DVN - Earnings call transcript Q1 2019 | Devon Energy Corporation

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Operator

Good morning and welcome to Devon Energy’s First Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. This call is being recorded. I’d now like to turn the call over to Mr. Scott Coody, Vice President of Investor Relations. begin. may you Sir,

Scott Coody

good and morning. you, Thank

statements press today, For estimates the our our call slides on that and supplement today will forecasts have remarks. the detailed website. are are uncertainties, The number These and a risks and on report not with call prepared subject along many slides our under to which are call of may securities available beyond These law. future plans, actual we for U.S. Comments are statements of to releases forward-looking comments contain answers are of operations our performance and guarantees results today’s materially. assumptions, control. and differ

to take questions. the we our hand that, Hager, slide call remarks, over Following to attention President And two your prepared and CEO. Dave and I will with our your will turn

Dave Hager

morning, Thank everyone. and you, good

outstanding was quarter absolutely first The for an Devon. a new one

Devon us the our oil last foreseeable With As U.S. inventory the growth oil to this revealed STACK, formidable Basin, sustainable, Delaware oil allowing economy, Powder world-class have drive growth Ford U.S. high-margin Eagle year, River we that multi-decade we future. and for Basin. on focus assets transforming portfolio, to will in

now cost generate of advantaged defined characteristics, focus from on guidance three, our the operational are strategic assets, from our oil underpinning for based on All-in-all, first capital U.S. at Light-oil raising have in from XX% first certainly productivity development with perspective, well plan of improvement amounts XXX you entire XXXX. high structure. a our the objectives growth pricing This with are see production to for represents operating if our wide our budget to into our as amounts urgency free slide structure corporate trending new returns. our deliver substantial on are cost and outperformance to executing margin. outperform oil quarter assets as there And of And production in ahead While today’s growth and our very our to quarter cash Devon. outlook is are And continues a our to not strength our the rates to we future excellence and finished the on Improvements of every strong. plan. is our results U.S. program four, value upside new the our one expectations, improving quarter shareholders to can the basis-point in be we of the This we sense original by exceeded us of efficiency in almost increasing we and slide many can very cash business, to on a expectations allows heading acting are level materially compared flow year. Devon from additional a XXXX. improve positions

more oil delivering delivering in production strong of QX. in results depth backstopped growth the is incremental this to confines later original Basin. $X And is driven billion are we production capital capital budget well by Importantly, this will prolific Tony $X.X but our of view our call, outlook in by the billion. efficiency this in we’re the within improved Delaware cover the

five. to Moving slide

further and very in U.S. key oil organization working my new in the I reshaping opening on portfolio is A U.S. to area among asset in ranks actively As optimize best we touched of a supporting our the efficient on profitability are our the the the with quality business. manner space, of Devon possible. our remarks, cost most singular of focus upstream aggressive emphasis of

baseline. savings expect to by the sustainable at achieve least our to in see the our you on U.S. cost $XXX XXXX million business chart can left, annual As we XXXX oil versus

plan reduction and a with level better actions go-forward cost alignment of operations, completion business. achieve and personnel of includes the costs, efficient more lower to range drilling field Our

approximately of that the cadence basis. is quarter. to cost is on year-over-year substantial million steady reductions hand throughout improved right results slide. improving to more more our targeted cost cost strong by we have our on exit first our run-rate projected to than the and of savings with attain were year-end. Furthermore, planned we of $XXX XX% contributor captured range $XXX made more Barnett $XXX our overhead demonstrated million of the annualized and by Canada This successful attention million savings the by quarter of than your asset The XX% of G&A now in G&A our momentum reduce in for we progress we significant portfolio, than have side cost to G&A estimate With quarter year-to-date, performance with G&A cutting of attained a expect Turning structure. most quarter, our now clearly was the guidance track and below the This our deliver which savings we a possible are annual performance by year-end. XX% second to the

quarter contributor was XX% and our efficiency capital our of gains U.S. efforts spending evident realizing These transitions business our to with the year-over-year we’re reduction key oil below as range. were to development. full efficiency low-end cost Another is declined capital in the guidance field the first

cost and I XX% to retire interest $XXX our frac crew River in spacing oil targeted of of throughout drivers optimize business efficiency to our about way on cycle last will our of or improved billion plan expense. by And this benefits slide in reduce U.S. dedicated Canada times savings $XXX go-forward Barnett, and this the exit to are million STACK improved annually. associated our million the proceed the a XXXX. the is we will of roughly up is interest of potential to cost which with Powder well a program touch Basin. D&C Looking expect capturing Key item remainder use the the to program to on the and plan capital XX% its infill debt, with roughly in our year our our reduce $X Wolfcamp With or ahead,

to slide six. Turning

high grade our Our progressing. also efforts are to portfolio

in exiting with intrinsic these Canada of the a our value I discussions manner. discussed for the the North our parties Canada, As asset. track with the since reaching progress long-term and discussions With been of am Barnett view substantial these time, in second Shale remain appropriate the the Texas, portfolio assets regarding and rooms Canada are sustainable very encouraged scale have rooms last are quarter, sale having we and in at now we’re the some XXXX. have the exit also end to our returns, sufficient on legacy our deliver Barnett positions portfolio. Overall, Shale. cash operating timing with opening In the of assets we the time by have of way for exit Barnett, assets growth to is made on exit spoke, by both our and valuations multiple we open outright we these advancing advantage from well process with an advancing last Canada the consistent to quarter. flow, our oil nature free sales U.S. we and in our timely data to of Data we to assets

