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CNX Resources Corporation (NYSE:CNX)
Q4 2020 Earnings Call
Jan 28, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the CNX Resources Fourth Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Tyler Lewis, Vice President of Investor Relations. Please go ahead.

Tyler Lewis -- Vice President of Investor Relations

Thank you, and good morning, everybody. Welcome to CNX's Fourth Quarter Conference Call. We have in the room today Nick DeIuliis, our President and CEO; Don Rush, our Chief Financial Officer; Chad Griffith, our Chief Operating Officer; and Olayemi Akinkugbe, our Chief Excellence Officer.

Today we will be discussing our fourth quarter results. This morning we posted an updated slide presentation to our website. Also detailed fourth quarter earnings release data such as quarterly E&P data, financial statements, and non-GAAP reconciliations are posted to our website in a document titled 4Q 2020 earnings results and supplemental Information of CNX Corporation. As a reminder, any forward-looking statements we make or comments about future expectations are subject to business risks, which we have laid out for you in our press release today as well as in our previous securities and exchange commission filings. We will begin our call today with prepared remarks by Nick followed by Don and then we will open the call up for Q&A where Chad and Olayemi will participate as well.

With that, let me turn the call over to you, Nick.

Nicholas DeIuliis -- President & Chief Executive Officer

Thanks, Tyler. Good morning, everybody. I want to emphasize four points in my brief remarks before I turn it over to our CFO, Don Rush. All four of these are emphasized in the slide deck that we posted this morning.

First up, the first one is 2020 marked the most successful year we've seen as an E&P and frankly as a public company going back to the late 1990s is measured by free cash flow. Better yet this bar setting level of free cash flow and free cash flow per share it's steadily and substantially grew as 2020 unfolded. Our original guidance for 2020 free cash flow was around $135 million compared to over the 356 million or approximately $1.60 per share that we actually posted. It's been an awesome year on a simplest yet most crucial metrics. Our debt and share count both declined in the quarter as we allocated that free cash flow to the great benefit of our owners and execution allowed us to strengthen our balance sheet and return capital to shareholders. All of it, in the middle, one of the most challenging of years and decades.

Second point I want to make. We expect 2021 to -- be materially better than 2020 is measured by free cash flow. We expect to deliver approximately 425 million of free cash flow in 2021, so that builds upon and then exceeds will be accomplished in a very successful 2020 and that's at the current strip pricing not consensus pricing.

Third point, we built a free cash flow generating machine and that should deliver on average $500 million of free cash flow per year between 2022 and 2026. Of course that's a market improvement from our 2021 target that I just mentioned the $425 million and that creates a sequencing to position us for a 3p on free cash flow level setting when you run through 2020, 2021 and 2022 and again that's also at the current strip not consensus pricing. And that assumes the incremental interest expense for our bond issuance that we did last year. Our seven year $3 plus billion free cash flow plan that we unveiled last April. It remains in place. And the first year is now successfully in the books. Fourth and last point I want to make. We expect the generation of $500 million per year of free cash flow to continue for many years beyond 2026. Our basin leading cash costs, which were just a penny over a buck all in for the fourth quarter. It remains a huge differentiator for the capital markets and I think they are just starting to wake up to that fact.

Extensive swaths of our acreage footprint and inventory, they worked quite well at the forward strip because of our cost structure that fires the engine for the free cash flow machine that creates an annuitize and sizable free cash flow stream for years measured in decades. It's no coincidence that all four of these points that I just highlighted, they speak to the same metrics of free cash flow and free cash flow per share. Free cash flow, it informs our execution focus, our strategy, our capital allocation, incentive comp, our investment thesis, and our M&A screening process. We secure the drivers of it like low costs in midstream integration. We execute to generate it and then we astutely allocated by applying clinical math. It's a simple yet very powerful concept.

Now before turning things over to Don Rush, one final thought. I just said our approach is simple and powerful, but it's also different from the industry. The management team and board of CNX, we didn't make our names originally in E&P and what we've accomplished to-date sort of proves that. How? We said we were different than a typical E&P from the get-go. And at a time there were a lot of industry experts that were skeptics that really didn't matter. We took a 150-year old coal company at a time and through constant battling, toiling, and perseverance we transformed it and really every imaginable way into the premier manufacturer of natural gas and free cash flow per share as well as the leader in tangible and impactful ESG performance in our space.

We shun the conventional E&P wisdom and we took a best-in-class approach to disciplined capital allocation. It was injected by our board to create even more per share value. And we achieved all this during some of the most tumultuous times seen in generations. A traditional E&P team of board coupled with the standard asset base would have driven the company to a very different place. We know it because we see it out there. Fortunately, our differentiated approach set us up in the position of strength that we enjoy today and it positions us for even more great things on a per share basis moving forward. This is the team investors and other stakeholders want if stewards of their capital.

With that, I'm going to turn things over now to Don Rush, our CFO.

Donald Rush -- Chief Financial Officer

Thanks, Nick, and good morning, everyone. I'm going to start on Slide 3 which highlights some of the key metrics to differentiate CNX. As you can see in the top left chart, CNX has one of the largest net shale acreage positions in the basin. This acreage position is even more impressive when looked at on a relative standpoint. Since our production is less than our peers and our base PDP decline is so shallow, we need to consume less of our current acreage each year to maintain the production profile we have today. So if you look at the next 10 to 20 years, we will only need to develop a fraction of our acreage, if we continue to stay in the maintenance of production plant. This is a key fact overlooked by many. The bigger you are, the more acres you must consume each and every year to maintain your business model.

Our lean and highly profitable approach allows for a much longer runway and less risky next few decades relative to our bigger peers, which need to consume two to three times the amount of acres we do each year in order for them to maintain their production. This is a big difference, especially when you consider that our plan not only consumes fewer acres, but also generates approximately $500 million per year of free cash flow on average. This outsized profitability on less production is due to our superior margins driven by our best-in-class cost structure that you can see on the top right. This cost advantage allows us to generate significant free cash flow and based on where we are currently trading creates an very attractive free cash flow yield on our equity. And we remain on track to continue to strengthen our balance sheet over the next several years as you can see in the bottom right. When you view all of these metrics together, it is clear we have positioned the company to grow intrinsic value per share going forward.

Slide 4 digs deeper into the cost structure. As you can see our Q4 cost came in around $1.01, which was slightly under the $1.04 we guided to on our Q3 call. All-in our fully burdened cash cost finished at $1.17 per Mcfe for the full year 2020. We expect 2021 costs to be more in line with our Q4 numbers and do average approximately $1.05 per Mcfe. Year-over-year equates to a 10% expected cost reduction. Assuming the future free cash flow is allocated toward debt repayments, we would expect fully burdened cost to decrease even further to around $0.90 per Mcfe and lower in the years beyond.

