ESTE - Earnings call transcript Q4 2020

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Operator

Good morning and welcome to Earthstone Energy's Conference Call. [Operator Instructions] And as a reminder, this conference call is being recorded.

Joining us today from Earthstone are Robert Anderson, President and Chief Executive Officer; Mark Lumpkin, Executive Vice President and Chief Financial Officer; Steve Collins, Executive Vice President of Operations; and Scott Thelander, Vice President of Finance. Mr. Thelander, you may begin.

Scott Thelander

to quarter welcome conference XXXX and call. you our and fourth year-end Thank

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

to may XXXX. will section call Investors today's telephone at the webcast Thus, be or by references note, and call certain be one statements the longer no to are earnings believes on and A XX-K reasonable of should earnings results directly described non-GAAP most be XXXX March measures. These measures Investors financial give website call available may GAAP financial on these information to our any to the be assumptions can of going prove replay will recorded or Also, non-GAAP time on yesterday. These conference statements Reconciliations by as these transcript Should as based our subject XX, the these measure prove actual yesterday. in risks, of for time-sensitive assurance management please announcement certain they contained replay. accurate risks no materialize more Although found of Form released underlying be of or of they in of that assumptions in yesterday to vary to reading. announcement documents under are uncertainties also speaks can incorrect, section are This correct. our expectations, any only information annual this comparable includes we via today, report Earthstone's and www.earthstoneenergy.com. materially. released the in filed also replay website,

from operations Today's CEO, find will from by Operations. released of an Anderson, about on Vice Executive with our Robert earnings Collins, access followed how our general Steve begin those President to You update yesterday. our call can information comments announcement

performance. Our will prior we'll CFO I'll Lumpkin, have some Mark provide to and to comments now for turn Robert, over regarding closing opening up Q&A. financial And then matters call the Robert. comments from

Robert Anderson

a Scott. you, and year XX% by prior reduction exceeding guidance in certainly us our your but achieved increase despite production many volumes and production daily our unexpected year-end resiliency with for XXXX call. Earthstone. of quarter fourth a We capital everyone. conference joining good appreciate in XXXX We Thank our expenditures strength presented from average evidence the are in XX% solid morning And XXXX challenges, of results X%. about the

Although declined prices goal our additional nearly flat a to in one-third. coming times in free dramatically our reducing helped debt EBITDAX, reducing some of for adjusted outstanding commodity oil in generated below provide essentially leverage with for XXXX cash us strong our on at moment. and X.X Mark We will ratio times XXXX. year to delivered the results one EBITDA the about us over position $XX XXXX in our keep by providing adjusted ability million hedge flow, XXXX,

XX, XX basin December strong Resource increasing acreage underwritten It to IRM's operated from existing EBITDAX counties by leverage. Our acquisition the ability talking minimal assets. Midland high did. financial of on a adjusted strategy growth our our locations while by by and PDP IRM was $XXX approximately drilling in Midland on accretive added having acquisition strong The inventory. drilling we production quality drilling announced $XXX execute closed increased million supported This our inventory I'll and moments and about of enhances a XXXX core of which value scale million position of our few XX% complimentary and on or in acquisition spend a to acquisitions. our approximately impact Independence about Ector IRM, was January with Management

gas the of expect production IRM’'s majority in sides capital and estimate Spanish IRRs de-risked to team. for general various further about counties. assets our which by in and inventory, from acreage, minimal Pearl production XX% on ranging producing with own XX% a acreage locations in in approximately to Ector $X.XX XX% operations our XXXX added administrative comes on and the A net production. the increased IRM’s is benefit is incremental, and the its gone on significantly Integration a based Perl to there costs, The folks margins life. Spanish County development and achieve both of scale. flat Midland from with oil, on very of areas lateral Upton at with and and are existing our located IRM $XX has operators, Midland compliment result well for by the to wells Earthstone continue The operated the acquisition large We core XX,XXX from in area project and XXXX delineated to with compete held acres in all we high foot IRM allowing XXX% us well where

those the how with field listening and of term. by in the to IRM We're today, should also We to deploying program to which the are forward you integration smoothly on gone has the have and IRM and been including efficiency IRM results seeing assets operating will welcome looking majority improvements in XXXX assets the results some mid-year, IRM's we able expect cost see the our operating personnel, drilling to those and approach sides. the near in retain result our in fortunate field aboard. pleased are of of large from start for to We

flow. have terms be the XXXX funded cash previously program outlined within cash expected rig of free significant resulting will capital operating one that our In plan, we well in our flow,

to We down rig. continue debt second for options considering a will pay while

completion scale and drilling through be to focused acquisitions adding financial our continue our on maintaining we discipline. Beyond while plans, additional

over call Collins turn operations. Steve to to provide on to update going the I'm an Now

that know XX myself over with Some years. of XXXXs. been early engineers our call as companies work operations. Steve in and all we and Not with Frank today, field of and manages has worked the and Steve at Steve Earthstone but together either or has you for on me predecessor the us actually he today

So join have with us today. happy a to I'm history him long working together,

So Steve [indiscernible].