message discipline to and slide shareholders. to remain increasing final capital is in key to My that cash we’ll seven. commitment returns Turning unwavering our

and business in pricing many today’s generating above this manifest higher stock pace of by will of times considerable to for is dividend; business, stated count few raised As year-end, scenario is recently also will base With to our our years Devon, windfall shareholders. are our we return levels and to higher free more past, planning the shareholder-friendly benefit in outstanding from the our the market our activity. a cash conditions, any just cash XX% it disciplined not higher flow favorable given by approach we’ll than benefits XX% reduce of share owners of than free our on capital ago. simply flow that amount I’ve And

asset portfolio our be and cost Vaughn, with ahead are I So, year-end; return the track completed top-tier our Chief delivering reduction results; Tony call is plan; cash on to shareholders. delivering over will base operating Operating turn promise our go-forward we’re to our our And in transformation by our to efforts to is Officer. on trending of that, summary,

Tony Vaughn

Dave, morning. Thank good and you,

has positions the oil for focused flow the plays U.S. productivity, on touched remarks, asset dramatic advantaged between opportunity delivering experiencing operating Not of opening future. industry, change new great among go-forward to free are that positions core we the economic improvement contiguous efficiency, low-risk best opportunities stacked-pay generation. Dave As programs large, provide in Devon is foreseeable base development high-return cash sustainable acreage new an strikes best us balance the our that and rank with activity his capital on results corporate entirely the capital a multi-decade unrivaled the step in plays, Devon’s acreage growth in in drive business our returns. a a well only but growth level and With

remarks remainder prepared the For which Devon. of the today, new Basin capital the I engine, efficient growth on is Delaware will my operations, focus driving

nearly the development on eight. the full Turning slide well Delaware few change clearly ship The focused The average. productivity showcases in deployed demonstrates of the with the the play have the has productivity hand historical the accomplished economic in This operating we we compared doubled XXXX our of that to in past improvements step over well to graphic in have our the in page slide number to years. core Basin improvement the development. have Delaware field substantial attained left tremendous we activity our side

levels we and of here, including the the I leveraged lot are of to we after protected to of revenues attain well of done productivity highs of Shifting area great new not acreage hand have your that flow are but production the value the contractual, are with the an we won’t XXXX. guarantees extend swaps. our our done a are hedging by a through another flow basis gas is regional Furthermore, in we attractive the the scale in way Importantly, details and firm pricing And work near right have marketing go next all on based -- into heating results, attention our slide, portion operating our good on transport, WTI assurance to during light-oil maximize Delaware assurance strategy. realizations well decade. a year-to-date improving. to well record and dedications benefits

to the from which margins these constraints long-term for will expenses field reduced and invested well infrastructure continue given is peak success. XX% in, hard this we outstanding, are results operating work basin. will lower from have paying levels the cost level operating unit the by of our our per substantially unit benefit positions thoughtful per planning and The very us in teams future. from nothing and short Overall, active off also in drive have Our

Turning nine. number to clear Basin. point, getting started are we this to be the I one just slide in want Delaware on

We to have inventory for equates X,XXX the the acreage Basin of years performance to today’s drilling have world-class Delaware lever come. At position to the pace, and identified inventory. years return this we high XX locations the in many

to the depth Basin Devon slide acreage XX, of Devon’s resource first our our footprint. the across high-return And in industry stacked-pay the briefly let’s that column outstanding results delineate geologic we expect Delaware, pivot the to the the further With the on across expand and to quarter. Delaware the in as inventory outperformance rich drove conversation continue finally,

higher new we XX% Mexico year-over-year, helped which area southeast on net XX wells production During New state the of brought across XX%. in Delaware the the line surge quarter,

results across great we Spring wells, activity by position Cat headlined Bone the area. was Scratch While Fever sweet a well massive acreage in Todd second our targeting quarter, our five in had spot

and rates XX-hour BOEs map phase XX,XXX these initial Cat Scratch rates the of you are are the from wells the well. right, these As the average the wells to per of prolific production Fever production on All the now the Basin. line in first wells XX see XXX-year project on of day can highest history from some per of achieved initial Delaware

wells development Fever X phase Delaware be the Scratch project and XXXX. production by uplift is with will The will line in follow provide success up with the our second expected Cat quarter to of We to associated year-end. that nice Phase provide the strong momentum a fourth Basin on XX the into

we development underway. six we where results strong in our area Wolfcamp where area very in southern Another County key is Rattlesnake Lea projects have achieving are

line seven day around successes Our first great average two of midyear. been our first The on production for wells in next have this excess Okra per Seawolf the XX-day in phase area multi-phase BOEs bring with us Wolfcamp projects is Flagler for Devon this will rates Fighting upper development, well. of and where project X,XXX per catalyst

Beyond And Flagler, is with we have our our and providing to now future special, contribute next prepared Rattlesnake forward Ritenour, the will acreage I wells. in and I’m rate updates the our that, to call truly year. with over Jeff projects that three Chief look other will This on remarks trajectory over growth high quarters my turn Officer. done to Financial the

