Apr 04, 2023
On March 31, The Capitol Forum’s Teddy Downey, Daniel Sherwood and Sharon Kelly held a conference call to discuss the most pertinent issues impacting energy markets and policy. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Thanks to everyone for joining us today for our weekly energy conference call. I’m Teddy Downey, Executive Editor here at The Capitol Forum. And I’m joined by Daniel Sherwood and Sharon Kelly on our Energy Team, as always. And thanks so much for doing this, team.
DANIEL SHERWOOD: Thank you for having us.
SHARON KELLEY: Thank you.
TEDDY DOWNEY: And I want to kick things off. We’ve got a lot to get through. I want to kick things off with this Advanced Energy Project Credit. And the IRS is re-introducing the qualifying Advanced Energy Project Credit, $10 billion that can cover 6 to 30 percent of investment costs for projects that support manufacturing for green products or critical mining. And Daniel, I know you spent some time poking around on this. What companies or sectors do you see benefiting from this tax incentive?
DANIEL SHERWOOD: Yeah. So, you just saw me all fired up in the pre-conference about this. I had a lot of fun prying some of these details apart. Broadly, to answer the question, I’d say manufacturing most clearly and then critical mining probably as well, not to exclude solar projects or specifically wind turbine manufacturing. I think there’s some subsectors within the energy space that will be especially benefited from this. And we can dive into those specifics more.
But I think that at the end of the day, you’re going to see the highest amount of funds going to manufacturing facilities, whether they’re manufacturing a green product themselves or if it’s to reduce greenhouse emissions, which are the two different ways that you could qualify as far as this credit is concerned.
Quickly, I wanted to take a trip down memory lane. I think it’s helpful to give context to what this program is now and how it compares to when it was initially introduced in 2009. In 2009, this $10 billion figure right now from the Inflation Reduction Act is about three times larger than the allotment in 2009. That’s adjusted for inflation. Feel free to check my math on that. It was about $2.3 billion then. When those $2.3 billion in funds got allotted, it got exhausted and oversubscribed within its first series of grant making. They eventually did one more round of $150 million from leftover funds from projects that never came to fruition. But that’s how popular this program was.
Then, according to, a Council of Economic Advisers report that I found which reviewed all of the ARRA energy provisions, in retrospect, they cited this data point that I found worth highlighting: a year following that round of funding, the number of U.S. manufactured wind turbines installed in the U.S. went from a 25 percent share to 72 percent. So that’s just after one or two years of this concerted focus of funding that again now, this time around, is three times bigger. So I think that gives you an idea of, okay, this did seem to have a palpable, on the ground impact to a company like – a company with great exposure to wind turbine manufacturing is TPI Composites.
Another bullet point the CEA cited was on the battery side of things. And, you know, Teddy, we have always been very—from a macro perspective, we see that market expanding greatly. So those are kind of the big points. It shows a lot more concerted effort. I have a whole name, a whole list, of other companies that got a payout from this program when it first went through. There’s a pretty dense concentration of the awardees in the Midwest region and East, some in the Plain states and then some on the West Coast, but a really, really dense, it would appear—I didn’t do a statistical analysis—but it would appear much denser on the east side of the Mississippi. But we saw big companies, Dow, DuPont, G.E., TPI, Eversource receive money from this first round. And then there’s these smaller companies like Summit Ridge Solar, which has already announced a 50 megawatts in Maine and Illinois, targeting the specific communities that are earmarked in this product for this round of funding.
And so I think in closing, my last note on this is one of the reasons why this is so important—and we get a lot of questions as to how would someone get exposure to these growth sectors that specifically relate to the energy transition? And it’s a difficult question to answer. Because it can be hard to rely on these smaller programs to try to play a much larger change in the sector. And as this program demonstrates, they’d only had one year of success after it was introduced in 2009. Then-president Obama tried to put it back on the books to no avail. Senator Sherrod Brown and a few other senators were huge supporters of it, but it failed to rematerialize until now. So it took a decade later for it to be reintroduced. And who knows what might happen here again with this?
The reason why this is so important from a market perspective is it’s what’s called a Qualified Progress Expenditure, a QPE. And that’s something that both the fossil fuel side and the renewable side really like because it’s a payment upfront. You don’t need to demonstrate a certain degree of progress before you get paid. You say, look, I’m going to invest and—there’s still a process you have to undergo through the federal government—but then they say, okay, great. We want this project to happen. Here’s some support.
