ESTE - Earnings call transcript Q1 2021

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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, 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. begin. may you Thelander

Scott Thelander

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

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

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

Collins, from to how CEO; will we'll from our Today's by Mark have some now over access our remarks I'll then and from Robert. comments find those of President call the released with can about Executive information begin followed Anderson, Vice closing President our earnings Operations; our turn call and Steve announcement Lumpkin You on and comments to yesterday. Robert. CFO; Robert

Robert Anderson

Scott call. activity. another quarter a everyone. start as we morning had We you very our IRM, conference to a good strong acquisition. of XXXX drilling we program, you, wells and We evidenced announced joining us closed We first the first successful for and our Thank and quarter quarter results we by a resumed full completed year, appreciate

a of rose This IRM to the terms production and losses offset quarter. results, oil January in the to over in XX,XXX that the contribution sales six per to resulting early late of than quarter, resulted day more production for more In February of equivalent barrels quarter. in wells that volumes due fourth closed or prior production impact little turning this production the per acquisition BOE in than X,XXX sorry roughly the XX% from BOE -- over offset downward the freeze day from

$X.XX rig putting the increased generated the million in $XX controlling and in of XX% year. now we look adjusted per to job our capital program we The gone for financial Resources, of key under within a a Midland quarter on will almost the strong, you quarter, while continue we million. by March, transaction cost Additionally, quarter, a and in Basin integration which we a of assets, in has the And is $XX execute metrics, our In coming expenditures the low-cost work. acquisition operating drilling quarter With control one expense, us prices, the came fairly plan. minimal few of resumed our allowing our our of price value $XXX.X assets cash the and flow. expected improved lower to on did at in to according to which to increase updating addition on to close The than free Tracker costs interest accretive minutes, to be forward fourth the to IRM million strategy We third early XXXX. Steve PV-XX the EBITDAX all The closing million BOE, $XX.X operated great announced building announced which compared in volumes, million of and for in guidance walk acquisition, those through in quarter X. scale to drove PDP a you first our production April structure. to carries activities highly integration $XXX in next the first

we this in relatively it the buying a Midland stable increase our further lower an producing low are and position price in providing by and production increases at assets. cost Basin from So meaningful attractive decline

BOE We X,XXX about the have second these estimated of that day will per year. add assets in half the

We locations also inventory. our Wolfcamp XX add to

capital on this assets year. spend to plans have don't these we However,

gassier locations in NGL the provide the our are existing and than and improvement Although, do takeaway returns. assets properties, gas attractive pricing for producing

complementary mix the generated we two-thirds assets, the the goal from a one-third cash a much a progress equity. Tracker view we cash expect acquisition that. of step Tracker end free and of XXXX X.XX and As about When is in what leverage, to strategy. flow lower with consideration being consolidation reminder, times next in using continued a we our multi-step is are approximately leverage-neutral combined as with with than

strategy these consistently efforts here as get our to they is into key nicely scale integrated for through at fit deals excited and our with two us which increase business, our efficiency consolidation, Earthstone. to and are articulated We a

our investor G&A low-cost, minimal drilling production maintain will add approximately increase IRM in and as also will combined presentation, we our locations, XXX and our we volumes the improving base per incremental us transactions staff. allowing metrics attractive It high-margin unit to significantly. costs Tracker operating add As while highlighted our

Now, Steve over update to I'll turn the provide on an call to operations.

Steve Collins

morning Good Thanks everyone. Robert.

the February. storm our from you regarding update me -- impact the call March call let from in our off to First

for did material storm. any longer week a back little increase a operating Although, get in took it expense production third-party have we approximately lost to plants not the due gas for capacity. to to full only We

I'll move current on Now the operations. to

a activity We pace have of underway. good

nicely. As March. I in sales project wells we County last mentioned wells -- These to net will tracking be and Hamman second our Those curves five are late completed and in nice turned our to Upton wells five call, quarter. area gross type in our X.X the in are in a benefit

A $XXXXX So BOE XX% Peak it's under oil XXXX content. XX-day with production still laterals well completed B Wolfcamp of completed average the all-in length wells day a shorter little per standpoint with front From stage. an these are and targeted costs lateral These early. per and zones. Wolfcamp XXX per cost of with average are a feet average