Jeff Ritenour

comments with have of My of will Devon we comes to the on cash quarter and along at Canada from our detailing with $X.X meaningfully generating cash focused and exited hand pricing. balance next with We position. new first Beginning increase the today in future billion Barnett Tony. the is expect the that strip of financial proceeds Thanks, it with today’s steps exiting and this amount on execution flow our strategy. the tremendous to free our flexibility financial sheet, the when balance be the

of an on this is the three-year capable of of cash delivering represents pricing production is an points. is ultra-low cash cash our top can billion. growth three-year exhibit to result XX% annually outlines repayment in capital debt while is mid-teens equivalent and by to basis. yield various Devon maintain go-forward while million slide delivering the year-end with more declining rate free providing cash maturities EBITDA oil of requirements for is our the market to in excess expense $X run our you debt at from new X.X free we to completely at range than attractive very on investors a rate. billion order X priority times. of breakeven flow of $XX to our still $XXX to This our free This plan competitive cap price see growth And debt share $XX, With of expect WTI would this in up Devon’s which XX, capable Devon $X a ratio attractive today’s strategy, proceeds an targeted new by A and price the redeem Canada within rate. at As to fund flow oil to designed pricing, approximately interest flow a WTI providing of cumulative Barnett,

XX% the business to is for shareholders of the the most ongoing well-positioned foreseeable to our cash regards the of another in a continuing key cash From repayment, to future, shareholders. to priority perspective, by we policy regardless debt efficiently active to grow With only quarterly by also past not addition over targeting the this In time. that of XXX. is manageable goal return largest to dividend our cash buybacks E&P program wide by to expand the but given is our space share few U.S. dividend flow. years. payout X% ratio XX% expect of to our dividend a financial is operating go-forward is our the program, steadily grow reward this dividend And With policy, margin oil our repurchase flow by one increased the of over a sector is in S&P steadily

the past repurchase flow authorization million at have cost our over of The we total XXX shares result months, and to free of cash year continue in XX remaining of of hand the will the a outstanding $X cash shares. to on accomplish execution shares. our generated XX% repurchased billion. of To utilize throughout a expect our we $X this, billion reduction Over

well. in our is strategy So quite summary, financial working

are future. liquidity the flow. and We sustainably pay business for set the debt have and and times, ratio substantial EBITDA steadily have free towards excellent grow X generating to dividend foreseeable cash pushing to a is go-forward will The our business we

call also With that, buy back stock. will to turn over I’ll the back our to Scott. aggressively continue We

Scott Coody

Thanks, Jeff.

and now limit call to open yourself follow-up. question to Please Q&A. will the We a one

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

Operator

you. Thank

from comes JP from the Our Arun first of Morgan. Jayaram question line

Your line is open.

Arun Jayaram

the both morning. potential for that a Arun Canada handicap could you as would touched how in XQ. wondering And sale? this you the JPM. Jayaram opened I of level the rooms remarks. if from you prepared Dave, you was But, spin here sit characterize Good today, in data outright your you on versus in interest

Dave Hager

Well, as we are multiple in in with parties. we discussions said, Canada,

them -- values I we we but of having for feel don’t We with those have. are sale assets. that, are are appropriate at than that think those we And could go of to a the assets. the discussions that have advanced value value detail very we that intrinsic about into likely a really good want we discussions more it’s optimistic

are the course this and more most likely. plan, working as of We of at that backup point view that in steps necessary are the that. in parallel, -- a all do spin potential We to probably background the

so, encourage. soon. And to everything, it we’re I the percentage In don’t discussions to those of we if are we’re on very not regards will Barnett, -- opened want know it are. where have a room; I opened be encouraged put but yet data

bid the could We get the large that cost. some capability do through asset not received to we’ve a opportunity. very Barnett. drilling of decline Dow often asset. unique people to when It’s position And completion a contiguous are interest this we quality seeing such that joint activities This has in have that low with through It’s a enhance drilling venture very what receiving a on have the acreage that recent we think and that able as an show modern opportunity our that. type not to you a compelling often lot been inbound frankly with completion and promoted with we’re activity assets

in will we a received that already so, room we’re advance sale of once to confident, we’ve proceed And of is around manner and very And be data asset. that. able calls that phone timely a lot to opened the

Arun Jayaram

wondering X area Fever. Phase my Phase around from could just I completed provide Cat bit cartoon, you a color the follow-up, some And of like be was X. Tony. larger Dave over step It looks in Great. if like or of Scratch it’ll

So, development, wondering you lengths and I and if of lateral was compare projects. two those contrast the could and the perhaps maybe spacing

Dave Hager

extremely and that, the describe then give granular on call bit have a we We producing XX Boundary didn’t Vice our wells. in do done to I’ll area, John to was where more Bone Unit we going John subsurface special over But He’ll in a I area. top the commented little The you it’s these special guys special able Spring understand out once this President. mapped by have Arun, past of And well. who turn to it But how spot area; lot wells area be wells is information. is at have followed would be sweet Raines knew I’m the the that got technical to a Arun, going that the think again, to in X the second outstanding. we’ve work the going be Todd to additional get Business in let Phase Phase X. been Raider wells we I’m started it of

John Raines

it’s a question. good Arun, Yes.

Scratch half wells a wells, for single-mile had Cat wells, We the and wells mix three mile one-mile-and-a-half on and in and mile specifically is of single the wells, of option program quarterly Following a two X.X, highlighted we obviously full XX wells. the two-mile here it.

on of second I the not planning of big two a go have east, phase have the to and difference in in note Spring Phase say, for the As that, two the And as bit be for little one, six expectations significant our upper sweet right first obviously we reasons we now, Bone having that the thinning upward our two-mile projects, laterals, to transparent X. Phase between and adjustments on the And two pay that we’ve outperformance would project. we spot. made laterals, I’d had contrast we laterals. single-mile X, one-mile-and-a-half we’re

on we Cat As a two located But, this the around X.X. type Cat well. project exceeding our and are curves Cat last does Scratch brought of is, results. would you what early the move move time wells they in the to I the X.X little were with X.X Scratch And say on highly east wells bit confident east, as based in majority approximately water of area in forecast that and we’re Scratch of

Operator

Our from next Hanold question from Capital comes Scott line of the RBC Markets.

