Devon Energy (DVN) 2 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Scott Coody	Devon Energy Corp.
David A. Hager	Devon Energy Corp.
Tony D. Vaughn	Devon Energy Corp.
Jeffrey L. Ritenour	Devon Energy Corp.
Wade Hutchings	Devon Energy Corp.
Kevin D. Lafferty	Devon Energy Corp.
Richard A. Gideon	Devon Energy Corp.
Robert Scott Morris	Citigroup Global Markets, Inc.
Arun Jayaram	JPMorgan Securities LLC
Ryan Todd	Deutsche Bank Securities, Inc.
Charles A. Meade	Johnson Rice & Co. LLC
Subash Chandra	Guggenheim Securities LLC
Matthew Merrel Portillo	Tudor, Pickering, Holt & Co. Securities, Inc.
Doug Leggate	Bank of America Merrill Lynch
Brian Singer	Goldman Sachs & Co. LLC
Jeffrey Campbell	Tuohy Brothers Investment Research, Inc.

Call transcript

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Operator

Good morning. Welcome to Devon Energy's First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will a question-and-answer session. This call is being recorded. turn over to Mr. like now the to call I'd of Scott President Relations. Coody, Vice Investor begin. may you Sir,

Scott Coody

Thank morning. disclosures and our report. review last you good This earnings our chance had night. and financial to release, the forward-looking and detailed package operational data that guidance, released I were includes hope operations everyone

so our the With our cover quarter. key today's for that provide slides slides make available today's remarks call, our on have a few to are we sure our will during supplement the Additionally, can to we follow the everyone along. CEO, will I slide preliminary President refer to Hager, on from website, prepared will call, items. Dave thoughts These prepared Then his number takeaways and and remarks.

that beyond may today which performance, statements expectations, comments number of not guarantees assumptions, to to These remind are to future law. answers plans, subject Vaughn, then many Officer, development around our U.S. our wrap this review would Officer. and of risks, to control. Dave, is XX highlights and key uncertainties, for Chief should our actual And are call we'll the our Q&A. infill prepared a These differ minutes. of answers Overall, you securities few by call with Following brief statements like on will estimates Operating questions results under this that and Financial and I STACK. open last going we'll operational forward-looking forecasts, commentary the Chief financial contain a cover our are are comments review a Jeff and Ritenour, remarks Then up strategy materially. and in Tony

our and factors, Dave that, Hager. For please And President call the Form a with review CEO, over to our of XX-K. risk turn I'll see

David A. Hager

you morning, good everyone. Thank and

comments For four centered messages. the call, of on be today's purpose will my key

Turning to slide X.

to production the by for midpoint raise, our XXXX guidance are rate we from the up outstanding compared XXXX XX%. and The that our productivity, improved greater an is which experiencing executed XXXX, initial are of The raising in Delaware operational estimated in multi-zone compressing outlook cycle have production with at due XXXX. for times is is and oil forward updated first key focused and of this these well the projects U.S. now activity to XX% our activity With of the of performance economic developments. production pulling is previous our are our guidance efficiency we the message With planned, represents we growth as STACK. driven we core incremental oil U.S. guidance gains higher STACK, development and than the multi-zone Delaware achieving developments, efficiency our into

most half toward us our constraints plan top portfolio. next Given into want of on emphasize deliver execution, because will upstream in both story. program full growth XXXX likely place accelerate supply quicker we'll areas and protection and industry, key With news all benefiting our the it guidance some assurance plan is price plans. XXXX likely XXXX. anticipated, end this arrangements asset marketing the chain outstanding production trend to has we CapEx our issue we're good capital XXXX flow reason the a range, guidance regional is trending top of spending of towards XXXX. profile to marketing I is our across is program the the only a in The completing have This takeaway our than our year and is serious for point becoming and provided

and in Gulf have near Coast to basis $XX and trending financial WTI valuable covering sold with remaining the becoming currently Longhorn premium on hedges transport access differentials basin. towards we firm are swaps the through off pricing physical WTI. These Midland have production Basin, Delaware the pricing in increasingly oil Specifically Pipeline, regional the

have our covering last in New effective hedges provide XXXX. attractive majority directly we of advantaged have and to WAHA have Canada. the area Coast In we XXXX in of on completely our The In as hedged the firm we And access gas Southeast I $XX in West Mexico, WTI direct of volumes agreements firm roughly gas STACK basis half off move WTI. the vast in location will avoiding our Cushing protection also at transport our line The good swaps transport sight to production. the gas our Delaware pricing. for flow STACK, price touch we the our hub. is of have production Given WCS our we to production,

service is market the On especially the Basin. tight the chain Permian right in now, certainly front, supply

our Delaware below our the commodity chain hedging designed and top with secured we've have proactively provided at pressure secure in our and program rates services providers. develop relationships the However, XXXX to Devon competitive supply plans to for execute capital basins has and rigs, activity prices term multi-year market pumping and opportunity XXXX. high The plans team at STACK supplies, longer in

So to Devon execution. deliver and certainty as to marketing providing summarize, chain supply is growth initiatives, our of on in our are shape great

we flow throughout by prices, approximately key XXXX. we factors. in increase The cash growth upstream current oil of deliver an be will production remainder to XX% With will to exit key is higher levels. A rate XX% first driven margin flow our on pace where of grow is message contributor compared U.S., in that by our to the growth third the are efficiently end to in Devon cash expect three increase approximately quarter by This XXXX. year flow strip cash

in in margins than WCS by to $XX the the recently Canada barrel higher lows XXXX, expect prices due remainder improving more to we QX. over of Next, compared per experienced

over to steps The aggressive structure. taking our of remainder are the third factor margins cost is XXXX contributing higher we to improve the

annually. now dividend our key which message on debt, to pace call. workforce, quarterly during initiatives will And authorized are friendly with million With to restructuring successfully Jeff we the of the costs interest ongoing final we we along end. and of tender by quarter. Directors several high XX% reduce shareholder my billion more recent later G&A Board our is complete our by $XXX advanced the the year pace in program, $X and In details a March, on are provide repurchase initiatives on in increase a of share these approved interest

through flow return and as ahead, cash repurchase the generate Looking growth share our free will program in our we continue the sale proceeds, cash asset operations we from shareholders of to dividend. and

potential provide significant cash for simplification to to our sales, like clarity I'd the additional Given strategy. portfolio through inflows asset