TEDDY DOWNEY: So when we’re looking at this program, I want to talk about a couple of these specific companies that we’ve looked at it in the past, particularly like a Bloom Energy, you mentioned here Denbury Resources and FTAI Infrastructure. And I want to get your sense because it’s one thing to be a small company that benefits from a windfall. It’s another thing to actually take that money and get a leg up and have a sustainable project and business going forward. And I’m wondering, just based on our experience with Bloom previously, what’s your take on some of these smaller companies? They might be better pure play. They might be more exposed directly to the money. But I’m curious to get your sense of whether or not they’ll succeed with that money and what your thoughts are.
DANIEL SHERWOOD: Yeah, I mean, this is something that kind of informs the dogma of our corporate investigations unit, doesn’t it? Identifying these companies from the whole and seeing if there is some underlying risk that’s less appreciated. And anyone who has been reading our work knows that with, for instance, like a Bloom or FIP, there we’ve identified there is some underlying risk and that these companies that are, to your point, a pure play.
With Bloom, they are going to manufacture fuel cells. I mean, that’s explicitly called out in this program. And Bloom benefited from this program in its first round, as we’ve been saying, this program is larger and Bloom is a more mature company. And so, they’ve devoted almost an entire page in their annual report to the different provisions in the Inflation Reduction Act that they can benefit from. Of the four or five that they explicitly state, I’d say that this one is probably the most likely to benefit them.
But Teddy, to what you alluded to in the question, let’s say they win the maximum 30 percent support level, that’s going to help upfront. But you need to have an economic facility to operate once you’ve finished expanding it or building it for it to really justify a repetitiously advantageous investment for your business model.
And that’s not even talking about Bloom’s natural gas-powered fuel cells. That’s just kind of checking off the box of, look, they make a fuel cell. They’re working on electrolysers. They’re working on hydrogen production. But if you take, say, another type of company that we’ve also written about, Plug, and compare it to Bloom, it’s like Plug’s business, again, that solid oxide versus PEM, they’re more—Plug can pivot to a hydrogen economy with more ease.
So it’s like when you’re making these bets on a pure play company that’s like, hey, I really think FIP’s going to make a hydrogen facility in Ohio, maybe they will. But that’s just one power plant and like one regulated transmission organization. And so, is that going to be scalable? And is that something that in 15 years they’re going to be able to do three times over? And I don’t have the answer to that question either. But when you compare it to a company like GE, that’s more artfully leveraging this program so they can reduce their electricity footprint on their manufacturing facility, while also being able to kind of tout this ESG philosophy, and they don’t hype the fact that they can receive that credit, I do think that that’s an apt comparison, as you put it, Teddy.
TEDDY DOWNEY: Awesome. I know you have a question for Sharon about the natural gas producers and debt. So why don’t you take it there?
DANIEL SHERWOOD: Yeah, absolutely. And so, this was a nice week for us to kind of put our heads up for air. We’ve been in the trenches recently, for those of you following along, publishing our investigations. And this is a good time for us to be able to kind of present some more of the current topics and things that are some discussion points and demonstrate how we dive that level deeper to do some value add.
So here, people, very rightfully so, are tuned into the interest rate hikes and distress in the financial sector. And we’ve gotten a number of different questions as well—how will that permeate into the energy industry? There were some headlines about Sunrun, the solar installer, had a large amount of funds deposited at Silicon Valley, things like that. So, kind of in that genre, we wanted to look at what are some kind of valuable takeaways that we can have here? And there’s been this broad narrative of, hey, oil and gas producers have reduced debt hugely. And oil prices are down right now, but not as down as natural gas prices. So Sharon, our enterprising ace reporter, gave us a good little peek under the hood. So Sharon, take it away.
SHARON KELLEY: Thank you for that set up, Daniel. So what we wanted to do is to just take a quick look at the progress that Marcellus companies in particular have made at wiping away their debts after a pretty remarkably profitable 2022. And as you mentioned, writ large, the expectations here were pretty high. As you might recall, this past summer, there was a Bloomberg headline that was pretty striking, for example. The headline indicated that U.S. shale producers could erase their debts by 2024 because they were, as a group, doing so well.