When you combine our low cost position along with a steady execution we have seen throughout 2020, the result is four quarters of consistent free cash flow generation, which you can see on Slide 5. In Q4, we produced approximately $85 million of free cash flow and $356 million for full year 2020, which was modestly above our previous guidance. Last quarter, we discussed that if CNX shares continue to try to continue to trade at a high free cash flow yield, we would have the wherewithal to repurchase shares in conjunction with paying down debt. That is exactly what we did. And in the quarter, we bought back $43 million worth of shares at an average price of $10.43 per share were $6 million of that cash settling in the first few days of January 2021.

Slide 6 illustrates the point that our best-in-class cost structure not only drives our annual free cash flow generation under the current strip. It also allows us to develop wells more economically than our peers. As you can see on the slide, out of the key variables and well economics excluding price, OpEx has the largest overall impact on the economics of a new well.

To quickly explain the slide, we used a hypothetical Southwest PA dry well with the 2.6 Bcfe per 1,000 foot type curve and the other assumptions footnoted below. We then looked at how changing the four main variables affect the internal rate of return for that well. For clarity, the delta shown on the slide are [indecipherable] improvements, the nominal rate of return enhancements for that well. So, for example, if the base well had a 30% IRR and you lower the OpEx of that well by $0.50, the well would improve to a 68% IRR. As you can see operating expense has by far the largest impact on the profitability of a well, much greater than even a sizable 0.5 Bcfe per 1,000 foot type curve difference. Also as you can see on the slide, the CapEx or D&C per foot of a well has a much smaller impact to the wells profitability compared to OpEx. And this relationship holds true, if you want to look at MPVs instead of IRRs as well. This is not to say that EURs and D&C costs are not important to us. We continue to focus on driving down capital costs and improving capital efficiency and well performance and look forward to that trend continuing as we become more and more efficient.

However, we recognized a few things about capital D&C cost and its competitive impact. One, we acknowledged that all of our peers are good operators. Two, we all use the same vendor base in the basin. So cost and technology advantages don't last long and ultimately D&C cost converge over time within the peer group. One example of this is the ongoing adoption of electric frac fleets by our competitors, a technology that CNX adopted early on. Three, lower D&C cost across the industry over the past decade has led to continue drilling at lower and lower gas prices ultimately just bringing down the gas price. Four, at the end of the day, OpEx is the most material driver of well economics as we said before and five, our OpEx advantage is sticky and will remain in place for a long time. These comments -- these concepts seem like they are common sense, but we find that most in the ecosystem often overlooked at and instead focus to intently on whether capital costs are $730 per foot or $680 per foot when the reality is that CapEx per foot is far less impactful to the profitability of a well than operating costs.

The bottom line is that CNX has a structural cost advantage on the biggest driver of well profitability due to the fact that we own and control our midstream of water infrastructure. And that we have avoided significant out-of-the-money firm transportation agreements that burden others. These were strategic decisions, it cannot be replicated by others quickly or cheaply, and it allows our best areas to be more profitable than our peers and similar areas and it allows for a large swath of acreage to be economical for CNX at the current strip whereas they might not be for our peers with higher cost structures and higher operating costs.

Slide 7 is an update from last quarter. Since then we have closed on a $500 million senior notes offering, which created additional financial flexibility over the next several years. We have worked hard to get the balance sheet to where it is today. And as you can see, we have not only paid down a significant amount of debt in 2020, we have also increased our maturity runway significantly with our closest bond maturity now five years away in 2026.

Slide 8 provides an updated look for 2021 guidance. As we typically do for current year guidance, we incorporated some modest ranges with this updated disclosure. The summary is that based on the midpoint of the 2021 guidance ranges production and EBITDA are up slightly from our previous guidance and CapEx is up slightly due to timing and the $80 million [Phonetic] CapEx beat last quarter based on the midpoint of 2020 guidance. Most importantly, we are reaffirming our 2021 free cash flow at approximately $425 million where our free cash flow per share guidance is increasing due to our share buybacks in Q4. On the pricing front, our guidance is based on the forward strip as of January 7th, 2021 for natural gas prices and we have used a conservative forecast for our NGL realized price per barrel of $15. Q1 NGL prices are currently running higher than that and we will continue to monitor this as the year unfolds.

And last, as we have said in the past quarterly guidance is difficult to be accurate on since a few weeks one way or the other on a new pad make a big difference for the quarter, but not for the overall pad economics. However, for some color, we expect quarterly production volumes to be relatively consistent throughout 2021. And as of now capital is projected to be modestly heavier in the first half of the year versus the second half of the year.

Slide 9 is just a reminder that CNX continues to screen very well compared to not only our E&P peers, but against the market indices highlighted on this slide. And as such, we feel that we are a great investment opportunity. Our focus remains on executing what has become a simple story about generating a significant amount of free cash flow each year and allocating that free cash flow to create substantial value for our shareholders. We believe that this will drive the intrinsic value per share of the company higher over time and continue to provide meaningful opportunities to reward our shareholders.

With that, I will turn it back over to Tyler for Q&A.

Tyler Lewis -- Vice President of Investor Relations

Great, thanks. Operator, if you can open the line up for Q&A at this time, please.

Questions and Answers:

Operator

Certainly. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Zach Quan with JPMorgan. Please go ahead.

Zachary Quan -- JPMorgan -- Analyst

Hey, guys thanks for taking my question. Just wanted to ask on thoughts on the buyback going forward. You utilized roughly half of the 4Q free cash flow to buyback shares. Is that a preview of what we should expect in '21 and I guess just more generally your thoughts on buying back shares, reducing debt with the free cash flow you generate?

Donald Rush -- Chief Financial Officer

Yes, no. Thank you for that. I'll start and Nick can add in anything I miss here. So I think if you rewind time back to our Q3 call, we were pretty consistent in the conviction of the free cash flow plan not only close up 2020, but we were projecting for '21 call it the $500 million on average 2022 to 2026. And we made it fairly clear that hey the balance sheet was in a good shape or our cash flow generation relative to our debt and our maturities was a very stable manageable scenario and situation and the leverage ratio targets that we're trying to get to like a 1.5 times leverage roughly with $1 billion EBITDA runway, in that zone, you need to have a $1.5 billion of debt to kind of get to that 1.5 leverage position. And we have the wherewithal and again going back to the Q3 call we quoted $1.5 billion between now and the end of '23. Q4 was the first chunk of that $1.5 billion that we were projected to make and we said we have the wherewithal to spend $1 billion paid on debt and have plenty of capacity of that extra $500 million to utilize for other things along the way.

And if the free cash flow yield at the equity and if you look at the call it close to roughly $2 per share free cash flow that we're projecting for 2021 state around close to a 20% free cash flow yield, we would be thoughtful and opportunistic as we move through the year here. So, I think, as you look forward, the clean answers are, we follow the math, we use the variables, we change decision making based on how the variables move around us and we have the wherewithal to do things opportunistically with share count as the next several years unfold and it will be a part of the balance between the debt paydowns and potential returning capital to shareholders and then the good news for CNX and CNX and shareholders are, we have the confidence and the wherewithal to do both.