Moving to slide X.

achieved the to sales resource clear, billion initiatives the footprint. multiple see going base we're in while portfolio of past, portfolio. we STACK, a in not the $X and our to play. To we rich of billion focused various $X.X As noncore asset Delaware we asset and a to-date, discussed targeting STACK at at we've our levels length in potential monetize underway noncore And more of have focus of are given assets. pure already But be and Delaware to maturity simplify become asset further we excess

$X concurrently We noncore transactions. roughly we portfolio. billion are throughout And our smaller, are pursuing asset sales actively of larger assets marketing

these do additional a commentary there each sense Vaughn urgency. high initiatives want over call with we're our for to of opportunities this turn point the are Tony going with that I While on of And to on, a lot operations. I'll of working emphasize

Tony D. Vaughn

force driven covering to I'd driving oil to begin the a Delaware slide a Dave. start assets, in quarter, STACK like QX production operating productivity. well This noteworthy A is by growth plus which X. our was Thanks, few delivered oil great growth behind beat. setting on by strong highlights with place and record XX% our

highest this the wells STACK brought Coyote rate Basin. history that The on IPs a day, with rates wells XXX-year prolific of For the in rate per in from of that approximately activity belonging of XX-hour wells IP approximately is day. are of four by outstanding These XX,XXX development was average our Boundary two wells new stunningly delivered BOEs delivered per XX,XXX quarter BOEs the Raider Delaware the XX-day which combined BOEs XX% the headlined day per Basin to oil. X,XXX well. most also Delaware achieved prolific per the

of production And I'm reflect we have very the in start capital effort XX of days great to asset drill at execution into improvements savings In STACK, attained times strong our We of gains, translated tier this as the well also that as underlying Overall, In base $XXX,XXX capabilities. results per a multi-zone our Showboat the Seawolf had was towards ahead a operating drilling plan. put staff's at that they quarter we this record developments. included shifted and and quarter. the top our of quality Boomslang Delaware, these efficiency for exceptional, of well. first the year outstanding our proud programs.

is Moving a of is my to strategy. infill remaining like our X. our I'd that spacing commentary that and great to focus interest base investor on slide STACK to right now, subject

quality, and very quality in many high best-in-class in which you play As position window. well well produced have the lower within This sweet and spot productivity results economic closely consistently who core play, high the acreage understanding resides technology the STACK volatile oil cost. the asset delivers well Devon's combination our capital of the the compete within know, leadership, follow oil for asset technical the of play our best of play of portfolio.

spacing to and our times and zipper we drilling And parent The to to are design of in at per will XX is with next STACK day initial next these multi-layer asset fracking. in drilling Showboat legacy stages the to is with multi-zone strategy. a designed to well our Showboat, compared development Meramec completion drilling efficiencies, more gains the versus we had densities – advanced legacy faster, leasehold inform Due flowing including XX% X wells projects. benefits well results. $X.X Bernhardt our improvements. times and achieved unit, and staggering, intra-layer XX% the of cost our infill designed three excited we area. Showboat X stages – Drilling million improvement development achieved development. further the is stacking, step early to savings of our than to projects per that back. the through projects were infill returns These Now cost improve most completion projects due savings well the in of the development efficiency the are concepts, activity and undeveloped, resource of we largely well the of are Showboat is our Horsefly, With optimize well future test for per complete,

today's With at our rates are that a with a runway productivity providing and a next will to results two projecting Devon. multi-decade to LOE For Showboat, pricing. obtain Even of for months well three expect to historic growth be horizontal strong we superior well we And expect developments, are strip staggering to a over and well the better would mid-year. Devon. resource emphasize our I vertical we huge peak burdened at addition assumptions tie-ins play. go-forward understanding great we economics, lower projects infill communication opportunity returns infill between the in with XX% and project wellhead capital wells in for the returns be and by associated These the of cost next these conservative have of level multi-zone like to inventory, for development projects,

most acres landing in today's net at that of zones window oil with economic of play XXX,XXX have multiple highly these possessing the acres are prices. the We core

increase expect Meramec with I call turn conservatively infill fully wells We Jeff. inventory our the inventory six over our per at over time. risked to And that, we section. surface drilling will to results have But

Jeffrey L. Ritenour

Thanks, Tony.

position Dave and initiatives Devon at interest touch in the and return opening, on will will I cost. provide the As on shareholder update debt underway mentioned our an

revenue. this increased the had revenues in expenses. these the have fees like to upstream accounting and present But directly This rules our cash to but result the production production liquids. I'd reduction cover been as Historically, that change were no statements or gas increased certain and revenue to processing for fees accounting first natural natural a recorded However, recognition financial beginning changed did change flow, quarter, fees impact new expense. the recorded earnings way gas processing to

quarter-over-quarter been have we in our trend in results our earnings not restated But historical restating provided evident. the release the is a Our have so historical table financials. result

