Tracee Bentley – Shale Mag March/April

Tracee Bentley - Shale Mag March/April

 

Tracee Bentley – Partnering in the Permian

The Permian Basin is a very big place. A vast expanse encompassing most of West Texas and the Southeastern quadrant of New Mexico, the region is roughly the size of the entire state of Utah. Like Utah, most of the Permian is characterized by arid, sparsely populated desert country.

Over the last five years, the Permian region has without question been the hottest oil and gas play area on the face of the earth. More importantly, this region has served as the center of a shale oil boom that has led the transformation of the United States from heavy dependence on foreign oil to the largest oil-producing nation on earth. The light, sweet crude that flows up from formations with names like the Delaware, Glorieta, Wolfcamp, Spraberry and Bone Spring has also served as the feedstock that has made the U.S. now the world’s fourth-largest oil exporting country.

Just 14 years ago, in Sept. 2006, the United States produced just 3.6 million barrels of oil per day. That much oil — and more — is now produced by Permian wells alone every day. In addition to the liquids production, most Permian wells also generate large volumes of associated natural gas, so much so that, despite the fact that none of the 400 or so active drilling rigs there are technically drilling “gas” wells, the Permian now ranks behind only the Marcellus/Utica shale region in terms of total natural gas production.

To say that the Permian has become a major generator of tax revenue and economic wealth is to be the master of understatement. Despite often-rocky economic conditions nationally, the Texas economy has experienced an almost-continuous state of above-average growth over the past decade thanks to the jobs-creation and economic development created by the state’s oil and gas industry. A recent report issued by the industry trade association TIPRO found that the industry directly supported more than 360,000 jobs in Texas in 2019, an increase of more than 5,500 over 2018 despite chronically low commodity prices that continue to plague the business.

The same study found that “between 2010 – 2019, total state taxes and state royalty payments paid by the industry in Texas exceeded $116 billion, including a record $16.3 billion contributed in 2019.” Much of that state tax revenue comes in the form of the severance tax on oil and natural gas, which accounts for virtually all of the funding for the state’s Rainy Day Fund.

This massive influx of funding from the oil and gas industry has helped to keep the state’s budget in a state of near-uninterrupted surplus over the last decade, enabling policymakers to take on the funding of massive infrastructure projects that had languished for years. The best example is the state’s 50-year Water Plan, which was approved by the Legislature in the mid-1990s but never funded. Thanks to the booming industry in the Eagle Ford Shale and Permian, the 2013 session of the Legislature was able to tap the Rainy Day Fund to serve as the funding mechanism for the entire Plan.

The Legislature has also been able to use the Rainy Day Fund several times in recent sessions to beef up funding to Texas Department of Transportation (TxDOT) to help improve and maintain the road systems in counties with high oil and gas development to keep up with energy-related traffic issues. This has been vital due to state-mandated caps on ad valorem tax collections by counties, school districts and other local taxing entities.

It took a little longer for it to develop, but over the past two to three years, the state of New Mexico has begun to see similar economic and tax impacts from a rapidly grown oil and gas sector, as the industry has begun to develop the portion of the Permian that lies beneath Lea and Eddy counties in earnest.

In any state, the reality is that an oil and gas boom brings with it a discreet set of well-known local impacts. From the Barnett Shale boom in North Texas 20 years ago to the Eagle Ford boom starting in 2009 to the Permian boom that began in earnest in 2011, the impacts have always been the same: oil and gas is an extractive industry that brings with it a great deal of heavy truck traffic, and an influx of new people to man the rigs, frac crews and office jobs that spring up in communities across the region.

The traffic and drilling and production equipment create issues related to congestion, dust, noise and view-sheds. The new people put stress on local schools and housing, as well as police and fire department needs. Then there is water: oil drilling and fracking create needs around sourcing, reusing, recycling and disposing of water once it has been used.

To its credit, the industry as a whole has become more responsive to these known community needs over time and employed region-specific approaches to addressing them. When the issues began to reach a critical mass early on in the Eagle Ford boom, the industry took the initiative of creating the South Texas Energy and Economic Roundtable, or STEER. That organization was a regional association that served as a sounding board and coordinating clearinghouse for cooperative approaches to addressing pressing issues as they arose, and became a very effective voice for clear public communications.