We’ve also certainly been tracking this focus on capital discipline from shale producers, and all of the mentions of that theme during earnings calls, et cetera. So, with that in mind, we wanted to take a look and see what do the numbers show at the end of 2022? How did Appalachian producers actually change their indebtedness over the past year?
And so what we did was we took a look at the ten largest producers in Upstream in 2022 that report publicly available figures. And we found that those ten largest producers ended 2022 with a total long-term debt burden of about $26 billion. That’s down from $28.2 billion at the end of 2021. So that’s a net reduction of about $2.2 billion. Those numbers kind of give you a sense for how far away the end of that tunnel still looks, if you’re talking about erasing debt—or even if you’re talking about just hitting a double digit annual debt reduction in long-term debt. On the other hand, it is also literally billions of dollars of debt paid off by just ten companies. So, you can see as glass half full or half empty to some degree.
With that in mind, we wanted to sort of take a look at how does the Marcellus stack up against the rest of the oil and gas industry? For a point of reference there, we took a look at a report by ratings agency Fitch, which at the end of December 2022 put out a report touting the strong progress that the oil industry writ large was making at paying off their debts. And the numbers they reported showed that at the end of 2020, these companies had $136 billion in outstanding bonds. They’d brought that down to $94 billion in outstanding bonds by the end of 2022.
So that looks like a markedly faster rate of debt reductions. That’s about three times the seven to eight percent rate that all Marcellus drillers were reporting. And so that’s also pretty consistent with the split between oil and gas prices, oil producers clearly had a significantly better year. Both enjoyed good years, but oil producers and mixed producers did a little bit better in 2022 than gas producers.
TEDDY DOWNEY: And so with the price low, I mean, ostensibly, even if they are having capital discipline, even if they’re not spending on ramping up production, that’s still kind of a long road, $26 billion. It doesn’t seem like a great situation.
SHARON KELLEY: And that doesn’t even take into account—I mean, part of what’s going on here is that you are seeing these debt paydowns, but you’re also seeing continued borrowing. And that’s something that even as interest rates continue to rise, we’re noting that drillers intend to continue to fund a significant portion of their upcoming drilling programs in ways other than self-funded through operations, or from the drill bit, as they say. There’s a Haynes and Boone survey every six months. They call it their base redetermination survey. And their most recent survey found that drillers expect to fund just over one quarter of their operations for the next 12 months through the drill bit, and the rest would come from various forms of debt, including 21 percent that would come from bank borrowing. So that suggests there’s a pretty significant exposure looking forward to interest rate changes and also to credit ratings. Something to keep in mind.
DANIEL SHERWOOD: And when Sharon shared this with me, I found what was most striking is that 7 percent debt reduction compared to the 21, 24 percent debt reduction in the broader sector. And that’s not out there. And for clarity’s sake, these debt structures are highly complex and there’s a million different ways that you can approach the drill bit. And as we’ve discussed at The Capitol Forum, there are a number of ways, alternative financing methods, for upstream producers such as securitization.
That being said, and I hate to do this, but I have to remind everyone that when natural gas prices were so much higher than historic rates, many of those producers took it under the chin because their hedge books were so out of whack with that uptick. And then half of them didn’t adapt their hedge book moving forward, hoping to catch more of that higher market rate coming into this year, and then were doubly impacted by the fact that it came down.
So, I also don’t have a crystal ball. It’s an incredibly hard job. But it is worth saying that it’s increasingly looking like—I mean, we stopped updating on natural gas prices on a weekly basis, Teddy, because it got boring. Like, well, it’s still low. And it’s increasingly looking like that’s going to persist. And it’s like they went from low to high prices and low again. And during high prices, lost on their hedges. And now they’re back in the low-price environment with a higher debt burden than their oil exposed peers. So, I thought that was interesting research that Sharon brought to the forefront.
TEDDY DOWNEY: Yeah, and also interesting to see if we’re going to have some either takeouts or distress situations down the road with higher interest rates. I mean, interest rates might not get that high just given the sort of systemic issues in the banking sector. But it’s definitely interesting to watch. I mean, I was surprised. I thought they would have had a little bit more of a windfall just given how—I mean, listen. I looked at my gas bill. It was pretty high. So I don’t understand why. My debt’s going up. Theirs is not going down commensurately. But thank you, Sharon. Really interesting. I’m excited to keep an eye on that. I wonder if we’ll have some more distressed people over the next couple of years get in touch with us on this.
