ESTE - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to Earthstone Energy's Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded.

Joining us today from Earthstone are Robert Anderson, Chief Executive Officer and President; Mark Lumpkin, Executive Vice President and Chief Financial Officer, and Scott Thelander, Vice President of Finance.

Mr. begin. now may you Thelander,

Scott Thelander

Thank you, quarter call. our welcome to first conference and

of as Act amended would get remind forward-looking within Section Securities we started, like XXXX will of statements Act XXA XXXX of meaning Exchange Before and Section I the the as contain call to the of Securities today's of you XXE that amended.

they based can give Although they will to management expectations, prove believes on these reasonable be correct. statements assurance that are no

should as certain that to on the risks, and subject described are found website, assumptions results actual assumptions report vary XXXX. documents or XX-Q in announcement prove materially. these and one Form in statements may we quarterly and These for Investors or Form XX-K section report of in earnings www.earthstoneenergy.com. can uncertainties underlying yesterday, Should of our on annual our released be incorrect, more These materialize the risks

certain non-GAAP directly measures. under announcement conference references financial in our Reconciliations call released most the non-GAAP to earnings yesterday. these to of comparable are measures contained includes also GAAP This measure financial

only please speaks on by replay by at replay. may will available time longer accurate also telephone information of today, Thus, to recorded time-sensitive going this Investors via no be call X, of information Earthstone's replay. the and any website today's note A of the any of May call Also, webcast XXXX. be as section

released earnings can to You our those announcement yesterday. how find information about on access

and remarks closing near-term regarding our from Lumpkin, will then and call CFO, Today's with by performance Robert comments matters CEO, comments begin from some and Robert. financial strategy our from operations, followed Anderson, regarding Mark

over to now I'll the Robert. call turn

Robert Anderson

morning many first call. experts morning, joining or and appreciate agencies. as good with you're staff are regulatory our this the limited from us offices We of we Like for we quarter our in guidelines Thank you, remotely homes follow health working you, very our Scott, and conference of everyone.

pleased have Non-field are March technology non-field able manage and since employees far. top of remotely to we field our working is of that safety and invested personnel we've conduct been priority, information we previously thus in. The and effectively using middle both been functions

Our put protocols and their go far. no place must issues work are the we job that that field location to safety in responsibilities following performing are personnel with a so

We our the a partners. our service our thank times, keep are community staff I focus quarter costs, doing sheet adjusted discuss current like the of targets to shortly. part appreciate on the for production, I'd on for to continued good and their diligence our to goals first team management and detail in us internal continued have prudent our that provider well, hit balance and EBITDAX especially practices themselves and serve cash achieving low-cost objectives for and and will our had We These and in which their safe. and challenging highlight environment. business But Mark more

afford ample energy very to due historic the unprecedented position, prices, consisting leverage that maximum price fixed strong the resulting the and liquidity. of fortunate hedge pandemic protection COVID-XX With are low we facing oil to have industry swaps downside and low with a challenges

see us and We curtail long-term on adjust volume drilling as extensions all fit. earlier our no negotiated no actively and in which year, obligations, the program capital contracts, also our minimum have commitments, we gives XXXX flexibility service production the we to

reducing XXXX. remainder flow for debt We of focus the on generation expect and to cash

oil in volume, of shutting prices, deterioration producers in mid-April. the With began low we high-cost

for net for to single-digit prices to what looked the our further in decided significant portion prices we production oil voluntarily As from May, a April wells declined reduce like of late near-term. operated

we be to total production net estimate a are that a shut-ins we XX% and for shut the non-operated company to curtail operated May or in to could of expect therefore, volumes. XX% range partner, Where to from We XX% XX% shut-ins production. net appear our of little May currently lower

the in fact direct quarter, decision per operating taxes, BOE get of spite costs and operating this per made the that with We approximately assets across our production in $X.XX first of averaged costs. BOE all $X.XX our

has As you and past a can moving subject two appreciate, further target this is been or week the over to change.