Steve Collins

were to glad the be which wells Upton our I'm we drilling project last December, the County we but Robert, call. in these the In XXXX not wells. when Ratliff completed paused production completed spring. the with In we Thanks, which six unit operations on drilled are wells in with pleased still of We our we that XXX% released awaiting results in our we working we update performance five on County. wells rehash I program exited also had fourth interest. completing hold with Upton since our in the January, XXXX won't quarter, yet XX began we located in completion, Hammond very

acquired drilling plan also the wheel five Pearl we IRM, resumed Midland in rig B completion Upper then to Jo turn these our one in Midland we Wolfcamp Lower to past rigs to three X.X who with move well the a county in in We've recently where reservoirs, drilling and pad and our in project activities program week well have will four pad wells We beginning from each a Sprayberry, County. of week acreage the expect project, drilling sales operation drill Hammond a finished next the gross the the Mill, so. that net also Spanish or on

We management including turned operating operated in full-year that anticipate operating With gross wells, plan wells next Throughout $X.XX and BOE XX.X driving for will focus or expenditure down week. the XX wells XX anticipates Upton costs. operated the net five to XXXX operated XXXX, net drill sales Our lease XX.X cost of XXXX. additional continue to averaging year. XXXX turning X.X and we be gross County gross on in to capital the will sales, an we expenses net gross, total just that spread or for wells five

of the management in With we the but addition a remain modest acutely we XXXX, will anticipate on assets, focused in increase year. cost throughout IRM LOE

moving scale should electrical help our some we artificial pumps service We in our time providers. operating some gas The business philosophies changes cost reduce of which and submersible also as to lift, like costs drive the consolidate long-term. from over will of savings enhanced should operating incorporate lift operating

weather address me the in impact let the of winter had February. we extreme Now

As turn Once Mark normal financials. be to permanent about back the I'll sales to now with disruptions XX% our plans. over days. of Mark? impacts. February the in we the from will expect significant other caused say to operators our experienced, in power was of majority everybody harsh operations I back or weather four experienced and gather we loss call that operations. five happy numbers, no the our And are down large to am review the now oil that online production all

Mark Lumpkin

of cash flow morning. our for free thank with the going Yes, liquidity. to of $XX.X of start flow the free Good balance recap and sheet generated We million you, brought I'm year. Steve. which cash $X.X the million us quarter, to fourth in

our on in know, the with another reduction debt cash down with As of free you all million been we've debt quarter. flow focused $XX paying fourth

And reduced to to times ratio For year, year year XXXX. XXXX times X.X XX% our X.X we in the was improved debt EBITDAX million adjusted debt at similarly $XXX from by decreasing end million at $XXX end. to from

we transaction the close As Robert IRM mentioned, did January. early

at would an total XXXX plus at to debt of the million acquisition, year-end by estimated combined leverage $XXX total adjusted X.X times. adjusted $XXX had have net related in outstanding borrowing EBITDAX liquidity and million million. IRM to include year-end with IRM approximately $XXX been a debt when So of measured the of base Earthstone to With EBITDAX as million debt $XXX we

approximately for As also million X, at $XX which net $XXX liquidity of net by to had year-end by our our debt million. reduced million $XX adjusted the we compared increased March IRM, debt

debt more cash we While the in the impacts net downtime paydown in February quarter operational the we anticipate continued impacts necessarily year. of do won't pay-down as throughout of first debt flow,

the guidance. as on year-over-year capital all capital midpoint drastically cut amidst totaled This represents million spring expenditures basis, quarter $XX.X in collapse accrued the the of as in and XXXX a below our price expenditures the slightly last $XX.X year, XX% know. we capital Our for fourth was million you which about expenditures a oil reduction

on to use this $XXX million in recently year deployed. flow cash repayment. total in guidance, released spending for free that million believe cash plan, and we expect primary to to significant free of we $XX that Based rig significant intend expenditures we capital will debt detailed one the flow we utilizing generate the As spend be previously this our

at Now fourth looking with of our let's start the $XX.X the million. in quarter XXXX top-line. Total revenues income statement, were