X.X to date, to our average share, billion bringing X. of of price total per shares we To million. March, In $XX an million have share program. Moving stock slide of repurchased program announced cost our the at repurchase we $X $XXX

to by complete stock end expect the this of XXXX. We repurchase program

to will approved the dividend In policy prior share, rate authorization, board share. common to share be perspective, addition in our quarterly new our of increase repurchase we our dividend. $X.XX The a per also a quarterly $X.XX With compared ratio operating per steadily quarterly reward XX% of we business dividend dividend a foreseeable and From cash the manageable paying XX% efficiently over upstream growing time. well-positioned expect flow of expand our future, upstream by targeting flow. to for X% to cash payout are to sustainably shareholders the our dividend

to to debt in annually. of (sic) repurchase Turning on higher $X.X billion [$XXX to successfully this our debt $XXX an effort million] position. focused reducing the coupon notes first $XX repurchased interest our go-forward We upstream in our by Strategically, maturities gross quarter, billion. million lower expense (XX:XX)

million turn Looking over reduction completed ahead, the months, the that debt our with that, back mature to $X And $XXX next billion we debt call over the will retirement of will Scott. the with I'll plan. nine have

Scott Coody

follow-up. Q&A. to a yourself Thanks, Jeff. one and Please the limit We'll call question to now open

can permits. have that, operator, further take our you question. time With as we'll you first questions, If reprompt

Operator

Morris comes Your Citi. Bob first question with from

open. is line Bob Your Morris?

Robert Scott Morris

nice morning. morning, Dave. this Very results Good

David A. Hager

Thank you, Bob.

Robert Scott Morris

of things at Or now? to are running the ahead you XXXX, know end. pull current look the going rigs that Is XX you dropping were year still on to going some forward As keep of year end have you you the that schedule are the four from rigs to of previously to and three all operating case? I planning activity

David A. Hager

But exactly actually efficiencies than same we're so anticipated. quicker developments, greater. seeing we do. still much program costs The going with multi-zone than are executing the assessment efficiencies. Bob, we are we and seeing going there we the knew crews, an have, our the these rigs, was we be that – to we that that, thing we're we even that what on to maintaining Well, is and efficiencies such lower same are making are by that more The like we're

overall those and efficient we are program. So where on degrading up want returns. as to efficiencies new rigs and seeing returns And see don't picking dropping as the we're potentially at really XXXX, by focused of beginning what crews. then we are risk very rigs the the And don't we currently crews with much

So process we're thought that's through. the thinking

key we're of final probably we're to and decision we're based the efficiencies balanced decision maturity to of top drop with returns on. that emphasize, exactly a we're to making But making receiving how of And sure here. the we point make make versus it's losing want this end guidance, the towards projects the do of were of the rigs that these a It projects. still we ready have rigs. continue a to I guiding has kind the risk We But are going some because the a and of crews, the decision. out comments, think with if it, much with to

Robert Scott Morris

stability what is you do environment natural necessarily the gas my packages how Or versus the such to market? more sort Barnett monetize you deals? about parts might think you from look continue deals? these to had And very Sure. you Shale. That asset given Barnett question you'll Thanks. is, preclude the but do these in there makes for continuing of, of even sense. look that Does And of joint a interesting venture Barnett, follow-up small, monetize to some the be to doing to out the subject more that in announced continue to something is and of to that that,

David A. Hager

This a relationship business Bob. is regards does potential we to Yeah. not to opportunity with Barnett. term change strategy of I just Great do question, to the we very long be the with And creative want what bringing think clear. anything as in This we them great essentially we wells otherwise identified company, basis such on that would promoted development execute. some take DowDuPont, to drill and now to an a has opportunities are a with not where form asset that

value it'd we're of pud an asset the there. these that opportunities be So just just not sitting with maximizing

rest So are of bringing our the with with the in portfolio. Devon promote. them the returns we makes competitive It to

still through prices. value the EnLink, our to a natural in more EBITDA, we We're regards the of that. Obviously Barnett optionality us benefit process the think But no term. provided in does way do these we it's with as this back challenged bring So way we'll forward to what long the great to change to or incremental decision at working short Also in term. provides gas obviously by are well majority which it's accrues lower additional which benefit. in

we DowDuPont. So and situations. expand we for We similar value. may great type real that like think be brings And that relationship possibilities it's a the in solution shorter term this decision can there future

Robert Scott Morris

lot, Appreciate No, that's Thanks Dave. it. a great.

David A. Hager

Thank you.

Operator

Jayaram next from Arun with line Your of JPMorgan. comes question the

open. line is Your

Arun Jayaram

I talk if conservatively the bit little three Tony, for spacing morning. risked could around you mentioned wondering you little comment And was kind projects. wondering the that maybe good I these pilots. just was a Yeah, the your could from production you about And pilots. if you a of bit risking

Tony D. Vaughn

Yeah, some these Arun, pilots complicated a past Hutchings leads base But, to least we key are going the our and the commented utilize play. bit. models. I library points dial have more lot the that put in the the attention we've for going minute, turn able asset over that data we've we a optimum when simple with more just participated to it, time got quite competency the unconventional attention that us. design technical different put we three the granular a extensive of information built into and who in projects at is that than fully Wade in of and are These dozen also more us. to It's think groups. and have about we that into earth XD an reservoirs Arun, be a I'm managing that in to you to to I fill there's have technical execution – in But call to And We into tell we will that spacing. We that it. to we have. a manage database just question to in Wade this

and You're by the that competency in guys same based seeing thing Coyote Basin. results just areas are work both prolific in of It's and technical fact and by the STACK, the really well accident. all some doing. across the None Delaware that's

the how don't bit bit to why of out little Maybe a areas. the you you're work we and describe in Wade, get trying brownfield explain type of a more the pilots? So, even what little greenfield

