detail and provide some additional guidance before we take your questions.
Starting on Slide 3 of the investor presentation and looking at the highlights. Magnolia ended 2024 on a high note with across-the-board strength in both financially and in our operations. Record quarterly production volume during the fourth quarter of 93,100 barrels of oil equivalent per day lifted full year 2024 total production to 89,700 BOE per day. This amounted to annual total company production growth of 9% for a second consecutive year and with full year oil production growth of 11%, exceeding our original expectations. Our total production at Giddings grew 16% with oil growing 21% and partially supported by our prior year acquisition in addition to strong well productivity and the continued expansion of our development area in this field.
Total adjusted net income for the year was approximately $401 million and adjusted EBIT tax was $953 million and our D&C capital spending of $477 million led to a reinvestment rate of just 50%. This allowed the company to generate free cash flow of $430 million last year, and we returned 88% of the free cash flow or approximately $378 million to our shareholders through our growing base dividend and ongoing share repurchase program. Our asset teams and field employees embraced our asset optimization at field level cost reduction initiatives implemented early last year and were successful in lowering our lease operating costs by 10% per BOE through the year. This, in combination with our efforts in continuing to work with our material vendors and oilfield service providers lowered our overall finding and development costs, helping us achieve a return on capital employed of 22% last year and places Magnolia's overall cost structure and the position of strength into 2025.
The confidence and strength in Magnolia's outlook supported our Board's approval of a 15% increase to our quarterly dividend payment earlier this month to $0.15 per share or an annualized payment of $0.60 per share. Magnolia's Board also authorized an increase of 10 million shares to our existing share repurchase program designated for open market repurchases and as we continue with our plan to repurchase 1% of our shares outstanding per quarter.
Turning to Slide 4. Magnolia's business model has remained reliably consistent and steady since the company was founded. As I've stated before, our objective has been and continues to be to operate a highly investable attractive E&P business that is enduring and focused on generating absolute per share value over the long term. Our objective is to be the most efficient operator of best-in-class oil and gas assets generating the highest returns on those assets while deploying the least amount of capital for drilling and completing our wells. Our continued loan reinvestment rate, which has delivered moderate growth and significant free cash flow generation services evidence of achieving that goal. This formula enables a significant portion of the free cash flow to be returned to our shareholders in our case, through our consistent and ongoing share repurchases and a secure and growing base dividend.
The combination of reducing our total share count, moderate production growth and low-cost structure creates an investment proposition that provides average annual dividend growth of approximately 10%. Additional free cash flow accrues to the balance sheet, allowing us to opportunistically pursue attractive bolt-on oil and gas property acquisitions that can improve and extend our high-return business. The results of our model and strategy are apparent when examining what we've achieved over the longer term. As shown on Slide 5, Magnolia has had one of the lowest capital reinvestment rates while realizing one of the highest rates of production per share growth among US oil and gas producers over the past 4 years.
Turning to Slide 6. Magnolia continues to generate high pretax operating margins, largely a result of our high-quality assets, our emphasis around efficiencies and cost containment. We successfully lowered our overall well cost and D&C capital during 2023 and reduced field level operating costs last year, which at current product prices, should lead to improved full-cycle operating margins in 2025.