$XX.XX averaged commodity, fourth the averaged quarter oil in barrel. crude price was quarter per our per average oil per Mcf and average $X.XX fourth realized NGLs Natural equivalent. By of $XX.XX was $XX.XX in per gas Our barrel price for barrel. the

per For the price year, our average was BOE $XX.XX.

with components oil our per oil our which that volume when just gas, hedging natural production. From over strategy, a over NGLs. production realized we our barrel barrel XX% $XX and Fortunately, amounts equivalent of of XXXX. fourth of including remaining to of from averaged XX,XXX all oil per XX% sales barrels And also was equivalent in $XX of the produced XX% comprised per oil, day, standpoint, just quarter

near six Steve the and wells As new meaningful mentioned, to contribute did quarter. on they fourth not we did bring year-end,

X%. day, For XX% compared guidance the BOE up year, by production per increased exceeded sales average to our which XXXX to volumes daily full XX,XXX XXXX

cash came On G&A barrel unit expense operating are year. all-in cost the oil and per the lease expense which fourth expense, tax, includes side full $XX.XX for quarter basis per of equivalent cash $XX.XX at and production an in interest on severance a

well Our average for range year per of full to our per fourth XXX $X.XX below BOE. and at XXX BOE, $X.XX in per guidance quarter, the in lease expense operating was the came which BOE

year. the G&A $X.XX year compared $X.XX of to G&A administrative typical the in quarter, in accrue achieving results compensation general we tax the On throughout The per quarter through quarter to cash in unit evenly is adjusted expense XXXX fourth the largely bringing awards which a more G&A result per due incentive our lumpiness operating awarding the cash would a successfully BOE. side BOE our per in to fourth expense are fourth was cash year

in BOE than cash we've our As no BOE in by and per reported our per cash aside production G&A cost continued less of operations smaller and allowed to reductions reducing our third continually XX% X,XXX $XX.X we current than XXXX, company $X production. to an $X.XX The produce us from G&A, million a XXXX. in and a structure, growth production, XXXX with G&A so improve in G&A one the much the with on way day, less XXXX base the lowest middle per cash BOE continued since over are in is have

continued our very in cash IRM of our our at the XXXX. To We the focus $X.XX per our to of G&A business, aspects continue acquisition continue With expect to in imply related guidance. per do little midpoint focus our Independence lower all incremental margins. to like cost on and improving we cost cost, or an acquisition. the managing and structure to And IRM on unit G&A BOE of and do our we

made loss good $XX.X contracts. derivative an we've done an we in $XX.X million, loss per while of reported standpoint, on of unrealized So we're GAAP the included a - net yet. or income year, progress, our a $X.XX not From million which fourth loss of quarter

share in fourth income net profit adjusted was or of diluted Our $X.X per the quarter. million, $X.XX a

reported GAAP loss year net for diluted million, loss $X.XX in the than the being of profit $XX.X which a share. share. XXXX was $XX.X per the We EBITDAX by prices a a per of XX% full of was million, year profit EBITDAX of or CapEx fourth oil dropping of more down our XXXX, adjusted And we year adjusted reported a only two-thirds. $XX.X million, bringing by from despite $XXX.X full For and X% $X.XX or million reduced XXXX, quarter to income full

bit average of $XX well gas XXXX gas. of an of for a with positive oil the our practice, on of remain differential, little over for XX% bit a WTI for midpoint of oil for a we of guidance, approximately basis, guidance hedged of our XX% $X.XX As and midpoint plus the approximately and at little our prices swaps

We the have and away also over at hedge our course this year. been shipping so program XXXX to expect of do

we we X.X% Going production in was our year. impact levels obviously be volumes our as our and the back impact to this mentioned, about roughly production oil think estimate of clearly From the roughly impacts year, the February, a impacted Steve the the results. weather, is will production quarter first a to and year for on XX% of or which full of barrels for standpoint, XXX impact equivalent winter

We're at our midpoint. more that, includes or production the but range end from turn Given XXX range. the production not plus BOE guidance to of Robert. would our bias time, us towards minus that guidance With it I’ll this this adjusting lower clearly a impact production the back