case While we seems seem as industry storage the is or voluntary a potentially of such in cannot to it forced across demand future for up, in remains guarantee as though shut-ins uncertain. of us significant May be recovery near-term, likely the that will occurring less curtailments volume the fills and months all and

determined factors further look be per have clarity shut-ins month revisit we our out. oil production in we how guidance will be Accordingly, playing this on as later Our prices. year and production as withdrawn well unit for XXXX as actions as our and to will guidance, gain based on cost as prices later the other this June well these volumes we

that $XX for first to reduced of capital any we range As making program that to the to and in not In update announced we we guidance. expenditures reported $XX capital million. million a our $XX.X a we're brief changes operational quarter, million XXXX, March, of

our largely annual expect our late Ratliff is six in May, well we is Upton the which rig, complete. to the Basin, in one operated County, Permian In drilling project pad So release Texas. spend our on in

create strong this momentum lose the that hard have crisis is Permian the disappointed quite are to us worked Basin. to we in Obviously, we causing

on were continued net and quarter, three on completed As an and County. our online example WTG of gross first in late that in we capital wells brought our during XXXX project operated drilled efficiency the focus Reagan

cost equipment foot over all-in an These a the $XXX, average reduction XX% lateral per three per XXXX cost wells foot. and about of about achieved completion drilling,

Hamman wells in XX quarter. in net Also finished had during or the our quarter, Unit County also on project a year-end. XX the that brought we at Martin gross online We was non-operated process X.X during five-well first drilling

future delay plan is there pad, all in an the And will and of progress as the we XX wells we in of oil Ratliff until finish completions but improvement to I mentioned, wells is well drilling prices. six drilling the which now,

this our adjusted we point, three capital results operated new bringing no coming wells. So additional the in non-operated expect online budget and online At X.X wells XXXX. in wells net

to With turn it that, over review Mark to the I'll financials.

Mark Lumpkin

Thank Robert. you,

did liquidity, quarter sheet secured set As fourth of our given to borrowing balance the senior current was $XXX XXXX, call, particularly base million. and recap today in conditions. going facility March a we're the our at under start with our we XX, revolving credit market On

the our recent XX% was the of is from the we banks profile. which deck lower assumed a much borrowing reduced and previous reflection financial base the by think by the only base, determination, Despite borrowing in price assets quality of our

our And March to under of we as outstanding credit borrowings debt. debt the remind the that the were facility in under million, is credit December XX. our a only of outstanding million XX, reduction have drawn of you I'll borrowings As $XXX facility outstanding $XXX XX% compared the

in million XX% to March to $X.X approximately and of million prices reduced million a to In borrowing in we capital funds XXXX $XX range XX, plan available. $XXX our As had unused the we in a dramatic million of million. incline by of response approximately for oil $XX cash capacity approximately of $XXX.X total March,

added continued profile. quarter to before the the our COVID-XX in prices, for volumes second to closely XXXX PDP incremental having the March for crisis book, more match oil have hedged third including heavily build we hedge oil quarter our hedge While impacted and

previous the hedged a for a we all price we per $XX do production plan, nearly XQ of and oil that actions our our that XXXX. have through Given at WTI second cash XX% of from initiated in significant is our cash targeted by beginning reduce of PDP to generate XXXX XQ barrel flow expect quarter to G&A

this facility financial capital and and us to to provide additional in strong So cushion flexibility. our further improve credit a position our financial reduce borrowings our puts in position working

that on second down balance would at end free that the of considering As expect flow a cash basis. higher use working aside, bit. quite debt to quarter not I work quarter deficit, near-term, XQ in hedge quarter, a on an assets capital bit the end XQ liabilities we expect have would during at our and expected And versus I will

financial revenues. XXXX topline, for oil starting at with first with and looking our first the metrics $XX.X Now million, contributing of quarter XX% quarter were revenues the about

sales gas oil per oil approximately and standpoint, averaged equivalent XX% day were of our From quarter and XX% XX% of volumes natural gas natural production a XX,XXX with barrels comprised first liquids.

position Now hedge let take our in more me bit detail. to a discuss minute a

a down swapped per above then XQ in day As approximately average day bit the X,XXX day And XXXX, we X,XXX of at is we X,XXX to in for starting stepping sculpted, oil X,XXX XQ. of day day XQ, quarter prices. barrels barrels down had end, WTI barrels $XX per oil in swapped per have X,XXX at year barrels to in per of barrels remainder This WTI $XX. price the per an of of and

continue have the from benefit largely less is hedges, basis and swapped impactful. natural side, underlying the also we We to differential on gas but strong this