Your is open. line

Scott Hanold

directly course performance look quantify potentially some just or if better all And, Thanks. you’ve productivity give commented a strong, of that more just production XQ that activity? enhanced you to us outperformance afternoon. to just Good of was at well there’s just the sense was oil the or through the that continues for some just XXXX. also efficient there operations least OBO upside, Dave, Can maybe

Dave Hager

took well did be that, it timing be XX% XX% performance wells adjust on moving XXXX a just I to actual into it. really of XXX the And Scott, clear we any activities. that mentioned up not the account well well overall our did QX. to timing, basis but points about early we increase to of future think, characterize And a on guidance, oil results what up we -- We only couple to John expectations. from just and exceeding are with

adjustments, good that of then about appropriate the thing, conservative make we activity then feel if and most is a Of just adjust see is course, the to activity right somewhat perhaps for thing the and how then. But on appropriate, QX the we and and remainder out perform now we thought the program. early,

Scott Hanold

what would I are kind the continue with price you as through that’s different kept you stronger bit since occurred and put quicker, that. get to fact gave know -- think run are you year, And if pace? spoke what split than you oil last advantaged, you you XX% of given -- budgets. guys respect seen appreciate seen ahead I you any any you they’ve that what, a Okay, maybe, obviously your in me, of I -- doing unchanged. little guess their Have do I you of? budget that and pressures off things already Have is inflation And, environment XX-XX to that this the

Dave Hager

very me one Well, clear start to with. just very, let point, make

capital our and be not guidance. will Period raising stop. We

are executing program. well Okay? very our on we So,

really just to we essentially program We executing XXXX. we’re for planned our right that now execute had have --

quicker But, of part that’s original is I We the plan, on our if details, then, have first that need over you -- far. year. I just all at and our and that’s walk capital and interested executed great of will you we rigs. ins guidance the XXXX results curious. a outs year a And are turn the be it just execute on see kind not plan, who in to results that you can them little more give you President it -- I the if you And But E&P, through back of bit little capital will can think a we more XXXX, of you’re achieving. we’re bit Vice activity? a you add this out because by or occasionally But when might Senior the the so little executing details them can Hutchings, he of quarter on on spot an what completion mean, you’re the times. overall rates picture Wade back us raising -- out during and Wade basis, efficiency

Wade Hutchings

plan would me a Sure. to that, close plan yearly our and our Dave. a what is And into the crews we just proceeding our do really support that our we’re you would seeing is that give Happy be four full-time inventory enough frac quarter-to-quarter guide. XQ to what building context had Essentially, about of I in in Rockies, for on bit where in let execution the reiterate, see rigs of month-to-month, months little we crew. the year, field. the to now there now indicated crew That plan. you you’re is original quite

specific guide, where Basin spans we’re and the that that that’s have crew the very to part spot in Delaware third in quarter. well, second second quarter bringing a so, contributing as And we project quarter of

average of So, $XXX being activity capital basis, our see contributing the driven by on a should it under the that’s for quarter middle actually of the the When you second in midyear and touch reduction year. completion spot full-year year. the roughly one more million you to then, peak really in spot Delaware, in the the a essentially the crew of our of in planned quarter. Ford the half look in at the and second STACK half, a what’s completion frac crew the essentially, That’s year, activity Eagle in this of the of the some increased second

confident the programs to full-year are very to in guidance. that guide our given meet have we’ve the in and able use we flexibly So, ensure we’ll again, that

Scott Hanold

Okay. was provide, that the all And OFS any you there commentary could inflation side?

Jeff Ritenour

absolutely, also seeing several is Scott, some Yes. seeing throughout portfolio, we’re deflation as but Hey, this different the categories cost across areas you’re inflation in Jeff. well. No,

our really from So, deflation standpoint, enterprise-wide, flat we to XXXX. output compared inflation, as see a

in the with really marry that and team’s cost with the driving it So, efficiencies that described, those some we’re basis. activity of puts the year-over-year takes, we see flat

Operator

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

open. is line Your

Doug Leggate

but wonder the about one evolution I relative, of substantially with it just curious, you could around actually STACK just if is showed that and are and across you they terms commentary if of Guys, wells, at up-spaced least that incremental least at impact. talk having obviously the significant showing everybody. morning, two the change start the changing whether I’m the relative Good any I example, offer could where would in plan across very board main capital a better performance goes Thanks. by that areas? spacing your clear

Dave Hager

Hutchings Doug. going is Hi, Wade to that.