Robert Anderson

today in Thanks Mark. Lot of our in morning. our information we provided this press release both and K yesterday

is our year. during which will the opportunities As you We're the base future. of operating about XXXX just off we're to drilling can now But has strong will XXXX make highest for about can sheet you reducing remain scale tell, rig tell We going strong acquisition. to to the the flow. later adding additional the for a start year. maintaining whether a result excited drilling second a on with us. with directed focused pleased very IRM We cash generate combined We're and for returns well free continue focused and commodity the as started a in larger while on optimistic significant this consider with high have a areas is plan as super of margin, we more one-rig flow sense a good We low balance a believe remain to growth. free and see platform drilling the debt are cost we continued getting great now, this cash program a towards but positioned to asset Earthstone emerge. environment and inventory price attractive

low assets IRM complement to create scale additional the further our seek integrated, margin we high cost that continue operations. and with fully opportunities However, acquisition

we committed that consolidation shareholder we do creating to at continue through will value opportunities look in and everything focus lens. Our on remains

all we'll that Now be some take with glad operator, to questions.

Operator

your [Operator coming Our Neal Truist with Instructions] question. from first Securities. with question Dingmann is Please proceed

Neal Dingmann

Robert, something on is just just my you mentioned. question first had

a you what what of It optimal just looking flow mentioned and smartly the it of about second production about flow? rig. guys optimal rigs, level growth? do with would what’s you’re sort you Is two your a one what and about you all Just obviously, sort wonder optimal, the best potentially adding think combination when free thinking thinking potential at purely when I'm level? best or how is this cash sheet free prices Mark, the And give prices? the the the with if going to combination - pristine You do of and you and - just about cash you today about think wondering Steve give level, balance about? of

Robert Anderson

your we’re of helps, flow. Yes, scale, it that - Neil, has and on this think it by acquisition, course, I added and cash with does depend driven to

maintain cash So out growing that, growth that. flow, to of and timing get within the we balance between trying the all actually much - and how of

some at time and day. to a to between of spend. cash it second a are And but put it’s So before consider who us we’ll that anxious looking work, And we’re we anxious at who flow of and would every there’s us there’s think run. again, the rig to of appropriate balance we walk are the capital second amount some I rig

Neal Dingmann

do time, was about in to then Okay, got release, and good the to how press you you've see. think

You've drilling. been pretty active already on

to How about the completions? production think 'XX sort should think at even upcoming those? another we Pearl, as You completion, those I about Upton. guess or XX IRM, Spanish based of the to before How in do talked about way, timing, analyst you look regards we on that

Robert Anderson

in kind past, as done in wells the we Yes, we've generally packages. complete of

be the completion. the drilled, pad, - start is we'll plan then will get pad the we'll second first and So on initiating to

the to County Upton the and starting well. year of will we’re put back summertime, then wells So, the half some I’d say be by online,

go by pad sense well just well four that out be, go. complete and three So got it’s that itself, ready other to it doesn’t there going unless we’ve to to pad make

just of the service the right get over is So in can function over companies there, that all crew the part of few a busy months. they next move but how

Neal Dingmann

What do XX? [indiscernible] the you you on Would XX fracs? or do

Robert Anderson

We done doing logistics not have first We but that There also the not other - efficiency timing that. seeing then helps you, time. some do on explore have there’s the we people probably that. that is

maybe be like So going pads you also pads, depends big your year or pad one that. - four. up. get around on And got Whether that's how this five to something it are our typical and size set is we'll

a out sense might we we’re So that done two just but then bigger not resistant pad right it have in opportunity. not we to make had the have frac yet. crews there, that And haven’t

Neal Dingmann

and the and one can’t locations if cash zero out notice market There show then I now can be there. a to just for but big help Ford, Slide Eagle XX seems last you’ll I Absolutely, there for take just the on flow. production right drilling

a have As balance mentioned sell you is certainly Ford? I pristine consideration the in don’t this sheet to earlier, anything. Eagle need But

Robert Anderson

based several It’s Midland to And which in that in the Eagle that keep is much are pursue. Midland in Ford, Basin asset, make things always to us because go been allocation to footprint a gives more we the find other a continue if capital us operated there opportunities good on for we could we’ll consideration capital bought sense back returns. it the just even Basin XXXX. of to the asset our any command won’t when going It back first suited to

Operator

with question. comes your question Scott next Please Markets. Hanold with Capital Our proceed from RBC

Scott Hanold

us in private using comments. what have Is look equity in history just at your now. stock these, how - about of these at as out or obviously like prepared look move some prices, and do do you valuations And it’s think a there when give today? there it in you at you deals pronounced of right You been of and more part a some oil interest here given accretive a currency? how Is certainly opportunities we’ve of there? of less all your like, discussion you sense the looking Can seen your even all

