Earnings call transcript Q2 2023

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Philip Riley

Thank you, and good morning. Welcome to our conference call covering the second quarter 2023 results. Yesterday, the company published a number of items, which can be found on our website under the Investors section. A Form 10-Q, a summary earnings release, supplemental info on non-GAAP measures and 2 presentations, one of which provides an update for second quarter results, with the other providing a company overview.

Participating on the call today are Bobby Riley, Chairman and CEO; Kevin Riley, President; and me, Philip Riley, CFO and EVP of Strategy. certain the other federal contains the statements call of meaning securities conference projections forward-looking and within Today's laws. expressed differ These and statements from to uncertainties risks in those materially that may statements. are cause actual subject or implied to these results measures. certain We'll non-GAAP also reference These measures be our appropriate found GAAP our disclosure on website. the reconciliations in to can supplemental

now the call turn over I'll to Bobby.

Bobby Riley

and earnings all participants QX XXXX call. Thank to you, on welcome Philip. a warm Good morning, our

metrics across second We record-high are quarter, results operations. from the with and pleased which production the of flow cash reflects

we As per we assets million performance continued to barrels dividends XX,XXX acquisition for number and day; $XX and and and closed flow; reflect comprehensive of and of company; equivalent on quarter, or averaged day gas of I generated per two, oil operations the New in the operational number strategic EBITDAX one, oil barrels cash spotlight adjusted want past growth transitioned of total call. excellence. production our a $X.XX you of of support. of achievements Thank dedication $X on million. to we our look natural a to the $XX successfully accomplishments: of the and three, more XX,XXX million this Mexico oil following to your we providing highlight operating overview forward These paid throughout per We for we lastly, share interest number

to over Kevin call turn discuss results will I the quarter. to for operational now the

Kevin Riley

results quarter both assets. the our The successfully Thank and the newly second of assets. New you, implemented legacy the in of reflect the quarter, of our Bobby, including the and acquired performance assets plan The integration the team good morning. Mexico

the peak previously our mentioned, quarter. As reached metrics Bobby during production second

of increase the attributable XX,XXX of organic increase the production XX%. impact Oil day, and acquired quarter-over-quarter assets XX%. The production XX,XXX of equivalent year-over-year as is quarter-over-quarter to as Total in and increase a of BOE barrels per year-over-year per XX% well increase of of a XXX% increase day, production of growth.

The than Mexico. to X.X drilled wells due capital company the wells net million in X in in wells and company primarily the gross, $XX Texas quarter during turned the X including the completed completion with The horizontal XXXX. released net guidance, New X previously quarter, Consistent X horizontal second expenditures X sales company's gross company X.X company the second wells quarter, including gross guidance for activity. quarter, New wells Texas to during the horizontal wells Mexico. before and well incurred lower accrued in X in prior second total acquisitions during The deferred X

closing at BOE. through remediation opportunities the Those production of range our we just guidance efforts. high-end acquired have a coming acquisition, Mexico. newly acquisitions total of the in for the committed company its to the operating legacy to had on Since outside well efforts identified Riley assets optimize before in expenditures and LOE basis, the in $X.XX capital quarter. is cash New both in BOE million $XX per per Mexico efficiently, New On assets resulted

on-site joint the efforts its generation of venture. Additionally, build-out company progressed its the on power

We the current of date during are the initial in-service targeting phase the latter quarter. an for part

the compared continue to costs in in see intangible slight year cost, the benefits to service XXXX. to that see we a second from in Lastly, regarding and decrease as continued XXXX of hope half

the call you. will to over results. to discuss financial I that, the turn Philip With Thank

Philip Riley

Kevin. Thank you,

million million assets. net share. cash quarter For of organic $XX per or of XXXX, before flow is or million of quarter-over-quarter. both was the $XX the new development million the Operating of higher volume was diluted up the increase latter $X.XX changes acquisition $XX $XX million income in production XX% for income by working operating from driver or second The X-month and reporting which $XX.X we're and the period the capital, primary

realized prices NGL XX%, X%, which realizations and tied fixed function were of fees while are about low, exacerbated a down realized are are gas and the experienced down realized NGL low prices market having in natural were second XX%. down The some gas prices very oil to natural like midstream we Quarter-over-quarter pricing volumes when was quarter.