Wade Hutchings

Doug. morning, Yes. Good Yes.

new We’re by projects we line. that on certainly spacing now have the pleased

we’re slide a -- If giving of update about see third three of you’ll the you look a keys. on there those XX-day on you ops report, XX

to that’s if all infill are can rates we’re this them area You oil see expectations. suggested. actually curve of seeing new core volatile type oil type our you curve better three at If And that anything, expectations recall, than or our above slightly for play.

for we’re is So, encouraged the by kind of I STACK year essentially say, that the capital result. on would yes, allocation broadly, based that. our for

STACK the continued well is investment so, at design, And in we key seeing I significant that last key point in plan. is moment, the relative thing or optimized to in the which that’s know don’t a impacts XXXX costs. at lower performance, current we’re than our also quite is the better past anticipating the to our One of driving of stimulation capital stack giving capital the our in we’re us we’ve had addition at this confident are stimulation shift

Doug Leggate

higher ask we just the just anticipate to Wade. should was cut wanted start far, past I that -- right But, I you you see after year? type now? check, are appreciate you you -- maybe that to too and little it curve I we clarification, reset your a the Sorry. again possible to obviously, it Is comfortable that took where you or will are going

Wade Hutchings

always today, results say curve. get the certainly few have of possibility. And we’re we the lot a projects. by say, we’ve warranted certainly we’re we’ll we’re the that these over ground. going just next But, to type few comfortable with upward that the first got based results new That’s on I’d now I’d that again, in encouraged spaced more results. by as a revise optimally projects

Doug Leggate

I inventory so that. follow-up, and the to Dave, love levels the more into little on. Delaware appreciate My get on detail and a I’d

a mentioned try current So, level, at look inventory pace. but high and it’s at hit current in fairly if risk XX-year I deck. just wonder that a the you also I I Obviously, the that’s slide could the level. inventory If

think we a year over is longer XXXX activity as So, how but I’m don’t you’re thinking debts term, time Maybe inventory obviously evolving about now. know should away your wondering, about only how that just the vision I over changes?

four I’ll does the five And evolve? how leave think it three Thanks. So, or that when years, there. or about you over next

Dave Hager

think, best are part said areas. zones to parts started XXXX XXXX to going in in Delaware now position -- have best come, here develop the we to Delaware. and the for now understanding in the are as which many first I’m to address much XXXX Doug, better zones bulk of XXXX, is, part have and develop through the bit of we’ve are moving which where about or we a a But, little more And the of to years Well, and the then, and I acreage XXXX different know the we and in last thing the appraising program detail. we’ve the spent in this Tony first before really were what that of John of

and rate we’re going we and in are that. moving have we Delaware. this drilling that And the most saw zones, increase future. XXXX into that that’s this of is what sustainable thing the important seeing change many you’re is for the the uptick is the for really And to a in the best so, And results performance years sustainable

tell And had that anticipated in think, we’re are continuing zones still you out some John’s we to some do working we’re areas not going appraisal I there. finding that work before. to

think we as I good X,XXX-well, we So, go this work more higher. potential there’s to But, somewhat do inventory. really feel have about the

give can on I think, little you a John bit feel that. more

John, So, do want you to?

John Raines

what feel I’d X,XXX number represents about good the our today the say, locations, characterizations. really we we terms Yes. disclosed, in of

And the advancing on activity, Todd, potential as inventory. and focused planning necessarily count, they success industry development industry our of XX% at inventory. represents appraisal bring derisk a as of a here that the look seeing that development out XX% type we’re take we’ve us we’re for And to roadmap. thing to then, or current core heavy of five tend Cotton But about. help our our mainly aren’t as future right of that a Dave our is have to mentioned, meticulously inventory. that that going with And planned projects some year our by in potential acreage programs of talk appraisal chance you we’ve we If now, well inventory one Wolfcamp unrisked is Leonard we very our Draw NAV areas. locations. program about into at within that X,XXX key And areas probability But, positions and

we report. about that inventory in X,XXX the the situation, really beyond feel disclosed ops even the good So,

Doug Leggate

be XX through up just objective to really development at? years guys. next To wanted what of years, down go does Sorry, not or clear, hold That’s you move or that pace? flattish to as I get the kind several

Dave Hager

additional going Yes. appraisal it I’d there is inventory, add say, probably more keep as we’re we to work. least if at flat

Wade Hutchings

is Hey, bit here. Doug, this Doug, Wade a color Hutchings. me Hey, add more high let level little

note, would today’s of activity life for I of inventory are think all we calculations levels. these clarity, at

So, quarter, set our that’s information transparent introduced we a essentially clear, of just inventory. more new about one clarification. Last

There X,XXX that. want locations, quarter we about the recall, four-basin in is talked X,XXX make. levels, so, the And part couple you are at of of if the high-quality points Delaware to key I last a really

those we’ve past of the disclosures in inventory, are the made any than only. different operated First, numbers on

focused we’ve so, we on that we confident the really on are And where acreage we in characterization approach our will operate have.

And the so, what told we’ve that’s you past. one of the from key in differences

in. we operated Delaware, unrisked we about at X,XXX well goes And those higher points amount look And as when or that John of an price we of confidence talk locations. that noted, at in on a basis, X,XXX have so, even number over locations significant the when high-quality

that’s the a by encouraged seeing inventory there. certainly capital actually we’re why you’re Delaware the have So, of depth today and in flow we

note and is, through our have we of of other focused scale on of as an of in trades. we’d that done One excellent lots operated the job size positions, the teams things the improving

non-operated our core one inventory of more do is locations. traded have allowed XX,XXX-foot us positions, or strong. turn our So, operated non-op actually of have And we to as things positions from those that’s positions key X,XXX the to

Operator

question of comes Guggenheim line next from the Partners. Subash from Chandra Our

line Your is open.

Subash Chandra

you. Thank Yes.

The first for maybe question Jeff.