And Daniel, my favorite topic we get to talk about next, MVP developments. And not just because Daniel is the MVP of energy policy and market analysis, but because the Mountain Valley Pipeline is a hot topic in Washington, D.C. these days. And I’ll give them credit. They are keeping hope alive. They’re keeping the machine lobby running, even if it is an uphill climb. I mean, they are sort of starting to put themselves in a position where, okay, maybe we can get an inside straight if we get the right negotiation on an appropriations bill or something. I don’t know. But I would love to get your thoughts on just the latest developments in the Fourth Circuit and in Congress. And I love talking about this. I didn’t think I would. It doesn’t really seem like something I would be that interested in, in some ways. But it’s Congress. It’s got some ups and downs. So I’m excited to get your thoughts.
DANIEL SHERWOOD: Yeah, from a House of Cards perspective, I think it’s one of our more leisurely subject matters. Because, as any listener would know that’s been on our weekly call each week. We keep saying the same thing. But I think it’s fun for us to explore the mechanics behind why we think that. And I have a question for you, Teddy, about, the legislative process in your opinion. So I’ll take the Fourth Circuit first, just because it’s a little bit more straightforward and then we can hit the legislation. And then head into the weekend.
So there’s two Fourth Circuit cases right now that are incredibly pertinent for Mountain Valley Pipeline’s development. One is Virginia and the other is West Virginia. So, West Virginia is still pending. So that’s another reason why this change for Virginia. Once they’re out of the Fourth Circuit, I think then there’s a lot more ‘green light’ sentiment.
That being said, it’s a huge victory that they had on the Virginia side and one that I wasn’t predicting necessarily based on the transcript from the oral arguments. So just for history’s sake, I want to make sure that I follow up on my guidance. So yes, the Virginia permit is being upheld by the Fourth Circuit. It ruled that it was not arbitrary and capricious and that those stream crossings in Virginia were legitimately considered by the state regulatory authority.
So that’s a big development. What exactly that means on the ground remains to be seen. I’m not under the impression, however, that they can immediately mobilize construction, and we’ll be watching that. Because that would obviously be a big step in the right direction for them. They have not had an active construction crew on any milepost in quite some time from my understanding.
So Fourth Circuit’s a big win as far as Virginia is concerned. There’s still some stream permitting issues in West Virginia and then the myriad list of other issues that we’ve discussed in the past, which will still make it possibly very difficult for it to reach the finish line by this year. Which then we always pivot to—what’s the Hail Mary?—a Congressional call out. As we discussed last week, this remains to be the case regardless despite the 150 amendments proposed for the Lower Energy Costs Act, Mountain Valley Pipeline is not called out by name. You’re right, Teddy, that the lobbyists are still keeping it up. But in this instance, the Keystone XL lobbyists won out. That pipeline was named repeatedly in this bill that passed. And takes away the presidential power of an international border crossing because they’re still upset about the revocation from Biden.
So that’s the Lower Energy Costs Act, as far as it’s passed by the House. It’s still supposed to be dead in the Senate. I haven’t seen anything change. Noteworthy that a few Democrats in the House actually came over to support this act. Like a Texas Democrat, for instance, who receives a lot of support from the financial and oil and gas industries. So do with that what you will. I don’t think even if Sinema and Manchin would support this, that it would still necessarily get across the line in the Senate. And again, Senator Schumer has said that it’s dead on arrival.
So Teddy, which leads me to my question that I framed at the beginning of this. Here we have this text. It’s been passed by the House. It will most assuredly be like a kind of bargaining chip in whatever goes on with the budget. How likely do you see that (a) specific text from this bill gets kind of mushed into the budget process? And (b) is it even less likely that a whole new amendment that didn’t get passed into this gets wrapped into it somehow because of some backdoor Mountain Valley Pipeline proponent?
TEDDY DOWNEY: Yeah, I would say, look, I mean, probably the best indication that this is not going to happen is that they couldn’t even get Mountain Valley Pipeline specifically in as an amendment in a Republican controlled House. That’s really negative. I mean, it’s not dead, but it’s negative. I mean, that’s an indicator that they don’t have the muscle to get it onto the bill. And this is a performative bill, not a—this is sort of like a statement of policy really for the House Republicans.
