Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to the Earthstone Energy's Second Quarter 2023 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 and Chief Operating Officer; and Scott Thelander, Vice President of Finance.

to Director call Investor the turn Clay of Jeansonne, Relations. I'll you. Thank

begin. You may

Clay Jeansonne

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

get law. to like will within started, that meaning we the securities call statements contain remind federal of today's forward-looking Before you I'd

these statements based Form on June Form believes results in assumptions one may certain or uncertainties are of these second This give subject the they on actual our Investor reasonable the to prove as should are year for earnings they can or more ended our XXXX, the our for underlying and on that document XX-Q of quarter Should to XX-K the XX, assurance will XXXX, announcement. www.earthstoneenergy.com. materialize statements annual XXXX described be management expectations, can incorrect, of ended XX, vary Although no correct. risks report report Relations in and These risks, prove December found assumptions be materially. section quarter quarterly website,

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

on August recorded accurate time-sensitive information speaks note of time call of today, the at please Also, may no as or listening X, reading. transcript only any Therefore, be XXXX. this information longer any replay

Steve COO; from from with our we'll comments followed our from comments some then President remarks Anderson, CFO. closing begin Robert. Robert will call Today's Mark Collins, have Lumpkin, And CEO, by and our and

over to Robert. I'll now call turn the

Robert Anderson

per with record with barrels oil reported the production the BOE for all. second on what levels component day, during continued per taking second for Thank Earthstone's very us operational quarter quarter, and has busy join over Thanks, We excellence our a XX,XXX everyone. Clay, of good production to you afternoon, day. been you probably quarter over XXX,XXX second setting company. day production the time for

quarters volume three or per stand-alone had production production We in well BOE have a us year full This above original exceeding has tracking approaching now XXX,XXX of with day. now level guidance. row record our

strong level the low drove outperformance production wells inventory, our continues stable well new to once record-setting for will base of Our and production Steve outperformance in. here again quarter. and several the production productivity of drove This highlight our showcase decline, asset our strength quality the underlying that strong quarterly our base. and results

plan adjusted approximately directly of quarterly and The performance quarter. execution EBITDAX of of translated flow strong the our for operating about $XXX into million $XX and of in the culminating performance, our operational cash million disciplined strength financial free

as Over we of strategically significant the few strategy into company the through key position with the the of entrance initial Titus years, the $X.X piece than Basin A in of the the acquisition Permian a our been February billion of to that in and positioned Basin acquisition Chisholm has XXXX last completed. acquisitions past with Delaware operator Northern August. the of addition more

Mexico next been development deals, we and For asset the our searching to we past New our integrated for plan. while months, acquisition the have on executed XX complementary

really results show quarter's can assets. these do This what we with

to the prolific and dedicated this asset to right expect continued focused we value qualities our capital our rigs our Delaware supplements going Basin the five which on the shareholder and Novo improvement transaction our significant acquisition Northern has We base believe for capital large the stakeholders. of to all of in add Our recent Northern with of on shifting Earthstone close Basin, efficiency. four see all activity majority announcement forward. pending strategy focus be With Novo further to the of the Delaware will

just qualities. of those several minutes highlighting want spend to I a few

Lea XXX the breakeven future high-return in approximately are over closing, portfolio twp-thirds Noble adds oily locations hold and of our approximately for drilling highly current locations, our future drilling providing of years drilling premier Delaware X,XXX and of rig the base deepening New Erste. derisked we Mexico. high-grading at inventory inventory low future in those Eddy with of of and We we Basin. counties economic high-quality an First, Upon years Northern currently profitable inventory XX estimate growth will life

propel our level Second, producers increase production should focus efficiencies BOE reported XXX,XXX asset represents top second enhances with fourth our range in assets This will this The of allow volumes. constant the our compared synergies. of We quarter nearly This the mid-cap XXX,XXX Novo existing significantly for XX% being synergies scale operating day. the an to us estimate operational costs. and per of production to a proximity and growth one in Permian into of to group. quarter on

Third, increases our Novo financial scale.

