XEC - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Cimarex Energy Second Quarter (sic) [Third Quarter] (00:03) 2018 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would like to turn the conference over to Karen Acierno, Director of Investor Relations. ahead. go Please

Karen Acierno

to morning, XXXX Good posted welcome our be to our today. the Thanks, call. everyone, An quarter referring may we conference yesterday, was presentation updated third during website call Francesca. so and this Cimarex to presentation

cause our we could discuss. results a of reminder, statements. number materially will discussion As to forward-looking differ contain A actions actual what from

ended disclosures release for for read with our and on XX months and the our should on XX-K news business. forward-looking our filed You our the was XX-Q in latest three our associated yesterday September which statements risk and factors filings other

and our our then And from Albi, So as followed well John COO, update Jorden, Joe begin on you will and with activities, an an production prepared CEO, will operations, results Tom costs. overview including from always, Lambuth. by we update drilling remarks on

you as accommodate over with to CFO, I'll Burford, allotted any is here ask in queue to we yourself free hour call, your we to may answer And that help you limit to that have and the And Tom. may to questions more the question we'd during like the like. follow-up, so to Our have. questions of Mark get one it you back turn one if always feel that,

Thomas E. Jorden

active projects development reservoirs. our understanding and and important back was analyzed completion. call furthered good, drilling activities. We on Thank very pleased you, growing of development that flowed Karen, in and quarter. joining million economic and of had all that this $XXX morning. million optimum a the exploration We're who thank completed, some of us our you to We report development Cimarex $XXX are invested to third which

robust We returns capital. our on are invested excellent seeing

growth As driver. on our not on focus capital returns, always, Production an a guide. primary invested of is outcome our is return

with averaged guidance. end production of was daily XX,XXX Our oil closed averaged generated track high our the we day XXXX quarter the per during in which cash during per guidance. oil strong County Ward net of day barrels deliver in our Also, above We the quarter which on our line barrels quarter of the XXX,XXX equivalent are solid and dividend. and We our fourth flow performance as well. quarter, of further during and the to increased the sale earnings assets of was

solid is invested performance of capital execution. good field definition on seamless Our underpinned return very by

coordination moving As we the complete execution field the have multiple parts to transition and of challenges. increased projects, development timing

Our operational organization has challenge adapted and hiccups. few risen to with the

XX XXX basis, forma increase set generating XX% oil production year-over-year importantly, XX% XXXX to XX% expect year. a to QX increase production by wells Our our we the XX% to for on during to adjusting to result Ward line is bringing that total to total of production with over sale, be the is for Most increase returns. program QX quarter XX% the we wells continues. production project Furthermore, XX% We XXXX. a brought County and production On a outstanding the production third ramp ramp this that another to XX year-over-year. oil year-end, on project pro will

have results highly and of Furthermore, these efficiency make that deliver structure. the capital organization to great industry and leading have maintain an assets cost scale We increasing our we repeatable. economies confidence

compete with best. ahead of decades with We quality well-positioned are We for can the high inventory. the environment

cash and that pattern prudent to a one in transitions repeatable by XXXX multi-year is development that returning to beyond, a development our establishing shareholders our large we As flow program a consistent scale and business. think within approach we to transition program fits dominated and cash more is excess

requires complex development flows Effective Our with execution and rising planning, prices cash Furthermore, plan. long falling programs time we infrastructure. flat and require that NYMEX to and around formulate leads maintain contract experience and allow will capital expand projects allow commodity us in oil a repeatable program these price. that lead improve plan budget and multi-year our programs tells us design, us Beginning XXXX, efficiency. consistent, to to a on multi-year that This for capital will permitting inefficiencies.

it. We have the assets for

have We it. have it. the for demonstrated And discipline as years, have we the the for organization we over

Our strong consistent profitability is no accident.

we modestly ahead, an have outspends capital that expect look a to program we cash with active flow. XXXX As

our the returns some of entirely have within is we sheet projects. like we'd our and as generate by define return flow full cash our flow Keep a the can development discussed, and less capital We assets portfolio. As and on outstanding our operations balance high grow into flow midstream WTI the in and price. $XX previously deploy free flat exploration cash This discretionary to we at cash cash expenditures. from development free over cumulative next years driven three mind,

Finally, in science business. good counts our

and to optimum our data to led and studied continue has During also analyze results deeper of competitors' Furthermore, our have each the curiosity of neighborhoods. in understanding a continued collect that we we've our year, operating of development. habit

that calibrated of results. by a reservoir our study our We have optimum gained are both development of and our competitors' confident we more understanding results complete