On revenue. to prior natural debt NGL to of expected by $X.X finance to increased. Interest as was be higher related revenue cash we expenses makes acquisition. transaction basis, also expense of million Oil the than an includes acquisition. $X.X the absolute was up our flow down quarter gas revenue as while XX% less materially use the Operating million, than

Year-to-date, we've accrued of $XX CapEx. cash million million of CapEx with $XX

Last the where vary was higher dynamic million quarter, than cash we CapEx quarter-to-quarter, opposite it's accrual. than will million, CapEx quarter, CapEx. accrual-based the had cash $X not This was $XX For surprising lower see. about to so

level which a high level the and as we levels reported April, strong Mexico, been last in activity took the described, very had higher to had asset end year. quarter, led the idle CapEx, Kevin still meaningfully early well the which to New Texas only As which development under with of New We Mexico of of the guidance. as both was in since production development over in activities

to start level to the year. right So good development average important a away for a of order it have was to production us in

activity loaded we In the a throughout as in ideal second would year. have the smoother this normal in in quarter first quarter well, is that year, or year, or effectively

third fair activity our with range million through forecasted $XX date corresponding our and that reduced year-to-date, of for million $XX correspond the approximately amount year. level estimate accrual to a completed the guidance million this to quarter. of XX% activity $XXX to with we've amount accrued into Given would and results, the quarter of quarter year third million. Combining have end continuing third the full of to CapEx good of CapEx million remaining CapEx $XXX $XX the activity large We'll of a

Connecting full currently and believe metric is to which last reinvestment encourage closer cash modest how ratio operating we year's most very our free then cash When using forecast can activity this year CapEx. in see on basis, more quarter. fourth we appear we flow, look that, flow CapEx this you at report investors level. reasonable cash So metrics, based to we to the of on to a will viewed

items cash costs, like include companies also which some We transaction exclude.

So year-to-date as anticipated, cash at free flow the has or million modest quarter quarter been million for this and year-to-date. $X $X.X

commodity concentrated half combined This been the driven flow operating by first with activity, has softer of in by the the impacted year. cash pricing development

with cash beyond incremental the levels the fourth of debt that optimistic cash dividend free spending flow We're will the year year, excess back paydown. flow out for in half in the the quarter, lower full with balance especially

end, to by had financing between our debt a last attributed $XXX of given some The is $XXX book value and X balance notes end principal notable million were few out I'll difference the pointing primarily from on At million value debt. the items which quarter additions the quarter. or costs. on of deferred discount we sheet issued

that of liability, is as million. quarterly is that highlight a $X due a payment booked million also to notes this current the principal of I'd $XX fact we the have

call, feature the customary a like prior without paydown our or on this offers noted premium make-whole. it mechanism as As we regular

Bobby to for pass it now back closing. I'll

Bobby Riley

Thank company. you. interest in And time our again, we your and value

may creating are Operator, questions. open next the focused for quarter always, the in you call and on shareholders As progress to forward and look up our updating beyond. our for value we on

Operator

the comes question first line Securities. Your Instructions] Dingmann Neal [Operator of Truist from of

Neal Dingmann

well, ultimately guide and I'm of maybe, along My just efficiency, now this? flow. of appreciate resulting Kevin, say, would for updated maybe production able or the Philip, your other that in spending, on increased what drivers driving even remind in through, Bobby, on what's specifically, though could is first limit you has question the appears cash maintaining D&C capital least and stable to some either free I with be what decline? what at as the sort model wondering, to so our base and are Or you on me -- how even improved more

Kevin Riley

acquisition quarter, for Pecos, largely to results the Lake or driven growth. the asset So Red addition in our organic of last by were

quarter-over-quarter that in asset and did the XX%, of grow brought them was substantially the late say If disaggregate we down, would I QX them but and tune QX. the to you break to completions due online legacy that about

drilling efficiencies products and price working had services Unfortunately, in acquired particularly some like we're XXXX steel for that development completions. see continuing late to on costs, still as procure decreases, to capital far As opportunities we're we off or the inventory XXXX.

benefits that year to So in yet, we're not but price see XXXX, those to reductions. starting benefit of we fully able later realize the and anticipate do into this

Neal Dingmann

help and steps Yes, the I and mitigate of maybe just sorry, vendors, of there just just on of different then of Kevin. flows take forward cetera. sort Texas, just you infrastructure. there's any look Great can sort New field my And know generally downtime ebb maybe infrastructure Are I'm second on proactive sort with is -- details. just anything can any to et say always overall in forward you or question, plays around generally going all I infrastructure. to the on Mexico, it specific that, how

Kevin Riley

flow our we to the let's facilitate there, a early a mid-XXXX. midstream which to third out currently coming partner Texas, facilities expansion In additional with have online, anticipate say, midstream they're doing further second to worked maybe and we that or

expand event no and the gas and generation, In capacity, power is over same thought that addition our to Mexico. which we of have announced provides to that, are on-site process into on usage working initiative the or hope we for in there New

XXXX, their fire disruptions, had think that, October we've been there online. of Booster mentioned. that Largely, that's for which back a repairs no, Kristina which maintenance and a -- Station, put in for Mexico, New was since had had which some DCP announced it they we've I done was or few QX

stability Mexico right working New midstream as direction goes. we're provide more So as the the far to in and Texas in

Operator

line question of of Parks comes next from Your Tuohy the Noel Brothers.