maintain the expected financial perhaps we into XXXX, in will meaningfully Novo but more increase a significant increase through scale our Looking program. drilling free so five-rig to EBITDAX, transaction Earthstone's even cash flow as higher intend generation our

by to cash in as compared before We standalone our acquire to expect increase than flow Novo. more free to agreed XX% plan Earthstone XXXX we

strength transaction and will will not issue we maintain all though leverage we we equity, with our the financial profile. not sheet. will cash, and Even Fourth, balance will low we finance sacrifice the

expect adjusted fourth last we stated on with leverage to X.Xx quarter acquisition, first meet XXXX. being EBITDAX, As Novo, debt expect the further below and forecasted EBITDAX announced the adjusted quarter we in the annualized when to onetime deleverage the to we based a to quarter ratio in full

stronger, transaction will create and Novo Earthstone. our strengthen a resilient And operational financial finally, we The meaningfully base. will more

over XXX an inventory representing approximately will proved million a We per oil acres of production will have locations, profile of Permian and our current years inventory rig day Upon XXX,XXX net pace. over of drilling equivalent. reserves we Basin of BOE closing, XXX,XXX X,XXX have over five XX at barrels with in of the

All lead free making more loan of these significant stronger generating and factors resilient. flow growth Earthstone cash to

for Given transaction, strongly we Earthstone. a the profile of the is value-creating this Novo believe transaction

the a on business well. focus that to small things our in continue difference will We make as

in our margins $XXX including and assets than non-core over continued quarter million year, operations. more improve we will of This million the the year. of streamline have in our this housekeeping $XX past second For instance, divested

sustainability Lastly, I and website. our to can last our report, want be which week, was highlight found published on inaugural

to and other ESG-related metrics our committed and information are We providing stakeholders. to shareholders

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

Steve Collins

Thanks, afternoon, Robert. Good everyone.

operated allowing in a gross, XX of and Midland production a two the and and on wells. net quarter Delaware As gross was another We put in of you wells to quarter group. total our can us at rig the wells count five during see XX XX.X from outstanding total results, second for net three spud it operations the Basin, Basin with the maintained quarter XX.X our

As Robert team great some mentioned, continued our operations bringing wells online.

presentation, the We have website. which and of wells our areas is shown of available these XX our on results updated Page corporate on

summary Our I'll couple the a high-level give and release a Basin Midland that those earnings pads we of recently highlights Delaware Basin. the results. online brought both of in

per day in few IP we XX the Delaware a Basin, was brought X,XXX the day day online on Boe and average around approximately and one County, ago online Irion oil. we which In of average In other X,XXX the X,XXX XX -- line XX% the an pads Boe two both with weeks Basin, per brought IP pad over per a in with state the area, on Midland Boe pad pad.

with are wells the a flowing to still over XXX daily good day Wolfcamp on per D Midland and close oil We that also in are mid-July brought XX% basis. in County looking naturally, but production average Boe two Boe online

the and should by of Midland acreage Novo At rig operating. As acquired improving to September our from in Novo transitioning Novo the Novo operations to acreage rig August, announcement, the drilling is our rigs assets. down finish a expect we Earthstone, we we value Midland from one that mentioned of the Basin take asset. move we will and in shutting increasing be pride our to in the Novo

significant focused on LOE mindset, on Boe operating reducing Given lowering overall first quarter, progress the made that versus highly we by per expenses. the LOE $X.XX during quarter. We remain

through transportation over offset higher the lower higher expenses. repairs, maintenance quarter, and processing costs slightly work during This chemicals for was and costs and partially by gathering, achieved

reducing responsibilities to achieve goal. I assure through per focus working We Boe, LOE will that you our team to continue is their this on of areas our entire can and specific

the are news starting signs renewed. benefit cost are of see to we good contracts We have front. beginning shown softening, rates and service Rig on some as are to our rig

over renewed month, on and in we three contracts of two past remaining rigs price the reductions to contracts rig we our five negotiated to roll two XX% next months. the Over continue trend as and expect our XX% of that

We also production casing of pumping pressure tubing. see services, cementing and the a and cost for softening

We service costs. that we on the seen high are cautiously have optimistic point

those little the of few current the in expect the our We full a on to cadence material don't won't impact flow the well our want next until in see results to provide any those for counts quarter and expected XXXX. I see through way quarters. of color reductions

quarter, or third and expect net we expect net the production. wells gross gross wells spud or put wells wells spud on XX.X For we and fourth on XX.X production. XX.X XX quarter, gross put XX for or XX XX net to wells net the or And XX to wells gross wells wells

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

Mark Lumpkin

Steve. you, Thank

release I'll is you our our focus breakdown but meaningful our highlights, some on that my would remind on XX-Q. detailed usual, and details a in want and results in additional metrics As to today comments key earnings some I providing of available