Just million. $XX March some benefit our the of was as approximately the on to provide of of XX, context book, hedge hedge our financial book mark-to-market

Mcf of quarter. NYMEX the per $XX.XX XXX% barrel, or gas of right resulted of during average per per XX% and barrel oil $XX.XX terms around prices during which commodity $XX.XX were an about This price in $X.XX pricing averaged the equivalent realized In our unhedged prices gas quarter, per first was of liquids natural were of prices Natural barrel. NYMEX. oil

barrel per NGL, oil, hedging an $XX.XX. the our per this improved the with quarter. for in gas resulted is Mcf realizations barrel realized per $XX.XX equivalent $XX.XX And $X.XX hedged, settlements price, to including which hedge during Our significantly of not oil of per remaining at program price average

$X.XX coming achieved in cash per LOE BOE aggregate. On barrel sub-$XX in BOE G&A. and coming at again at per G&A the for With per expense and cash in BOE side, $X.XX per we targeted of $X.XX our LOE

cash million end around the million our $XX.X a is We the year. which for an G&A the updated absolute have in low guidance prior to $XX.X basis XX% targeted reduction guidance, on versus of

a highly on as management progress. very aim everything in to reduction value our some We team through further fully primarily also keep We in remain really employee in are employees do control that achieve utilized. through initiatives doing our base to executive compensation, cost-saving this but focused the our and

making an light. investment view are employees it's We continue and and to people, that we'll a our in team in our effort,

lower we million which production our taxes million sequentially. per XX% the in reduced valorem from by $X.XX income about first fourth diluted our the $XX.X pre-tax net From expense income share, also $XX.X quarter quarter, of derivative were reported an We reflected the standpoint, our ad X% of contracts. or GAAP gain and and interest on

a million $XX.X was million The also a driven was impairment million related first of by property results an prices impairment. gas included goodwill oil to expense, and $XX.X impairment, quarter and which commodity XXXX $XX.X low

quarter. first measures. Our reported or $X.XX $XX.X We the was measure, million adjusted adjusted net earnings the of non-GAAP Please $X.X also share income, a in diluted of and reconciliations our for non-GAAP million first measure, release adjusted EBITDAX, non-GAAP quarter. per see for explanations a

With I'll back to Robert. it turn over that,

Robert Anderson

I'll we good Again, had Thanks, a Mark. reiterate, first really quarter.

depressed to we work. focus cost continuing While efficient of be prices as will environment even the contractors on employees health as of severely persist, the we control and our management the the and more and diligent safety well while protection where about practices commodity and communities

said we to mitigation as our and wind no complications efforts. I activities, properties manage we As earlier, completion and arising down produce continue from experiencing drilling our COVID-XX

on year at year-end throughout being maintaining Xx XXXX. position the continue focused levered balance to our below also are sheet strong target We and

not changed strategy despite industry Our current has challenging conditions. the

scale low-cost, on environment. through this building efficient to on We value-enhancing focus [indiscernible] in distressed be operations continue plentiful and

the We a that as will consolidation part of expect result. occur to a be

Before have. this who dedicated to personnel working new to thank we again smart are adapting we questions, would you say to your we take our challenges like and

Our working it. go affected our this to those hearts tirelessly to to us out thanks persevere pandemic those and help by being deepest through

long-term and We days in decisions years will experience making key stakeholders our the believe company make continue to focus and will best ahead. Earthstone stronger and the and our resilience on for

With that, operator, we'll turn it over to questions.

Operator

you. Thank

questions. your We the The Brad Capital [Operator Markets. line with proceed question comes be Instructions] first from of conducting Heffern now session. a Please question-and-answer will with RBC

Bradley Heffern

Hey. of questions shut-ins. everyone. have a couple I on Good morning, the

the Because So not shut-ins? rationale cost. the of the to was it's behind close what op all, first obviously,

based on So there purely some the it of components difficulty was marketing the forward curve barrels? and of the for sort oil? outlook Or was

Robert Anderson

appearing sell $X, was at in late not It's $X based what April. wanting $X, on oil like it to our Brad, is $X, to look really,

to it's month. that adjust through we So we made And decision decision. time move as game a that the