As the boom times in the Eagle Ford have wound down, the industry has chosen to roll STEER into the organizational structure of the Texas Oil and Gas Association (TXOGA), where it still oversees Eagle Ford-related issues for the industry. While it is always hard for an industry that consists of hundreds of competing companies in the free-market system to advance unified responses to issues, the STEER model and staff were quite effective in allowing the various companies to speak and act in a unified fashion.

By mid-2018, a similar discreet set of impacts had bubbled up across the Permian region and risen to the point of intensity that led a group of 17 company leaders doing business there to create a regional partnership designed to help address those issues in a coordinated fashion. In November of that year, the establishment of the Permian Strategic Partnership (PSP) was formally announced, along with its impressive initial funding commitment of $100 million. (That commitment has since been raised to $180 million over five years.)

While in some ways similar in structure to STEER, the founders of the PSP quickly realized a different mission was required. STEER’s main focus was on addressing operational issues in the Eagle Ford region due to the lack of any pre-existing regional association. But the Permian already had a regional trade association addressing such issues in the Permian Basin Petroleum Association (PBPA), a traditional trade association that has been doing such work for many decades.

Seeing that role already ably filled, PSP’s founders landed on a different focus in its mission statement: “To strengthen and improve the quality of life for Permian Basin residents by partnering with local leaders to develop and implement strategic plans that foster superior schools, safer roads, quality healthcare, affordable housing and a trained workforce. The companies involved with the PSP will bring people, expertise, resources and leadership to develop solutions in partnership with local leaders and communities.”

Note the emphasis in that statement on the words “partnering” and “partnership,” because you will be seeing them often in the remainder of this piece. Note also the emphasis on “plans” and “solutions,” because those will be recurring themes as well since they together form the central focus of the PSP’s day-to-day efforts.

 

Finding the Right Leader

Mounting an effort such as this requires a leader, and not just any leader would do. An enterprise of this scope and scale required the matching of the project to a person with the experience and skillsets needed to be able to plan and oversee all of the various moving parts. Beginning shortly after the PSP was announced, its board, led by its Chairman, former Secretary of Commerce Don Evans, embarked on a search for a new president who would become the face of the organization.

While strong management skills were certainly a requirement, that was far from the only one. The PSP needed a person with excellent communication skills, someone who had years of experience deploying effective communications to a large variety of audiences. Strong interpersonal skills were also a must, as this person would be conducting personal meetings and forming relationships with key officials and citizens across the vast Permian landscape. Experience with the oil and gas business was, of course, important, but experience with public policy and community outreach was equally vital.

PSP needed to find someone who could relate effectively to public policymakers in the morning, make a lunch presentation to a local chamber of commerce, and handle afternoon media calls all in the same day. Someone who could set the agenda for and conduct a high-pressure board meeting the next morning, perform outreach to a teachers’ group in the afternoon and have dinner with a county judge or governor that evening. And then be able to do it all over again the next week.

Evans and his board of directors needed someone who could handle all of this and more with grace and composure. As luck would have it, they soon found the person they were looking for, in Colorado.

Being born into a farming and ranching family in Chaffee County, a rural area west of Colorado Springs, helped to form Tracee Bentley’s outlook on life. “My dad’s side of the family were farmers and ranchers, so mom worked at the prison, and actually she, in the last couple years, she retired as a warden,” Bentley told us when we interviewed her in February. “Mom was not the first, but one of the first female prison wardens in the state of Colorado. So, you can kind of see where some of my influence comes from,” she added with a laugh.

“Obviously I’m very proud of her. And then, my dad was a farmer who took a lot of pride in his work. The family farm was a little bit south of Chaffee County near the Monte Vista — which is in Saguache County. That’s called the Arkansas Valley, and that was my stomping grounds.”

Growing up in a rural area has had an ongoing influence on Bentley’s choices in life. After graduating from high school, she decided to attend Colorado State University, located in Fort Collins. “I definitely am not a city dweller,” she said. “Because of how I was raised, I’ve always preferred rural settings over the city. After college, even Fort Collins – which one would argue is not a huge city – became too much for me, so I moved to Weld County.”