Nicholas DeIuliis -- President & Chief Executive Officer

Yes. Zach, I would just add that. To me the most important thing here is that we've got a conviction at our cost structure, the integration of our water midstream, upstream and our inventory is going to be a substantial engine for generating free cash flow. So I look at 2020 in total. Q4 for 2020 and our guidance is for '21 and one year in the books across that seven-year plan that we unveiled last year as long as we continue to execute, we are going to a) generate a substantial free cash flow. I think the scoreboard to-date has shown that we're doing that b) we then want to allocate that free cash flow in the right places and at the right times. And the two biggest most attractive opportunities we see right now are a) reducing debt and b) opportunistically retiring shares at those free cash flow yields that Don had mentioned. So that continues to be the two areas of focus for us on free cash flow allocation, the share count reduction will be opportunistic and I wouldn't read into a quarter or a year. In past, I would instead look toward the metrics that matter us when we're doing our rate of return math. I'd expect to in '21, we continue to execute, we hit our guidance on free cash flow. You're going to see significantly lower debt at the end of the year and you're going to see a lower share count if the free cash flow yield stays where it has been hovering at recent.

Donald Rush -- Chief Financial Officer

Yes, last quick comment, since I forgot to mention. Our hedge book really helps on just the comfort and confidence and what these cash flows look like for the next several years with approximately 90% in '21. We already have a material position in '22. And then if you look on '23, '24 it's getting close to almost being half 50% hedged up in that area if you assume flat production. So there's structural advantages we have as a business coupled with the clarity and cash flow generation via the hedge book allows the wherewithal to be thoughtful on this -- these next quarters and years unfold.

Zachary Quan -- JPMorgan -- Analyst

Thanks, guys. Just one follow-up. We're seeing basis widened out a bit. We're mostly hedged on basis in '21, but less so in the out years. Can you talk about what you can do to mitigate widening basis and just your general thoughts on what happens with basis over the next few years in Appalachia given some concerns about new pipelines potentially being delayed?

Chad Griffith -- Chief Operating Officer

Yes, Zach. This is Chad Griffith. I'll take that. And I'm glad you asked because it was a point I was hoping to be able to make today. We've actually gotten out ahead on the hedging risk and we're actually -- over 90% hedged on in-basin exposure '21 through '24 exclusive. So that really isolates us and protects us from some of the in-basin volatility that I think you're pointing to and certainly that you're seeing and some of the risk with some of these pipeline projects and potentially what might come down the road on these pipeline projects. So, that was -- we've gotten out ahead of it. We've isolated CNX from that risk. And we've been able to get those hedges put in place at what we think were attractive levels. A lot of the details are available in the supplemental materials that we put out. We have not traditionally talked about exactly what markets has been included, but I was -- I'm glad you asked because we were able to sort of add additional color that a lot of that forward basis has actually been focused on removing that in-basin pricing exposure.

Donald Rush -- Chief Financial Officer

And just to sort of add on top of that to Chad's point there's the basis side then there's the indexed in-basin price. So those two things kind of can be confusing I think between the two. The basis numbers sometimes is just the difference between what Henry Hub is and what the in-basin local marginal dispatch cost is that economically kind of hedge out in the future for it to produce a well our in-basin. So we monitor the stuff very carefully. One thing the entire industry has gotten very good at is producing gas. So I think when you look at any of the supply demand fundamentals, whether it's in-basin or any other basin markets out there, it's going to be tight, these things are going to be volatile. So I would make decisions after forward strip. That's why we take opportunities to sort of de-risk the forward plan and ensure that we have the clarity in line of sight on the investments that we're making on the drill bit are protected from fluctuations that may or may not occur. One thing we've, I think, all learned is that the world is very unpredictable. There's major drivers and variables. The gas prices that are out at anybody's control for the next month's let alone years.

So we use this strip to make decisions. We go ahead and lock-in some of the economics of the wells prior to spending the capital, gas prices go up. We have a good wherewithal to be able to take advantage of that if it's structural and it's a long-term forward strip thing that we can do. We've shown the wherewithal to manage our production profile to take advantage of seasonality or differences and spikes or downdrafts in the call it hand-to-hand combat gas pricing environment. And we feel good about the business model we've built works really well if gas prices they were at and basis stays where it's at for the next decade or if it step changes up by $0.50 that's just even a better company for CNX, but we work well either way.

Zachary Quan -- JPMorgan -- Analyst

Thanks, guys. That's all from me. I appreciate the color.

Operator

And the next question will come from Neal Dingmann with SunTrust. Please go ahead.

Neal Dingmann -- SunTrust -- Analyst

Good morning all. My first question; Nick, for you -- Don, really given your now stellar free cash flow. Could you discuss a bit your thought process around free cash flow allocation. You mentioned a bit about all the debt repayment equity repurchase, but I'm wondering when it comes to these two plus a bit of growth and then probably even in the future potential dividends. I'm just wondered how you sort of think about all these?

Nicholas DeIuliis -- President & Chief Executive Officer

Sure Neal. I'll take a start at this, just generally thoughts -- macro thoughts that sort of play into this allocation opportunity set. One, you know, lower debt typically in our industry with its volatility coupled with the opportunities that present themselves when things get volatile is always a good thing. Sometimes that's difficult to quantify. But we know it's tangible. We know it's real. So I think, you know, the leverage ratio metric, absolute debt level metric continuing to allocate a portion of the free cash flow, the debt reduction is always going to be front and center with us through the -- definitely the next calendar year, if not the next two, right. When you get into issues with respect to capital itself. I think the industry is going to be facing more challenging times, frankly, whether it's because of forward strip pricing or just the overall sort of approach of how our industry is viewed by the capital markets is going to get stingier in terms of being able to make your case to secure capital. And those that can be free cash flow generators and self-fund and take advantage of the stingier capital environment are going to be the ones that not just navigate through, but thrive in it. And that's certainly us. So the ability to post free cash flow is more crucial than it's ever been, especially on a consistent basis.

And then, the third thing goes back to our prior comments on the first question, which is on the share count reduction front, it is part and parcel and integral to our philosophy. It was really started by our board a number of years ago. And if you look at our seven year plan with one in the books and you look at what the prognosis is for our business when it comes to free cash flow generation after that six year period left on the seven years. There's a compelling case at the free cash flow yields we're trading at to reduce share count and create substantial owner value on a per share basis. When that changes because of the math, right, because of the fact circumstances when we start to trade in line with what you would expect on yield and other avenues for shareholder return like dividends I think come to the floor to be considered, but right now for the foreseeable future, debt reduction, share count reduction opportunistically I think those are the two primary paths for free cash flow allocation.

Neal Dingmann -- SunTrust -- Analyst

Now makes sense. And then really Nick my follow-up for you, Chad, just on sort of more on cadence timing and focus. Obviously you know those earlier slide just showed the depth of your inventory. So I'm just wondering specifically given that depth and a moderate plan, how do you think about this year, maybe talk about targeting the Marcellus and Utica sort of driving the gas plants around that?