If towards what remind debt keep metrics, would on proportion EBITDA share the be to what might asset and go you us could sale refuel parity to proceeds, buybacks? potential proportion delevering from

Jeff Ritenour

one our repayment. day first $X to expectation billion go from said we’ve What would the is debt is

alternatives the work would to lower the at X repurchase share leverage both that So, And and be available for the and the combination X.X -- beyond of received $X Barnett ratio. into the down times billion other that proceeds our top take of would end that Canada be of we that and to list. first from metrics that will anything

Subash Chandra

Permian on and slide in was I’m Okay, report, thanks. the the potential the And has ops and the thinking circle questions I inventory the not those been ahead. if I just though that recall even to-date? go on proportion you this Because think that what slide, addressing -- curious, call. circles have tested But, I’m maintenance which of there. of Wade intervals. XX curious, maybe for number we’re of just

Sorry.

John Raines

is This John.

trying represent landing of tested potential zones the I’d to we’re what we and there. our Thistle majority for think say full slide is in have in most of these that the areas. column the part, just I Rattlesnake opportunity

we’ve west test the now and Draw move appraisal more play, in and do our then, Wolf Todd. drilling Camp, the in Draw as Cotton to Basin got the Cotton right area. development in well we Camp in Leonard, we’re spacing Todd, Wolf in And Potato As as our first

we’re but in I core five tells how the give So, you Basin. our derisking areas you Delaware generally wouldn’t a that percentage of progressing just

Subash Chandra

And if final PRB which quarter? spacing what also the launched can spacing, one I just helps. That in you Yes. the a in interval and the on have

John Raines

for Hey, the question Subash, you cut please out on that. you repeat us? Could

Subash Chandra

PRB, testing? you’ve sure. and launched interval I was the Yes, spacing curious, just you’re what test, the which spacing In

Dave Hager

And Turner. We’re right land our Turner per three the appropriate Rocky head that to now. to more testing to saying call be we what something the the there turn on probably who’s unit. to going business going wells section Ketter we’re over I’m Mountain in Aaron of is

Aaron Ketter

position. which test. in also appraisal in obviously from spacing varying stages acreage, And commenced the conjunction depending is continuing in Niobrara that, address to to our quarter, our across we’ve this we’ve development been See, the Turner with on acreage

Right half decisions. upside us, to of per back important XXXX results some we we three but make and program. set our this there, the now, get that latter the section data we’re wait before very wells be for entertaining that’ll capital get up we’ll better really year with as so, And test, to

Operator

of from Rice. Our Charles question next from comes Johnson Meade a line

is Your line open.

Charles Meade

to Ford. wanted the Eagle ask first I question about

change Devon there, whether discussed prominently had thinking results. -- say portfolio? any partners your new it’s your at -- and to little is change in or your in You’ve in least there Is I’d important of best a this how kind that of about a quarter’s

Dave Hager

have of on far, it’s the relationship think we BP; of that significant asset a see the the Well, technical so cash out that inventory And addition we are very great -- our exchange as that great been view Gulf a encouraged get good a to a growing you the -- it’s asset margin frankly views pricing with that, has flow. improved. for And plus in with we generate are result, type relationship asset. there. we asset free we high the Coast our and it’s with Obviously, working

So, new the we’re extremely to Devon pleased inventory our company. as that have for of part

Charles Meade

Got are the But, I then, that it. BOE in Thank at actually rates whether really the parts. fact Scratch guys those perhaps is producing the you’re a rates. wells thing have are been broad then, guess, ask if you those day the to can test I about another to or idea percentage contributing terms Delaware two you. those those, as that question One, indicates Fever open an those Cat And other just XQ rates there what about a test say, it you in different Basin, XX,XXX rates, could pretty reservoir. of -- is kind actually us And rate of a those and volumes? give

of and you So, wells is resource there still the spacing majority chance capture place? wider that can that significantly a in at drill

John Raines

to John. is This the confident we’re the Yes. per respect spacing, very section. wells four in With

out in executing there area. currently we’re our that the that spot feel plan this a is the is that So, sweet We Todd in drilling phase. do

the first and the the project exceeding These two driven to forecasted XX quite by Cat X inventory of is about the estimates would say are exceeded question significantly to overall Cat your barrels limited of wells, most around the Phase of by Fever. Scratch approximately in each. each phases So, earlier in beat, Back associated the program. a that quarter wells, still five is I with day Fever the those our contribution Scratch to days wells particular production type curve respect our X,XXX with that two-mile

a delivering of it’s bit beat the first see, quite quarter. in could the you So,

Operator

Sachs. the from Goldman Singer comes question from line Brian next our And

open. is line Your

Brian Singer

think zones through of the as here? with inventory efforts, regards the number for do but to locations you give XX, And greater the you your in confidence you subfield Continuing highlight that in slide going to in go the to that question us on you that’s result return locations to increase as of X,XXX or your a return rates within an of derisking Bone Leonard? from landing a Permian compare relative perspective, the can rate on more Wolfcamp of then, just relative the latest Spring, theme the how follow-up thoughts the

John Raines

respect question, necessarily zones. only of increase feel result we locations, Delaware in with the the that derisking but your not Devon number industry, latter undertaking will an not the landing say to we’re I’d in in Basin, like

has our got five laid on difference feel locations. basis, we’ve acreage, slide some on XX. areas core With of But, the in about those geology. a out each respect bit we position, a think, number of rate return to the will core which that’s of we’ve unique I programs of little it three Devon thing overall increase that one consolidated the

rates So, be on the that our exceed burden all better very a very on competitive. generally area could depending But drilling, speaking, Wolfcamp be these with the programs Spring the those speaking, characterizations are Bone of than better which all north But Again, they’re basis XX%. of return areas. five we’re competitive Rattlesnake. of vary generally across could than Wolfcamp,