Wade Hutchings

at we've between then highlighted When of testing, are three XX we Meramec All certainly we spacing three wells Sure. those them the which core are and per wells in section at the best we we're all all from range here, in look play. projects Thank in that reservoir. of couple Meramec at projects Bernhardt. call X three essentially section And you, the a zones these staggering is in of core reservoir, lower Tony. that that the than have per Horsefly, Showboat they landing XX a All what to wells the just of are then XXX. way

all slightly approach at to to HBP other we more we're be was parent reservoirs infill though, testing investments non-operated different in a spacing. spacing And different industry in an mode mode. made. we've than the it the Ultimately, recognize needs but than because we staggering a stimulation and lot that the well these, So testing lot from they're addition the same roughly learning in anticipate and

and projects. certainly to and a tweaks you the to testing more stimulation of making on being come determine most lot is give we're we've But monitoring do at out that things spend layers so those projects. we're are or we these stimulation dollars invested pressure wells the value get a projects looking how we're to in particularly science each The detail where lot trying the as of of design each And We'll the if our between between online. optimize multiple of these Showboat really effective one around not. one

Arun Jayaram

of wanted gears talk to about a shift billion Dave, the asset That's maybe multiple bit, of really potential little kind $X you highlighted I sales helpful. proceeds. packages, program.

$X But that that is on what first as think to also proceeds, acres you to get central of you some We capital? call in plan I How sale that the to you cash XX,XXX receive asset do invest that of kind Delaware that billion? the is note the Basin. extent

David A. Hager

to We repurchases. bulk that share see going the of

Arun Jayaram

Great. lot, Thanks a Dave.

Operator

the Your next of comes Deutsche Ryan line question from with Todd Bank.

open. is Your line

Ryan Todd

you I detail I Maybe below Thanks. Great. the gave a Showboat, on on could lot follow-up. ground the all appreciate focused if stuff. just

larger bit your development clearly forward? had And your cost cost terms little encouraging talk ability that and and of what what programs to there. in you've down efficiencies? drive a the You Can you above capture performance on very for ground, going efficiencies about a seen you think means on

Tony D. Vaughn

Ryan, this is Tony.

at basins. with probably these surface our legacy permits development this we we the we ability think felt the established more we had two expect we're talked XX% about the have concept. the to with into associated all – or flow last because over centralized we've production multi-zone And only comparison type valuations have surface the I efficiencies of in being full told, permitting just years onset, to about concepts to across the see quicker a about description to historic like going facilities. how And efficient up you increase not fully larger that and

a we a concept. and drill-to-fill really concept We these, have here is designing are

facility be centralized so able to go in what is handle we'll we areas And forward. you build general production as will these see a multi-pads that'll

for a rate we a for that while maximize that cost very so they will project. rate design design the for of will centralized come not efficient And And production as pads design on, facility. into pad, effective a given we'll that on flow then back same and additional peak will return

more $XXX,XXX because all doing cost the be burdened well going a work. $XXX,XXX, And be go be type that battery, centralized in certainly per legacy wells as to just continues production not be gain And were it's the well. just a we area common going efficiencies will the per that project-by-project, around we than start below on conventional ultimately for these So efficient into the It's if are $X.X forward, that tank structured about you come centralized much to that. and when flow million time maximize period varies developments given the for looking of to space. at long to but facilities as it it'll the

Ryan Todd

Thanks.

so XX% with And you is uplift kind couple it the far, past line that in of over seen so what envisioned the you've years?

Tony D. Vaughn

Actually, Ryan, knew other we going anticipated. this And learnings learning on. much to Anaconda we we've one, Showboat what Project STACK. quicker going through we Delaware space. in be Basin. the virtually our project the in were We're into the completed accelerating have actually projects And We're than we

we So project to about our this. we're that know We're management to or different the look one going starting with We encouraged potentially is of already in projects are that quite XX this stage another. at – direction go. we're have

we're right now into mid so projects the And and way approving and all projects out reviewing XXXX. late

originally probably are we is And and quicker than are with efficiencies this concept really So a associated this what the coming larger well-oiled anticipated. machine.

David A. Hager

versus the previously Tony talked And, more with the Showboat Ryan, for example that stimulation then on stat cost savings. how a you seeing fracturing are of efficiencies also historical. a well. are savings side we described So, on drilling we've we real surface probably I about too. just And Wade, the have facility at hydraulic think efficient side Obviously as much

Wade Hutchings

of two-thirds we that we Dave. to Sure, project completed about was there essentially planned. the had essentially that the we time Showboat, stimulation Specific found in of what

surprised these efficiencies, we noted. anticipated had lot do found way willing pleasantly to to lean even for we faster credit different were than team in a we out Dave that learning mean that. the and lot some executing And being But try we those a forward to better get and hard of anticipated. So I a as to field really the of want curve programs give of results. things work

past. per essentially far. early so project from that had this really the done times that up from we accelerated the stages day by drove we And production So we our what saw in X

Ryan Todd

Basin. a from well can incremental you're up. for XXXX. bulk takeaway like you of Permian the to versus helpful. talk how as Can and beyond the through quick situated FT – until, into potential follow on term And up it incremental the out capacity longer the look need you you That's maybe for the We flexibility? Great. see very mean that, the quite looks – you now Permian Thanks. pricing appreciate balance sign then out of maintaining we how of about clarity I

David A. Hager

going Yeah. – to real experts talk, going because this. they're several the And I'm we to ask we're have let people here on

to And a granular you so, up Ryan, going business marketing midstream little on Kevin Lafferty, who here, give and our answer to I'm more heads that. ask