Nicholas DeIuliis -- President & Chief Executive Officer

Yes, I think, there's a little bit more wet gas in the mix is rolling through from '20 into '21. You can kind of see it flowing through a little bit of the production cash costs that you're seeing in '21 versus 2020. I think when you look at call it what we're going to do in '21 we've kind of call it go back to the Q3 call said that if there is this the price spike that may or may not happen sort of later in the year we got the wherewithal to kind of pull some of the 2022 deals up a little bit or like we've done before. If there's a disconnect and shoulder seasons or something like that, we can kind of delay some things and push it back to later periods. But the net-net, we feel good about the next couple of years. We have clear line of sight on being able to execute it very, very efficiently. We had an operating team. It's the best in the business to get this done in a very efficient manner. So we're set and how we want to think through that. As we said before, the bulk of the six-year program.

I guess it was seven now it's six-year program is based on Marcellus activity with a little bit of Southwest PA Utica to just blend down some of the damp Marcellus gas. So that Chad can talk a little bit after I finish about how that damp Marcellus gas and what we blend versus what we process now that changes as NGL prices change. And then, a little bit of activity in the CPA Utica, but yes cadence wise, it's fairly similar, fairly consistent, although again these things get lumpy quarter-on-quarter, but Chad you want to talk a little bit about the blending and what we are doing.

Chad Griffith -- Chief Operating Officer

Yes, thanks Don. So one of the additional benefits of owning our midstream system beyond the cost benefit as -- it provides you a tremendous amount of additional flexibility to be able to move gas around to optimize or maximize the value of those molecules and certainly as NGL prices rallied particularly propane. We've been able to already move some of our damp production back toward processing to take advantage of that positive frac spread and we're continuing to assess a number of additional wells that are sort of right on the border between better to send a dry versus wet. We're monitoring those really on a daily basis and close sort of communication with our processing partners to determine like when is it actually like economically best to send those molecules to processing. And ownership that midstream system provides us that flexibility. Similarly, we have our asset base has a mix of really a dry-dry sort of Marcellus versus some wet-wet opportunities down the Shirley Pennsboro field. So we're looking at what is the exact way to optimize the timing of the fracs and TILs and that's really Pennsboro field to take advantage of some of the near-term strength in NGL pricing.

Neal Dingmann -- SunTrust -- Analyst

If I can just sneak one in on Chad -- Chad on your comment, I guess, for you Don. Would you all consider monetizing this midstream. It sounds like it just remains too important internally?

Donald Rush -- Chief Financial Officer

I mean, we've, I mean, I guess if you look at the last several years, we've got a pretty thorough track record of just making economical decisions on left rates on, you know, to keep a business, DSL business. We've sold more things, both undeveloped acres and, you know, producing acres and different business units and I think anyone else over the last several years. So, we follow the math, we assess any of these decisions, do we think that -- it's a big part of what drives the future economics of the company. Yes, do we think it's a big piece of why our cash flows are so much lower risk than the peers. Absolutely, I mean, I've tried to explain it call it upside down what the peers would look like at a $0.50 higher gas price. We look like that like you know so that just gives us a layer of reliable free cash flow that gives optionality to do interesting things over above and beyond that. It unlocks a lot of additional values for CNX.

So we evaluate everything when we go to making decisions to do things on a risk adjusted cash flow basis. And we'll continue to do so, but we like the position we're in and part of the reason we like the position we're in because what you're going to want to add it. If everybody had the midstream, the gas price is probably just be $0.50 lower. So, I mean it's unique for us because we're the only ones that have this type of a situation.

Neal Dingmann -- SunTrust -- Analyst

Great details and tremendous free cash flow guys.

Operator

Thank you. And the next question will be from Holly Stewart with Scotia Howard Weil. Please go ahead.

Holly Stewart -- Scotia Howard Weil -- Analyst

Good morning, gentlemen. Maybe I'll just start off with a couple of questions on the production numbers. Could you provide the overall shut-ins in 2020 and then let us know or give us some color on if there is anything in the '21 guide in terms of shun-ins?

Nicholas DeIuliis -- President & Chief Executive Officer

So as far as what the total quantity of Bcf shut-in during 2020. I mean I think we can follow-up with you on that, Holly. We -- if not you know I sort of look down on a per day number and started to see how -- watched how it fluctuate over time, make sure we were optimizing the value of that, but I don't have a total quantity sort of available my back pocket right now. As far as like 2021 guidance, we're not currently planning on having any shut-ins in there in that guidance. It is obviously something we'll continue to monitor. If the opportunity presents itself to be able to maximize the value of our assets, our production stream by timing production differently then we will definitely jump on that just like we did last year. And just like we did last year. If we make that call again we would lock in the arbitrage and hedge it again just like last year.

Donald Rush -- Chief Financial Officer

Yes, we would modify and sculpt our hedge book appropriately if that opportunity presents itself. And like I said that's just all of the flexibility that we have. It's hard to mathematically show the value until you do these things as they unfold and trying to predict when they happen is it possible, so we don't try. We just keep our eyes open for them and we move quick when they show up.

Holly Stewart -- Scotia Howard Weil -- Analyst

Great. Well maybe Chad just a follow-up to that. Can you provide the exit rate for the year for 2020?

Chad Griffith -- Chief Operating Officer

Yes, we're are looking at 1.7. About 1.7 -- about 1.7 a day.

Holly Stewart -- Scotia Howard Weil -- Analyst

Okay. Perfect. And then Don I saw the slide on just the total cash cost guidance for 2021 may be getting just a little bit more granular 4Q the midstream costs were a lot lower than expectation. Is that a good level kind of to think about as we're moving through 2021?

Donald Rush -- Chief Financial Officer

I would say where it gets us into some of the mix. As you roll into '21 we've kind of given what the costs look like in '21 and clearly some of the optimization Chad talks about moves some things around. If you have some processing end up with some higher realizations. So the cost looks a little bit higher, but ultimately your margin stay and your cash flows that you're looking for '21 stay the same. So you're going to see call it fluctuations based on a little bit more dry versus a little bit more wet and you look at some of the kind of the FTE moving around on to unused, used and stuff like that and it's just really kind of day-to-day hand-to-hand combat as we're seeing what the delta is between the Q3 to Q4 then into 2021. So, we will continue to use call it goalpost guidance to give somewhat clarity, but it's going to fluctuate on a quarter-to-quarter as we make these week-to-week decisions.

Holly Stewart -- Scotia Howard Weil -- Analyst

Okay. And then one more for me, if I could. How are you thinking about that CNXM credit facilities. Does that stay in place?