As shown on Slide 7, the strength of our balance sheet remains best-in-class. Maintaining low leverage is a key component of our business model, minimizing overall financial risk while providing flexibility and optionality for the company. The absence of any oil and gas hedges provides us with the ability to accrue a significant amount of excess cash flow to the balance sheet during a period of higher product prices, which can then gradually be deployed as product prices recede. Deploying this countercyclical strategy has been in our experience, benefiting the company and our shareholders by executing on accretive bolt-on acquisition opportunities during more modest product prices. While other producers have shown the ability to capitalize on one or two of these metrics, it is uncommon to have a low reinvestment rate with above average growth per share combined with high operating margins and low debt. Its effective and potent combination allows us to maximize free cash flow generation and continue to support our highly competitive capital return program.
Slide 8 shows our returns at the corporate level or the overall financial outcome of our business model. As I mentioned, our return on capital employed delivered another solid result with ROCE of 22% during 2024 and despite lower year-over-year product prices. Magnolia's return on capital employed on average over the past 6 years or approximately since the company's inception was 26% or roughly 3 times our weighted average cost of capital. These superior returns are a function of our high-quality assets, our strategy around disciplined capital allocation, maintaining our low debt, a low cost structure and further enhanced by our ongoing share repurchase program. This combination has proven to be a successful recipe.
Finally, on Slide 9, Magnolia's business model continues to result in consistent and reliable free cash flow through the cycle with a significant portion of that free cash return to our shareholders. Since inception, Magnolia has returned nearly $1.6 billion or approximately 35% of its current market capitalization through a combination of share repurchases and dividends.
We entered 2025 on South footing after a very solid year of operating performance and a strong financial position with an improved cost structure. Our business model and strategy remains largely unchanged. Magnolia's plants to operate two drilling rigs and one completion group during 2025, and expects to maintain this level of activity through the year with total D&C capital spending anticipated in the range of $460 million to $490 million. This level is roughly flat with last year and at current product prices represents a reinvestment rate of less than 55% of our adjusted EBITDAX. This also includes an estimate of nonoperating capital that is roughly the same as 2024 levels. Our activity and spending is expected to deliver total annual production growth of 5% to 7% and including low single-digit annual growth in oil production, with the overall characteristics and quality of this year's program expected to be very similar to what we experienced last year.
Most of our oilfield service materials costs are under contract through at least mid-2025, and we continue to see some ongoing D&C efficiency improvements generated by our operations team at Giddings, inclusive of last year's 7% increase in drilling feet per day. While our D&C spending levels are expected to be similar to 2024, lower overall well costs combined with improved operating efficiencies allows more wells to be drilled, completed and turned in line, supporting Magnolia's high-margin growth while providing additional operational flexibility. Approximately 75% to 80% of this year's activity will consist of multi-well development pads in the Giddings area. Over the last several years, we have gained a much better understanding of the subsurface and normal technical knowledge through our own drilling and data gathering in Giddings.
We plan to put some of this knowledge to work and allocate a portion of our capital to further delineate our significant acreage position at Giddings through some appraisal wells, decided to test some concepts further extend the balance sheets of the field and expand the competitive advantage that we have gained in the area. Our (inaudible) area assets continue to generate significant free cash flow, and we expect to allocate approximately 20% to 25% of our capital to this asset this year, including modest development as well as some appraisal activity. We believe that our business model and strategy provides us with a durable competitive advantage to sustain our moderate growth over time and allowing us to continue to add the serial compounders and value for our shareholders.
I'll now turn the call over to Brian to provide more details on our financial and operating results.