Kevin D. Lafferty

this and both Yeah, Dave, the we and Thanks, And U.S. of a products the good good all strategy Canada. morning, in our noted Ryan. our in have is plays slide key XX, place ops on in really report of position. ourselves a as we we put across have in with all

or dollars both bottom use both that have really mitigate can and we of of to go firm the financial So flow combination we a assurance hedging physical making and transport to sure line. risk

transport So certain building the refineries. bit certainty us, little Calgary U.S. slide that MEH as for hedge of in out where building the to people. we in is out the a cash in on relationships and XX, gets the the to sales, amount lock of and our here, do we it's especially his that of the Dave of and oil, group but have as with in the Longhorn. so stronger. we're job an go Permian intangible East the the a in book have barrels local starting pricing, basin for to there. flow actually and we've good And both And key comments, Magellan rest over of and Houston And a noted as marker, on then noted well, key really And with marketing just our

both at gas What of So in with but to to And probably you just just and XXXX another announced. a in our we going people then pipes the line of going is product have online that we to and are hedged to that first though not $X under firm that that Cactus we get starting wave see a as that have whole in well, highlighted then XXXX, projects oil to have are barrel. market. course other other selling XXXX been have our mid-XXXX, we products, $X.XX come is financially several transportation and make sure

of go strategy downstream, again substantially. commented, blown the solidly shipping, gets through then tightness, forward. we this we and/or continue on us have out this differentials this And financial period Dave will So strategy, as as pretty hedging where

Ryan Todd

Thank you.

Operator

from line Johnson of comes Rice. question the next Charles Your with Meade

is Your open. line

Charles A. Meade

led target or if Yes. has elaborate I the can about there. bit anything Boundary versus any Dave, on of Basin. the But the changed you Good you area team really bit remarkable Delaware guys a know how morning, on touched I came area? in a this those what that like you talk those And on little results perhaps ask, wells, and to you zone your to in to would Raider in in view wells your rest your And that what pre-drill? respect? or

David A. Hager

Delaware one Senior goes again Rick going Rockies, to Charles. who want to I'm we comment. comment he But people clear just Vice several going Basin Gideon, – charge Sure, make And is in ask our really further. have his to of President the to in ask I We're before into and thing here.

three also you – is only wild there. curve to IP. really exceptional anticipate this, be an clear. great with up strong ask us truly to wells in our to wells what going not normal chokes opening the really to seeing where the can these This is This pressures, a out EURs on I'm get not this times didn't area XX-hour is area area, huge we're to make You but due type two but it

area So we that outstanding this an is truly discovered. have

want a about you Rick, So, bit little to talk more it?

Richard A. Gideon

you, And Thank Well, How Dave. I we Absolutely. did about great Charles. tell hoping would somebody was question, these find them? ask you. wells. I'll

best technical best are think or And have teams teams focused spots. on working basins these these I the the basins. we parts sweet of the in industry identifying the these

this, be this spot. identified than an better went were we wells wells. would into when aware was much We these typical So sweet

they were that than bit even a what us thought. better surprised they think we I

of we management, the these opened As this, different order Dave nothing this identified chokes. as in additional the indicated to wells of And we'll from maintain we full managed we management They from X.X choke a of said typically were standpoint. have over were do report, any be open None the wells than drilling a in reservoir. operations we've to did the in our wells on we as value area years. next choke

Charles A. Meade

there on what in going I has Bone changed your doing to the other having spots – these forward, is identified are you're delivered? Second wells Rick, it it going sweet view or Springs, differently seen things be you've guess, And actually

Richard A. Gideon

wells. ability metrics On to back make the these better these a what battery I the again were and flow and execution it was outstanding top wells that them. of to the test of think these confirmed identifying in large job know into it's our for. looking that great The our don't this knew I view. we different did We changed view. teams a

views. it, I So I these our we'll all but throughout it did changed it of affirm continue don't know our basins. that to identify think And

David A. Hager

of give context help to this going Charles, maybe out, little think where you be I a may with And, too.

First, great a area. there is obviously

above good in XX have We say this this wells. in they're that infrastructure can't about the really XXXX and our late and type that this the build to beyond to here. wells into to more wells the is – more all XXXX sweet the on a curve. out think but of we've actually are online. we of be they're of building biggest well to spot area. area. We commensurate we're a part going production given going impact, out more to a with the just think going good, timing them all to to feel drilling these drilling be going We we be going going The is And and type And be bringing have the identified be we impact of

our and guide, that by on. wells and year. throughout But we little late XXXX, we allowing has bring execute XXXX, wells here other results as U.S. benefit to of production continue frankly, will oil production a obviously to the to guidance. the raise impacted these us it upside So beyond bit guidance And be already we as our the bulk see some production our

on comment one had more So, Tony, that? you

Tony D. Vaughn

last keep our But you Charles, fruition over in Yeah, it's a me the to about quite years talked We've now. made big bit three for a approach, driven mentality hard to years. four coming quiet to couple this. shift this really right on data three, probably – It's ago. really

always areas And well But Rick these localized that planned. area, one ultimate and just we across the time And what we just in work, of approach all IPXXs, and area. not XXXX to and late value well. in the to been mentioned, Raider not Boundary number starting we've These and Coyote always beyond. feel the seeing the you're weren't like we're recovery so the estimate events. see since this were a best is as We've claimed random in which

starting going forward. see expansion So of results to we're an our

that are And board work. be the some good prouder is perspective really really leadership of type across so couldn't a work teams our from the think we technical this We doing. culminating

Charles A. Meade

Well, and all Tony, It's Dave, that added thanks helpful. for commentary. Rick,

David A. Hager

you. Thank

Operator

comes Your with from Chandra next Guggenheim. question Subash

open. is line Your

Subash Chandra

Yeah. Hi, it, a But there that's So actively asset And to transactions. Is if just intro not page. there's Or clarify that to sales in I are stages just the – on sale? understand described bullet? that where it to bullet dumb in other trying the a for secondly, a that want initial if disqualifies that maybe is billion asset the or larger acquisitions. are that it you page just just presentation, below out bullet point something say, about $X pursuing from the distinct there X, question. is

David A. Hager

a is it distinct bullet. Well,

question So me to that let – we up. are the try frame whole and

we say billion in we of than have billion sale potential we the anticipate Barnett. asset $X Johnson already $X when sale the the County first that So on proceeds, of in executed more that. culminated And

high $X part Delaware of significant we are the Texas have we year. multiple billion we that And has think that Delaware, It's within value. side. such this not plan are acreage second marketing properties, what development on as the but the a is The our term long

You lot multiple that's it a high don't undrilled We since obviously in think has value property, primarily production very acreage. have marketplace, there. of so the a it's significant

here asset other going some and plan in are the to sales second $X we're that XXXX. execute to billion. So that largely And

transactions some of larger Beyond that, actively those some at working we as looking we magnitude of strategic are and speak.