Donald Rush -- Chief Financial Officer

Yes. So right now we're not that you know that transaction was structured and fluctuated the debt instruments remained outstanding. So we still do financials and post them to the holders down in that standpoint and what we do or don't do call it over the long-term I guess to be determined. I think what it allows is some flexibility and call it safety and capital structure management. Obviously the simple thing would be that hey one capital consolidated structure and low debt for the enterprise and if that makes sense over the next several years and we can migrate toward that if for whatever reason to Nick's earlier comment if some of the E&P specific kind of debt markets are more difficult due to whatever reason and rationale that might be even though our balance sheet and everything looks good individually you could get caught like just industry wide like noise.

We have like the midstream side, which is just a pretty amazing efficient way to raise capital with the kind of security and collateral you can provide in that and like we talked about the safety and the cash flows that are available to that kind of piece and entity. You saw this I guess right in the middle of the COVID situation last when it started last February, March when we did our CSG project financing. I mean our upstream bonds were trading difficult along with the rest of the peers groups on showing difficult but we raised 150 million or so dollars it call it a blended almost 6% interest rate whenever upstream bonds were very, very challenged. So long-term, we will see near term like most cost effective thing to do is kind of leave them as they are and we'll will make those decisions and we got time clearly with when the bonds down there expire and obviously the credit facility down there has a good runway on it too.

Nicholas DeIuliis -- President & Chief Executive Officer

Yes, Holly, this is Nick. Just a general thought on that. I think it's an important point because whether we keep two separate facilities or whether we combine them in the one moving forward. I think it does show that our cost of capital should be more efficient because of the asset rate that we've got than your typical upstream Appalachian peer. In other words that whether it's one single facility moving forward or two separates the weighted average or blended cost of that is going to be better and cheaper than what you would typically see for an upstream only and that makes sense to us. That's part of that's like another confirmation of driving things like cost and excuse me free cash flow.

Holly Stewart -- Scotia Howard Weil -- Analyst

Yes. And you probably saw that in the way that your bonds priced back in November. So, OK, I appreciate all the color. Thank you.

Donald Rush -- Chief Financial Officer

Thanks, Holly.

Nicholas DeIuliis -- President & Chief Executive Officer

Thanks, Holly.

Operator

The next question will be from Michael Scialla with Stifel. Please go ahead.

Michael Scialla -- Stifel -- Analyst

Thanks. Good morning, guys. It looks like you're going to be able to pay off all your debt in your revolver pretty quickly with free cash flow. I just want to see how and when you're planning to retire your fixed debt in your seven-year plan, do you build up a pilot cash until the fixed debt becomes due or can you call any of the fixed debt early. Just how you plan on handle in that new seven-year plan?

Nicholas DeIuliis -- President & Chief Executive Officer

Yes, I know it's I guess flexibility, as you heard, we've been using often, but being able to pick and choose along the way is just something that we find to be helpful and thoughtful to be able to do this. We have a nice structure I think with what we have it the RBL like you mentioned, we do have some of the CSG bonds out there to that are pretty -- not pretty, they're very efficient, they basically callable at par. And we also have the cost structure is starting to kick in really here and a couple of months for our first unsecured bond and clearly there is up in the market trading to. So if you look through '21 easy math is and just like you said I mean there is enough to basically take care of the RBLs and that puts you in a place to allocate capital behave very thoughtfully not only across the different pieces of the debt structure, but the wherewithal to do things on the share repurchase side as well. So, simple math and what we've kind of laid out in the '21 guidance is it just go and go into the RBL for the simple math in the guidance. But when you look at the optionality you have to pick and choose these capital stacks. That's a nice piece to have.

Michael Scialla -- Stifel -- Analyst

Okay, good. So it sounds like no need to park cash on the balance sheet for any extended period of time. Wanted to ask on slide six. It's a great slide show your cost structure advantage on operating costs relative to your competitors as it relates to well economics. If you looked at that same chart not relative to your competitors, but just relative to yourself today versus where you think you'll be 12 to 18 months from now. Can you say what you think the biggest controllable driver under that scenario would be on your returns?

Nicholas DeIuliis -- President & Chief Executive Officer

Yes, no, I think as we've laid out in prior calls, we've forward looking assumptions are fairly conservative. So the cost components that we have kind of coming down where we're basically contractual in nature. I mean that it's unneeded commitments that we have just rolling off as they expire, the contracts expire clearly Chad and team is obsessed on the D&C front and they're doing a lot of great things to push the envelope there and we're trying to obviously push the envelope on the OpEx cost side as well. But Chad I don't know if you want to talk about any of the initiatives we got on the sort of the OpEx and the D&C that to try to call it continue to beat what it is we're doing today.

Chad Griffith -- Chief Operating Officer

Yes, thanks Don. So certainly on the OpEx side, as we've talked many times about the -- a big chunk of the OpEx stack is contractual and/or corporate structure based means that the ownership of our Midstream, the firm transportation commitments we've made. These are long-term sticky cost advantages that it would take our peers a longtime or a lot of money to sort of narrow the gap on. Some of the stuff that's a little bit more directly controllable that we are paying laser-focused to is -- your OpEx piece, which is a smaller part of overall operating cost, but certainly OpEx contributes to that, it's about 10% of that stack. And we're always looking at ways of maintaining by optimizing how much maintenance we're doing optimizing how much expense we're -- how much we're spending. What we're doing with cruise. How we deploy our workforce trying to squeeze every bit of optimization we can out of maintaining our asset base.

Similarly, on the D&C side; look one of the -- not only does our sort of maintenance and production, the seven-year plan that we've put out there provide you guys a lot of guidance and a lot of long-term view. It also provides our operating teams, a long-term view and that allows them to plan ahead to negotiate smart contracts, smart logistics, make sure that suppliers will be in place, service providers know what's coming, that we see what challenges are coming down the road, whether it's longer laterals or two different, different drilling locations like making they see that coming down the road, they know where they're going. They know what to expect and they can plan accordingly. That has allowed us to execute at extremely high level and continue to improve the leading edge cutting edge of D&C efficiency and look we've got a team downstairs incredibly intelligent people, incredibly technical operators giving them that long line of sight on what to expect giving them clear goalposts to what we're solving for free cash flow per share has allowed them to just focus on executing and get the job done.

Michael Scialla -- Stifel -- Analyst

Great. Thank you for the details.

Operator

And the next question will be from Nitin Kumar with Wells Fargo. Please go ahead.

Nitin Kumar -- Wells Fargo -- Analyst

Good morning, gentlemen, and thank you for taking my questions. I must may change tack a little bit and talk a little bit about what is your macro view on gas right now your own plan calls for very steady production, you were talking earlier about hedges, but I'm just kind of curious, what do you see out there from your peers and some just want to gas perspective?