Our many of development our optimum differs philosophy of from peers.

maximizing invested value such optimum net excess and of dollar in a involves seek We capital present our past, the incremental return standard net portfolio. the in at said competes have that value. of for rate discount a maximizing between within last development rate we present the optimize to As tradeoff XX%,

manner as development go we does and to further develop consequence invite of and watch us of in creation. into nor Our you relentless is value assets. a direct our innovation, our philosophy over-drill under-drill. science, We value not ready focus creates on a our here full that culture We're to

soon. the they proof additional the more call that, to detail. to forward say, I'll I look John detailed As the With in over is you a pudding. outlook with sharing turn for

John Lambuth

Tom. Thanks,

and and during wells. in quarter. spent X currently rigs was three was have during now Permian the completion in drilling Mid-Continent. operating are working the gross, million new During XX quarter, XX XX% in in of We Cimarex We complete the in exploration drill and region million and capital quarter invested third the the invested of completion activities which on our of and XX acreage. the $XXX development net $XXX and across Mid-Continent brought region gross in crews wells XXX Permian the our with production XX%

XX quarter, early are pre-drill these Now, contributing ramp an matching results test Snowshoe about Texas. the Wolfcamp during third in the each to specifics X some Upper onto line in our County, our second region. expectations. brought Permian, we project, In spacing wells since wells the XX wells with on mid-August, Reeves net production including line On half gross,

which, quarter the all laterals pilot are equivalent contributing Animal fourth Our in in the Lower Culberson X Texas. of wells second Wolfcamp consists spacing section, XX of Kingdom, per These the September to Wolfcamp began wells wells X County, the section, with volumes. producing late testing we XX,XXX-foot in in

Moving into Lea County.

lateral exceptional XX-day slide We in peak a XXH. barrels long of XX of barrels oil of Upper oil the is our rates of on X,XXX the also that another at of drilled Hills, peak X,XXX day. Red lateral per XX-day had per equivalent barrels drilled can rate oil a had have Hills per new X,XXX presentation, per oil area. day, see Unit Highlighted in XX-XX, barrels X,XXX long equivalent well several Draw the Wolfcamp wells Wolfcamp production Red Vaca XX-day day. on you of Red day, well called of that Hills This Upper We IP a

of sixth XH, lateral not the fantastic of well X,XXX a an the of Wolfcamp have barrels per peak In oil in per oil a And per barrels in that X,XXX a was Lea area peak Avalon XX-day we day. continue Upper well That western Carry X,XXX of barrels the X,XXX a also Vaca to had of first (XX:XX:XX), Draw the day, but Back lateral, have A had which we On XX-day IP barrels that X,XXX on ex results barrels to The day, average well landed barrels side same XX-day lease, barrels oil IP drilling X,XXX day, (XX:XX:XX), our The Culberson equivalent barrels peak X County, X,XXX of equivalent drilled X,XXX on oil of Third per State and last of Fed brings of long-lateral oil we of completed oil oil good day, County. IP of per barrels one-mile barrels the equivalent per of least, IP of had wells per sand a Leonard of in Spring. XX-day our day, a per this oil X,XXX X day, oil X,XXX per equivalent, day. Bone a peak had day. drilled equivalent XH oil of Northern wells Lea results. all

are holds currently the forward running projects ahead, details our projects you vast rigs multiple when The to XX on look look more we As We for Delaware drilling Basin opportunity announce plans. our these across a development giving we Cimarex. XXXX we acreage position. have

the six This flowing per the laterals benches. Now currently of in pilot eight testing XX,XXX which of foot staggered equivalent completion on the section spacing. is onto development operations project consisted are wells Meramec Steve-O Mid-Continent, back, two finished stack which is

production and drilling the Lone expected the XXXX. the third in acreage our the spacing contributing currently with Woodford quarter, development first both year We these ramp. in pilots position of completing the additional are Hoppinscotch new quarter JD production end or area, production to began four across projects projects of on now Shelly first from with In Meramec our Rock

equivalent North-X X,XXX liquid peak begin the oil of and XX-day Area. The on of day. barrels ready We would Anderson brought the liquid also also drilling drilled the two located of Leota we lateral peak currently Rock. X-XXH X,XXX of XXX the our X,XXX equivalent call with Woodford Lone while in And a barrels rich wells in achieved per laterals barrels XXXX. finally, to portion quarter end day, second Sweeny Farm XX of to I'll drilling well, rich of on a Albi. X-XXH of long rate XX the in foot impressive then turn are barrels This West per commence by the the in development that oil day of section per getting oil project With Kim day, oil had completion scheduled Joe rate over XXX year's per of