Brian Corales

Thanks, Chris, and good morning, everyone. I will review some items from our fourth quarter and full year results and refer to the presentation slides found on our website. Also provide some additional guidance for the first quarter of 2025 and the remainder of the year before turning it over for questions.
I know we ended 2024 on a strong note, highlighted by steady and consistent execution. During the fourth quarter, we generated total net income of $89 million with total adjusted net income of $95 million or $0.49 per diluted share. Our adjusted EBITDAX for the quarter was $236 million, with total capital associated with drilling completions and associated facilities of $132 million. For the full year, adjusted EBITDAX was $953 million with D&C capital representing 50% of EBITDAX. Fourth quarter production volumes grew 9% year-over-year to 93,100 barrels of oil equivalent a day. For the full year, production volumes grew 9% to 89,700 barrels of oil equivalent a day, with oil growth of 11%. During the year, we repurchased a total of 11 million shares, and our diluted share count fell by 5% year-over-year.
Looking at the quarterly cash flow waterfall chart on Slide 11. We started the year with $401 million of cash. Cash flow from operations before changes in working capital was $919 million worth working capital changes and other small items impacting cash by $11 million. During the year, we paid dividends of $107 million and allocated $273 million towards share repurchases. We added $165 million of bolt-on acquisitions through the year. We incurred $487 million on drilling, completions, facilities and leasehold and ended the year with $260 million of cash.
Looking at Slide 12. This chart illustrates the progress in reducing our total outstanding shares since we began our repurchase program in the second half of '19. Since that time, we have repurchased 72.9 million shares, leading to a change in weighted average diluted shares outstanding of 23% net of issuances. Magnolia's weighted average diluted share count declined by more than 2 million shares sequentially, averaging 196.2 million shares during the fourth quarter. As Chris discussed, the Board recently approved a $10 million share increase to our share repurchase authorization, leaving 11.7 million shares remaining under our current repurchase authorization, which are specifically directed to repurchasing Class A shares in the open market.
Turning to Slide 13. Our dividend has grown substantially over the past few years, including a 15% increase announced earlier this month to $0.15 per share on a quarterly basis. Our next quarterly dividend is payable on March 3 and provides an annualized dividend payout rate of $0.60 per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supported by our overall strategy of achieving moderate annual production growth, reducing our outstanding shares and increasing the dividend per share payout capacity of the company. Magnolia continues to have a very strong balance sheet, and we ended the quarter with $260 million of cash. Our recently financed senior notes of $400 million do not mature until 2032. Including our fourth quarter ending cash balance of $260 million and our undrawn $450 million revolving credit facility, our total liquidity is approximately $710 million. Our condensed balance sheet as of December 31, as shown on Slide 14.
Turning to Slide 15 and looking at our per unit cash cost and operating income margins. Total revenue per BOE declined year-over-year due to the decline in oil prices. Our total adjusted cash operating costs, including G&A, were $10.62 per BOE in the fourth quarter of '24. Our operating income margin for the fourth quarter was $14.48 per barrel or 38% of total revenue. 95% of the decrease in our quarter-over-quarter pretax operating margin was driven by the decrease in commodity prices.
On Slide 16, Magnolia had a very successful organic drilling program during the year. The total proved developed reserves at year-end 2024 were 149 million BOEs. Excluding acquisitions and price-related revisions, the company added 44 million barrels of oil equivalent of proved developed reserves during the year. Total drilling and completions capital was $477 million in '24, resulting in organic proved developed F&D cost of $10.77 per BOE and reflective of our current drilling program.
Turning to guidance. We expect our 2025 capital spending for drilling completions and associated facilities to be in the range of $460 million to $490 million, which includes an estimate of non-op capital that is about the same as 2024 levels. We expect first quarter D&C capital expenditures to be approximately $135 million and anticipate this to be the highest quarterly rate of spending for the year. Total production for the first quarter is estimated to be approximately 94 MBoe a day, with 2025 full year total production growth expected to be 5% to 7%. Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston, and Magnolia remains completely unhedged for all of its oil and natural gas production. The fully diluted share count for the first quarter of 2025 is expected to be approximately 195 million shares, which is 5% lower than first quarter 2024 levels.
We expect our effective tax rate to be approximately 21%, with most of this being deferred. Our cash tax rate is expected to be between 7% to 9% for 2025. We are now ready to take your questions.

Question and Answer Session

Operator

We will now begin the question-and-answer session. (Operator Instructions)
Neal Dingmann, Truist Securities.

Neal Dingmann

Congratulations, guys, another great quarter. Chris, my first question is just on your well cost. Specifically, one time I know you all had a good bit of -- your well costs included a number of tests that you performed downhole before actually producing the well. I'm just wondering, now when you look at the plan, are you still doing a fair amount of science as you drill some of these Giddings wells? Or is it now just strictly a development program?