Robert Anderson

question, Scott. Yes, good

focused So both that private. we on of out a we and are that various think opportunities public basins pipeline there in is there

the good, of who they that some But and I the talk participate non-core is to off guys public which think private guys important. we’ll you’re start to with The review going recognize assets, take upside. scale cash we want sell will but maybe in ride today processes. is continue to some they maybe see to of

to sure continue use to cash. we’ll make the equity leverage looks going cash each focus and how separately each do terms we so little has kind on profile on and don’t in of structure we a whether that, we’re we some And over end deal. And different. deal And up want of what levered, flow a to get impact of with we deal the probably

much So to think consolidate. think there’s continue playbook our that because to an improve I changes don’t as opportunity and prices still I

Scott Hanold

you Yes. point the seen But change in sell you change I of months? and happened - that last to appetite any what’s couple the have privates guess to by see Do the sellers, given to over others. that,

Robert Anderson

improved maybe long accelerated you selling cycle think this to is prices know mindset I never of they’ve their last. of because, going how

countries. Sometimes foreign by some that’s dictated

And so the level on all the activity we’ll see speak. in I as are improved happening market are there. more we out folks banks And busy divestitures sales. advising guys some There of decide.

Scott Hanold

us we you other at obviously, expect a the Permian Permian mention look is bit your Permian? focusing you you your you focus that you’ve how here, you did you’re primarily you that, the mean, there Ford, look obviously, playing opportunities define help basin’s at. plate, guys look when Can talked but, attractive I the well. should about and and been on like, field, thinking to that? that, the are pretty little Yes, Eagle the primarily as like, Or outside has

Robert Anderson

Eagle that, the focused we’re say that And anything at looking not on is secondarily I’d, else. then and Permian, Ford. the is focus primary The beyond

Scott Hanold

just to… that. And okay, enough. wanted Okay, okay, Fair I just I misunderstood

Robert Anderson

there. weren’t in trying We to Appalachians compete the to go

Scott Hanold

or months. And seeing bad? had for two Any any you’ve surprise it with surprises good you’re so IRM that far

Robert Anderson

And we’ve work, think who is I any positives goes the that. very positive the And surprises of integrated hard to quickly We I it positive they’re hear folks lot I’m in seen the that all but seen trying the really on and the capital that being the negative? you’ve from organization, to spend going negative, folks And to anything of to for or be bigger field. glad don’t part talented a Steve are I the a and speaking think the response. we’re else that to do board. Steve, response Steve, did from and some

Steve Collins

No, it’s put are positive, we were philosophy, well. by some willingness a and have mostly make. people the They reacted to encouraged work and capital to need that new to make the changes

Operator

Our Company. next your McIntosh proceed & line question Dun the of from is Johnson John with question. coming with Please Rice

John Dun McIntosh

it's Maybe for negative bucks. hedge benefit was you Mark. in year, ways headshot the Obviously, it a year that have XX you well but pretty both you’re this huge under can last now to book, a

think would more at layering on? kind to with you XX hedging bucks start you of like upside At would maybe how about for point strip forward year, little a what higher? here that year. wondering little a prices room And for going you Just this it for the over leave next with

Robert Anderson

had and Right? to more another it’s way at drilling deck year, of just Let whatever me and reference. well yes, said a it but both thing this more you a so that one you’ve more underpin activity, played can’t we’ve what address and year. ways. the price We given a downside little everybody’s And upside last just perhaps it. you for away for out balance very debt, just some program And manage it, hedges, the but luckily you bit, look risk have at

in So hedges, Mark? much XXXX around more we'll it’s prices investors or are on I'm this year. left that layer analysts think difficult And move as continue you've and comfortable the to when too few think about where table. we a we

Mark Lumpkin

Yes, he XXXX. means

Robert Anderson

Sorry.