Robert some have financial results. and quarter net million the was of was Adjusted or million, flow daily was income $XXX with So second driven, $XX production. as EBITDAX $X.XX Adjusted let record start $XX cash share. per me levels for million all by mentioned, free

having had XX, of having take Novo which million $X At face new quarter borrowings These as from me $XX significant facility, million balances is the through a you end, debt, of million let debt $XX in amount reported entirely minute inclusive two no June and noncore cash on of tranches deposit issued of during in our our million which Now received of paid cash over senior having several debt over assets. comprised quarter. selling transactions $XXX credit net we the approximately proceeds had quarter and we of toward having are unsecured cash $XX acquisition, and We notes. at walk notes to end. a senior billion balances incorporates unsecured slightly our and

do our on leverage million. incorporating little cash of $XXX expect or X.X to price $X.X balances, in and billion standpoint price have to Novo We bit Upon of LTM the adjustment XX, transaction perhaps purchase a for a estimated XX debt estimate purchase a that. million lower expect debt close and the net than downward roughly $XXX to adjustment From closing July we ratio an and of August times. quarter, we posted we leverage approximately the

yesterday. website After out We investor do transaction, to on our the to new credit Also our on down commitments undrawn credit have will on cash all deck capacity. $X near which to free Novo, our this that with billion, we in closing significant with our facility utilize facility $X.XX should of flow the XX published term. was to leave the under close laid Page credit intend of closing Novo pay borrowings us billion facility elected increase upon on

production XX,XXX of over we a day, XX% From quarter standpoint, really was average that fantastic had results because liquids. were and production gas XX% of natural and second BOE XX% record gas oil, per comprised our natural daily

and applies by our wells driven new forecast guidance but in to during the online performance quarter, this really during year first full quarter, informal largely both production came both production in general. the know, second you PDP better-than-forecasted which was that quarter also guidance well significantly really exceeded to our and As our

decrease BOE daily closed Our if of year-to-date average you end August, top which XXXX the XXXX XXX,XXX daily we in similar has on rate day of Novo production, we per our our production had seeing did the production production some the time quarter the flush significant of last and acquisition, to Titus guidance. fourth anticipate year. relative recall, Last exceeded to in

lower the combined on Titus. post rig Given count close and

again which Titus, production now just we've on flat full on and you of XXX,XXX able And essentially what BOE production IR been where per can see the that's per for around to past reported we has three how laid quarters the here would this day As held closing I today, sit maintain and deck production includes we've out since And BOE XXX,XXX we've quarter. six record the closing page second quarters you five point right on day what the our of results Titus. over were. actual been to our guidance we've

know, out we're This really to our attributable and as looking our of in a Novo high is weeks, this is well forward really and we're quality Delaware -- on asset really the to closing production asset Basin. pleased now continues you grading We're base, really acquisition largely to of which this is next the it our both the working able operations, Northern of the on which, that is levels. base efficient couple our hold at those pathway as and is, focused

Full in particular. and on presentation, to details is our investor of in guidance color I but want today provide guidance CapEx some and earnings updated our release. did production

closing and date Including Novo quarter Boe XXX,XXX both XXX,XXX to XXth, day, XXX,XXX between towards assumed we're August per for to of oil. day fourth XXX,XXX of and of third per production quarter Boe guiding production in XX%

per will a end We're expect relative decline that, the of guidance we which especially the in the flatten decline much we after flush first more but than low half do fourth our some that expect side. to oil not below quarter to day, year XXX,XXX range. year, do really head some we production this granular during Boe on do as XXXX, fourth production position pressure expect Novo's get will out profile, next of initial production in the production of into Given in quarter fall XXXX, is we and in

the Moving and anticipated, bit we're We second little well our pleased on than I'm tracking invested which that a in is CapEx to guidance. million $XXX CapEx. on lower quarter,

probably $XXX the CapEx million we're year-to-date. As see can you right from spent of at math,

which of So, are of guidance here. $XXX million our the XX% that's exactly year, from range the maintaining midpoint, beginning we

little infrastructure. on second bit quarter, spend less did a the we During

that of $XXX are guided for in we we full the between to shift third But quarter. invest million the as and still net-net, $XXX will Some million expect year, reaffirming previously now.

from midpoint this like a the quarter, to versus more the $XXX split also $XXX million here. weighted million in closing the in the we of you're picking something in bit assuming be partially if quarter, a million Novo and $XXX we're related up quarter some towards be would quarter the progress activity expect little roughly to And third third fourth completion fourth upon

element going standpoint. We net year good the to the to than going we're and capital within how of feel to considered. very an of like to things able things operational And same going previously all four looks about do it complete planned, wells and be like we -- say budget are feel that we would so CapEx the by three I from really end that's a plan. the spending we're more positive had

year and the a sneak price Taking same come peek play. the do into XXXX we and that some be year, lower assuming five throughout full see rig these to into starting bit reductions a of expenditure XXXX we're should service expect capital little program than

the contracts until most hit benefits mentioned, Steve won't about some As XXXX and really got we've of even of run through first those quarter.