Joseph R. Albi

on touch unusual call I'll joining Thank you, all on thank John our and items. the for you today. us

and and Our production, follow up resulting service then few with year comments on I'll costs. guidance, production a full QX quarter our and third LOE

we With guidance production. production the BOEs of BOEs equivalent had the beating new XXX,XXX our day equivalent and reported setting day, quarter for of XXX,XXX of end range company volume solid to XXX,XXX upper a again another per daily QX, once for per net record in

quarter, the the total resulting primarily XXX in was NGL a during per on wells our XX driven this guidance barrels of quarter. net call, came the with midpoint strong fewer we've is half track second significantly the our of September is With XX changes, volumes our another our than barrels projected momentum with range for line XX,XXX ramp to completed half wells came oil during slightly completion forecasted. which timing beat through come than up volume our than QX QX last cadence at in total forecasting day, up day. of on quoted line changes. We wells to coming completion QX, more We're and XX,XXX primarily guidance ramp net on year. coming with wells per XX,XXX XX higher above Our by six the to QX, This began the Even completion past related scheduling which in projected in volumes. we to Year-to-date in net slight line year. a of on of remain in

with per any us adjustments oil projecting midpoint model quoted of with the QX not With our to Ward early of equivalent XXX,XXX oil we XX,XXX is oil end to to an range October barrels guide for low the XXX,XXX day, side performance, the slight well now QX to in QX that high confidence just XX% net guidance QX production oil in giving is XX% XXXX to slight daily oil our XX% to of QX last change QX guidance to XXXX equivalent due over up above and is we our QX the our timing QX oil current in, anticipated average This range. have in shift be XX% estimates XX,XXX related volume asset the oil sale, call. XXXX XXXX updated range just Our per to County in solely volumes equivalent on volumes. for guidance up over volumes barrels coming Adjusting range forecasted day,

of XXX,XXX per the to equivalent volumes Jumping XX,XXX of were with our we're $X.XX day of to to barrels XX,XXX QX at came quarter barrels in BOEs of per from our day, total XXX,XXX XXX,XXX per $X.XX oil For of line oil projecting last down slightly below in XX,XXX in to with in BOEs cost XX,XXX the production day that's per for volumes low year, our for equivalent end estimates QX. to XXX,XXX BOE, per lifting and day per to oil we guidance and production. $X.XX range where of $X.XX the OpEx, range BOE

some and to we on we've of on and production to properties with now guidance behind our continue pressures the items comments and BOE. saltwater cost. and And focus per Although disposal, closing lastly, $X.XX dropped County us fuel, our on see lifting projected to power completion $X.XX cost LOE, as controlling cost cost such our drilling higher compression Ward

side, And we've mud. as to diesel focus check. up seen minor with That recently have items of our the said, drilling pressures drilling rates rig XX%. some efficiencies, AFEs in On stayed XX% the portion in and seen mostly our also cost we've go such oil-based on

realized some our we've to sand operational in down have the call. softening as water AFEs. a service area, and $XX.X and estimate Wolfcamp sourcing That's sand in savings local cost also recycling, through seen our both the interval, the our $XXX,XXX million. AFEs frac through local design result, X-mile in last cost recent and And we've facility sourcing additional On side, and total logistics, Permian from lowered completion Permian, Mid-Continent. In on are million efficiencies, the current running depending $XX.X cost well

and with about Our with quarter $X.X with And a AFEs Eddy our design, In X-mile range AFEs from $X.X our down area, local of our deeper Lone sand completion East from $X.X X-mile in X-mile and are million. are Spring quarter local million New of That's lowered Mexico $X.X last Bone we've million AFE sand benefits million running to Northern a a Rock $XXX,XXX quarter. Woodford also to with Lea of million. down $X Counties the pricing, $XXX,XXX to pricing lateral million million. from last last refined range $XX Meramec $XX.X

great in third our the closing, a So we're coming beat quarter. of upper guidance. We equivalent QX off volume end

growth pro XXXX. oil QX in came XXXX to QX Our of over mid-point. XX% projecting production forma above XX% guidance our QX oil We're

are quarter continues to and cost lifting program and favorable results. down out our last Our our drilling total costs churn from well

for So we'll with that, and open it up question answer.

Operator

We will now begin the question-and-answer session.