Brian Singer

and think production year what year. as strategy that? then, within next it going of you’re couple XXXX for could about looking -- the about STACK type STACK, talked course this in you stable key for that to the production relates that over how So, what it are what change Is plan? the stable goal is of you And STACK your a are the be milestones the to your years,

Dave Hager

just I off. may start

I think that. STACK really of assets, so view we the one have flex as our we

discipline opportunities we’ve Company. free rig capital count up going cash maintain the company, have that to the generator be asset Eagle ability of the Rockies, and generating that in given the the seeing we it’s But, free to with really as having have into one flow while we’re with flex Ford, program out going the and down, significant the flow. significant the BP one growth to a the we for lined it’s are assets, it’s success cash We a Delaware, and we’re the

over looking next may year able we’re So, of walk to for be so. having or said that, the that Wade, bit little the milestones more at a operational through

Wade Hutchings

so, Yes. Happy to do Dave.

of that mode I optimized develop spacing this on gas however, think this window. for core liquids-rich to appraisal tests part do, new development have to primary two we is our XXXX, have. continuing play, the condensate program more in execute of We year the pretty focus important volatile continuing oil the

XXXX And XXXX. so those critical are and inform for results to our pretty plans

those a we’ll to come certainly sharing as state; so those And with be you. mature results

window so So the the future of flow gas oil to in of continue spot year, gotten point. growth then $XXX generating play it’s milestones can where really a important as of on objectives determining that reiterate across But, now the we for that Dave’s condensate million I’d a We’ve to that’s STACK we is funding core material order the somewhere depth the really room the volatile I’d extent develop and key our cash a year, the -- part it the say us, running window. of and for see as a enterprise. just

Operator

Our next from question comes the of line Barclays. from Jeanine Wai

line is open. Your

Jeanine Wai

the kind between thought last oil your previous strong that process kind your you to of bit flow your high-return the you budget, dropped your three business on earnings And now to talk Dave what’s any remarks, now guess in list thought indicated would cash there. CapEx be cash that drill free and flow. you’re Can presentation excess we I like US reinvest about April but not back My in cash of market to first flow off in equally only update? option changed uses We instead your commitment in the presentation. quarter. signaling of was the free that you is your recycled we in of and question that four noticed free prepared

wondering this. in environment So the that of into we’re factored there’s that kind if you’re just something operating seeing

cost asset like sale so to proceeds or logistics year-over-year, else? something something flat is You expected related or it mentioned

Dave Hager

really Well, committed out. And I we the that has with only with laid plan changed that already think with off that nothing reason to have are to that Devon. that. the No, plan, laid we’ve plan is dropped that we out New that execute staying we already we

what no change standpoint, have say guess, from So we is. slide what is that operationally already is, plan the any that I People a, at wouldn’t just that. have we all. the communicated plan It’s understand that I change there plans to

high-return Devon. the to disciplined New a on from be standpoint areas focus We going and our capital are very in

changing there’s The plan. of the -- at other not is really, all. sort is we’ve not there. change any around no else -- that optionality around out as optionality look laid at everything it But strategic So would that the I

Jeanine Wai

then, question And is follow-up on efficiencies. my

you’re rate. You Delaware expected ahead that also tracking matches mentioned run in that quarterly of and the spuds quickly little a more your executing specifically than QX are guess, the I

in of you’ve CapEx the We forward offset your percent I first Eagle where the given a budget noticed if your little both mentioned the which STACK your of and was drilling night that last other up out CapEx some Ford portfolio and in So in presentation efficiencies comments. very bit some commitment ticked CapEx completion, there clear, does the Delaware the you continue total pull to made flexibility to and come the think this? to and

Dave Hager

Yes. And before I’ll it. Wade details of that we let walk through the see

Wade Hutchings

Sure.

me two Let address question. key parts of your

we’re a and of first our the earlier think dollar intense a drive I in we opportunity had Short today in to we simply area to a we STACK are times that focus to at to and continue in us things the fairly eliminate. where that need that guidance. of flexibility IDs, whitespace a to within of able whitespace well on stay spud that your There’s the and out. the between our flexibility is, on execution in IDs. improvements that if we forward come pulling-forward to answer continue bring areas likely when lot Back the because the that those but you’ve cycle question capture of And of to we question will dollar come line. we’ve we pull times the that’s on all seen see that when lot have out would to many that, well first capital capital found programs where

the our not able spuds well sooner basic online execution we’re have of changed to though so And may even materially. get timeline

Operator

Our of next from Ryan Simmons question comes from the Todd line Energy.

is line Your open.

Ryan Todd

update this so expected outlook think Maybe and you’ll can what’s between the for is about now outside total? the where do the upside talk to how how -- -- probably million to SG&A. there be thought? the of and you cost Is get by year-end and terms Barnett, there -- you you you reduction $XXX in upside of you’re on now than the then? more expectations in the XXXX a Maybe mean, the just made much there potential the you clearly think that even the And on year-end XXXX, reduced SG&A more maybe ahead of much of progress potential far you couple congratulations a where you the faster quarter. you market Is I down think quick Canada ones. and have get between first

Jeff Ritenour

ahead is forward, Hey, about schedule. the No, well appreciate and rate run the feel Jeff. we’re This really question as like Ryan. I Yes. going we we think of

$XXX for our excluding $XXX the estimate full As of Barnett you year. second described, quarter, and Canada to which is our ahead million guide the for if you look again, at it equates the about million the piece

So I there’s the would yeah, answer always say, question potential to upside.