can continued see what now. year we and the see of throughout we'll service on half the of throughout this right So, XXXX, decreases remainder the costs and in into year first the really based -- think

up to hand And a working first to turn an Earthstone. Boe LOE Nova Robert. mentioned, over was I $X.XX Steve LOE over side including, before it as per improvement his the standpoint, costs, team things as Steve quarter the me the the hard wrap to and expense is Boe into $X.XX per as for From optimize Let we mentioned, incorporate assets the quarter.

expect you in second our $XX we the higher year little $XX for some year-to-date, G&A to prior to second $XX of the a of basis compares did cash little lower to million the at half really a to per for million We the which guidance us in $X.XX a that and in put represents of the bottom incurred brings and which million when From of XQ per which favorably to $X.XX, annualize it Boe on million end bit expenses it cost peers. our quarter, range, is $XX about XQ. would perspective, bit and $X.XX be a very Boe

that, over for With to it back turn comments. Rob closing I'll

Robert Anderson

we the Earthstone cash the of a one to believe transformed balance having one an EBITDA offers We free enterprise solid our sector into with highest investors lowest company Mark. have stands yields attractive at below value billion, flow a which a is including of sheet Thanks forma proposition pro in multiples the that total billion at $X.X our value $X.X E&P value significantly pro and which proved reserve enterprise to valuation higher value forma is that than

for Our consistent deep continue to inventory, outperforming history position years. Earthstone of long and operational excellence performance

shareholders. creating for Our team of has our history value a long

We to our will diligently ultimately the continue created recognized. we've ensure shareholders work long-term that to is value for

for turn questions. to that, it over operator back any to now like With I'd the

Operator

Thank you.

questions question-and-answer the Scott a first Hanold We with proceed Please Markets. be conducting will [Operator session. question. of Our RBC from your line Capital now Instructions] come with

Scott Hanold

Thanks. wells I what wondering And these is lateral and Yes. and was assets you behind of obviously, terms continue like afternoon. little laterals as of those Good to like X,XXX those? us bring the at extend a have color there in time, all you opportunities returns give if could look to of how is kind you together M&A? opportunity to Bolt-Ons kind over efficiencies much enhance of tactical to or those swaps, length

Robert Anderson

at the shorter we in question. going Good terms little Thanks. in which the footages beginning Midland are year here. New there, probably of really and our Basin generalize But the of bit a in guidance what I'm and Mexico. longer Scott, in little to a put bit

the X,XXX to the of X,XXX areas, X,XXX go Novo laterals. different XX,XXX-foot Most two wells, for we'll same. feet So stands about to probably the

to going fall we're So into again. bucket that

so your the about same. half first question, the it's that's So of

probably bit there, would you. up a it if granularity more helpful can little we And for with be come

as -- ours. their and is asset, develop and to laterals offset extend tougher get Secondarily, develop operators the continues to we ability tougher

our for of Chisholm most have can trades. acreage to economic. things be we But is perhaps what part, lengths go with in and to efficiencies, make some and go units, trading that. opportunities have where I'd even improve still acreage tightest increase the out around like acreage bits some in develop and we we find the along where do look of and acreage, our but could very job some say this Novo we now will and remaining smaller can some There We lateral maybe

Scott Hanold

work of bit that. been a doing of cash little the Understood. like mean Thanks in what stubborn bit to place a efforts terms some that to on And in have Novo’s you're some context putting assets you Can And think seems see a do for it context drop. down. of the OpEx. you're I of maybe it give I around it's trying lower the LOE.

probably kind So will just but mix of to it assets, base a stubborn things the down, you're what been bit there? improvements that doing have little just on make and it

Robert Anderson

a at contracts, like part, I beginning dive cost. I can into go and from instance. all They went stubborn the down. the fixed some up let went that were It labor high the contracted can compression, Well, details. have you Steve all compression most our level, And for is of because for up. things tell are didn't a is and you the And they year, then

it's So or in use whether the we going field, not down. that our labor guys that's

and see that over increases to So team, labor, including increases see own to our we're there where continuing year. we use the will continue some

Steve the are and we savings. let some we things I'll have address where seeing that done