Noel Parks

of even rig as a the as companies on see little in with the going be and a count seem side, region, other be of utilization, tell about curious, wondering out just leveling can way. that factors maybe we the see bit drivers to what mainly I other up the of you might was Just cost helping. had it hope I'm considerable any your that forward on couple of or going the horizon inflation the confident back you service less is far just seeing and sort things. bits

Kevin Riley

little XX combination about is Rig -- Where from of a seen change savings. softened a XX,XXX days, and we've drill that. savings, them but think on is if the most a it in there's XX I so our not wells, a costs But we tubulars. probably XX,XXX have It's to bit. completions think you day. you substantial to

that which differ a pipe in that prices sizes I've as some and But all makes as in well to difference much use cases, Tubulars, a seen some cost. we and of, -- XX%, due demand. various availability lot drop the

Noel Parks

that of legacy horizontal vertical And it. like acreage, a that to between breakout to Great. the of mind days? of question well from proportion just out have on that some The completion the Texas versus a actually, for lot give your brings the the going you're feel me drilling what the completed and drilling a you part. Can part cost between works is these plate

Kevin Riley

are doing So development go. not any currently producers we vertical as as far

some approximately drilling completion drilled for breakout truly facilities, XX%, have the XX%. and that well, drilling be post I is or water a well wells the completion tubulars vertical. balance We on and are would would about COX for But injection say then horizontal which a cost, for current

Noel Parks

with in thing X at what just and of this possibilities, your out like whether Or we sort wondering, that might on an a of you other a know their And about levels oil, was talking peers your Okay. up and there of looking seen part sort just handle of I the in one oil just If X peers sort on you had you there of optimized et activity the drilling anyone activity program most has among look Got handle like, uptick being was oil? or have cetera? ahead opportunistic basin. plowing you. hedging

Kevin Riley

divestiture, down high Texas pace unless don't provides of one areas drill. in our of and I just of HBP driven it not not New sort lot slowing at activity regardless are flexibility. Mexico, in a seen areas and mostly lot our necessarily peers out our the have -- so our is that drilling particular a think of preparing And some they're for to

Operator

line of comes of Tower the Your next Water from Jeff question Research. Robertson

Jeff Robertson

able steadier but just ask, This setting when might way it's benefit those together Kevin program to one of to be the early think questions of a you a being next operating year? your about putting you over capital Philip, talk XXXX, X about maybe about or deploy too program plan owning can in assets up think you as

Philip Riley

was That to exactly out. diverse Sure, smooth That's diverse can Jeff. Yes. geography. of set and having one similar that a initial in but assets, the attractions We style of right.

spending seen we quarter. You've a bit of this concentrated had

So these wells that's absolutely We do as plan. Kevin very just describing. the was drill quickly,

out, So efficient most do that's spreading for an a cost savings when the you back. all most if and positive. to you back achieve you get things rig, But it's as basis a absolute on those

with margins. and spreading we're XXXX. it towards as a excited possibility end It one effective also straddle beginning starting But So a a just we're of to activity is a We over already getting bit. general, completions spread quarter you say, materially place quarter, or that. and about out drilling like the but in can you pretty better early,

a the for while. we the about If you pricing, for low -- had were $XX XXs of lot pricing quarter, where think second we a

stubbornly well commitments costs pandemic industry some tightness then, during had experiencing, As still seen down. and high the high come peak was was Kevin that that those describing, made you've pricing. the holdover were Since And supply sets you right? from chain

the you've a and got the dramatically a dramatic come And $XX roughly increase time, seen from As in the then difference. down steel we've price, makes Kevin at China. oil same that so described,

XXXX -- free some I excited cash and early, we're about and said, we So get like can we're attractive flow. but it's margins overall that

Jeff Robertson

one Just other question.

the completed quarter wells of X quarter, have producing be in drill to in be all to that in those the Texas the fourth and 'XX? third you expected On would planned

Kevin Riley

currently plan into producing the over commenced well, have we those [DUC] We drilling in and have operations is to current our first of X wells carry those QX, a XXXX. on to but intention potentially

Operator

questions further this no are time. that, this And call. There at concludes conference with today's

disconnect. You may now

Riley Exploration Permian (REPX) 8 Aug 232023 Q2 Earnings call transcript