Mark Lumpkin

Yes a end of we've It the generally I was paradigm to we've $XX. OPEC traded a post at $XX shift. range And mean, this that philosophy in complete got of XXXX.

some well it in the done I $XX.XX, that were because we're XXXX, some for was there. hedged I contango, Our one has of let's longer next out year. further one the hedged the XXXX. that been, hedged we from hedges thought make in cases, and in we hedged really And had moderately strong. really year and is benefited a mean, we've strip remember sure particular, we in out was In

And mean, protection more bias look are probably it. it. stay and of we literally consistent discipline. day, bit picture. bigger to little there's continues again And out But in done think We and continue hedging to does for sort at try about it, couple no throughout I doubt a at course of swaps yes, of further. strategy for just I we peers mean, than Here months we're downside that's the every And probably right to particularly the to contango, and again. - our what year away with some XXXX like chip strip just may strengthen our that we'll we it the hedge and not to are. yes the of cycle, the a now. But

John Dun McIntosh

we to those completions, but color and I rig they're do on No And impacts that storms, the running, on? winter of, appreciate on with that but good anything know everything the to aware relative follow-up, getting then the up production be should that that's hear. the a on, on-time. color, come appreciate come else

with maybe then, expectations and occurred? any that or around additional maybe Just any - CapEx OpEx might fixed damages have

Robert Anderson

but everything's, we're having a into on mean, everything's schedule so and I scheduling from No good year, even days so we're in early standpoint. Yes the it, XX relatively almost though far, but probably be needed well it anyway. from standpoint workover, impact needs, - two thing The an prior they the related only a to may winter storms or that extraneous major to got some than some have Could this non-op improvement other capital or activity plans. AFPs could additional we they not activity? see pick up And want I level? could would what partner who say And we another of increase a aware with get we anything that's, to on in obviously our their CapEx in additional prices. is But rig we've we're decides cost year. already

So think pretty were plans because set. improved going their don't well even to with the far, happen probably I that's prices,

CapEx increases of we're it from could. our isn't to So bunch that, our a focus non-ops, but going see

Operator

Parks your next question. The Brothers. with comes from Tuohy proceed with question Please Noel

Noel Parks

talking drill things, lot Jo before a is to mentioned paid you formation. far just drill acquisition a going that established done? there trending it to work your some you it? really And there is well acreage when Do the I targets the attention you're hadn't results about be what drilling as - and on expect I there, had in Mill, you’re the of couple how - as you results been or you did pretty still be to from existing

Robert Anderson

reservoir Mill We well in target lots of is And that me of you and good in have wells Wolfcamp, that Midland show And it's non-op the assets we're year. stack group Jo on lower how plus our Mill Mill participated I Yes, told participated Midland a that of a Jo last there's in drilling Jo some companies. a best the Mill Mill target. County. is probably wells it data in. in is for and lots is existing Jo to The Sprayberry the believe guys we good of no County established our of Jo

Upton maybe this take a that's and couple like we a no a similar a had most in step So, had where good Apache drilled C results and point, Wolfcamp characteristics. C, not our we're go we're we the new wells really to risk something develop did of geologic sort into and - block County had and going a of of target cap out not at a exploratory us Niihau,

the outcome. so, and also we Wolfcamp had C wells good drilled And

Noel Parks

different we're were incremental oil tighter really services I to on scaling I as is if maybe you were Great, possibility to things we thinking when might ones. to think of the The now there - you environment pretty maybe were just in than beginning of lot about, intensity benefiting just and little better actually rack want a spend might getting year. be your where the see as course, be and the bigger headed a from do thoughts fracs, interest were prices weak? goes, much spot in back of that, far price and get a

learned be is still you there can scaling from, bigger So are this to bit? to just achieve a inclined you you what by back or head point at think do anything

Robert Anderson

comment the our as kind team necessarily the only in development. of expert that, that dictates much it's is not on where about are that you that price as my here is Steve

it. address So Steve I'll you like have but offset intensity do things side consistent. been that, We've let wells of pretty the and

Steve Collins

been Like we've a try Robert really on frac little consistent at moving changed every every that. wellbore, well, we make around time - that what's like we've not and seem every can and we type said, to things in well. our based our to relationships, best make direction. design, Yes, try the the time see the bit best price. designs child usually And we parent, curves to we - look well, we open We tweak just right whether

And to considerably. I change we're so, don't going think

Operator

with comes Capital. John question your ROTH next with White from Please The proceed question.

John White

Good morning, in gentlemen very on and nice year troubling congratulations a a environment.

one midstream Just result item curiosity particular winter and was one problem production well was storm? of one that the gathering? there February there the the freeze Was storm, or ups the or predominantly particular on reason

Robert Anderson

electricity, it’s Steve right?