Given that cost to in lows minor these of costs we quarter these last for wells fourth fall year. we in of range compared balance cost the laterals saw an the creates shorter inefficiencies plus price upward a which side laterals stage service These completed higher long are expect the pressure the the per had year. what the some on than we

We our a of March our drilling project know our Midland drilled Mill you well. and County. Hamman a -- Wolfcamp Spraberry with three all in Lower X-well resumed Jo a we B also Hamman in with program As

by completing quarter. begin in to early third wells quarter them the expect We online these have second and

well acquired rig are pad on the currently to IRM. from Pearl full the a We Spanish acreage moving

Lower the XXXXX-foot drilling learned intentionally are all one-rig shorter the we acreage. apply these likely X IRM are the and excited the when year X the get IRM These back drilling We're drilled to which are for - under drill this bring wells current laterals of XXXX-foot Wolfcamp We bring we can and are program. Spraberry any well lessons rig A only laterals. planned wells wells laterals our will we so to as

pleased personnel IRM at to the of assets of We the the the operating new the which Earthstone with were production the smoothly. helped on really and wells. us IRM operational We on integration are has expense very field board optimizing and performance IRM go have focusing glad with

or lift or to we plunger electric this by of ESPs the ways lift the gas One main changing from gas-assisted doing submersible were method pumps is lift.

changed early we've it's the results that very been with lift on. on we've the wells Although the pleased method

-- costs ESPs. there's see more work-over Let's associated with where

wells shift and reduce to per On rates to we'll that the failure and decrease the time to the to aim expect we turn ultimately run over the we over improve financials. call gases as So Mark? Mark time road. the unit to LOE down review

Mark Lumpkin

Steve. you, Thank

the and liquidity financial as the do get we're from into then for we financial some and today quarter. start matters with sheet So, other recap side the usually the balance going of to

we when that. our it bit Tracker liquidity been liquidity to for know guys of point was able And continue you we As to improve us scale. remains do as what a used and versus increase early revolver we in fortunately January have focal to a strong closed

as which increased an may base It previous facility recently we amendment the an our the million. have credit for million borrowing also you $XXX $XXX from be to from third So, seen provides Sequel to $XXX announced increase the assets revolving expect completed Tracker Midland and we to closing of in from of $XXX the Basin million the acquisition million quarter. that upon and early to

and balance debt end. quarter at the to Going balance cash

we million we the slight the borrowing Tracker at cash for acquisition a to this acquisition increase million on balance will debt now this We the base closing. million given on bit will us recently in XX, under $XXX.X little closing. million that paid actually million Tracker at As balance XX% $XXX consideration at liquidity under cash IRM puts over of $XX.X year. interim requirement Adjusted reduce closed closing the a of at borrowing of reflects on undrawn that we be plus to $XX Based increase had And in the base availability balance flows of a of the and cash Xth acquisition borrowing borrowing March available the million. the a the increased by which expect debt January $X.X that over have base anticipated base. the period cash $XXX

the up the million $XX.X fourth pay of generated over million allows the the and quarter $XXX million at down us ended quarter debt. to IRM compares of $XXX we drawn January debt our for course to and This million closing total having that debt with a quarter last gross of the quarter of $X.X in early cash of pretty healthy the we For year. free flow significantly of to very in

a and if this the when standpoint, any of making $XX five Tracker the $XXX but short expenditure quarter. to lateral currently operations rig gross net anticipate to $X.X was to XXXX really on result capital update production the X.X after run add generally, not we saw the also you drilling debt and CapEx close And repayment utilize throughout wells first the totaled $XX from flow year, acquisition. And for early guidance changes month really, a quarter. we we And paydown million sometime midyear. cash end in for and running for million of the of of million a rig the initiating free second of accrued million we'll completing So having to budget quarter. our to the of January the costs about From we year. update continuing expect guidance remainder based around rig guided the We're capital do we X are