As it happens, Weld County has become the center of gravity for Colorado’s own oil boom, lying as it does in the middle of the Denver/Julesburg Basin — or DJ Basin — which became one of the nation’s hottest play areas beginning around 2010. Though much more compact geographically than either the Permian or the Eagle Ford, the DJ Basin has been the center of a busy search for oil and natural gas, as well as a center of a great deal of controversy for more than a decade now.

“Weld County produces over 80% of the oil in Colorado, and pretty close to that in natural gas,” Bentley said, “so we were at the epicenter of energy production in the state, and I was right smack in the middle of it. There was a time not too long ago, before I left to come to Texas, where you could stand out on my deck and see three active rigs going at the same time. So, we definitely lived and breathed oil and gas where I was at.”

That early exposure to oil and gas has proven useful to Bentley, since, due to the career choices she has made, she would end up becoming involved with the Colorado oil and gas business and all the issues surrounding it from multiple different perspectives.

 

Tracee Bentley – Being in the Right Place at the Right Time

At Colorado State, Bentley chose to study communications and wound up obtaining both a bachelor’s and a master’s degree in the field. Like many students, her extracurricular activities and interests while in high school led to her choice of majors.

“I loved debate in high school,” Bentley said. “Schools from across the state held competitions on constitutional knowledge. We would be assigned a topic, and you had to either argue for or against it, and your only source of information was the Constitution. I absolutely ate that up.

“Number one, I love the history of our government and understanding why the law works the way it does, and how it can be interpreted. But, second of all, I really believe that one of the most powerful tools that we all have is our voice, and how we use that becomes so important when we are articulating an important message. So, I picked up on this very quickly.

“And I carried that love into college. I loved studying the theory of  rhetoric — and now I’m getting a little bit nerdy, but Aristotle and Socrates, I just found it fascinating to read their work and have them talk about why they chose the work that they did and the power of words.” She paused before continuing. “So, I decided this is definitely the major for me.”

As her college career progressed, Bentley’s major combined with a life-long interest in sports to lead her into the area in sports led her into broadcasting. “I’m a huge sports lover,” she told us. “I played three sports in high school, and I’m just a sports fanatic. So, I did a lot of work, signed up for several classes in sports broadcasting, and it went very nicely with my major”

Those classes eventually led her to an internship with the CSU athletics department. “That was amazing,” she recalled. “I got to work particularly with the  CSU football team at the time, working with the news stations that would come in, including the major ones like ESPN, and I was able to see some real behind the scenes stuff related to the broadcast. I really enjoyed that aspect of it too.”

When the time came for graduate school, it was clear to Bentley where her path should lead. “I knew by the time I was applying to get my master’s that I still wanted to go down this oratory/rhetoric path,” she said, “so I decided to go ahead and pursue my masters in this area. I have always been one of those different students — I don’t know, at the time it certainly was, maybe not nowadays — but I was always very motivated by public policy, and I wanted to get to know that process better. I wanted to  know ‘who are these people who are speaking for me and for my family and our community ?’ So, I volunteered on a few campaigns in high school,  marched in parades, handed out signs for the representatives in  my area. 

All of that political activity in high school and college led Bentley to the nation’s capital. “I went to Washington D.C. for a couple of years and worked for then-U.S. Senator Ben Nighthorse Campbell from Colorado.”

Bentley came into that position with Senator Campbell in an unusual way. As she explains it:

“It was in 1995 when Bill Clinton was President. The Senate was deadlocked on a budget, and the President really, really needed the Senate to approve this budget. Senator Campbell was on the budget committee at the time, and he was going to be one of the key votes. But he just could not agree with the budget that was put in front of him, and he was feeling a lot of pressure. He was so unhappy with the budget and the discussions around it that he literally up and switched parties! So, he went from a Democrat to a Republican literally overnight, and his entire staff left because they had signed up to work for a Democrat.

“And so, the Senator picked up the phone and called the Congressman that I was interning for and said ‘Well, my whole staff just left, do you have anybody you can loan me?’ And the Congressman said ‘Well, I have a  new intern. I mean she’s pretty green, but I’ll send her over.’” She laughs at the memory. “So, they gave me a little box with all my things and said you’re going to work for the Senator. I literally was at the exact right place at the exact right time, because nobody else my age with very little experience could’ve walked into the position that I was in at a U.S. Senate office. I mean, he had no staff, and so the couple of people who were there became the jack of all trades and we worked on everything. I got to experience a lot of things that nobody else would’ve gotten to, and I am forever grateful for that.”