Nicholas DeIuliis -- President & Chief Executive Officer

Yes. So we've been cautious about the '21 strip for some time now. I think we've consistently message that we're very keeping a very close eye on weather, particularly this winter weather. And I think we're all keenly aware that the winter has been a little bit disappointing so far and I think the strip traded off as a result. I think since our last call I think Cal 21 full calendar years off maybe call it $0.28 or so and I think Cal 22 is maybe off a dime. So you've seen the markets respond to the weaker winter and I think that's what we are all sort of worried about. Nevertheless I think there is some structural under supply going on, it looks like even with production off one or two Bcf per day compared to last year, if demand and exports are up. So it does look like where maybe structurally undersupplied. So everyone shift in their both thesis to next winter, I sort of make sense to us I think but at the same time you've got rig counts ticking up ever so slightly you've got weather continues to play a big role I think the point is the markets are going to continue to fluctuate wildly as a function of weather producer behavior policy like there's going to be a lot of volatility in gas prices.

We will continue to hedge. We continue to ahead, we're very heavily hedged well out into the future years. We'll continue to hedge. We continue to include basis as part of our hedge just to minimize the amount of that fluctuation effect on our just to minimize the amount of those fluctuations effect on our free cash flow plan.

Donald Rush -- Chief Financial Officer

Yes. And then just to sort of add on top of that I mean we do have a lot of internal views and analysis on these. We just recognize that a perfect crystal ball doesn't exist a couple of variables and small movements on a couple of variables outside of anybody's control can take a very accurate model and make it look silly within the matter of months. And when you look statistically I mean the end up the floor hedging typically ends up better than not hedging. That's just statistics and we recognize that fact and our eyes open that either could be our structural change and obviously we'd be happy to see that. I think you're hearing a lot of the right things from different folks about trying to stay disciplined and focus more on free cash flow and maintenance of production, but I think the ecosystem has a long way to go to solidify that they're actually going to do that and part of the ecosystem is I mean if you just look at the research community and others.

I mean there's still valuing companies off the EBITDA multiples and the free cash flow talk I think it's starting to come, but I think the more its demanded and the more free cash flow is the main driver and how people are viewed and valued. There is always going to be risks because it's pretty easy to grow EBITDA as the E&P company. I mean these wells and the ability to deploy capital and grow EBITDA is real, we've seen it, but it hasn't actually showed up in shareholder value. So I think this -- you all can help the ecosystem and everybody I think will be better off if focus on free cash flow was the main driver on how companies are viewed and EBITDA multiples remain the soup of the day it's risky. It's enticing I guess to go ahead and incur that EBITDA to get a favorable kind of treatment in evaluation mechanics versus maybe the right decision was just to focus on free cash flow, but it hasn't quite flowed through how people view companies yet.

Nitin Kumar -- Wells Fargo -- Analyst

I certainly appreciate your focus on free cash flow. So I appreciate that part of your answer as well. I guess you also kind of been passing mentioned how difficult it is for the industry these days in terms of investor sentiment and ESG concerns, you were one of the first to adopt e-fracs in the basin. But I'm just kind of curious are there strategic opportunities that you see for to participate in any kind of green revenue streams and things like that one of your peers was talking about partnering with a company on monitoring some of their wells. Just curious if beyond just reducing your own emissions and if you're using e-fracs anything you're seeing that might be interesting?

Donald Rush -- Chief Financial Officer

Yes, no, I think this is something that some of the conversations that I've had and Nick has had as well. So I'll talk a bit and then Olayemi you can talk and if Nick want to chime into, but I think a lot of the things we've been doing have been very call it ESG focused and friendly. If you look back to the creation of CNX Gas and capturing call it coal bed methane that would have escaped to the atmosphere and today it's called flaring and different things like that in the oil and gas field. But we've been focused on trying to be thoughtful for a long time now. I just don't think we've talked in ways in languages that people are used to sort of seeing this. I mean, the evolution frac fleets one example. I mean, we're very focused on sort of local and sustainable and trying to be thoughtful on numerous fronts here.

So, I think our track record shows we've leaned into a lot of these sorts of things. I mean we have a partnership with a bigger plan. It does kind of like call it coal bed methane generation and we've generated carbon credits. We've had for the last few years and different vehicles. So focus is there I think communication could -- can be improved. And I think the track record of things we've done I think gives you a little taste of things we can do going forward. So yes we're very interested and not only do it doing right generating thoughtful profitability through this and the company set up and has a lot of ingredients to be very successful. If that becomes more and more important to the world, but I'll go ahead and let Olayemi chime in as well too.

Olayemi Akinkugbe -- Chief excellence officer

Thanks, Don. I think the ESG -- the new focus on ESG is appropriate even in the environment we're in right now. Don was talking about the whole purpose and the whole view of it has been in our DNA right from the outset, the way the company was created was if you look at it is more in the limelight of ESG. And one of the things from us that we really appreciate with a new focus on it. We are local, we've worked local, we live local, our employees are local. So the new focus on ESG especially to make sure that the companies are responsible. It's actually a good thing. It's good, it's a very good thing for our workers, it's a very good thing for our company. And in addition to that, provides new opportunities for us and for all the companies out there as it relates to that. I mean we've started looking at ways to use, to use more of our product and we've seen that when we deployed our electric frac fleet, we saw the efficiency and that's why we use started seeing some of our other competitors adopt that as well.

And as we continue to talk and evaluate. We're seeing more and more opportunity with our legacy assets to actually take advantage of the new focus and opportunities in ESG.

Nicholas DeIuliis -- President & Chief Executive Officer

And then finally the only thing I'll add is, from a big picture perspective, if you look at sustainability and ESG, right two buzzwords or terms that are being bannered about everywhere you look these days. We translate with that means into really three crucial legs. One, you got to be transparent. So when I think of sustainability and our local commitments that Olayemi just talked about or our free cash flow generation. We need to put out to the world there's responsibility to transparently state and very clear metrics that are measurable what you're going to do versus just hollow words or promises or happy talk. I think you see too much happy talk when it comes to sustainability and ESG, let's be transparent, let's lay our cards on the table and show the capital markets and the wider stakeholder group what we're going to do. Two, tangible, OK. These things, these targets, these metrics, need to be measured, they need to be tangible like what did we actually deliver on that you can measure whether it's financial sustainability or ESG as it relates to wider stakeholder groups like the tangible measurable accomplishments.

I sort of PR feel good type things and then the third piece of this is actions, right. So if you're laying out the transparent view on what you're going to do and then you're doing that intangible metrics or your action is going to be consistent with all the stuff you just said. So I think it's pretty simple across those three. But despite all the talk and the volume of stuff has being bannered about across those metrics. I think those three things are lacking quite a bit. We don't want to be and that, but we definitely want to be in the camp of here's what we're going to do transparently, here's what we're going to measure and accomplished tangibly and then here's what our actions where they were consistent with those two things.

Nitin Kumar -- Wells Fargo -- Analyst

Okay. Nick, I can see you tangibly touched the 43 million that you return to cash shareholders this quarter. So that's great, if I can just sneak one last in. I won't be an E&P analyst if I didn't ask about capital efficiency. As you head into 2021, what is your base decline compared to '20 as you hit it into 2020 and kind of how do you see that tracking as you slow down your activity levels?