Christopher Stavros

We're sort of down the path pretty good here. We've been doing this for a while, several years in getting certainly after COVID fairly consistently. So the science now is probably far and away more limited, maybe to some of the newer areas. And I would tell you that we're more down the development path in Giddings other than maybe some of the activity, which is a bit different. But as far as poring actual science down wells, it's more limited right now. So it's really more or pure development.

Neal Dingmann

No, that's what great to hear. And then second question, just on shareholder return. I believe I continue to think you'll have one of the more appropriate dividend and buyback policies. I'm just wondering assuming you don't probably spend too much (inaudible) on bolt-ons and other opportunities and the cash position continues to grow to, I don't know, $500 million, $600 million. Are you comfortable with keeping that on the balance sheet? Or would there be various other strategic plans? Thanks.

Christopher Stavros

Well, we've seen this happen before, where the cash built to $700 million for a little bit of time, I called it the winnings during a period of very high product prices. And then with a little bit of patience, not believing that it would burn a hole in our pocket for too long. We deployed it when the time was right or when we saw attractive opportunities come along. So I'm not adverse to seeing it happen and holding on to the cash for a little bit of time, but not a lengthy period of time. I just don't think that it would occur for that long. So anyway, I think there'll be things that always come up.

Operator

Oliver Huang, TPH.

Oliver Huang

Good morning Chris and Brian and thanks for taking the questions. I know you all are fairly conservative when it comes to booking of reserves, but it would appear that you all have quite a bit of gas inventory that gets very little credit from the market. So just kind of wondering, what would it take to just lean into that acreage a bit more, just kind of given the trajectory of gas prices in the near term to maybe unlock some of that value there?

Christopher Stavros

Yes. I guess part of the answer is that we -- I think our cost structure has seen quite a bit of improvement. So it all starts with well economics. And some of the actions that we've taken in the last couple of years around reducing our well costs may have improved the returns in certain areas that might have been previously a little bit more marginal and puts us in a much better position. So we continuously revisit, review these areas to see if they could work and revisit them again as we further optimize just in terms of other efficiencies.
So look, I think it's exactly the same within our extensive position in Giddings, the 550,000 acres. Probably not. There's probably some variability in the performance or whatnot or any acreage. But -- well, more of it work out over time? Probably yes, because we're learning more every day, and that's part of the -- going to be part of the appraisal work that we're doing this year. And so I think it's more along the lines of stay tuned. I probably have more to say about it or you'll just see it happen a little bit of time.

Oliver Huang

Okay. Makes sense. And maybe for a follow-up question just on well cost. I know you all have done a good job of lowering well cost over the past couple of years, first, starting with the completion side, then moving to the drilling side last year. But just kind of wondering, are there any immediate levers or line of sight to things that you could potentially do maybe along the lines of longer laterals, just given how contiguous the acreage is? And if not, is there anything in particular that's keeping you all from kind of taking that step?

Christopher Stavros

No, nothing that's preventing us from taking a step. I mean, again, we continue -- as I said, it really all starts with the economics and that we're in a much better position right now. So we're examining different parts of the field and trying to test some new things and push the boundaries a little bit around the field. So it seems to me before we go out and pay $4 million, $5 million, $6 million or whatever per undrilled location that we should probably take a closer look within the acreage that we already own.
So as I mentioned, we've gathered a lot of data, some surface and also from some of the base assets that we've acquired in the northern part of Giddings, southern part of Giddings and as we integrate and optimize some of the learnings from those assets. It should allow us to expand some of the balance sheets of the field. And actions that we've already taken around not just the cost, but also some of the optimization around inventory, et cetera, I think it has led to us adding tens of thousands of incremental lateral feet to our drilling inventory. And over time, it will likely amount to multiples of that. So we continue to test some concepts and I think it's going to go well for us over time.

Oliver Huang

Awesome. Thanks for the time.

Operator

Carlos Escalante, Wolfe Research.

Unidentified Participant

It's [McKinley] in for Carlos. So good, solid quarter for the team. So my question is what does your 2025 capital program of (inaudible) same capital stay about your long-term sustaining capital? And my second question is how close are you guys to drop in (inaudible) partial going forward?