Steve Collins

the salt it they your couldn't electricity. everything. well roads. trucks disposal, biggest, you third-party disposal was was If - water run Electricity put The the a because have to but couldn't didn't oil the

So getting they had trouble our it away. people Even pump around. own couldn't

So midstream it get have going And then of around everything. then compressors was running. when you did a it didn't combination the their

with no gas. had to go place you the So

is whole basin giant it act. And balancing a totally the derailed. just got So

up So XX it and and did a back week days. but take running it's or balance now,

John White

adding possibility on little that. the if would there some said of a above don't anticipate rig, that on just Okay, get XX And lot but the - know, non-op adding is WTI of that's go second a or second I seeing you good us give it thinking factor you non-op a increased you principal color. what's you rig. CapEx, second preclude I a activity, is a there, more appreciate adding rig? from of your

Robert Anderson

operate can multiple plenty think of first six. we one it Yes, we're price, this run one, flow cash get sure near activity. making term. this and environment, we're non-op do then a whole free five the additional not we of rigs good pretty or staffed the And it's, like in it's to the say logistics going I rig second bring the smoothly. year, And if we've price got not least in I even in it's, some at

in And considering. get then pretty available, one, and bring second we're the the And be also later of let's so, little year looking in a efficient. we're what of It's And running small down further kind to road. pretty still. we'll this at is the a one kind what of, function are services going

Operator

from your with with Stephens. question. comes Gail Please Our Nicholson next proceed question

Gail Nicholson

to year And of the versus look doing initiatives you me when And is go-forward at potentially how remind guys activity fixed percent you basis? are does this Could you a your compare LOE LOE on that XXXX? improve variable? then any XXXX, in workover to what

Robert Anderson

exact don't Gail wouldn't that around and and we lot that's out but Wow, breakout will things? And maybe questions variable a in that between does, we the the I do reserves XX/XX, there it's Steve maybe our break fixed. somewhere there. unpack. it I know calculate guess way of

Steve Collins

that number less XX. know exact don't I - than a little maybe

Robert Anderson

Yes.

Steve Collins

variable… That's

Robert Anderson

workover it. then just additional we're… We've of right mean, because operating and IRM plan Yes, and then, got conditions, some I of workover wells, their their Steve? side

Steve Collins

workovers. That's in towards with some correct. IRM’s prices, capital of put some like those we'd And see some the upside to increased and we wells. the that And

a run, budget may in long change workover need hopefully year, a the while all attention. a of methods, because lift your But up. reduce progress. wells where show that'll Our some so this make can lot take bit grow you and those which, We little that's to failures,

Mark Lumpkin

some A for that needed the it’s were workover on What big down sort were little pretty pretty activity did went of couple XXXX. XXXX, workover Gail, our We’ve in I’ll what historical about similar financial a internally piece in typically we a to specific I a And XXXX, by was of from which should moved significantly. to typical, around. be bit XXXX. component say done, in year-over-year just there that really workover happened. of sort part two-thirds, of was of years actually that reasons wave in wave ago pretty record basis there And sort I mean, add our that. of maybe of And well, we went just for XXXX because up there a perspective. was

XXXX bit workover there’s IRM So is there in of that bit we’re basis. going - XXXX. on more do a so spike With of lot a in unquestionably to there’s a

versus or mechanism either Our things standpoint But, own assets some done from similar more not that last we want we’ve work year. do and that different we other to probably do is as to needs identified a bit quite lift workover things. a be

we’ve more it have doesn’t our definitely quite could and And built our we think but into last our expectations higher, than one, well year, guidance as this It workover that kind and little our an and gotten plus to it’s our we better guidance next Two, number is this forecast. then more have reasonable our year, Earthstone a a hope normalized of will. think it’s So come hope we that in is, year. of levels combine elevated sort year. back high be of we Independence maybe in as workover

Robert Anderson

at you long the today I might spend or your Steve you’ve did - philosophy stays this look a what up. changed Gail, But you and we money And and time, Mark. runtime mentioned way that some really so this, because and operating have add lasts the

we just the things get time runtimes things on of benefits the fix one also really So but we’re some time LOE last long production side. out And side, it and and really good try on and doing.