Steve Collins

is compression by down. Robert about from field same rigs, back not sand stay renegotiate labor and problems the balancing of from we our Part contract out workover but COVID. and to on hard like left to hard field we're workover increase. labor those worked chemicals working said, the over that get supply But and hard worked field, labor, rigs, We contracts, field or

Mark Lumpkin

too. don't LOE. Hey, this speaking Scott, We add, thing separately just I is report Mark GP&T one from would

as inflation, do to surprise us So say apples a their it against that our because year a earlier lot our LOE. I'll CPI. oranges have another little is And And lot include to in pieces escalators piece bit because was GP&T by LOE. like embedded this of caused a folks contracts internal these benchmarking relative don't peers, that we in one that's of

that the of I that's the embedded don't to even want linked basis going you're that per the inflation It relative I alone, mean, BOE of That's include just in sticky. our is increased by a away. LOE it on reality first sometimes the revenues. the if quarter say to like Like That's $X.XX model. when to But bit non-apples-to-apples their might or across peers, basis. you comparing a have contract. folks some of does part not that

Robert Anderson

our -- to a you're you opportunities reduce us and right, will I costs. working it basis, business. cost on for work cost on and in look continues fixed Steve to his an But per BOE all-in hard will when to bit. will right I'll side that and team direction look continue the And down, help G&A guarantee to cash be continue other probably end our Novo we at of to our out lower

Scott Hanold

all appreciate I the context you. you. right. All Thank from

Operator

Thank you.

Our next with Dingmann Neal questions question. come from with the your line proceed Please Securities. Truist of

Neal Dingmann

about. Maybe, you the for time. just Thanks here. were kind question My last bit a the talking two-fold to Robert, of little on is question

return, -- possible all about to before, starting new you with and to would this one-time about, Mark with to wonder think too properties think divestitures, get and year, you're improved it that you're not if mid And talk all just leads sounds be. about under the can even might be new scale, us by get early like well-product believe what thinking be certainly that if about mentioned with might well one-time, the much next point. You where you shareholder certainly, Combine productivity, successful could how I well you it are under, at that you divestures. but

Robert Anderson

shareholder and our I anything's It's lot you start the don't mind. Neal, Okay. on changed. there. think a in questions from I'll returns. backwards asked of

that. given the opportunities it our to next for to can some year, one-time, You down on up right. get different return start amount what we We about we thinking evaluate and get under or do we paid on and haven't got revolver options we continuing shareholder front,

value. like we makes some the will see figure again, and as our if more assets way, past, balance that and we point. acquire work returns we way if in we'll we'll out creating focus come right we've shareholder and try opportunity on make said see sense, a to But it can at And with the it

Neal Dingmann

Okay. how those divestitures, for what's -- a And be? can -- of maybe just sizable then the on second one quick just part that,

Mark Lumpkin

much us Probably another little that different done. helps we've out a bit. continue the not months, Maybe to a than It's not what sizable, don't what up, prices be but perhaps. are we too to total, go to already things assets, And In over we'll XX that more. maybe successful it's $XXX in would sense streamline bit makes Oil to know selling million our operations but for sure. XX next going we're sell sell. it's if

Neal Dingmann

And Got quick for it. maybe one then Steve. you or a

on that plan have you drill unique appreciate anything list the that top portion very wells County. what's top of the of two and of wells there about kind in and that I some Just Eddy to two noticeable of in wells, your those And area? slide Again, that all those sort is both wells?

Mark Lumpkin

unique. wells got We of equally. Nothing wells those like that. love lots all We've

three area, some in and wells completing that's exactly the to I quarter wells next that… that, third on another, bringing remember some quarter, like and that finish we're wells, can't going Stateline something think something or month, four we'll be late this month, drilling I like probably on up fourth later

Steve Collins

the Four in wells quarter

Mark Lumpkin

started. wells of Four quarter, the get would at will be end the

then we that Lea surprises And there as hopefully few up. some -- got lined wells complete probably, County more in we're some got working we've a we've on other now. So

Neal Dingmann

Thanks surprises. your guys. like would I

Operator

Thank you.

proceed questions with of questions. Chandra next with the come Please from Our Subash your Company. the Benchmark line

Subash Chandra

right, to or and for Thanks. instance, differently thinking of is business, you you BOE is Hi, XXX,XXX -- of count Are building Question on things Robert. here the more more nature? the about that business there of the like D, exploration PDP do and on term, the product. lack that increasing any here, a for whatever be versus going now Wolfcamp running better you're type inventory maintaining focus a transactions, what