Bradley Heffern

does they this enough. And were agreements? like back And I also, at. have that the Okay. that about that lease you guess, then have the can Fair wells the will you talk rates to for the confidence any something come implications

Robert Anderson

shutting rotating agreement Sure. not very One throughout thing is and different from the long, leases. we're our wells we're wells lease standpoint,

at some wells in general, a month. the will little bit So produce, point, during

satisfies that that So issue.

come were the have coming the the they confidence to that will in where hit wells back We our frac that line, wells based back were forecast. past, on to

very And wells, our don't again, for in on we're wells, have long few than effects. there's new that other not detrimental time. any a we And a majority shutting of wells enough the long been think

dynamic we're waterflood where in thing built other issues energy got old The is not and that sitting standpoint. from things in an momentum that, up a reservoir like you've create

we felt like the pretty risk reservoir low. was So darn just

Bradley Heffern

distressed about the mentioned being contrast probably comments, just out resulting it. also of of the consolidation to hunker Thanks. of end Got And assets situation that how this. you the might guess, think Okay. desire the the Robert, from uncertainty down? your they're I but you between you part then also likely be at there, the do and

Robert Anderson

Yes.

things true. in And prices. market bit therefore, shut of think both assets There's you're properties. the until going make going sales stability little have then be that I a to down of those those are properties sense. more distressed there's participate to asset in and We'll

through the for going maybe and sell, in in sellers prices times These movement fall, should foregoing who, to opportunities we're take of again, the more recently, here advantage that. stress create that and or try sell some reason, to gaining need With help to like something want this. scale whatever

Bradley Heffern

Okay. I Thanks. comments. the appreciate

Operator

with the of from SunTrust. Neal questions. is proceed Please your with Dingmann line question next Our

Neal Dingmann

just forward you are keep. efficiently is again, from that pristine to Good morning a occasionally back, wondering HBP than one to or just prospects makes on it first and efficiency able three I'm of where question continue the of if you address the your lot point the all. more to I make with future rig, just My you that or sheet rig? one there forward reason especially come because with But just wondering that? given come to know sense would balance activity. I'm going going you a would make now all would anything either whatever back rigs two it sense with have because just or that that like this acreage either or sense you'd Or

Robert Anderson

mouthful, a Neal. That's sort of

know see what price? be about handle exact at come we four back. but especially some more a comfortable what rigs, definitely if costs. price, to is, it we're So gets us a to that coming the going little we And is reduced I don't can excited back with

we're have I going on because field, of a to little put back we you build up the come bit team think to it's will the a back we going to efficiency new time. when take

everything an out obligation From we and HBP pushed status, year. a status,

in ask justify, low of groups lots So those then the some of didn't where we've It got or just remained level at And environment we position, we looks wayside. let if by the same go acreage what the to and those economics to annual like. size the cases, on back time the evaluate. some prices for go would extension, another depends may, to depending

optimistic that case. takes going but oil back But to prices that, we're recover, we're to whether we the and maybe And it's XXXX, or we year, it are that's going think January to think sometime all work. in get

Neal Dingmann

the the there had guess forecast any in? remainder like too non-op, the what on I lastly And CrownQuest or just just I for Any you're what don't year? heard thoughts there is then thinking thoughts on of for I often

Robert Anderson

We particular some for in of plans put So on hold. deteriorating, to have then operate parties one a Midland group. drill with prices couple rapidly our activity a that parties they wells. our any of our had us, on acreage March. and as started of hold all all We County new who areas speaking to in when And put in

year. right discussion So capital any no now, there's of for this rest the having of plans

Neal Dingmann

financial. thanks guys. good, Very Great

Robert Anderson

Neil. Thanks,

Operator

McIntosh Rice. from comes with question. proceed your question next Dun Our line with of the Please Johnson

Duncan McIntosh

quick most and were questions the morning, asked, my Actually Good Robert, question but Mark. revolver. of on a

any a XX% and you prices from the to redetermination think all you're the if got the materialize look out out the to get if just the Wondering $XXX cut. industry? comfortable as million? banks fall we in with early there You sense of you exposure feel here bank's they're level how do pretty is that that, at the kind thinking do you And about

Robert Anderson

Mark, handle you Hey. that one, please.