XX% wells day equivalent approximately and quite sales contributing first higher liquids. XX% first a the slight standpoint, X% content XX% of pad barrels looking well. or with From production online to addition and metrics for The production revenues. a were production, higher our a from natural oil as online the of little Also have percentage during from ethane really comprised versus in the bit and new acquisition, gas of top also heavier was volumes due oil the oil than million were per quarter, came oil X% little XX% rejection QX percentage oil IRM came XXXX but impact probably at quarter our were a December the bit from took first financial $XX.X bit of quarter line up starting XXXXX quarter which or content -- gas Now of the a the bit and a of revenues with volumes of a oil natural that base a mid-March. about that which of

weather, about Steve the something of to due close we volumes quarter winter referenced, by first so As per day. reduced BOE lost to XXXX or production February production our which XX%

wells day new we near benefited stated, As wells first of turned and six the volumes previously the the quarter that year-end IRM the acquisition sales impact XXX online from mid-March. to from came BOE about in and a

first Tracker include four the versus guidance be fallen the range of production all XX,XXX you little bit the that per we cadence is full flat-looking and for production a expected relatively it's does might day. flat the production we considering what March. which right our completion XXXX, the the As reminder, a during relatively It a when year with that's quarter, for through year, to and first be not profile in in quarter up quarters. in XXXXX Having middle should but consistent guys second quarter last visited with BOE

our And reflect update will We we add Tracker BOE of that production year. the when we've we the I and from XXXX should we guidance indication prices exact course, now think for of it what quarter. timing just impact the second guidance like roughly our incorporated standpoint year-to-date half mentioned for some on look the the day previously at this, where And that rest and Tracker to looks that Commodity how again. Robert note year. will into also a the put of also out but of will are as closes of per gets

Our $XX.XX of barrel per $XX.XX. pre-hedged barrel quarter. of which oil That's natural about per by total $XX.XX roughly fourth of prices XX% $X.XX are per BOE the for liquids significant gas a Mcf realized versus a quarter-over-quarter, pretty natural those equivalent of all increase and gas up were

also operating at And $X.XX On our which Robert a came a quarter, bit on expense mentioned G&A year. BOE. expense basis, the quarter. IRM for bottom range good the on first we BOE tax, our guidance $X per was freeze as really interest and of LOE and despite was expense include work-over production a severance lease the our the first February. below the of BOE front-end-loaded was in result and side is impact quarter the all-in $X.XX That really per costs, the per expense of for assets to in cash, that in And which in cash $XX.XX per-unit the some

They'll per is what that. positive consideration, does costs. and and the these February, freeze LOE that This we optimistic without like we're So look asset. saw costs result. in LOE this that of when And permeates but able in the do for to are be in exogenous personnel may like bias work lower the the few that operating maintain in focus year unit now the and both achieve job. guidance of us also we range team's months take really really year And the assets organization. of you production the IRM Tracker as lower optimization assets cost IRM beat on our a for We'd even cost we're into hands, toward the the at to our field through throughout that not doing it and because see work have really a the will to to our you a good with entire preferably pleased our any includes more field benefit a end on have probably being know, can on the events lower a with our

announce we'll that we So guidance closing update fold in as there Tracker when and well.

it. going performing considering to on of that's of goal per far a And impact continue optimistic and the and we're a assets really pretty costs how working unit be ultimate So piece Tracker that the this on is to we're from the still cost to assets and maximize down. we're so basis, key expect able year margin a driving IRM course, positive

and our we right which side, with first was On really is in per $X externally. in expense quarter, BOE approximately line what the general $X.XX guided the administrative the cash adjusted or forecast G&A and million

much IRM little Our cost last to to per net in past we the number an of strive loss reported first $XX.X cash has improve acquisition loss per $X.XX both us a assets focus of of of per allowed income of G&A years reduce had continue the G&A XXXX. the we as over continue structure to can continually BOE growth reduce production the do that in the unrealized we've or structure we on side. able to compares standpoint, as which BOE per cost our as unit very and quarter. on derivative just over really $X.XX on That From LOE to million the a first been in to share, and loss down on the to I'd year and G&A looking costs in GAAP addition Tracker costs the impact and the note quarter million are $XX.X $X $X.XX forward lowering incremental and included contracts. also we our an

income was up the reported $X.XX $XX.X million million impact the adjusted of a from net quarter. or of in EBITDAX fourth first approximately first We diluted profit per share the excludes costs adjusted transaction the which derivatives Our $XX.X and quarter, in XX% quarter. of

remain little With hedged closing oil includes XX% including guidance on comments. swaps it midpoint midpoint a for for As negative which $XX basis our XX% the Robert guidance of is our back below over with $X.XX are And differential, the we for of on turn prices these approximately approximately the positive; a to gas, for which over of I'll of little practice, and oil is that average gas. of our differential. XXXX basis a and well