Robert Anderson

looked on where more than definitely outsized seller mean inventory. got Yes. depends inventory Subash, but and it's we good there's focused on PDP are inventory, compared component straight deals still has. we've what all now PDP to I it really the at

at time that spend how fit looking see we and and in our development So portfolio. plans it

But D risk those a zones like not development an are in deeper is it the low other development Wolfcamp you Avalon loader in plan. Wolfcamp and the is that, the opportunities the the there's make about, and that company. sense the aren't like those whole New places exploration, Avalon. above then of our shallower We'll the even and exploit Wolfcamp talk in Jo same get of D, there exploration bunch and Mexico there's and Mill side into Spraberry Midland benches out basin go we the we The the and can take benches we're and

areas them. reasons to All to areas. those things drilled have are work geologic believe they're other we good in going where proven in certain And then got we've

into gas of to kind to like next and go to the but not explore we're our there play going something So for we're game. our see excited XX,XXX-foot vertical add those not wells locations or That's that. portfolio, out

Subash Chandra

that deficit old guess, you sort you do have pan a or multiple think your the getting how theories I and tackle excuses what's And by you the, that you now ways gone between and is to want disconnect multiple closer of as presence, tackling about size, any it. is. something But fact value? wayside PDP to internally why Permian it what Got have some the have of the your do

Robert Anderson

or probably another with and deal every just the of And great we one the a thing it we day. can And deal. do in is we That wrestle Yeah. process that another can closing is we question, did continue perform. to

see position. our to folks will. results look maybe starting notice and transaction, are it We're avoid confident see The they that will think Earthstone. shave and at and efficiencies sticky. can I acreage we off continue some think I operate investors good those are I'm hard And I and take need taking that on that probably pretty believe to with impressive done some results, show efficiencies So we've another can't team costs. staying good a even to They're -- as and that us

do hold And shares, will larger positions other folks trading to EnCap sticky are who ownership for and get be investors have volume some large They with at their stock investors. We and some the have time. of off that in then inside appropriate we've they'll and and sell that great allow time, probably liquidity our got Post. over

those. we we and bought So day assets to can really prove we that the on market every hard work execute to good

Subash Chander

Terrific.

Sounds like you. a plan. Thank

Robert Anderson

Thanks, Shubash

Operator

Thank you.

proceed Meade Our next questions Charles of Please Johnson Rice. with come line with your from the questions.

Charles Meade

and Robert the most some of coming Tides to sounded outperformance the And see us Crew. that's it right I guess I of your Mark you assets. the were that's not the of to back understood correctly, want or was going most Steve understanding, like and continue? your if me I to for if comments, point rest afternoon, the the are why from Earthstone to you attributing Mark, reasons there versus beat the plan going to that Good would

Robert Anderson

Yes.

was that the past do ties. we quarters timing I three wasn't Titus, spent about questions. hold in But lot can the questions, know as a of two on benchmark. new XXX at sitting just start And in didn't I at a long ability a I was attributing production once, and next I we to the how time. few time was and we're first a going the that's for I bunch the are how flat I -- wondering So our really great day was a acquisition. X thinking Those here quarters That's

we've full So had no actually acquisitions. quarters with now three

year XQ model and I for almost about right, to since came XXX,XXX. then, XXX,XX was if held our mean, XX,XXX day, thinking XXX. we've production flat per BOE our then, guidance I'm million we in So was, last at at this back

in midpoint lower And is then quarter candidly, has on drilling had And declined to say quarter. had call then May, lost shut bunch EBIT about million related as I related of that Titus pretty we completion being efficiency to than it's higher just I And guidance, heavy this say pre-NoVO quarter, nervous better day we had per day. than second the and was -- would we darn the Lea thinking anticipated. is was of turn this specifically model about in -- not and we just day our in that, capital we was XXX did wells that and the we really, top like than XXX you, of literally a our and that. overnight like than It's able $XXX a the stuff to certainly The a less a million lower BOE and into $XXX oil. PEP dollars the I told se. in something oil would County the did first of barrels I this year. X,XXX

higher And like expected. normal had really, we exactly hit was XQ, that in like almost and We what's that downtime happened than it came is was. it out

every not hey, average, a model been. wells, early well, at, kind is looking some we expected. function on day but I how oil started than are of It we well So XXX same we a of has early had well, are better of the the two results content what single our our and mean really that but things.