Mark Lumpkin

obviously economic that's pick the made in. to us, pretty when in prices relates pretty worse sharply that and I'll Yes. we we're decisions, question. spot. March, We the a it Dun. it It's CapEx. That's as to shut great true also relates to the oil true decisions decisive even looking some And at one, got before a as fell to

one not do to decisions job or resources sell do the number spend for how oil and we're $XX? we the shareholders, to Our our secondly, Or or the every we do price employees. want that cetera. well, our making way, of then sell higher of for to Realize sell on, That's is a we good for for $X later stewards of what and CapEx, our want it's G&A, whether hedges be our to going barrel it? a step et barrel

we we certainly and could that we banks and the of a And because folks could saw processes the signs, little saw we're of gotten nervous that go did things occurred, done. out borrowing not in the a the choppy some play certainly, terms but as early more some extent seeing be to bit have get base, signs bit more that

now going just PDP Realistically, most we're a because on the because looking at part. wells. you're not new between down and borrowing the the fall any to mean we natural go bringing for the is rig and decline really set down base I

if not math enough in for debt. actually push We've comfortable we it get further got shut down that the of be But that. you Yes. that some ex-period at liquidity does we'll of about you PDP can honestly rate ex-barrels out? into Now time, paying doing some we're very feel the

the the what liquidity. off PDP of of that what the now, going decks banks roll we're kind even plenty And have using is to are

a are them, of out one Now Brad's to to maybe of and acquisitions our situation going some it's distressed M&A. little and doing organically does not thinking the of of acquisition. into There We're answer bit question go a there. whether lot on that become CapEx or

relates done we our amounts at we're if are next as significant with feel and producing things the also end we've even forecast weren't of looking with and pay drilling. not that, And still frankly, hedges, year. And to of we year, borrowing later now barrels, year and year, headed, but the base, next it comfortable where this not debt especially, between pretty down but could the just this

Duncan McIntosh

a Great, as opening those it's that on is flattened of a does right of start And that some, what now? brought the your wells I kind are thanks. things in the little And of if arrangements. Contango your up front? on one was the I collapsed color right. little decision that gotten agreements. role a factor All back provide cut kind out you has chokes to think that's to have you've follow-up, been prices on marketing as play then And some you light could marketing better that these in I wondering of know seeing of but kind what role

Mark Lumpkin

it and Maybe first over to turn Robert. then part I'll that question take of it, the

you the especially near up the terms a the prices calculated ended or before. and where collapsing, what plus happened in the role situation basically with month $X.XX roles, to minus on of yes, months, with is it's $X.XX In in typically

$X role $X. April, is So or to going the late be $X minus by we or knew

basis, knew in good going on Ford Permian over a that a both premium also to get was basins. We negative to pretty and trading Eagle time at two as those Cushing we're differential that

decision. if absolutely lot risen probably of And better. that shut-ins the May. will diff better And a forward that's role by how looking decision our economic different the $XX you to piece It plus a then That certainly, was about June. strips since a for and on it's April. critical apply Probably take late to looks

think do about decision. from you different So an that economic

with lot of what and the cetera. And terms Robert to disruption we're that In pick the be more and certainly, had going up maybe no there. is marketing, shut-ins et to over talking a to everybody's that's something currently focused curtailment given on curtailment, I'll on kick seeing

Robert Anderson

what we gets on I And it the complicated. thinking relative would front, with a with, June we're purchasers, we're Yes. and say multiple that we're daily our marketing just – dealing both purchasers dealing to that and of multitude have volumes May about.

have some on some truck, We have pipe. on we

And so that. in its all or thinking nominations are progress and it about

what June. So more as comfortable on we I'm getting June, more to we're June might to like, look turn going look in that volume

come worst shut-ins to play as on, get just However, a beginning of other the turn month. and take going closer we may and may for the have we're prices enemy that the back we our direction, be to as to out

Duncan McIntosh

right, All following you thank quarter forward and congrats on. a to all and look strong on

Robert Anderson

Dun. Thanks

Operator

comes question Please proceed Grampp the next question. Capital. Jeff Our your with with Northland line of from