We’re continuing and parts the at all categories. each attacking different to of of our business look cost

rate time, the that that down parameters quarterly good So, so to about trend very we guide XXXX. in change expect on to we feel comfortable any we walk continue laid soon too basis with run this as to we still at continue out feel that. point the obviously we call. on through last It’s see you’ll a But

So still first obviously, the in there’s some quarter. noise

our then fourth show as and quarter quarter year. in and second the quarter third move we the see savings up really can results further into this You’ll of

Ryan Todd

a which just I assets. I appreciate on Canadian quick early in timing June the terms in the impact And Canadian anticipate the of of on is XXth, on color expansion, the think sale the targeted Q&A then, Mountain will maybe Barnett Trans for you sale? the gave the Do follow-up. the decision any progress on you the about of that have conversations

Dave Hager

sophisticated differentials sitting move We talking that players, the this. order so. somewhat, isolate but they term, more variable it economics. variables company the on, are the variables have to a in all like while any toward really wouldn’t long here we’re They’re to improved differentials lot trending all of out And understand most important looks being prices are Obviously don’t think there. there. the variables guys with these going longer there improved all well, term that are quite as the and players that are shorter obviously in have These I forward real in term, one are understand

Operator

question from And of our Advisors. Energy comes from David next the Heikkinen line Heikkinen

is open. line Your

David Heikkinen

got like barrels your of pretty of do that’s digesting to sounds I it a things How you kind with just XX-day think XX,XXX then well and you rate. X this much Delaware kind day the results flowing. is sustaining then and point then and oil think and quarter-over-quarter, of X, of about it how Phase grew Phase volume that see adding I growing

back. that end big up X that So of And coming the year Delaware at the reasonable? then another declines the with see quarter-over-quarter, is Phase you bump

Scott Coody

strong you in Scott. Hey, Delaware, on quarter David. expect saw positioned half in This From the some growth a the significant an in growth growth QX. of trajectory modeling for basis the the certainly volume minor Delaware uptick obviously and we’re oil in a second We’d second then of year. is pretty the perspective, the

the growth too. as be going top And raised rate to you exit of that’s also raised rates. overall So the and year on our guidance that, we we’ve growth saw, full for corporate our driving

to to going of Rockies and as is as the a momentum XXXX The of So second going well, have in well. growth Delaware year we’re engine. the heading half into the key start contributing the lot is

David Heikkinen

asset with then, trying putting reduction by signal as the anything on proceeds or with cap far a debt you’re sales as believe to proceeds, the that I to of the up And don’t is billion anything fair? Dave, $X

Dave Hager

fair, David. entirely That’s

We anything. are signaling not

first sale that’s the of said. Canada go to the proceeds reduction the of billion $X we’ve We’re just that Barnett what saying debt will from and and the

saying Before that’s we the today. we’re began process, what

So going on. no at signaling there’s all

David Heikkinen

guys. didn’t I Yes. it. expect Thanks,

Operator

next line question Paul from our Grigel of comes the And Macquarie. from

is line open. Your

Paul Grigel

that? how the around up CapEx the total the Ford that the year-end, Eagle Maybe Ford you given of the or how to budget are and cadence discussions communication then around view on CapEx should budget, still changing this levels, following potential terms clear could year guys’ move Eagle very into we in going activity

Tony Vaughn

well. rigs currently Tony. we additional up The BP is this with there. so have is working a we’ve Paul, rig that had working We four relationship quite picked

increased part, the see in larger of half past but the rate associated a As we’ve we’ll seen over the bit can three and for the year lumpy, a two the with little years, be will projects one rate most that years, second the come IDs the on. of

previous Just four we’re working the the more so partner The Devon. thing I rigs two probably is had there. is currently relationship one of note, right could one aligned think good we not this closely being than by been better be operated with of between technical and companies with it’s now, dialog the

it’s really well. So going

Paul Grigel

you remind just on around Right. line Good And hubs, to the move guess, revenues, to back that have some not on the to guys being of positioned natural of play. of possible hear. can Permian there? the prices you’re to given how I the them Permian turning quickly, gas able dislocation gas you in focus on -- actually Any clearly thoughts us physically your out but

Dave Hager

No, when spot hedges Paul, standpoint right. have a place, realization you Spot marry and that you’re in on the economic great we in we’re there.

are We’re $X.XX Henry off -- hedges about of I think our Hub.

So flow as really price from assurance a there months, realized several noise you’ve basin some here last in getting over to standpoint. we’re compared the the of seen other the nice a

that we With blaming term that contracts the the avoid we Waha. operationally, have we at actually physically have, scale long

to long-term that to actually customers, west. goes moves and with have EPMG our then that the gas we firm sales gas with the Our

and feel on our assurance issues not there. good about seen have gas we the So flow moving any really

Paul Grigel

you. Thank Perfect.

Scott Coody

hour. top at Devon Well, your hesitate which myself do if question, to interest team you. consists and the Thank at Chris Carr. didn’t of Relations today. And in we’re the the anytime, please everyone’s to We we now good get appreciate reach not Investor a Have out day. of

Operator

participation. disconnect. today’s you Thank conclude you And call. your for conference does now may This

Devon Energy (DVN) 1 May 192019 Q1 Earnings call transcript