Venker First Morgan question of Stanley. comes Please from Drew ahead. go

Drew Venker

me okay? Can hear everyone. Hi, you

Thomas E. Jorden

Yes. Thank you.

Drew Venker

Tom. production. was you'd in give multi-year you kind then and process wells spoke commodity (XX:XX) in much many per a about little Hi, times of bigger on a from for just to you how more How lead on bit color planning pad multi-year And spud general? have first those terms I pads you hoping mentioned of typically static process. that price that budgeting

to that'd price hear. a mind have be helpful there, you If in

Thomas E. Jorden

boat Drew. there, a load there's Well, of in questions

Drew Venker

Sorry, Tom.

Thomas E. Jorden

guides on all it's to look you're together the have debate. lot to sales, lead by plan, of at to. number projects looking lot you you we're thing and need first design, take long time moving that what multiple the of to it parts development because the the it's we various business flipping it's going pick if at to coordination to time a These – coordinated you at one certainly mean, multi-year so elements you wells, parts. paper put our to I when ready you us on to planning a And moving come XX, of XX, say drill but look say innovate, and of it's and a We're valve

our an cash planning we're carried it. annual We've been file commit don't estimate in always we a about. say business that's multi-year changing multi-year but feel and that on doing And multi-year with fit point price of good we'll cash we'll based at hesitant programs, to to we where that available willing so, plans to to a and underpin commit our with and flow invest so to just is world anymore. plans. we've the cycles We're now change Well,

Now, the we we average and capital that file's NYMEX current plan us leave cushion we program to to a deliberately that price will didn't execute flat budgeting little on. deliver I strip a the say going below so be a number. give price can that that's

So, room in fluctuation the for fact particular flow. can than number is the less think some count cash that's our important being leaves us that on you it I and number conservative downside a

our as in to many I want mean, far question remarks. area-by-area, your on As what wells, be going I really said opening is underscore how that I section-by-section. to

want a and to It you're want miles. for learned optimum tremendous can us reservoirs or stranded over will robust, embark don't these really one But a stranded any about assets. going go leave change We course well-planned, development. to amount have We see change any the over And two want to development. And we well-executed of leave don't managing value. on that we fairly to play.

Drew Venker

Thanks for Tom. that,

very this particular, mind. As XXXX? results follow-up, in the And can increase my an area activity stood a whole program. more the impressive that Lea County, in talk you broadly would operational maybe about were expect just in out Is quarter. you to

I of as draw your would portfolio really bright from this just program far spots surprising year year. upside of you've or in probably which had that capital a the as think terms learnings to stood more areas within being wealth the next out

John Lambuth

is John Lambuth. This Drew. Yeah,

a we very competitors and known other the us, of I demonstrated stated there's I surprise. that Red for area think that we brought attractive Hills the just drilling and As us that's a Culberson with a areas of with like yeah, but additional some return to were we've been around parts go wells don't our on. our by always that area Reeves, in is we we're it, the lot very opportunity pleased along past, would high big they mean expect say investment very and of in invest New with frac other design about I we do way Mexico. that capital and rate other and

other in zones. of The assets looking other are exploring, thing still our all within at we we're even the landing Permian, still there, and

when there. As are that potential resource we development, we full Tom make want to we alluded sure the capturing the all to get

that landing by the our well a as And so to that areas part that's continue Culberson. And in ex do in (XX:XX:XX) was very each our key sand still of Back announced we Carry which evidenced that program. I of

said, go we sure Tom resource As any behind. to when make leaving development to not we're

Drew Venker

Thanks color, guys. for the

Operator

next question The ahead. is Michael of from Stifel. Scialla go Please

Michael Stephen Scialla

Yeah, everybody. good morning,

Thomas E. Jorden

Morning.

John Lambuth

Morning.

Michael Stephen Scialla

multi-year share I to Is part preference investors part willing and would willing have follow for to be of wanted a investors. mentioned to plan. share returning Is the or buyback that there to on you program dividend something cash you that a the up you're with Tom, be of that? would increase as

Thomas E. Jorden

will like a don't yes. how multiyear. that what answer Well, includes and the first our communicating is be, we'll outlook know granular I be looks but we

to and the always, that to it has some we'll hesitancy we're always on things these that's to subject internally, As communicate are of going to led one things But change it. us. commit if

only I think fair. that's

predictable an to we'll but expect We is we one with standpoint have from future. find excess to that I healthy in the think of it's the off be us say our that's table. who's dividend, sustainable, cash, off As our shareholders, more them. that means share investor returning a always far to If the mean, table think I fair dividends and things nothing that the position. to as is and that more would growing cash nothing's and have owners we certainly what say want we been to