Nicholas DeIuliis -- President & Chief Executive Officer

So we certainly expect base decline to continue to decline over the seven now six-year plan. The thought was that the idea there is, as your production stays flat or flattish that your replacement each year with new wells goes down because you got more, a bigger, a bigger portion of your production base is sort of older wells and as those wells, the average age of your wells get older, the decline curve flattens out. So your replacement rate goes down over time and your average decline rate goes down overtime. I think this year where we expect sort of looking at 2020 exit rate and sort of what the decline is off of PDPs. Again the 2020 I think we're somewhere in the crowd mid to low 30% sort of client curve decline rate and year-over-year. So that's sort of what we're targeting right now needing to replace in 2021.

Donald Rush -- Chief Financial Officer

And as you move forward through '22 and beyond this 26 plan it will kind of trend down to around that 20% sort of time frame. And I think when you look at call it 2021, it's a little bit noisy just because we shut-in a lot of things in 2020. So it turned a bunch of things back on right around kind of November and December at the end of 2020. So again, the decline rate between '20 and versus '19 and '20 versus '21 just looks strange because of all the different shut-in things that we did, but like I said assuming sort of no shut-ins in similar cadence you'll see it move from that position and in the low '30s down into the mid '20s and down into around the 20% or so when you get to the midway point of our now six-year plan.

Nicholas DeIuliis -- President & Chief Executive Officer

Yes, that's a good point Don. So if you all recall, we held back a lot of production of our new wells and brought them online with winter. So you basically have a handful brand new pads till the November, December time period and so they were at their peak production. And then as we roll off and into the balance of '21, you'll see those pads come off their typical early times or a decline.

Donald Rush -- Chief Financial Officer

That was I can going off memory goes from March to November. So has a bulk of pads that we and again economically fantastic and it helped our cash flows, tremendously helped the rate of return of those pads tremendously. But clearly it gets moving around a little bit on these based declines whenever you're doing things like that.

Nitin Kumar -- Wells Fargo -- Analyst

I appreciate the answers gentlemen. Thank you so much.

Operator

The next question will be from Leo Mariani with KeyBanc. Please go ahead.

Leo Mariani -- KeyBanc -- Analyst

Hey guys. I was hoping to get a little bit more clarity on the production here, obviously, a very strong fourth quarter you guys talked about a 1.7 Bcf a day exit rate here and I think if I heard you right, it sounds like you had a lot of well that came on kind of later in the quarter at peak rates, which kind of helped you guys achieve that. But as I look into '21 your guidance is kind of just over 1.5 Bcf a day and production went down quite a bit from that 1.7 exit rate. Can you just kind of help me with the math there, is there just a really big drop in the first quarter maybe because no wells are coming on because I think you guys have said that the quarters individually in '21 are all pretty similar on production. So can you kind of help me bridge the gap between the 1.7 and kind of the just over 1.5 and the guidance here?

Nicholas DeIuliis -- President & Chief Executive Officer

Maybe I'll start and let Don maybe wrap up anything I miss. But certainly I think what you're seeing what that extra rate is an impact of the shut-ins that we had during 2020 right. So we held back a number of our brand new pads brought them online at the end of May, in early November in the November and so you're seeing basically the December 31 number that is very, very strong. And that results in a surge of production synced up with November-December basically early March-November the winter months. The strong price that we saw in the incremental hedging that we layered on to capture the strong winter pricing. That was by design, that was my plan, that was the whole point of sort shutting in summer time '22 production was to get this surge of production during winter 2021, but obviously as you roll into sort of normal course steady pace development that's sort of normalizes over the course of the year and I think ultimately I was just out. So basically what you're looking at. They go over the course of the year wind up averaging out by the numbers you're alluding to there.

Donald Rush -- Chief Financial Officer

Yes, I mean, I think as you roll into again all we had, which by design, we want to get as much production as we can and how we optimize the flow of those as well as to get when the price back and again we got it via the hedge book. So even though the kind of the cash prices hold in there as much as you'd hoped in December and in January we got it via because we risk off the hedge book and we capture those margins even though that it did in kind of show up. And as you look into, call it, I'd say our cadence on Q1, Q2, Q3 and Q4. Yes, I mean, it's Q2 is probably going to be the latest quarter. I mean, it typically is for us. And, but it's not like dramatically different. So, yes, we'll run on that sort of average will be Q1 will be a little bit above the Q2 be a little bit around it or so below it then three and four will be kind of similar in that front.

But like I said this could change pretty quickly if the gas prices spike in the summer, drop in the summer, spike in the shoulder, drop in the shoulder, spike next winter or don't spike next winter. We'll shift around our production management to squeeze out actions of millions of dollars and for us like that's all free money, if you can just shape your production profile, different and increase your returns. I mean, why wouldn't you, right. So I think these exit to exit quarter and years are going to just look weird for us because we're always going to be moving things around to try to grab that extra million dollars here and there.

Leo Mariani -- KeyBanc -- Analyst

All right. So just to make sure I sort of understand, I mean again I guess the 107 to the 105 does seem like a fairly kind of healthy change. Are you guys sort of saying that there is a big component of like choke management and just production management also just driving the shape of the volumes were you guys were just trying to kind of produce all out into the winter and now you can kind of cut choke back the wells and be a little bit more steady in '21 am I understanding that right and obviously I know that as prices change during the year, you'll modify that approach, but just want to make sure I got that at a high level?

Donald Rush -- Chief Financial Officer

Yes. if prices are good. You try to grab as much as production per day as candid prices aren't that good you try to save a little bit for later if the later prices share something, but I think again it's going to be on a quarter-to-quarter week-to-week thing. It's going to be like hard to tick and tie-up. But if you look step back like 2020, our production total was 500. No that's '21. 511, so 2020 we're 511 for the year. 2021 we're forecasting 555. So just because we are like a 107 in December. And we're going to average like 105 or something all across the year like we've increased our production by 10% on 2020 versus 2021 for the capital program that we have out there, it's still generate a $425 million of free cash flow. So this is like pick and tie just like a 175 and make our '20 productions coming down like our 2020 to 2021 production grew by 10% and you're going to have some things. And like I said I'm glad that we had a once have it in the good month pricing and right now it's a little bit shape be down.

So, I'd say that bunch of stuff whether it's choke management there optimization on that coupled with the fact like we said earlier. We saved all of our deals that we're going to be coming online in the summer and fall last year internal online in the winter. So that's going to create a little bit of a not smooth production profile.

Nicholas DeIuliis -- President & Chief Executive Officer

And just to sort of maybe wrap it up on this issue. I think what you're seeing is what happens. It's the difference between managing and E&P business for production and production growth and production cadence versus managing a cash flow generation plan to create per share value. We look at what's going on month by month or week by week or quarter by quarter in the context of free cash flow and free cash flow per share. And the way I look at the progression is 2020 was a very successful free cash flow year at 356 and 2021 is going to be even more successful. We hit our guidance rate or when we hit our guidance of 425 and to me that's, that's what we're solving for. Now where production cadence plays out in that is nothing more than a variable and lever to be managed versus the other way around.