Christopher Stavros

Yes. I feel very comfortable with the range of capital spending, the $460 million to $490 million that we gave, sort of the midpoint is right around certainly at current product prices, what it will take to generate the type of growth that we talked about, the 5% to 7% and lower single-digit oil growth. I wouldn't imagine that we'd have to -- if your question was around slowing activity or dropping a rig, I wouldn't -- and certainly, a current product price is not going to happen, I would imagine that, that would have to be something below $60 before we even thought about that side on oil. I don't see that happening right now, but we're prepared to do it. We have a lot of optionality and flexibility in the program. We've done a lot to improve our cost structure. And so we're well set up to achieve what we plan to achieve for this year. So I think I expect the plan to be fairly steady.

Operator

Zach Parham, JP Morgan.

Zach Parham

Just wanted to ask on the trajectory of your expected production through the year. You talked about 1Q CapEx being the high point of the year. Should that drive more growth in 2Q and then maybe flatten out in the back half? Just curious if you could provide some color there.

Christopher Stavros

Thanks, Zach. Yes. So I expect it to grow ratably through the year. It may -- you may see some variability, but I expect it to grow fairly ratably through the year. You'll see growth in 4Q to 1Q, 1Q to 2Q generally. The percentage between quarters may jump around a bit, depending on the pace of activity. And as we said, the first quarter will be a little bit higher in the highest part of the year in terms of capital, which should see good first half volumes. But then I fully expect to end a year at a pretty good clip. We could start to see likely, frankly, maybe triple digits on overall volumes or certainly getting close to that. And then certainly in the year, maybe 40,000 a day of oil, if not a little bit better. I think these numbers are more or less in line with consensus maybe a little bit better.

Zach Parham

Thanks for that color. My follow-up, I just want to ask about Karnes. You mentioned some appraisal work that you're doing there. Can you just give us a little more color on what you're testing in Karnes?

Christopher Stavros

Yes. There was an opportunity that we got involved in about a year or so ago through a small acquisition, about 25,000 acres. I've mentioned it on previous calls. And again, I would describe it as an exploitation or appraisal option. It's an oily area. And if we can make it work, it could go together with some of the activity that we typically pursue in Karnes. We have had a couple of recent wells there that have performed quite good. But I do think we still need to study it a bit further before moving forward. So we'll just have to see how it goes. It's still a little early. But I'm encouraged by what we've seen so far.

Operator

Noah Hungness, Bank of America.

Noah Hungness

Morning guys. My first question, I was just hoping to get your latest take on the M&A opportunity set across the Eagle Ford and where you see that greatest opportunity set? Is it in the oily window or the natural gas or somewhere in the middle?

Christopher Stavros

Yes. Look, over the last 6 to 12 months, there have been several opportunities and assets or packages that have popped up in the Eagle Ford, mainly West of Karnes and a varying quality and size. As we've said often times, we look at everything. We take a lot of tires, and we may -- may or may not participate in some actual processes. But anyway, we look at a lot of things. And we'll just sort of see how it goes. There isn't anything that I would describe as massive or huge, but it certainly does have a varying degree of quality. And we've always talked about on M&A, not looking to just add existing volumes, but looking to add opportunities where we can -- we have the chance to improve our resource set and upside over time. So we carefully look at those things, too. But they are generally (inaudible). Yes, they are -- they have tended to be a bit oilier as you would imagine, in the lower Eagle Ford.

Noah Hungness

It makes sense. And then for my second question, I was just wondering your current CapEx guidance has a range for splitting it out by area for Karnes between 20% and 25% and getting between 80% and 75%. How should we think about what would cause it to go one way or the other?