Michael Stephen Scialla

ask just Thanks. And to want Very then, on your good. development. I

don't XXXX how most – number this be it are that you're know part at guess, is plan don't are it than to of you're to in by of you're to now drilling going wells I know sounds Can your in when apples-to-apples peers. I if of on My well wells and you versus development when wise. three-year like delineation. you're your in into feeling if You percentage I'm of performance a I along full in comparing at gut areas. well point. lot you said of terms is of further compare you're this I more where peers terms bringing the development your I it's development look say right development

Thomas E. Jorden

as to us, landing new to and always on Well, going John's that point. least we we're with be new a an in was landing important go Back Carry County. comment zones, Culberson That was at learning that's well zone

reservoirs we mode high by currently landing and the a challenge we in with not well We have it we that degree with prudent currently the and and and do be understand development that in zones confidence the understand, continue surprised could a of to go way additional that's full is wasteful. required spacing would

space of we a Wolfcamp when a probably go new discussed communication XX Challenge of you're development, we'll landing you hydraulic new need that we confidence we is, degree these still we to to really the which incorporate couldn't Meramec, or landing zone, that have to that are, upfront. months have said ready But degree if confidence add high have talking Woodford, or those about if upside reservoirs I'll aren't number we with which some have into discuss. you today, XX the even But ago. a reservoirs and high getting Now, to of developing, the of a with were in we that haven't surprised we're it's whether zones, we're the that the appropriately.

us the are areas be our to to an to thing exciting roll and next to able and certainly and the that's program to degree have our few upside assets say high But a that we'll continue of there So, will to confidence. years ready populate surprise where you. over we're

Michael Stephen Scialla

Tom. Thanks,

Operator

of from Please question ahead. Bank Lynch. comes of The Leggate America go next Merrill Doug

Kalei Akamine

Doug. morning, guys. Hey. is Kalei on Good for Akamine This

Thomas E. Jorden

morning. Good

John Lambuth

morning. Good

Kalei Akamine

wells more So, quarter. Permian two production bringing in the the was as quarter prior times in flat on despite

can you're XXXX? the in growth drilling-focused in slacking Just quarter-out be XQ What's there? through XQ, was capacity. expect cadence Will quarter? more completions-focused? rationale And here frac be this And wondering and XQ this we holding what quarter-in, back

Joseph R. Albi

With your those profile question Yeah. part with associated This regard were third the in wells Permian later is count, have them. and to most of completion of Joe. cleanup about the a completed the quarter

it production the the more So majority is their obviously third. the was than of to contributing quarter fourth

into that as So plans And utilization, frac you've the that. remainder for out mentioned his timing three the we call John far as are knock all with fracked. the built those got this frac the XX I'd of have of our had that that wells continue leads year majority And we to in for to of about scheduled that been on already half that for that mentioned the quarter. note, fourth QX mention the

Kalei Akamine

your Sure. and Does maintaining up How operational you'll guys you point, at about you frac some at out? all in picking crews Surely to hurt do be additional rotate momentum? frac the crews. it think

Thomas E. Jorden

see consistent more quarter. lead is but well a goal operational achieving more to that quarterly we benefit we're that This to our really and transition really footprint. into Doing to us really to It's as as lowered do take be Tom. have look just question, get operationally. going by We little our And count Yes. cadence. certainly your going to bringing like to does crews to out that's on time one program here in ahead, efficiency. in a herky-jerky, We to uniform is a quarter prior our consistent operational

Kalei Akamine

follow-up, on my NGLs. just for Thanks for And that.

this price quarter talk between a sell for was Can particularly of is Conway strong or near-term disparity capacity there ability into And full do And and to comment, board, they're really as So NGLs. growth? a you frac broader industry a across Obviously, the to where markets bottleneck find you beat talk this and premium your the realizations pricing? not? about the can premium see whether you status a about Belvieu. being

Joseph R. Albi

Yes. Joe. is This

arrangements – as are long-term we established or all either processing facilities firm to in – our of backed purchased place. sale whom sales with which prior our calls, of have the are linked we mentioned or in Our NGLs

concerns constraints, confident to with regard So we feel very about there.

recent being day expansion. I an about barrels there on today, additional that announced of an saw expanded think Texas That's entity's you a a barrel Louisiana. was of day capacity XX,XXX and in top announcement XXX,XXX

one. So what feel can't frac be exact a industry to is tell can number I give of our like to gas seeing is and are that that this hopefully but standpoint, you you us adequately a the we covered, for you radar projects space these the oil tight hit just tell the saw from products we numbers number brownfield we're what space. going And I in the outlook that get through

Kalei Akamine

answering my in week forward We'll next seeing to look you questions, for Thanks guys. Miami.