Robert Anderson

Mark. Thanks

about and ours with As how bit it's you and little of maintain that company can the big focus costs our inside a we we focus all a a of folks. time see, of each talking on spent all

ability position execute support our increasing acquisitions. strategy high-quality with of to our continued Our scale has on strong growth financial to accretive

same Tracker by integrate well that have assets. IRM been and And and pleased been received have IRM with hard We investors. and acquisitions have worked do close we the Tracker we the really the find thing to will

on focus creating plans. acquisitions, gaining as been team accretive with our This our we've scale focused not and new for corporate for a course operational requirements shareholder our with for management alignment compensation absolute performance maintaining are and price value us by growth performance. incentivizing share incentivizing We with is on

aligned aspects. a As in are fully continuing path is acquisitions our work shareholders to certainly our investor still strategy. points program, we our additional a of for compensation more of along gaining is with out, the all presentation there do through us component lot in but scale large And executive

increased are through and and flow base of deal, With one-rig a down production cash the significant free generating further nice acquisition we on IRM the a continued Tracker growth rate. of closing upon our at the debt paying the program pretty

As were add essentially alluded March drilling rig rig. couple about of even positive in flow to that have rigs to cash are the likely anticipate of a aggregate running in And and a in company. years we to on attractive this sometime we strong after inventory, will profile now with adding three into companies the I cash year, second rig second three Tracker with ago close free the significantly being still flow combined and we we half four the one more second

of update closing we to Tracker around acquisition. mentioned, Mark guidance the expect As the

We these as returns have have scale shown create the inventory to the through bit with two and we recent acquisitions attractive the deals. returns operational attractive and generate to drill continue focus via and

remains that cash consolidation and be cost, shareholder but built generating our as The with that could to free they with criteria the industry high allow value with disciplined growth. continue our our pleased acquisition our continue must low foundation add complement we margin as we'll motivation sheet are strategy further of protect We objective. and is our operations maintaining our primed our opportunities a and sheet scale operations and and execute meet to Creating primary aligned balance targets balance flow. strong strong must us to have well

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

Operator

Thank we’ll first you. this your Our from Dingmann session. time, conducting comes state question-and-answer a Neal Truist. Instructions] At Please [Operator question with question.

Neal Dingmann

Reagan like wondering Rob, talk release press in rig rather towards later potential talk all. be Upton. than what -- first about morning would or my sounds will the with -- you just or plans -- question you sooner or second, Midland bit? activity back most and for little on go Ector to I that or first where think think just Could a I year, this you I Good it see near-term either maybe returning Steve, about

Robert Anderson

Sure.

acreage seven up out the then County. having in with blocks point got begin or or second County. up sprinkle would we four those County in with. four between to and have -- we block And and wells over but time. of of Upton end in rig, Éireann pick go we'll we've acreage IRM other forth and rigs back rig So we'll blocks two two those a the At rotate drilled where then Midland And Upton Reagan Midland in [ph] being a basically will to areas the and some other either of bigger

Neal Dingmann

just the continues on asked And then to be there out Okay. forecast. question

that remain free strong for flow level, with look this -- -- like to that the even to thought nice could team you off and at think again, that minimal and decide hit get -- you Frank solid throw ideal be rig, that still I most some different do these prices that guess free the point what than level maybe I when the pretty paying you and near-term of down? plans at second if cash think to cash continue what's level continue that and flow. pay debt Mark you But it what you maybe that might when besides days. When my ideal I

Robert Anderson

makes And something that's Yeah. to to continue already at is leverage operations bolt-ons, amount. we of grow for probably where and near next don't business. flow -- Neal and in any free debt pay that -- exactly out not whether to That's the acquisitions have the step. first look utilize down some opportunities, or It's other continue we course to turn we to looking it's then our half cash but have figured business minimal