After her very eventful two years in Washington D.C., Bentley moved back to Colorado to finish her graduate work at CSU. Looking back, she credits her experience with Senator Campbell as forming the basis for the rest of her career. “I spent two years in Washington, and when I came back I knew that government and public policy and understanding both of them was something I enjoyed and felt I could make a difference in.. That helped drive my graduate work, and then really everything else beyond.”

 

Tracee Bentley – A Strong Reputation Creates New Opportunities

Tracee Bentley’s first job out of graduate school was as Director of National Affairs for the Colorado Farm Bureau. Given her background growing up in a farming and ranching family, the job was a natural fit. “I loved agriculture, so it made a lot of sense for me,” she told us. “I was there for several years, absolutely loved it. Then, I started doing my own consulting work, and eventually started my own consulting firm.”

Not surprisingly given her background, the client portfolio for Bentley’s firm was tilted heavily towards agriculture and energy. “I didn’t go out and recruit only  AG and energy clients, but my clientele was heavy on both. I had a couple of renewable energy clients, along with oil and gas.

“People used to ask me how I was able to keep some of my clients from constantly being on the opposite sides of each other. My answer was communication and sometimes compromise. I gained a reputation for being this all of the above kind of consultant and it has served me well over the years.”

When Denver businessman John Hickenlooper was elected to succeed Bill Ritter as Colorado Governor in 2011, he needed someone to re-organize and find funding for his energy office. Bentley’s name quickly surfaced as a prime candidate for the post. “When Governor Hickenlooper got elected, he needed to reappropriate funding for the energy office because somewhere in the transition between governors the office had lost its funding. It had no money to operate,” Bentley told us.

“Governor Hickenlooper wanted a more balanced energy office, which was very representative of  Colorado’s energy portfolio,” she went on. Governor Ritter heavily favored renewable energy and his energy office had focused almost exclusively on promoting renewable energy sources. But Hickenlooper had more of an appreciation for the state’s growing oil and gas industry and wanted his administration’s policies to reflect that balanced approach.

 “My plan was to refund and reorganize the energy office, then go back to my private consulting business, because I loved what I was doing, and I loved my clients.”

It was a good plan, but as with so many plans, the actual flow of events interceded to place Bentley on a different path. Once she had completed the job of getting the energy office refunded and set onto a more balanced course, the Governor came to her with another request.

“The Governor needed a legislative director who understood rural Colorado and most of the inner team were urban-centric. He realized he needed somebody who could provide that rural voice and perspective on all issues. So, he asked me if I would join the team and become his  Legislative Director and Senior Advisor on agriculture and energy. That was just too good to pass up, so I said yes, and it was amazing. I’m really proud of some of the things I accomplished there. I feel that had my voice not been there to represent rural Colorado on some things, I’m not sure that they would’ve gotten their fair share, or certainly things would’ve turned out differently. So, I was thrilled to be there, and I wouldn’t take it back for the world. I am so thankful to Governor Hickenlooper for giving me that opportunity.”

Moving Into the Industry

Right after Governor Hickenlooper was reelected in 2015, the American Petroleum Institute (API) decided to open an office in Colorado, where anti-oil and gas activists were heavily-organized and leading a raft of efforts to hamper the industry through local ballot initiatives. API’s goal was to establish an office that would work to provide accurate information to Colorado citizens through earned media and other messaging efforts.

“Opening the API office in Colorado was just too good to turn down,” Bentley told us. “So, I left Governor Hickenlooper and went to open the Colorado Petroleum Council (CPC). We became a  premier trade association rather quickly in Colorado and one that everybody trusted. When ballot measures, rulemakings, resolutions, etc. were all coming at us at the same time, and there were many of them, we were going to be the one to do a top-notch, well organized and led effort.

A perfect example of this was Proposition 112, a statewide measure that activists successfully placed on the Nov. 2018 ballot. Prop 112 would have increased drilling setbacks to 2,500 feet from any occupied dwelling, church, school or public facility. The same setback would also apply to any area that regulators chose to define as “environmentally sensitive.” Given the undefined, nebulous nature of that provision, the reality was that Prop 112 would have served, for all intents and purposes, as a moratorium on oil and gas in the state.