Jeffrey Grampp

thought have? one extended count a offset it the about are historically. seemingly where like pad. guess thinking that cycle there? Hi you you Should guys pad expectation the the added, been of in think I'm XX, you've of with guys I to size looks that comfortable, efficiencies I future that step-up the interesting, on times more headed a irrespective big I basically rig that happening where maybe kind Am right? as four per guys. you with than scenario overall more about is a maybe and rig And five that extension even from of Obviously, we wells guys was it Slide being

Robert Anderson

things. a couple There's of

and definitely true. You efficiency, on picked up that's

is dynamics, thing other Jeff. reservoir The

stacked the capture another as and kind seems possible. be to as the develop resource much economically sure possible you of them making in benches, That way benefit. as So best

So those size. the two combined give pad us

pad. in wells forward on pad, that or and five a finishing drilling on the we're going well, So or range, per six average right – well sixth now, four up

on efficiency So hope off reservoir pick we can the the gain also leaving that we up are side. and that side on where we

Jeffrey Grampp

it. a if kind more understanding of there's kind Understood. any the And blow is next for heading that you implications think where for Got Do about kind this what we But mix modeling it. out I that sense don't expectations question. few down of Got should some know of PDP Mark. oil more to a of have with going mode? on GOR quarters, maybe of level? and kind when a stabilizes

Mark Lumpkin

doesn't it just us. We look honestly, XX%, actually little think a mean different XX%. a be We it's drastically like to bad to thing, I XX%. tick it's bit. it's but down content not the oil close wouldn't probably still we think pretty That

volume obviously, That indefinite we've because an that for an sort indefinite time. being got shut-ins said, of

As it just light as not frequently, huge was. on switch the But the a remind content. we're like not easy flipping back oil me in all it's technical generally speaking, as everything exactly guys, a expecting degradation

Jeffrey Grampp

Thank appreciate guys. the right. you. I time All

Operator

Roth from comes with line John proceed with question. Capital. question of Please Our next your White the

John White

I have the through is don't a to paying say, gained crashes all experience with now. off been just you've Good that wanted I really morning. the all question. you've with Robert,

in company, opinion, you well the could. as positioned got You my possibly as

congratulations. So

Robert Anderson

I send Frank. to Hey Thanks, I appreciate note a great it. have will that John. mentor. you

team a and all around great not us. So It's me.

John White

with I'll Frank. touch get in

bet. You

Robert Anderson

Thanks.

Operator

Wangler with Jason line from Imperial. is Our next your question Please question. proceed of the with

Jason Wangler

morning of kind Hey, may It dovetail the guys. there. last good on question

you budget or production, And them entails kind of capital also of things? things. about And kind what kind that I assume think and talk getting you in the then that's kind this mentioned production into on back operating of you as rotating costs it of As the shut-in would Can Robert, budgeted full wells back as cost the – even you and about bring you that year? you?

Robert Anderson

issues, unit, Good gas wellbore to it them we that we'll a wells of questions. each a well Jason. did that unknown, amount treating a thing Sure, rods mechanical these putting but by treated and the And those is around shut or and tell shut from cycle ability the we're we makes us little very part squeeze you to on bring the of job gave that them next lift chemicals back in. with and one the bit big confident and wells I'll of chemicals enhancing because little a kind in wells before good with before we in we

that remedial to we're going to So of when that confidence capital gives back not us to we whole fix have that spent lot needs these wells them. turn a be some on,

any little different, are wells But the be Basin. going programs in Ford there's Midland capital material Now area different, chemical that don't I a area said, a because we're a learn to going that the to go little the particular to there's differently to suspect, maybe bring would cases, and and be something little we definitely Eagle we between a general, in it some ops, bit going – think is all do the where back each online.

Jason Wangler

obviously you here pretty kind or built then you of the shortly. DUCs have will And up

wells think would be you Or you'd of that tandem bringing wells it about, the that all kind that you some make probably stuff, appropriate? sense all in again, As rig on? would think before and whenever a back it's on do bringing appropriate, when done back complete

Robert Anderson

end completing those a liquidity, flow a back between that. all the oil XX-ish we're balance cash I the different year, rig and of And not the it's is oil are and bringing get where to wells, of and the go we think and two but a those we're there end decisions. it bringing wells. complete year, is We at ahead Maybe is back. If rig hovering we're today.

sort really that it's And hurry dependent. the we're to somewhat of willing So those it continue wells. to is looks to We're watch something more price going a price bring to in be have a It's it. we complete of to those big throughout like. not the do what year. I future XX don't

Jason Wangler

Thank it. you. I Okay. appreciate

Robert Anderson

Jason. Thanks,

Operator

from Palmer. line proceed Please & Parks your is with of question Coker question. the with next Our Noel

Noel Parks

Good morning.