they looking had at on by by quarter, PDP. maybe like first rate decline that late PDP forecasted. the year online even secondly, just The much were as as then we even it or call didn't end decline And wells

some type that looked we not we it. I some part better assets. net-net, relates really do curves, would what So forecasting expected. better around just we the of but encouraged a we're has it generally modeled. the than mean, to that Delaware, they're tightest really probably they are I just have It's of than doing conservatism certainly say speaking as

is that's little -- And XXX you And to here a it pretty be we never reasonable. day. actually also you last fourth drop telling to you sitting bit told going that quarter it's think a that We're we're next XXX, telling recognize year. year, the I we it's dropped. that going

fantastic, don't but think out real adjusting that outperform might expectations. time too conservative. prior turns things you we're too to some I we're being as So the seeing conservative. case, We being we're to we're mean, think be relative if

Charles Meade

you you if a could a Thank things it's we us that County. this Wolfcamp that's have two of but Mark. is lot context. curious wonder results. notable Midland for oil things D elaboration, D are from One, just look my results helpful And cut at give industry, Steve, the higher to I least oil a my at seen in cut, And bigger don't a and recollection, are at least there's to high in we've what than other some then or results a -- But about two me. the that is follow-up, for That that. Wolfcamp I'm perhaps Robert

it second And that on bar it rate of but could to an lift, you them burner naturally. -- you point, the if I it's face like it, and then go? artificial you at to into maybe like just a that rate, when recognize want isn't context it which -- of seem doesn't not rate put lift where the and keep kind off the and flow artificial put piece, -- a some to But have you'd -- on might what

Robert Anderson

Okay.

little Wolfcamp giving of by a Let me you bit D. start the just info on

in recall, deal participated Lynden a we -- years primarily ago, operated CrownQuest you'll several County. Wolfcamp We wells, Energy CrownQuest. private basin, bought and good was results. So company in really that This if Howard with the our D by public first --

wells lot both has on Wolfcamp a the and in Midland Line. then, Since of Glasscock CrownQuest D drilled County Midland County

so D being Reagan us area. And initial Upton in easy and for initial an since development Counties. Wolfcamp We've was for the development in right seen good this development

and Reagan D. developed both a in have who in a there years Upton been been operator the for the several County in D three-well there's has it very Reagan of drilled some some basin, a And Wolfcamp while, And ago. large privates now pad

lift operators' it in to B long in at exactly see go private the ours we this to been on where other an head it's lift. lots on and plenty you these can going development of data areas got will this results We're to see We're just So Wolfcamp versus as we that's we not amounts watch about of that meaningful going D talk haven't an artificial rated, see point, continue -- X up to and of places. side when enough this Steve, these compare sure pretty happens in to additional to us for on what of be developments, and in some it what gas. we're we've the pleased. add block of opportunity Wolfcamp But acreage.

going I but… think it's up,

Steven Collins

got Yes, of it's are started going about to pumps fluid. up, and the a to pressure I -- X,XXX coming next that a think out -- down wouldn't Those heads it's it. can't tell be $XXX go. you little quite bit a enough about close. pumps how it if go million We big ready and weeks, pump stumble we're going X to the so I X they're going here, handle be bit X much. to all flowing to It's pounds to going of do are or I'm a in to times, we'll up in

ready that to I So but yes, we're cut, oil going I that it's also ASPs walked those conversation even in to go. are high had good But be here. efficient. before that's more because

to doing forward looking it. I'm So

Charles Meade

interesting. on Thanks that. I'll for be It stay will details. tuned Right. Well, the

Steven Collins

Thanks, Charles.

Operator

the your of questions. proceed with from next Scialla Our Please questions line come Stephens. Michael with

Michael Scialla

from -- for X-rig you getting And it second you desire that year. that to like keep and in sense contracted plateau, do Robert, would you the need at you of other to Mark, in I said result And the fourth you to level guess, any you'd that? in to production program said And to do plan spend sounds less flat? CapEx half. this on quarter half decline have production your do year rigs expect you're given the you the next have what first deflation stay a prices. than lower

Robert Anderson

try declining I'll of Novo high what, don't private down the asset. don't Titus and Michael, peak. for those tell are come and these us keep we examples, develop at and examples letting we great is you production those one we'll buy and right thing plan X the and the and do and fix equity-backed mind companies capital

we time did keep let and done X XXX,XXX message we've bought at it come we've we like BOE Mark said, with and down, if I job we've quarters count the a that day So our think flat of our pretty good production had we time. the hadn't Novo, and after at our a rig in been and capital consistent we Titus,

of I So stays we that of to flush kind out the thing asset. Novo once the here same get think

Michael Scialla

That sense. makes

where program want you be So to like seems right the X-rig operationally now?