Bentley and CPC helped lead the effort to beat back Prop 112, and it was defeated by a 12-point margin in that election. At the same time, though, voters chose to elect Democrat majorities to both houses of the Colorado Legislature, and they proceeded to pass a series of anti-oil and gas bills during 2019. Bentley said it was hard to see that happen, but shortly after that Nov. 2018 election, another opportunity would come her way.

“Shortly after the 2018 election that I had a couple of colleagues in the energy industry call to ask me if I had ever heard of the Permian Strategic Partnership,” she said, “and I had not. They described it to me, and I said, ‘Wow, there’s nothing anywhere like that that I’ve heard of.’”

Bentley was intrigued by the mission of the PSP, in large part because it presented an opportunity to work on issues on a proactive basis. “The more I looked at it, the more excited I got. I love the energy industry — it’s something that I feel very passionate about,” she told us. “I got really accustomed to playing defense, and I think I played it very well, but it’s not very often that you get to play offense for an industry that you love, and have that opportunity in such a powerful way.

“Anyway, long story short, the stars aligned, and they hired this Colorado girl to move to West Texas and run the Permian Strategic Partnership. And I have to say, I can’t believe it’s already been a year. All the things we’ve accomplished in 10 months, it’s been truly amazing and I feel so blessed.”

Indeed, it has been. A Partnership in Every Sense of the Word

When you listen to Bentley talk about the PSP and how it functions, you hear a lot about the word “partnership” and its various iterations. Though the PSP’s budget is quite robust, it quickly becomes obvious that this is not an operation that is focused on just throwing money at problems. The goal instead is to partner with a variety of stakeholders to support long-term solutions that will serve to make life better for everyone.

“The companies involved with the PSP will bring people, expertise, resources and leadership to develop solutions in partnership with local leaders and communities,” Bentley told us. “So, initial research was done before PSP was officially announced, and it showed to really move the needle, and in order to avoid missing the opportunity for this basin to grow in a very smart, efficient manner, we needed to put our both employees’ time and resources, and our money into five key areas. Those areas are education, healthcare, housing, roads, and workforce.

“We have a committee of reference for each of those committees that is tasked with going out into communities across the Permian Basin and saying ‘Ok, in each of these areas, what is lacking in order to make your community a world-class place to live?’ It sounds daunting, and it is, because these areas are large — the Permian Basin is a massive geographical area.

“What I’ve found, in being here for 10 months, is the word ‘Partnership’ becomes really key. If there is a community that just feels passionately about a healthcare project, an education project, a road project, anything that fits in our five areas, we want to walk through what a solution could look like with them. What is the reach of the impact this project will have? Is it sustainable? Will it move the needle in a significant way? These are some of the questions we ask. 

“And finally, if the Permian Strategic Partnership isn’t here in 10 years, will this project exist and continue to serve the community that it was intended to serve? Those are our criteria for projects.”

When we pointed out that the functioning of the PSP sounded similar to being on the board of a corporate or private charitable foundation, only with more focused employee involvement, Bentley agreed. “It’s very, very similar,” she said. “That’s exactly right. We funded over $30 million in the last nine months of 2019, and we have some pretty amazing projects. I love that they are all unique and across the board.”

Bentley noted that the PSP is not intimidated by the size of any project. “We will take on projects of all sizes,” she said. “For example, we were one of several funders to fund seven charter school campuses across the Midland/Odessa area. We did this for several reasons: For both capacity reasons and to hopefully raise the quality of education, not just for those in the charter schools, but for those in the entire region. 

“Not too long after, we funded an initiative in New Mexico, in Lea and Eddy Counties. We gave each $250,000 to provide professional grant writing resources with the hopes of leveraging it into so much more. And we are so thrilled. We launched that project mid-last year, and we’re already seeing grants that we knew that those communities qualified for, but it takes resources to get resources. I have a feeling that we’ll be talking in the not too distant future about an amazing rate return on those.”