Gail Nicholson

LOE $X this in further a that be less XXXX. good from there’s assume to a likely to fair $X.XX XXXX workover improvement on year? than it’s in So go-forward chance sees And that basis

Robert Anderson

have to I bit if things look close which that’s mean because try and because per environment January. just of We averaged at that? might fair. driving is mean, I workovers. this higher. Earthstone course, much BOE why of factor so last of $X.XX the a think we’re standalone some for spend we is full-year would early and mean until $X.XX year year mean, standalone, year, $X.XX we scratch of is the that that Yes but Yes, to mid-point in, little you our of been I not you basis this for money low, in the didn’t buck that the total Earthstone acquisition I did LOE and last to head, as the guidance compare includes just had really XXXX you Independence. on a I your sort Well, it’s is the well,

the the a and it’s seven is Ours trunk workover just the expense. a of is bucks, up additional expenses, expect, just probably not little side, like biased we but LOE $X.XX, but someone general but of from the step up maybe kind piece largely bigger

Gail Nicholson

on Great, pipeline guys thank you over XX% oil your targeting production XXXX. you. then of are in And

do up on your the improve versus you XXXX. When think the I new realized does side? XXX% one, a and that’s to in pipe pricing oil XX% get the

Robert Anderson

improve Yes, a it Trucking is expensive little does bit our pricing. more typically.

trucking the consolidated we of probably saw I XXX% have zero different of blocks us be because acreage. just Although for big in barrels. for XXXX, at think we don’t just at rates times, competition It’s because on to pipe, impractical

XX wells probably going then be did, and you an That’s infrastructure. always you probably but get to If that could trucked. there, way a when has asset outlier pipeline is got you a from long

want areas of matter our a got we’re to, and probably just get but to get pipe we point, out a there have to target year. put don’t and probably this that the to we’ve but we It this at all on other happen are won’t us So between next planning timing it’s gathered that if year, the couple done.

Gail Nicholson

like average on then $X.XX any should pricing we or And on improvement, realized just think that? an thoughts basis, $X.XX, companywide on the maybe

Robert Anderson

$X.XX more. like It’s barrels Pipeline probably truck higher most are than than less part run about that sometime maybe $X.XX. or and barrels the for more $X

Operator

Instructions]. [Operator

your Company. Dun Johnson question with is & the Rice with proceed of next McIntosh a Our coming from follow-up question. Please line

John Dun McIntosh

profile bit how the of you on get trajectory of you guidance, mid-point? but think talked this full-year bit one of kind sneak to year, a the production of get color I with kind the if kind we impact, about could that about we little just a little when that of just think

Mark Lumpkin

here. Dun Yes, question, that’s good it’s a thanks Mark

to try one. address me Let that

shifted just five is pretty brought sort might forecast of wells we So the February be was based the or and in online What’s downtime I of X% first from a just it’s than thought the XX% being it in it sort be ones pre-February, online, more - year. it quarter a quarter of But six we’re these standpoint lower bit flush was at something probably think still shape And going little the going minus kind we ballpark. the of wells was general February few is to QX to and a February. excuse lower a it still was the impact, where little for that end me last be. on our production highest production

conservative So decline something that. I’ll like weeks ends probably up flat this. quarter, was pretty down bit based the of have, higher like obviously it’s year, so a day, the in being little a but the our was of probably - the mid-point a what what four flat That’s first that mid-point on a kind it’s Typically, profile, of our a guidance little of It We could that in year. pickup we than XXX reduce fairness per in the we barrels pre-February handle midpoint than forecast. in little [XX.XX not bit that’s our but I a on for a production XXX maybe of still QX, throughout the making, be storm of guidance. or little a on ago, was ton probably And thousands] hitting to three versus impact, our thought looks come the bit midpoint, XXXX it it in probably say if pretty bit lower throughout really pretty And guidance flat the day mean, BOE year. the little the QX, the QX. to and like

guidance is lower we the within the still the it’s it’s of on Now range definitely end. our gave, lower, forecast but

again, quarters a of little range. bit you’re a hit in just a and see bias makes midpoint the shape bit probably four of a the flatter, the throughout which versus So, quarter, lower really the a first

Robert Anderson

I Dun, it additional LOE what gives increase that from just we think the good overcome and in overcome see. February to challenge IRM happened us the a expense

and there. in And be our to put goal that guidance, pretty and everything are what but is there we out you like line with handily out try our see so, what models and

some of good us ahead guys good incentives our So, in are got field. the we’ve for there challenges

Mark Lumpkin

to fantastic folks to And a we’re we our with all every field job We’re on to do the and the that. are continue focused that line of very and hold in feet task day up the fire and year.

Operator

this Thank you. additional time. questions It no have we at appears

pass to So floor I’d over like comments. for back to the Mr. Anderson any closing

Robert Anderson

first the time your Appreciate on everybody. and call. and today, quarter we’ll Thanks, your catch interest Thanks. you

Operator

your Ladies you and thank gentlemen, webcast. this We does conclude participation may lines at and your disconnect for this today’s teleconference and time. you

Earthstone Energy (ESTE) 11 Mar 212020 Q4 Earnings call transcript