Leo Mariani -- KeyBanc -- Analyst

Okay, that's good color. And I guess just last one here for me. Can you give us the number of wells that you plan to drill and complete or turn in line. How do you want to look at it in '21 like how many Marcellus wells should we expect to come online in '21 versus how many Utica wells in the plan this year?

Donald Rush -- Chief Financial Officer

Yes, sorry. I'm just getting the sheet of paper. So the bulk of it is Marcellus and there's two Utica wells at '21.

Leo Mariani -- KeyBanc -- Analyst

Okay. So what's the total number of wells then?

Nicholas DeIuliis -- President & Chief Executive Officer

We haven't, we haven't said explicitly we have. So I think in 2020, we were at 46 or 47 TILs I believe off the top my head 45 and then we said we're going to transition obviously to the maintenance plan, which averages 25 wells a year from '22 to '26. '21 is going to be probably somewhere in between but maybe a little bit, a little bit higher.

Leo Mariani -- KeyBanc -- Analyst

Okay. So between the 25 to 45?

Nicholas DeIuliis -- President & Chief Executive Officer

Yes, so -- yes, right.

Donald Rush -- Chief Financial Officer

Yes, I mean, we're I think right now we're on 37. So I mean we -- I guess that we can get something posted it out there for clarity, where we'll do it as like the quarters unfold in our supplemental tables. But yes right now '21. It's around 37 and two of those are Utica.

Leo Mariani -- KeyBanc -- Analyst

Okay. Thanks guys.

Operator

The next question will be from Noel Parks with Tuohy Brothers. Please go ahead.

Noel Parks -- Tuohy Brothers -- Analyst

Good morning.

Nicholas DeIuliis -- President & Chief Executive Officer

Good morning.

Noel Parks -- Tuohy Brothers -- Analyst

You know, one question I had, I was thinking about your share buyback plan and you already have a good healthy allocation already approved. And just looking at the stock in the chart and thinking about what your appetite was for taking the risk of continuing to buy if the shares and maybe gas prices keep trending up and if you have a sense of maybe an upper limit of how far how far up in price you might consider buying. And I think, I asked this is on a like 52-week basis. The stock is kind of near the top of that range if you backup a couple of years, it's kind of like right smack in the middle of where it's trading in the last few years. So I guess my thought is do you consider where it is now just way undervalued on the free cash flow basis as you've mentioned and where you're continue to buyback would be attractive or do you think there is a chance that it's going to run too far beyond where you'd really want to put capital there?

Donald Rush -- Chief Financial Officer

Yes, I mean, I think, I'll start with saying predicting with what the stock price is going to do or not do is an impossible thing like rewind time I never thought will be at $5 or $6 a share for the time that we are there for a little bit. So I think trying to predict stuff perfectly is similar to the gas prices. It's like a full there like it is something that it's hard to do. I think whenever you dump it down to its basic principles of like how do you feel about the free cash flow per share of the company, what that translated into free cash flow yield, how do you think about pace and process and timing, as Nick said, this is something we talk about it and think through with the Board all the time.

Clearly, we have the wherewithal to be thoughtful on this and we will try our best to judge things as best as we can over the next several quarters and years and because you're right I mean there is different catalysts that could have different effects and we'll continue to call make the right calls at the right time to the best of our ability over the next several years. The good thing is that there is a lot of cash flow comments relative to the debt relative to the market cap of the company relative to get into the balance sheet of which would be completely iron clad once we're at that level. So the optionality is there and we spend a lot of time trying to be thoughtful around these decisions is weeks and days and months and quarters and years unfold.

Nicholas DeIuliis -- President & Chief Executive Officer

And then the only thing I'll add Noel is that. To me it's much of -- and you're right about obviously the one year and the prior multi-year averages versus stock price, but for us, the decision-making on allocation of our free cash flow in particularly in the area of share count reduction exclusively comes down to what we think our future performance is going to be what the risk is assigned to it and that metric to define that is free cash flow, free cash flow per share, the free cash flow yield. And then seeing their per share value creation opportunity with respect to share count reduction. And with the yields that we've experienced, right, looking at based on what that is 2020 and 2021 and forward on free cash flow. There was a good opportunity there, we took advantage of in Q4. We've got the flexibility, as Don said, to keep doing that through '21 and beyond. But at the same time debt reduction remains front and center with regard to our focus.

Noel Parks -- Tuohy Brothers -- Analyst

Great, thanks a lot. And my other question. And again this is asking you to talk about or think about totally external factors, but I have to admit, I am a little surprised that crude has stabilized as handily as it has right in the sort of low '50s for the last I guess we're going on three weeks or so and at of course a lot could happen geopolitically of that corporate and so forth, but do you have any sense or and hedging would your hedging it doesn't affect you directly that we might be seeing an associated gas story maybe start to interfere in the gas markets more as a say second half '21 event. I was not really thinking that was going to be likely for at least another year plus.

Nicholas DeIuliis -- President & Chief Executive Officer

Well, I mean, I guess if you can predict how Saudi Arabia and Russia will cooperate or the coming 12 months. I mean that's a better crystal ball than I have. I think that's why we definitely focused on hedging because some of the stuff is just beyond our ability to predict. I am encouraged by seeing crudes are stabilize around the $50 barrel mark that seems to keep people from getting too heavy back into the associated gas plays. Although I am hearing from bank start talking about seven handles on the oil price, you start getting up to those price levels, they're talking like a year or two down the road that those levels you're probably start seeing some folks coming back into the associated gas play.

I'm just not sure whether -- the OPEC plus is that interested in allowing American Permian producers to sort of achieve another foothold. I got I think that they are incented to try to keep price down to a level where the Permian just doesn't just doesn't get going again, which should help keep associated gas out of the market but may -- future will tell. And that's why we keep we just stay steady and consistent on hedging and taken all that volatility risk out of our free cash flow plan.

Noel Parks -- Tuohy Brothers -- Analyst

Great. Thanks a lot.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Tyler Lewis for any closing remarks.

Tyler Lewis -- Vice President of Investor Relations

Great. Thank you, Chad, and thank you, everyone for joining us. If you have any additional questions, please feel free to reach out to the company, but thank you for joining.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Tyler Lewis -- Vice President of Investor Relations

Nicholas DeIuliis -- President & Chief Executive Officer

Donald Rush -- Chief Financial Officer

Chad Griffith -- Chief Operating Officer

Olayemi Akinkugbe -- Chief excellence officer

Zachary Quan -- JPMorgan -- Analyst

Neal Dingmann -- SunTrust -- Analyst

Holly Stewart -- Scotia Howard Weil -- Analyst

Michael Scialla -- Stifel -- Analyst

Nitin Kumar -- Wells Fargo -- Analyst

Leo Mariani -- KeyBanc -- Analyst

Noel Parks -- Tuohy Brothers -- Analyst

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