Christopher Stavros

I don't think you're going to see any subtleties that you might have appreciated or looked through into the wording of the remarks is really around the noise. I mean for Giddings as an example, last year, it represented 76%, I think, of our overall company volumes. I think it's within a range, 75% to 80%, same for Karnes. It might be slanted a little bit more around some appraisal work that we do in one area versus the other, et cetera, it could be partially timing. But I wouldn't tell you that there's going to be a sizable or significant shift one way or the other. I mean we still like both assets for what they're capable of delivering and providing to the organization to the company. So I wouldn't expect a big change.

Noah Hungness

Sounds good. Thank you.

Operator

Neil Mehta, Goldman Sachs.

Neil Mehta

Yes. And I apologize if this question was asked already. But just your perspective on the big focus areas around Giddings in the year ahead, what are some of the operational milestones that the market should be looking for in terms of continuing to assess how that project is developing?

Christopher Stavros

Well, I hope to be able to talk about some further expansion of the field in terms of our appraisal work and some of the things in terms of further developing it and delineating it. As I said before, it all starts with well economics, and we're just in such a much better position or a really, really strong position from our cost side of things. And so more comes into the fold with some of that. And it provides us with more flexibility and optionality to pursue some things or take a little bit more risk around appraisal work and test some areas, test the balance sheet, expand the balance sheet of the field, if you will. So I hope to have more color and maybe provide some more actual feedback or data around our results second half of this year. We're really just starting to get at it. So in terms of this year. So hopefully, back half of the year, we'll have more to say.

Neil Mehta

That's great. We'll stay tuned. And then the follow-up is you got a really solid track record of dividend growth. I mean you're targeting $0.60 here in 2025, which is differentiated relative to loss mid-cap E&P. And so just your perspective on the sustainability of that dividend growth and your ability to continue to achieve 10% type of numbers? And how do you balance whether dividends or buybacks are the right use of that incremental dollar?

Christopher Stavros

Well, on the dividend, the safety and security of the dividend is a critical element of it. I don't want to be one of those small mid-cap or any company for that matter that sort of promises dividend growth, implements a growing dividend, then it sort of somehow vanishes in the midst of a deteriorating portion of the cycle. So I don't want to be one of those companies that sort of has to fall back on that promise. So the dividend in our view is a promise to the shareholders. And so we thoroughly stress test the dividend at much lower product prices when we go to the Board for an increase every year whenever that happens. And so I'm comfortable knowing that we'll be able to grow it.
And remember, we talk about growing this dividend per share payout capacity. So the share repurchase program and the consistency of that sort of builds into that and works for you in terms of reducing the share count. So your actual cash dollars outlay doesn't increase as much as the percentage increase in the per share of the dividend. So it's sort of a natural benefit that and plays hand in hand in that growth. And so I think it's -- on the share repurchases, the consistency of the program really is a good mix of ingredients, if you will, around the recipe of our overall shareholder return program. And I feel confident that it's -- we've done the right thing by our shareholders and sort of dollar cost averaging. And for share repurchases, and it's improved everything on a per share metric over time. So the balance of how we're doing it, I think, is a reasonable approach.

Neil Mehta

Thanks. Appreciate it.

Operator

[Jeff Jay], Daniel Energy Partners.

Unidentified Participant

Hey guys, I just -- I was looking for some clarification around the Giddings appraisal work. if this works out and you find what you're looking for, how significant is it for your location count down there? I mean is it incremental? Or is this sort of a really big deal?

Christopher Stavros

Well, it's a really big deal in terms of what the potential is because you got, as I said, 550,000 acres. And we always look to add more opportunistically if and when we can, and that might even include some additional lease opportunities with time and some bolt-ons as we've done in the past.
Look, it doesn't take much. We continue to, as I said, press on the balance sheets of the field and by adding, as I mentioned, incremental lateral feet to that drilling inventory. It doesn't take much to make a sizable impact on our overall resource relative to our annual drilling program. So I think about it that way. But over time and over multiple years, it can be quite sizable.

Unidentified Participant

Excellent, thank you.

Operator

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.