We are the purposely and being because nonspecific the are of the are that on STACK, the growth company Delaware are, Basin, what in saying the we Rockies. primary the future engines those

we are other their areas opportunities they're maximizing value may see be have We our other extreme we frankly be we may in of But opportunities worth that where companies, not the within of our high are more in that other portfolio undeveloped development looking because worth the portfolio. that than portfolio, at own of quality yet, opportunities.

So some of these currently larger transactions. we in discussions on are

Now the these several universe situations because reason there's limited a frankly. we in aren't is of being buyer more specific

And receive so the power the we we optionality have want have we execute sure the – which may to shareholders. we that maximize for and on, maintain actually and make of we to that that we around value these

options that value. to it. one another. that we We're ideas non-specific do going transaction So don't we We to I'm to around have have that so continue – or on And go way though, can be we maximize have obviously. some going be to

number have opportunities way total. strategic go. are actively to on options which We other a that we But pursuing more of reach nature we in may $X billion

Subash Chandra

on more it these was you've My applied wells update on before the you some applied of in STACK? provide And whether it's in color is, proprietary you. this follow-up the completion maybe quarter? identified in whether Thank techniques And any Okay. an can Delaware? being

Richard A. Gideon

tight variables. clusters, rates, continue technical production back to optimize teams our and progress We This model sand and currently the continue is clusters, in Rick both volumes, multi spacing the the of Again, the to flow we number areas these. watch Gideon. the Absolutely, of the sweeps, these. multi,

in results and monitoring techniques better back, our of That, completions you're the real-time of in the wells Delaware, is with the similar using, flow seeing you're different STACK seeing. wells. very of tied the the all that our and we're providing our monitoring it So real-time of along

Subash Chandra

a if should still curious we the across sort Yeah. assume Or program? that's Rick, application? discrete I'm it's of being applied if

Richard A. Gideon

every the you across similarly want a to has we're all that pump across completion they're I never – Everyone horizon discrete very every executing. the is that It's but part to being every applied think way it, we program. basin in same.

David A. Hager

business thing units. that think our are of we is I key communicating the all constantly across

company. So have completions that the there, across experts look we entire

talk described, out but all almost frac based X.X updating about or people the the we're that. constantly best areas. way of those you not my thing is explanation areas, each time receiving That To of And heard do of And our or knowledge for the techniques so technique hear communication. that they internally things information is mind lack is because of frac like it's and on frac what the X.X may apply of my different completions. continuous, our techniques in on different sometimes is it. to we actual this like it due other I've we best of are It's real

improvement so real wells. on And individual continuous truly that time, – we even program a is it have is

we've flowback that with not we're change that's to that drilling entire updating way it. program, hard are as going because is it work change doing work. XX/X/XXX we how The And so one that it's and room describe discrete and through control room go across our made, we're the a we constantly we to well way and the

So...

Subash Chandra

Yeah. Thanks. guys. great update, Well,

Operator

Your line Portillo next question TPH. the Matt from comes of with

open. line Your is

Matthew Merrel Portillo

guys. morning, Good

David A. Hager

Morning, Matt.

Matthew Merrel Portillo

From a Coast able a the of been to transporting gas XXXX. to you've West strong perspective secure by volumes flow level assurance in

need accelerate clear marketing the toughs does its FT for view industry gas to regionally, as volumes likely out, how capacity and and the your Devon basin? and strategy potential medium term west-bound As around

Kevin D. Lafferty

Matt. again. Lafferty Kevin Hi, is This

all let and First me this. of the clear be value through about try the all, just way through, walk chain to

amount the but I and and strong gas wellhead on a both in even from when side access gives of there that and largely think – processing New to plenty Mexico plant. to that's which of build upstream happening gas really processing. the processing the gas amount us Texas getting to side, new the We On that, I'm our ample an say site is referring gas

Northern have side, all. comments, at gets tie-in in that and can Natural pipes. easy El being that out When constraints way to of the be any tend our others very it the Paso gas and This the Transwestern move see go lot west. is benefit volume really So relatively to to and market we would and and that there we don't Mexico, we large west New a Dave's we residue

And so just really because we that geography. mitigated are would any and of limitations have location

we get a to or firm, forward move look to follow are whether not projects So We're the are out to have there need that going are we the see Coast And pleased have projects gas commitments. basin. other Gulf that of of built. Kinder lot shipper and contemplated at different being project, Express, to and Morgan

can taking So other right we into on we're now sell we And those at projects we do same feel oil. that on and firm us. have always considering look what capacity. like we gas the way But for it people means firm

Matthew Merrel Portillo

learnings, seen We've announced the second color And you my follow-up Anaconda an I savings and And of how how was you on to Great. provided Steamboat of is your views capital flow around to perspective. material cash guidance? your XXXX question program. factored as cost into continue on kind this some free your a factored progress wondering is efficiency that's term savings. into your pretty long much from

