Question-and-Answer Session
Operator
[Operator Instructions]. Your first question comes from Brian Singer of Goldman Sachs. Please go ahead.
Brian Singer - Goldman Sachs
Thank you. Good morning. Given the lack of... I guess final decision of processing of exactly what the Canadian royalties will do for the deep gas drilling program, how do you think about the timing of your winter drilling program and when do you have to make a final decision on what you are going to do?
John A. Manzoni - President and Chief Executive Officer
Thank you, Brian. I am going to ask Ron to answer that question for you.
Ronald J. Eckhardt - Executive Vice President, North American Operations
The deep program well. Let's be clear on deep and really deep. What industry has been calling deep is what we would call... normally call deep basin and multi-zone well. And those are relatively unaffected by the royalty programs. Although payouts are stretched slightly NPVs are relatively unaffected. The deeper programs what we call deep in the foothills because they're higher rates built in... because they're high rates initial... initially in their life both NPV and payouts are affected. And because the royalty rates are very sensitive to rate we have to work through our program on a well-by-well basis. And that's exactly what we are doing in the course of a number of the months, we will have that effect... well in the course of the number of weeks we will have that effect.
John A. Manzoni - President and Chief Executive Officer
I think Brian directionally. For the deep foothill wells in the conventional gas, the royalties structured are going to have an impact. We've already signaled some reduction going forward into next year in terms of our programs, and Ron is busy working through detail for the results of the program that he can impact in the fourth quarter. Does that help?
Brian Singer - Goldman Sachs
It does, thank you. And then in your opening comments you mentioned the impact of that asset sales have had on headline production numbers being down year-on-year. Obviously that's going to change but the projects you referenced that are coming on, but where do acquisitions if at all fall into your priorities as a way of both sailing growth and using free cash flow?
John A. Manzoni - President and Chief Executive Officer
I think as we go forward... the answer... direct answer to your question is that, the history of this company has been based in acquisition. As we go forward we will be considering of course all sources of growth of cash flow going forward and acquisitions will feature as part of those considerations as well as exploration and exploitation of the core asset areas that we have today. So, I think all options open, Brian.
- To read the full transcript on Seeking Alpha, click here »