Neal Dingmann

you. Thank

Robert Anderson

Thanks. right. All

Operator

question. Jeffrey from Alliance Partners. Please Campbell comes question state next your with Our Global

Jeffrey Campbell

morning. Good

cadence. the want spending CapEx I you to First, ask about

of it XX% like like sounded short XXXX got in completion looked rig going costs of guidance a you I quarter on laterals. current maybe mainly it and was about you was And think first said it The March.

not just was next the you wondering, quarters? how second three see now, how have spending do I we over the So the assuming but rig you -- unfolding guidance do

Robert Anderson

is It's Hey, easy. out quarterly. Jeffrey basically equally spread this

year the So keep busy all rig you think we're long. going to

cost that's figure you fixed completions we batches. then wells a we'll out when and So complete have and in

so pick And But over equal of year's through production the cadence. is end year. of up cadence the really cadence rest the year. the first completions completion that the until equal don't about the rest the The -- quarter be year. will that's of It of next

Jeffrey Campbell

rig -- that you of maybe adding cost that on, monthly anticipate give rig appreciate spending? my then if cost not you modeling that range I question us -- bring second here, to range No. second you Okay. without And us specifics that. can too anticipate contribute help to with you of for that but a great to per the is a asking decide the might I'm

Robert Anderson

drilling dependent rig to cost we even to second rig It's some year, year on the frac. probably really end we and to we're going of the latter start. a the no have when build to in if be with on the bring that completion going of up until just costs But very inventory only half

is $XX million that say completion or million in you a of what quarter, the or So for the $XX exactly I so could at half roughly don't capital know half we about if to equal a cadence first think of or spent you if rest side. quarter of the rig the without but a it's year

of don't I the So magnitude. That's know. order

Mark Lumpkin

on I completion million million probably probably Jeff, CapEx. $XX a just would $XX of little $XX doesn't. adds And million includes it And again The of it And $XX timing. depends bit guess. million probably activity. the to

it a -- different just not million to of $XX that which I going So up September X, X. a X but to is rig But than going little July to think $XX is on depends looks guess. kind pick fair July million and we're

Jeffrey Campbell

last this a way. I'll And one, -- my broad Yeah. I That's M&A, ask that. appreciate in for very this regarding helpful. more

look think space? prices, As oil firmed E&P for set prices some continue do reduces small-cap higher analysts this are or to are and you calling you opportunity your the consolidate increases as even to

Robert Anderson

And the will assets? were sure get our We're there's discipline it not which, asset increase processes. if just going we're competitive It and to likely you keep looking definitely A able we'll to through us what up. isn't for. and opportunities not. same Does prices look be to change, lot that's activity to technical or are number going I'm more of acquire because make any see, oil or of discipline go more to the at, successful opportunities financial these we

Jeffrey Campbell

was I you. what was That Thank looking for.

Operator

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

Scott Hanold

Thanks. Yeah.

Is with full-time your that do through is ideal asset say no forma pace other or base the lines or assuming should Just curious ideal it all second with frac about bolt-ons, the that XXXX and there a on point up Obviously, the is M&A think really most efficient as three asset we because pro forma of see Tracker, crew? what a you pro rig obviously rig. where adding sort likelihood count? cadence the including you discussed a of bringing the

Robert Anderson

point Scott, company concerned And overly got team good about and that up with fortunate. of been the know lining is. our his with working where it's that to with really we've we're Steve rigs we've what schedule our perfectly, vendors a not they our our a relationship vendors frac number

three running think so And we if full-time efficiency and have-to-have our necessarily same. the we frac our can rigs about I to crew. keep don't we two timing we a So can have rigs, go

flow two pretty point I to good. know times, delever we And a say, where get cash XXXX So we in don't that right without lot of running issues we free any rigs now, know yet, optimum look rigs. still I'd we but the continue two the develop to sub-one and

Scott Hanold

is another around the to corporate a size how Could organization the double perspective, more? just be Okay. your on is down can how your taking are capable makes and M&A, question big organization? from you right discuss just road? still execute? you sense. consolidation lot That And for potential able how you So sized now a Like,