And so they’re very likely to get some traction with some of those things in an appropriations conversation because that’s their priority. But Mountain Valley Pipeline isn’t even on that priority list. And so they’re going to have to finagle it. And the Democrats in the Senate are not really going, you know, Manchin is not going to be that influential because the Democrats are going to be wanting to get their stuff in on the Senate side. And so really, the House Republicans, that’s really where you would want them to use the leverage in any kind of conference or House-Senate negotiation.
So, I think it’s really pretty bad that they couldn’t get it on there. And we’ve discussed how specific they really need their provisions for there to be a big boost. So it sounds pretty bad actually. But I think we’ve got to keep seeing—again, their sort of inside straight is going to be like Manchin in the Senate somehow trying to sneak it in. Or I don’t even know what they’ll try. But I think it’s definitely worth keeping an eye on. And maybe there are other reasons that it might not have been added that are less problematic for them, but worth keeping an eye on for sure.
I do want to come back to the legal stuff, Daniel, because one big court win—I think it’s safe to assume that there’s a pretty low probability that Congress is really going to accelerate this. When we’re just looking at the legal hang ups and logistical hang ups, is there a realistic timeframe? Or what else would you need to see like in succession, following this Fourth Circuit win? What other wins would Mountain Valley Pipeline supporters get excited about that would be moving up the calendar for them? And I think it’s safe to assume Congress is not going to pass anything and it’s not going to be completed this year. But, I mean, it’s still interesting like when is this going to get done? It’s still going to be a big deal. And we’re long-term thinkers. I know some people that may be on this call might not want to wait that long, but we’re interested in sort of looking out here. So just want to get your thoughts on that.
DANIEL SHERWOOD: Yeah, and honestly, that is the much more, I think, forward-thinking question to your point. I’m kind of hurriedly trying to pull up one of those nice little tables they have of all the different permitting issues and legal issues. I’m not sure if I can do it on the fly. So my initial answer would be the biggest next victory would be that Fourth Circuit, West Virginia stream crossing. And I say that because this pipeline has been at 94 percent complete construction, 92 to 94, for the last year or two, I mean, two years even.
And one of the problems is this horizontal directional drilling underneath these streams and what are the best mitigation practices for one of our favorite subject matters in this space, erosion? But also to preserve the environment of various endangered species. One that we wrote about in the context of this pipe often was the Candy Darter and the Roanoke logperch. Another one that gets a lot of attention are different—I think it’s the Northern Long-eared Bat. And each one of these animals have different environments in which they inhabit and thus have different conditions for development. Most recently we wrote about this legal theme as it related to FIP’s NGL terminal in the Delaware River and the Atlantic sturgeon. And it’s this fascinating world of administrative law overlapping with our natural world that’s trying to make sure that we can sustainably develop our economy without also pillaging some of the natural resources and natural environment that exist already.
And so, until these legal matters are resolved in the Fourth Circuit, construction crews can’t get down to the bottom of these streams. And so think about a stream crossing by the nature of how water moves. It needs to be in a low part of these high topographical areas. This is mostly mountainous terrain and water will flow in the valley. And these are not like your cute little streams that you can drive over sometimes on the way to your house. Some of them are. But many of them are kind of, I’ll say, embedded almost in this kind of complex accordion style topography. And so being able to navigate, get there, stabilize your construction equipment and then drill and get out. And you have to fell trees. It’s a relatively high contact process at the construction phase.
Once it’s done, it’s done. A pipeline talking point that I don’t understand why they don’t use more is biodiversity in rights of ways of pipelines is really high because humans can’t mess with it anymore once it’s built. But building it is incredibly invasive to the environment. And so seeing those two Fourth Circuit resolutions would be big. If we had more interest—and please reach out and let us know because this is something we could very easily determine—would be figuring out exactly what the next construction steps look like in Virginia. Because whatever it looks like in Virginia, you could assume it will be similar in West Virginia. And then you can gauge how long it would take to finish construction on—I think it’s like 100 and something—stream crossings that they’ve still not bored under. So that’s a considerable—that’s a lot of streams. And then my favorite issue that I always like to talk about—sorry Teddy, hopefully this answer wasn’t too long. You gave me a good question.
TEDDY DOWNEY: This is good. I’m learning. I love this.