Kevin D. Lafferty

let about to going and to again. start Matt, Dave first our or here. and hand strategy. procurement first me supply this chain either then Tony I'm But off is Kevin talk

of contracts about type in largely So activity and destiny. the decoupling QX digit at of still especially of us. QX have of secured services. see for to inflating of – industry numbers, single a control own a been we've we inflationary going of number, the still increased we to see in XXXX, has our and the digit our and lot this from is is talked Permian, We our low type XXXX of approach double efforts. because because the And how while Permian, This headed we've and taken locked the a debundling all differentiator

we've good to frac the when place our XX for with pages in the rest on we And as the see and efficiencies lock services XXXX of inflation these XXXX out So to contract no XX the that and stated in side, drilling continue as combine well us situation. in on ourselves program. really for we the ops you in report, a throughout literally

David A. Hager

great comments And, doing. description we're to a would question. what into gave to your I about already. Matt, you overall what But largely maybe our talked of capital Kevin going specifically say Kevin your specifically baked question, is

the more before, as to projects based So anticipated. efficiencies the as we're This getting it's we're that returns And on really that's we executed looking at a just activity about opportunity I point is in than being quicker have said the the means we decision than where, do that. right those with to what on more anticipated. decision

Matthew Merrel Portillo

you. Thank

Operator

question comes Doug next from Bank You the line of Leggate with America. of

Your open. line is

Doug Leggate

I confused Horsefly to X there. one section assumed development I of XX could the just Bernhardt, leaving that's to type if still do go for you presumably your on Good wonder some sections STACK the must that location a going risked think development forward, Because it pursue Can Showboat, but in section term. per model to backlog, going obviously any not everybody. about plan Dave, if as me? higher. be frame upside only inventory. of there's risk forward I wells go you're undeveloped? back I relates with per plan Showboat, to materially Clearly Thanks. going the you those backlog has longer morning, How the wells guess

David A. Hager

think wrestle to that first answer project of than anything else. question, and to on say thing Yeah. come we But I is teams as returns are focused that I there's that rate with And would great the one with. more it's return up a our no question. And our Doug, of perfect

seeing shouldn't a we we And has or project. else NPV our reached limit. further. that, having when per where it NPV that's say, then a Now spacing a invested we're the said doing point to the we in then And we go any at overall in dollar look is we're the the do of per invested dollar NPV whatever or perhaps if project, well, get degradation

the development where still wells front of the to us. of XX% early on, and important STACK play, in are remember, in appraisal we're it's so the on early Now the of

limits as are and move And maximizing some all over only but then on on a optimize the other we we'll on focuses standpoint, the come we returns, more of the it. So that these. in into all testing from other program that But that spacing factors general, I not it's NPV forward. things,

program. that? Wade, They anything in Showboat XX we're the don't variability six there all necessarily. upside wells But you wells longer upside like the obviously. to going mean think obviously to want So Showboat. doing Then per is term is be there look do there's across to to section we section. I per add

Wade Hutchings

of that the last I each a sections think six add, of and that the wells only best more under zones, is these play, the Dave, edges that prosecuted economically different appraised and for section we the zone is upside context play estimates even our important the I I around the the clearly it's competitive. the productive section, of early in is in understand set a of, to thing have the that recent landing And lot play of official would historic done reservoir most and and in saw there's development think as per guidance landing we one was than target. appraised

inventory overall the increase will likely that clearly so for And play.

inventory pencil able core what When of development be to and testing purposely of be these and those, will we'll that think in full plan we our the our down of the developments provide guidance finish actual each numbers kind obviously we're year. in this be will so And what play. put we field revised our around

Doug Leggate

clear. don't want or the But devolvement updating you over just so. a I looking like that field want to that I'm enter was be curve labor I previously? over just full type full test way year that's that curves just type Was be at point. of But last simplistic this had field a parent out a single process this Or to of to development. you Guys, clear, grossly curve? given Wade, a type guessing

Scott Coody

a additional type curve But context. modest ago that put you and we think I'll could some over Wade the core. context volatile then maybe some Scott. forward. the spacing with in And on out Wade, is type nature That was drilling hand top infill this assumptions it how largely predicated target provide the of a Meramec any explain reservoir year zone, being in the upper I'll the Well, going of parent over to the leasehold curve. said, oil which about it is

Wade Hutchings

that single on. zones is each simplistic have as I section. different I've properties. comment Those different about have think a zones slightly going landing Yeah, that spot reservoir curve Because your been noted, overly type now target landing to we we're in multiple

We and developed trying maximize field a to from spend. now well, – we're Dave's doing development. of shifted well parent reference we mindful capital parent I comments full And that are really return approach a also infill to or around to dollar we've the efficiency every back

lower even capital well. some costs drive are lower EUR little So take be as ultimately, per per we likely to bit going well, to in willing a can we places

And so find the spot to working really there. sweet we're balance

Doug Leggate

very Very, clear.

David A. Hager

right. All

don't say, Just Doug, about forget capital the efficiencies.

curve. these getting are great developments really the are are type that higher. also We capital we're driving the around these questions – But returns efficiencies the with

Doug Leggate

Yeah.

well [Resources], Continental your it last quarter. think partner, out laid I pretty

too structure. on. opine you. your with Scott, the strategic is to I put Canada know it quickly strategic question, and just a we wasn't Dave. your much sales current I this. to EnLink just think your My don't on But leave if want and strategic just follow-up so could spot you And I where strategy, quick on asset Thank headed I'll to I we're wonder on two. that the you question commitment ownership ask there. very really

David A. Hager

that's not it. on any more from than But described as Doug, might I great currently going try you suspect, specific to a get you. I'm

be it. And it's so lot options interest But these We best more of specific. we any understand around don't think well. in I a have options our to really

Doug Leggate

for Thanks Thanks, question. guys. taking Bye. the Awesome.