Robert Anderson

able we more Yeah. That's an handle And are not maybe activity, be great at maybe a production, sized to moment. not the question. double to but

two is So bit little we'll office. some LOE, different. that's work every minor Obviously, and the through a and to very transactions, there's these continue to staff, it's our hard on field In that. transaction staff additions in

the have have where can management in the more don't number we real right I and place to other got than to next doing really and good we're and we the capability for management to grow. motivation now. what you a than, And authority the continue plans, we've So level the team, handle of

accomplish a team. have I lot know we great can more. staff, a great And We

Scott Hanold

obviously, noticeably, And XQ. budget. Okay. could one I -- able you here, presentation page expected your went frac from, if $XX,XXX the from have like, capital talked cost think show going in range bit to in I your one and some from all And in -- a seems it's from it at up you it the on understand. And the little XXXX $XX,XXX. least about where handle XX, this I lows last you're to

that a originally, If confirm, of little sort was that or for you could leeway baked bit there plus. there's of in

coming where Secondarily, is if specifically discuss pressure you could that from. like,

Robert Anderson

pressures part. of going thoughts little let was Steve seeing. be. know what to Sure. plans But capital we are first it is, for pressure bit costs the we're Yeah. just had And the and I'll But into handle the where built part definitely didn't We inflation our first -- part. or handle in year. our a the the that

we bit after I Steel of continuing stole I on, -- think prices quarter. were to instance we for surprised might the thought and some commodity would We continues prices be be little they level a hoping steel world subside hot in economy the some But they inflate. continue the off the first to to thunder. instance for were Steve's -- and still and of entire a costs grow. of

our so, but -- inflation some built definitely So we Steve? had into thinking,

Steve Collins

-- the the right, that side. It Yeah. Rob, was on steel. drilling you're

pretty up bit probably the expected. just that good. factor largest side, completion the little leveled drifted off -- in two On prices a everything are they but Sand we which probably have has

has their a big and level is of ramp-up kind suppliers one a employment gone production a And cost are fuel up level sand Diesel too. the getting little things bit. As their quite better.

probably those have to seem biggest leveled two they off. numbers, but So are the also

models are I So we -- our correct. think

Mark Lumpkin

Hey, the of here like frac we That really short it's more kind a a recently I on fourth like was stage. a And was that stage. a What completed in, good. longer lows the quarter we in $XX,XXX was for the just just did $XX,XXX That was under per Mark. we would side. felt lateral. little pad Scott, add lateral

longer And there's $XX,XXX because As laterals, some a more a Steve like pad inefficiencies probably was like equivalent short-lateral. on that -- $XX,XXX that on that at something to the lateral. is X,XXX-foot on smaller mentioned, cost like probably pad

just think It affect it probably yes, doesn't lateral from the just to $XX,XXX, a place of the will a year what also ultimately cushion we there. range will cost context we bit little bump we side. $XX,XXX bit the And next little than partly for year because So did but we in program a up on have shorter deliver. of little do a

baked what cost cushion. we mentioned, had into away guidance for a put out of bit but it we takes Robert the inflation As probably little

Scott Hanold

Understood. Thanks.

Operator

Our state White Capital. question. next with your ROTH John Please question from comes

John White

thought it congratulations. and a I morning strong quarter. was Good

reported other strength report NGL that in NGL expecting market interested I've on be comments the your price I and than was higher You seen it. significantly I'd higher-than-expected companies and behind several prices.

Robert Anderson

Do a handle buy tell it. your because look Steve him gone costs into I because piece. dives amount one we one details. I'll do the they've of live buy I'll Go just key. is you propane, propane little Mark you fair where tremendously. John? let but propane up that at of so