Bentley gave us another example of an instance where it takes resources to get resources, this one a transportation-related project the PSP has taken on in Southeastern New Mexico. “The state of New Mexico was not getting their fair share of federal build grants in our opinion, to help with those critical, priority stretches of road, that this entire basin desperately needs and certainly southeast New Mexico needs.  But the New Mexico Department of Transportation did not have the resources to apply for that grant, so we provided the state with $80,000 for what we would consider one of the best transportation grant writers in this area, maybe even in the country, and said ‘Let’s go get a build grant.’ And so, for $80,000 New Mexico got a $12.5 million build grant, and that’s the kind of rate return we look for.”

These projects, and the others PSP plans to take on in the future, are all selected with the group’s core mission in mind. It’s not about throwing money around; it’s about partnering with communities in ways that are both impactful and sustainable over the long haul.. 

Tracee Bentley – Inviting Out-of-the-Box Ideas

As one might imagine, the expanse of the Permian region and the large number of communities within it create a great deal of work to be done. With that work comes a great deal of travel. The PSP’s member companies did not want to create an organization with a huge number of employees, but they do make many of their own employees available to help handle the load. Bentley finds the contributions by those company employees to be invaluable.

“We rely a lot on our committee members,” she said. “They are the ones who are out in rural Texas and southeast rural New Mexico putting in an immense amount of time and doing a lot of hands-on work. I can also tell you that an ideal day for me is absolutely much of the same. It’s not sitting in Midland in my office, although at times that is necessary, it is out meeting with our Permian Basin communities and talking about what is possible and new people, new ideas that they want to put on the table.

“One of my favorite things about it, and there are so many, is that we invite out-of-the-box ideas because we feel like if there’s an existing idea and it solved our challenges, we would have already implemented it, and there would be no need for this. We love out-of-the-box ideas that often end up being part of very practical solutions. 

“I also have a very talented, motivated staff, albeit small, but we’re in the basin a lot making sure that, even when we don’t get to make as much one on one contact as we would like, that people understand that they can pick up the phone and call us or email us at any time. This has been proven to be key.

“We have started a periodic newsletter that provides a ‘here’s what’s going on at PSP now.’ So everybody knows what we’re working on in what areas, and we’ve gotten a lot of positive feedback from that.

“Every now and again I go to Santa Fe, Austin, and Washington D.C. to work with our leaders and help them better understand the importance of the Permian Basin not only to the state of Texas and New Mexico, but to this country and the world.  We have had great success partnering in all three of those cities, but our priority is right here at home in the Permian. This is where the majority of our time is spent, by design.”

Tracee Bentley – Feeling at home in Midland

For Tracee Bentley and her husband, moving from their longtime home in Weld County to the vast, West Texas desert was a big decision. But as things turned out, the couple felt almost immediately at home.

“Our children graduated high school a year before we left. So, they are in college right now and did not make the move with us, and that made the decision and move easier on our family as a whole,” she said. “But we came down to visit Midland, and it had much of the same feel and character of rural northern Colorado — we fell in love with it almost immediately.

“We are not ‘city people.’ We prefer the rural feel and the rural setting, and Midland very much has that. We love living in a community that appreciates and understands the energy sector, and certainly, that is Midland, Texas. Not to mention the sense of pride and strong moral character that is embedded in the fabric of Midland and across the Permian has been amazing and overwhelming. We immediately felt welcomed, when people said, ‘Welcome to Midland and we are thrilled you are here.’ We were immediately embraced in the community, and that made it an even easier transition. The Permian Basin is one of the most unique, special places anywhere. 

Bentley immediately went about getting involved in her new community. It should surprise no one that she has sought out projects that involve partnering with others.

“One of my proudest endeavors, since I’ve been here, is serving on the steering committee for Priority Midland and Opportunity Odessa. And those are two opportunities and projects very much align with the PSP mission. Both are comprised of the thought leaders of each community and getting to know them has been a wonderful experience.

“These are people who care deeply about their communities and want to create real change when it comes to infrastructure, education, healthcare, workforce and quality of life. I was excited to be invited to participate in these local efforts. It has been an amazing experience.”

It’s been a whirlwind first year in Midland for Tracee Bentley, and rapidly-evolving business conditions are conspiring to ensure that the busy pace of her day-to-day activities will only continue to accelerate. But she is already integrated within her community, meeting the goals of her mission, and energized and excited about the prospects to come. There can be little doubt that, for the PSP and its member companies, she is the right person in the right place at the right time. 

 

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels.

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