Operator

Your next of Singer Sachs. comes Goldman with from the question line Brian

Your line is open.

Brian Singer

Thank you. Good morning.

David A. Hager

Brian. Morning,

Brian Singer

Or want regards you're probably from you more longer the certain and And big as greater matter push capital in growth other share in and efficiencies there a areas program when flow to for less better position cash from to term? seeing you the is efficiencies flow as picture, or efficiencies Are of core free great it higher oil plays? Going to a cash the prices, with CapEx room leaving higher result become synergies. the don't that to you maintain growth CapEx. think that that CapEx, rather less Definitely with operational within see and back lose for over you, efficiencies repurchase? hear debate

Jeffrey L. Ritenour

our Hey, I would is this flow the significant is latter. approach. I to through that of the growth remainder say Ritenour. as game expecting and Brian, Yeah, in year. this mean plan generate We're certainly we Jeff cash work

Dave cash cash towards about, we But right end repurchase As that earmarked the we expect return to excess flow. And program. flow trend and have talked our the of we shareholders. may to share generate significant free higher capital free for now

Brian Singer

in question. Eagle Great. quarter. asked has an noticeable higher Thanks. second don't believe then production And It's bump a anyone you I Ford expect that during

Eagle those a return process, anyone realizing or the some increasing you yourselves do the the involved decision of the commented I in running as that activity? assets, the while the past in And rate what in are still see best of partner capital think case? else Ford. there's you've to wells Is limitations

Tony D. Vaughn

most we returns of anything the we the company. some highest Eagle does got like of the And It's margin the in have in extremely do probably prolific It Ford. it's production company. the Brian, predictable.

do like we that. So

associated production that opportunities. some those. to will that talked boost previous shortly IDs We're we've lower And horizon the you're just the I on quarter. have with fairly we upper seeing think the in a the and Eagle continuing prosecute over here past come narrow Ford

call that the redevelopment, to about wells. some with and existing depletion where some the the an addition wells partial lot associated the mitigate getting of back of go that a lay had of in we're and we maturity Austin Chalk from pressure also can we've we and opportunity In some opportunities

additional like chasing an think close the and is wells They're data. And there there side. XXX very now. tight. we're feel we're we very with going are on through out a relationship process still on The basis, and so all unrisked still technical told BHP that XXX, right with aligned We

the us a XXXX of half feel opportunity the pace like new that's in at And We that come for we'll rigs points in data to some have will Austin and excited about this field. up year, point. a be are pushing at right open this the second working see early frac some couple and And project. Chalk really the But in we in we to going continue the concept. redevelopment we and crews

Brian Singer

Great. Thank you.

Operator

Your next question comes Brothers. with from Campbell Jeffrey Tuohy

open. line is Your

Jeffrey Campbell

Good morning.

David A. Hager

Morning.

Jeffrey Campbell

quarter. the on Congratulations

David A. Hager

you. Thank

Jeffrey Campbell

other Could geologically you Second you typical little quarter. Bone [Second] is Bone zone? additional this Second bit. it zone that it a a commodity talk that it's thickness, siltstone brought the new an like unique, out in Bone substituting play elsewhere? drops How particular Or maybe it about mix? off is And for Seems is some

Richard A. Gideon

It our it we're But this between It's additional seeing a on this H, Second area, thickness. in Bone. First that top you, in on depends Yeah, is as again. depends the permanent where enough Gideon sits Rick our the see. field you you're the an It's I at you're of Second given and – Bone at. where good at siltstone on porosity zone. tell will

we've think I per of X,XXX a around Boomslang in out couple there BOE called wells our of area day.

in size continue As this to enough the develop the won't prize, we we the area. prolific of basin. it take But that it will a look, across span is entire

Jeffrey Campbell

in increasing well my of helpful. there the been that these low surprised my sort just is activity were mistake. so Turner, to Rockies Or growth driving interest second these the the was cost. see and wells an wondering, Because the primarily quarter, was I question, I one-offs? the is in have Parkman thought Okay. that's yeah, plus zones? focused Great, was program the other attractive I And may But Teapot on

Richard A. Gideon

This is are Rick wells not Gideon again. Those one-off.

We the focus on Turner. continuing are to

our early we've Teapot historically in appraisal our continuing While executed Parkman wells, we're our spacing, we're which in in the execute on. to on Turner and

those wells. down on continue we additional Turner those of some bring to work the continue us up bring program, and into as see and to You'll channels

Jeffrey Campbell

little try safe say And that's a in Parkman/Teapots longer is to that of talked to you you're that in the overarching to the be spots. the plan doing into about this point some to way come Delaware exploit when sweet STACK Rockies. Turner find of as sort largest Basin? I get to in spots Then you'd the in that it? because that troublesome, up? – the area know little of of term can sort sweet you at manufacturing you've it maybe to these the a think point develop similar like tends and is way bit they the Is to can get to But what But mode where it some because

Richard A. Gideon

multiple I in at multiple you we're say I areas looking Turner. that think and Turner horizons would the stated well.

looking best seen you've we're we and Turner. the the some can how our develop, So and lower spacing tests of at upper in

we But Let's forget through to large some not programs, have still Parkman looking and continue upside. see execute we're which at will those very additional Teapot. as that could we you area think also, in the Niobrara

Jeffrey Campbell

appreciate very great. I That's clear. Okay, it.

Scott Coody

hesitate to the of at interest to Investor hour. if we're please the at Chris didn't reach to Relations soon. you in time, Devon Thank get now don't and myself Carr. consists of and we'll any we today. your which team the everyone's question, talk to top appreciate We out And And you,

Operator

conference today's call. This concludes

now You disconnect. may

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