Mark Lumpkin

the first Yes. a John. and were quarter. more love the piece is, XX% little in the since and come question. down quarter It's positive propane of barrel quarter The prices XX% good biggest it propane ethane. first We if Propane potentially a April. of pricing future. in the you liquids, bit there in about NGL pricing going and look They've Thanks, positive and the on the exceptionally about a at in some is some there strong things is Yes. are things

off quarter. little price is result of gas a volumes. ethane or the about NGL but the pricing. of XXX a into half $X probably It strong you shaved have think probably say did the that I day slightly down actually leveled recently. period for a here equivalent they in flipped probably reported a and to where get price. That's barrels volumes a little quarter, is we contango higher $X were I'll about kind impact weak The overall of our the and they've reject that was lower of bit a relative for higher bit there or XXX off also Brent but of XX% we production

with little the So bit in sort up of barrel. pricing to less ethane NGL added that boost because also you the end a of

of and dynamics was it's market terms So say in sort a you're a there dollar got that. price I'll some I'm barrel flipped things particular propane WTI. a production give is done. going barrel potential it where prices propane, piece correlated the with equal tight. biggest us not would in first quarter reflected but the WTI to propane go of was on in a fractionation rates bit of say flipped. things year negotiate that to It's and And better the but tight the optimistic also it's it's There's are. little to chance in we're a transportation forward fractionation that there. on parts ago, being availability more not in better for. it that's positive fractionation I and adequate that very And of to pretty But get NGL other doing very actively here little Permian to just bullish of going going takeaway we're where we've the necessarily of demand from boost try necessarily we're it's and the liquids situation storage capacity. that's not of sit of The perspective. And barrel and particular. heavier given per and And that's the a around a really correlated with really

cash that's strong a lost the offset in completely almost quarter but freeze honestly we price from chunk that. of because production flow a the a result. February increase the standpoint NGL So mean really I of

John White

details. appreciate I those

and up So pricing. propane rejection ethane stronger it's sum to

Mark Lumpkin

But yes. the of propane more the rejection, than ethane

John White

propane. I respect have all natural And due Okay. with I gas Robert, piping. buy don't any

Robert Anderson

buy some propane, John. Help need Well, you out. us to

John White

you. Thank

Operator

Noel Our Parks next question Tuohy comes with Brothers. from Please state your question.

Noel Parks

Good morning.

Robert Anderson

Noel. Hi,

Noel Parks

of revisions the Could you've proved I with base and you strip at might of reserves the year gone the like higher cost doing a a ballpark. in given this have of after now look just reserves assuming pro sort assuming was -- from wondering, second ballpark couple done you of would last away. a transactions current the process Can sort can also prices the -- transactions? year, and roughly just rig, what your the forma

Robert Anderson

And Tracker. a got And and as we it our that. PUD more at out you'll we Noel. see developed summary proved information investor we've total. actually a But Earthstone and file regarding question, have we do That's and good and deck, of IRM our entity if you there, reserve then proxy by probably in break look

value. see some we at to that our much the of oil, to details can does in dates further that than until same not the envelope the we're into terms what you filed. Now too it's back go going of aren't get do rough $XX Other exactly and proxy but calculations the

Noel Parks

fair enough. guess things. two look I'm well, And -- little wondering you No, I a thanks, bit as

arrived took. lot the deals of at that you looked a You at you before ones

a sort I'm the way what's to little bit that those and hearing take inherent in where Just that of weigh market opposed you the areas areas on to service are just look of pass will maybe the completion parts what about as vertical developed, sub a the on. more more at wondering of with And -- that though. least more little better maybe parts, room work little -- you this So with at going and probably what's might it's on attractive running interested less in what I point. you? at the more a was information developed took in the developed how dwindling you developed also guess Midland the I in particular, legacy it including guess thinking in do looking as a that at

Robert Anderson

and about. it question. look in what deals bigger at scale We can And be it's That's business. keep cash as little The of future. outside is. ratio high-margin. we is view. a like in as to speaking, of looked And generally a it's It's within still Yes. doesn't probably but that to have a we base not a or we a bit And But or it's we're right? matter the cash have that, bit past got size flow structure low-cost XXX% we fit therefore But oily, to is to money combination attractive generally a oil and running look speaking, this lower our And the move bulk our because inventory of might Again, look borrow at that's low-cost base. that. do production basin in going inventory, at same and ambivalent gain go room. bit a little at little and out the what to structure look deal I than we're kind gain what good XX%. to going of for east do you gas production, us that we'll talked as scale We we on and we'll deals we've strong that mean upside Tracker but more to XX% flow production to -- it's like opportunities pretty the continue our that. go as

in it they're and looked varies. deals most looking year one of other. we're at past little we're both But bit or those come a component of some the we've everything at the and in way of two lopsided the sometimes with In or production, has -- fact,

Noel Parks

Great. Thanks. me. That's all for

Robert Anderson

Thanks, Noel.