Robert Anderson

to Mexico. in have really For rigs Works us well now, that's for four right. running Yes. New

Michael Scialla

Yes.

early see a sense the acquisition, in had couple close you next a do getting? weeks, the know be does that the plan Okay. a did And And on expect you you I of model in to of their development. you're Ovation you pad here going of how you're -- the Novo kind there to to of want the that for that of going what of get lot acreage. is do new the with I when acreage where just to acquisition, attack have terms to is if highlighted it

Robert Anderson

drilling will complete rig the and you move Yes. its mean right later sometime over month, got And this XX that develop not pad in same, that or but on pad Novo it's maybe we'll working done all something I end at Steve, a closing a and rig drilling we'll Basin. this the pad so they -- a it will now here pad there the running heard here, after time. its finish Midland one wells

sizes develop as a colors take all bite to or won't little four as all larger we're project that of little XX-well that still through out probably project to you to But which and got that. sizes And time. eight bit smaller anywhere match this a be in to a figure art at from take come and Novo on working once. want at But big right now. up are cube project. it there the an seven progress. a a you've Rubik's work And where probably and bit is We'll wells of It's

Michael Scialla

Great. Thank you.

Operator

you. Thank

come Our questions. of Noel with proceed the Brothers. from questions Please your next Tuohy line Parks with

Noel Parks

afternoon good Hi,

Robert Anderson

Noel. Hey,

Noel Parks

to Just season. vendor by encouraging because during making so some costs had turning and and your progress – been that given costs as One the companies it's a – thing, it's you're hear forth listening to couple. the really shown very base we've on have how

time going is be normal of side around. this think sales of sort the sorry, to ebb you in service cycle do curious, a the I'm sort in -- just I'm this So

thing just looking also is being how COVID. on I with oil wondering transfer a that the sort might heading a in stem bit. did forward, is a activity of effective gas about lot And kind that card, associated a of Permian sort wild was doing, forward of depending challenges store there But tightness bit infrastructure of the the as is the of serve

So, on thoughts here just be would great. that any

Robert Anderson

ebb in always now few cost bucks and to some have back is there we when for and down. we're costs potential do just be seems as I up flow, prices a not fast. see -- so coming and down And delay Well, mean, an coming come a there always down

to I leaving think that a coming Permian. basins is There's example in little bit of gassy and good rigs is the and it are supply Haynesville a demand.

performing rigs And operators or price high-grade -- so than and quality can tell maybe little something rigs, that. cheaper but a poor or where at it's even lower like

relief to some feel the going pumping number XXXX. if probably can going really I good The we're it's time. hard think into take we'll pressure really we So biggest I And get is there, think some on. all working that

Noel Parks

your northern the as kind intensified, electrical curious, situation what's there? Midland in like And infrastructure Great. Is it up stressed? just it adequate? of look efforts the Is

Robert Anderson

Yeah.

the Not Northern I think right? you're probably Northern Delaware, talking about Midland? the

Noel Parks

yes, Sorry, Northern Delaware.

Sorry.

Robert Anderson

based we're move good the good activity And there our in no change there. around. It's and the man's is on And we the news news is ability, have like also to not things land. infrastructure is portfolio Yeah. our

up And So we ability gas can we're when our that. move backed does see to plan around from planning time-to-time, get accordingly. on have bit. it little it either does or and And we water, a the

of now of things infrastructure. half in aggressive of the that's for year it quarter, slipping is but talked done some is a some lot infrastructure. seven this capital timing pretty getting dollars. plan about that It's spending to okay. there the We're the months our bit six got We've year. a So of in some third the We first or little

to ahead wells terms and not in bringing of infrastructure. we any still on be need new We're having where of

operators ourselves and to So it's benefit spend there see of guys getting money better other up the continue capacity. as in adding we the midstream

Steve Collins

almost Chisholm, generators over. Specifically since we've on side, electric took and released with the Titus we XX

it So And get also It's making the helps LOE bit. a happen the and but electricity always is there there. that quite we you start, coming. that when we're

Noel Parks

a Thanks Great. lot.

Clay Jeansonne

the backed end for the run. here because going it's a are of lot Operator, folks. of up we day we have business a to And we're that

all look appreciate the calls And we the visiting So and questions. quarter. all we forward next you to with

Operator

today's Thank does appreciate your conclude We teleconference. participation. you. That

time. this You may lines Enjoy at the disconnect your of rest day. the

Earthstone Energy (ESTE) 3 Aug 232023 Q2 Earnings call transcript