DANIEL SHERWOOD: Good, good. I find this issue with the Blue Ridge Parkway and then the Jefferson National Forest, to be fascinating because they’re land issues. It’s like land rights issues, federal and state, overlaying with private sector. And again, due to the nature of the unique topography of this pipeline development process, even though the Jefferson route, I think it’s only three miles or maybe even less, like the route that the pipeline needs to go through, this national forest, is very limited in the overall 303-mile stretch. But they don’t have an alternative. And f they would have, they’d have developed it by now. They need to go through this area, it really seems.
So those are interesting to me because I do see a reality where somehow miraculously they finish the Virginia stream crossings by November and they’ve almost finished them in West Virginia and have figured out a way to extend construction into early winter. And then all of a sudden they get this Jefferson National Forest thing and they rush it, rush it, rush it. And then they some injunctive order gets issued later. But then all of a sudden, their pipeline is complete. It’s probably going to be messy like that. It’s going to be like Mariner East. Think Mariner East and its expansion. Like that pipeline was commissioned and completed and under construction and then completed again like seven different times. So I have a feeling when the rubber really meets the road, that’s how this process is going to get. And again, that demonstrates how far they are from there. They’ve got a number of relatively large legal issues to resolve until they can even say we have one contiguous pipe that makes it down to where we said it would.
TEDDY DOWNEY: I think you answered this already, but I have one kind of related question, which is like the pipeline is sitting there, right? And normally, I get your point that like, look, you don’t have to mess with it. Once it’s there, it’s there. But with these erosion issues, is there anything like within the last year where they have to go back and be like, oh, crap. Actually, there’s some stuff that we need to go fix. And because they’re not doing construction, are they still maintaining what they’ve got?
DANIEL SHERWOOD: They have to.
TEDDY DOWNEY: Okay.
DANIEL SHERWOOD: And they’ve been. And to your point, I glibly said this is a talking point they should use more. And if they did use that talking point more I would then respond with, yes, that answer. Like there are leaks. There’s erosion. There’s maintenance. There are all sorts of things. You could argue that because it’s so difficult to access during construction, it makes it even more risky to access during a rupture. And that’s happened before, where sometimes the advantage of a remote rupture is that stereotypically human life isn’t harmed, which is a great advantage, of course. But the disadvantage is it takes longer to ameliorate in certain instances. I mean, I would take human life not being harmed over that any day. But I’m just saying it demonstrates that it’s not just like, you know, the DMZ has like one of the last populations of a certain type of tiger. Like, I don’t think North Koreans would take the Siberian tiger over the DMZ. You know what I’m saying? So it’s a nuanced talking point. And to your point, those right of ways need to remain accessible to the companies for all sorts of reasons and all sorts of monitoring reasons.
TEDDY DOWNEY: And my last question is does the Virginia—and I’m guessing we’ll look into this, but off the top of your head or your initial inclination—does the Virginia win inform anything about what might happen with West Virginia? I mean, I know you talked about this already a little bit.
DANIEL SHERWOOD: Yes, it says to me that their final – well, the Fourth Circuit has been a major barrier for this pipeline. And they have ruled on a number of occasions, more than I think most observers would have predicted, that the process for these permits were insufficient and thus void. So this is a change in that direction. And it reminds me of the Montana District Judge, Judge Morris, similarly kept ruling against these auctions and then eventually got like national attention. And the judiciary stereotypically doesn’t want that. They don’t want to be politicized. They don’t want to be known for the venue of choice to kill a permit. Based on these oral arguments, some of the panel did seem to be empathetic to the environmentalists arguing against Virginia’s process. That’s what led me to believe that they might throw it out again.
So again, what does that signal? That signals that the judiciary, in this sense, is a little bit more willing to defer to state authority. And the West Virginia permit has similarly been repeatedly challenged as the Virginia one. And so maybe it’s time for them—the Fourth Circuit will feel that it is time that the process was appropriate and thus won’t void it. This is definitely a good sign for those who want on time construction.
TEDDY DOWNEY: Okay, great. And I guess we’ll be keeping an eye out for the next Fourth Circuit decision and keep tabs on everything going through Congress. And as always, this has been a great conversation. Thank you, Sharon. Thank you, Daniel. And thanks to everyone for joining the call today. And this concludes the call. Thank you.