Operator

from Nicholson question. comes Stephens. [Operator with Please next Gail state Instructions] question your Our

Gail Nicholson

Good afternoon.

the If pace. than I bit low peers year end level would normal You $X little mean But guys think XXXX I look work-over how pace. I that how talked think to when roll activity and with the larger guide When been? remove of dig your importantly, had already smaller but anti-normal LOE XQ more of at XXXX, we we look I some have forward? had range, despite sub-$X about to margin when a you transition the from that a this more cap ESP the bit to I $X.XX per normal in kind LOE production in about more. really cash very into we into quarter at then you those kind the BOE, a LOE towards low the in XXXX clear you wanted we improving a forward? being And should LOE gas is lift, two, at weather a know going then the competitive

Robert Anderson

The help internal hope so without are Gail. the really are to definitely side work-over once cost the leave then. we is definitely is goal out that But a that you'll without going of how with get guidance these -- see a we're until terms Tracker target out to our that be for an to as and peers our competitive moment wells a would targeting us. of going going we're we BOE. performing Well, we're for the side. cushion on BOE new in some But figure sorry LOE And below I'm you, below there assets some $X $X we our

Mark Lumpkin

Gail, it's Mark here.

per when the months work-over. LOE, the was even surprised first when about direct so the -- probably we came did And LOE was a or a Where probably Yes, of versus that elevated will of they the at I but quarter, did. March swing the be it. well for $X.XX seen on quarter, was still least expected in so a we really excludes candidly of that terms which I about BOE little and LOE well which really, the had and really, that's as elevated bit second couple stuff. that on of work-over as Just was mean, I in numbers was prelim in what

the non-work-over just So that Steve we about focused cost very structure. the honestly doing testament I the and reducing to piece the things in are to it's mean, talk folks doing on field a

closed the is forward before. you optimism come think there's than mean, some of in to for short. and the And the to we some things tell because that better anything little the below going a moving to hesitant going effect might come know, initial you month up about full year. But lift of some probably the up told we're if usually one of January. we execute. here you some continue to reason IRM we of love range Thinking we're there tell that to you And of the I mechanism. we're is because I not and We've only some sit that normal storm. overpromise be out upside. team I'd February of for what going definitely really was seen messed is

months So to really more we'd like the Earthstone in testament to assets some see are and early I field. like a the approach to really that. But mean managing good the trends

Robert Anderson

hard planned. those and aren't terms really on. -- big it things kind to of have go Gail thing at a when They hope in money to some we somebody this is hits it we non-recurring was non-recurring. necessarily fracs all work-overs and in well a are and you plan they're other spend to in of The events happen field the least It's good it well -- of, are production that to return bad

the is year. throughout of So the avoid that we what hope rest to

Gail Nicholson

When Tracker. position the Great. completion And and we I the and moving with the the of the legacy there's at half CIL. back then base know of tempo asset pieces in year look

XQ -- you production should we for on just up XQ it tempo kind on there of detail provide down of trajectory the flattish pre-Tracker, any and kind XQ -- of that we quarterly can or progression. a kind think CIL? Should So

Mark Lumpkin

of of It's per decent we that we of than was over a At March, the storm. Robert probably because the artificially a first a quarter I mean BOE that. mentioned little for were bit higher definitely flip-flop sort XX, as were of X,XXX that. the little end but day low

on quarter starting roughly and March. a quarter with little late for in bit the in We're probably QX. base kind in flat step of the from brought a So QX we in second we're the down kind of and up production a then maybe

Gail Nicholson

guys. I the Great. clarity. Thanks, Okay. appreciate

Operator

to the Thank turn all for Anderson closing remarks. have it you. we Robert back And that's for questions I'll today.

Robert Anderson

time. Thanks, it's I been everybody. the We day. appreciate know long a

So next quarter. we'll we'll hop you to and -- next go work month off talk back to or and

Operator

disconnect. you. today's Thank conference. a great concludes All day. parties This may Have

Earthstone Energy (ESTE) 9 May 212021 Q1 Earnings call transcript