Robert Anderson

Noel. Hi,

Noel Parks

a Hey, just couple had of questions.

You expiration right, extended the some that's your mentioned reflected reading if of having right, earlier about And not that acreage. the schedule the I'm terms in lease there? XX-K, on

Robert Anderson

K, the by it, XX/XX. and in That's we the probably time as that's filed of because correct when

Our was year. set the obligation for drilling

did of we in out pushed those so obligatory a wells where And couple year. instances were negotiate a

Noel Parks

I at compared to up, the I seemed a had because the year-end Great. it a just was Okay. huge and I XXXX amount. not quick like gone mean, wondering took look it and XXXX, numbers

So so was thanks. it after that that would make that, sense

Robert Anderson

Yes.

Noel Parks

And me are interest a quarter one rough as rate is the credit noticed where of kind can to this of housekeeping, rate the note be month? far for going taking as swaps quick sort effective give interest effect line? headed of the thing, you some second I on idea – about a –

Mark Lumpkin

Noel. I'll up. Mark. one Sure, It's that pick

LIBOR it underlying So three is past really all some us months not got has under to in – swapped LIBOR points looking here Yes, happened XX basis tightened bit, debt, something but at some what rate was downs. XX% caused with period effectively which swaps. of quite or on a over interest or with our our a do what little four-year four a component we've the that. of step it's probably That's like to

right In rate terms kind rate, our the interest of X%. about is now, underlying regular of

in where probably kind for few below the margin about a of X% you credit is the tranches. X% right number think to I LIBOR LIBOR XQ, and it's agreement been last relative what But above use that's a little if is. our

Noel Parks

necessarily to you with want balance as over you of in properties just with any a been mean doesn't of strength but a that to And lot. hearing you're should Great. touch wondering been available. equity, bit me that's Thanks topic consideration? or Are greater sheet. it's it about that's those to degree might and accepting in consolidation, up appetite sure quarters, some And for your It happening. seems the I accept seeing equity the people quite a be was the talked about

Robert Anderson

the but sure said do, You It be like right wanting thing. people should isn't seems to it happening.

like, that grow, more think matter. think that's and to look little in moment, private sort demand they I opportunities little appetite at by there'll or bit where take can be equity sellers a public a look whether we're look like, a fall I for a things until prices frozen out the and just do then bit, what state does therefore, of what at a

are to a together. our we're our we and in equity and So record always as willing use track party proven – bring grow has out,

Noel Parks

Great. probably hard pretty unload as kind non-core It know just strikes increase? time much terrible some trying wondered, me. It's is bid maybe to of the I really high-quality as for the the what seeing you're get of you enough everything stuff. And just what I any have just this. a to stuff. overall far any is clearly as be is This if for on probably stuff a don't available, to you thoughts the And out. frozen? you Or Is have dropping of seeing lower-tier seen said, it just quality on people you're

Robert Anderson

and interest, Ford frozen things focused really seeing few would main probably into as then of the our in and the our the going Eagle We're where and not are in we're distressed – that year things to I beginning and aren't I've that We coming materially. the of really we're The that's seeing are the were peak areas deviate assets sort a that have areas, team from we're are Permian. that focused. and that am that areas that seen probably are

Noel Parks

a lot. thanks Great,

Robert Anderson

Thanks, Noel.

Operator

Thank I'll the question-and-answer you. hand At and Anderson we've to reached session, closing the Robert of our for remarks. floor end this over back time,

Robert Anderson

everybody look second always, Thanks, listening emails through And forward Yes. to today. to the getting and open and quarter. for as we're Thanks. in calls

Operator

This conclude conference. you. Thank today's

You Thank time. may lines your disconnect at your you this for participant.

Earthstone Energy (ESTE) 9 May 202020 Q1 Earnings call transcript