Operator

is of from The next Campbell question Please Jeffrey Brothers. Tuohy go ahead.

Jeffrey Campbell

Upper results, know I am Results ask and morning. control area Good XXN-XXW targeting Devon section, wells watching but them tests that relationship and lead typically from and production eight of your Meramec enhance advantaged don't some I northeast questions conclude comparative closely. spacing to were either of and you involved volumes Devon's companies' Cimarex guessing these per north test other to Mid-Con I have about cut. them best a four and or flowback were oil efficiency, will capital in

your broadly curious very about And their was tests that view noticed that their with I consistent of So in numbers conducting seemed you're ongoing conclusions. the I the of that some area. are

John Lambuth

Yeah. This Lambuth. is John

You are the their go mentioning, analyzed Devon's sight there. you're five five three we three are. as rate order achieve to of wells section. to where and section wells in Tom per forward have we and we say, simply would a line particular to have correct we And that data to that's of do results in Meramec basically are well our return model In is per I that maximum at PV just the one mentioned, we operations. see

Thomas E. Jorden

our anybody assets. else's That's on We to Yeah. speak don't have That's overlap. not assets. to

John Lambuth

Right.

Thomas E. Jorden

we're confident. one pretty just say other And I'll thing. But

returns the said outstanding the love I've in play. in we getting Meramec. As We're past, the

entry We the into carrying best fairly capital are play. cost And competing is low for a the it best. also the with of

initially have represented, about are probably spacing well is but answer, And little from clearly our the less we're steam But play. others. than ahead a in and results not what very perhaps and We enthusiastic the outstanding was full is I Meramec. go forward had John's Cimarex by for think the

Jeffrey Campbell

which looks where Am And Well, in that when sure color. that right appreciate question. me slide spacing as Is to look at I right talking follow away far When correct slide the XX, testing the area, is we're it correct? about a up like course Lone now. tighter I from I you that a make give just pretty here. that you're I bit little – at Rock quick of I let look

John Lambuth

it except is Meramec to. our – Woodford and alluding Rock not Well, drilling. is Lone and what you're Mississippi drilling

So spacing, different that's okay? a

Jeffrey Campbell

Right.

saying So Woodford going that the three be on we're we're able the tighter potentially forward? is but five to to spacing the support view Meramec may basically,

John Lambuth

Woodford doubt spacing without a is No, much tighter. Yeah.

I remarks. fact, In alluded in as

Our that Leota parents, in next so which drilling wells be in per we'll XX project additional section development section, is in that's addition the the XX big wells Woodford. to

spacing, So do expectation well and with yes, there. we that confidence results tighter great of much very in our

Thomas E. Jorden

on support talking average not just to five, that's there have about where when bulk over quote play so places are our reservoir of way the that eight And an to we're we're the saying view to not three we assets. the we're add mean I won't want that the but I going we you're average.

Jeffrey Campbell

proximity. I in Could this and I correctly, dots within area. one there I'm understood. there wondering, mean are all on approach. that is sure wondering being simultaneous each roughly Draw Vaca moving I colored little I could you've this question, these again from this it area they're the want and future but to some these XX have at other? or was close only just is a developed a like actually ask I is together slide if plays to follow the the up I multi-zone of sort forward tested And where All No, discrete was – when spots zones three be as interpreting look a always looks sweet in And going I oil be make you. fairly follow

Thomas E. Jorden

these here would say our zones out we're that many alone a to in addition competitors lot number I Well, us. tested not one have of of

prospective independent or what's of mean Spring. us – develop see there's then optionality tells not. say, that them from Wolfcamp can secondly And information lot that independent we a have I Upper we Avalon, of, a Bone we lot So

those So come don't would advantage one We bench. think to more infrastructure do then of as we they be the bench. have co-developed. And off, see decline our to that do follow-up of and tend and then take that we it in

Jeffrey Campbell

Great. Okay.

that. area So right, you're appreciate yeah, there's results. very very I question And with that's it's color. a active great no good

you, on quarter. Congratulations thank again. So the

John Lambuth

you. Thank

Operator

is question go TPH. ahead. Matt Portillo next The of Please from

Matthew Merrel Portillo

all. Good morning,

Thomas E. Jorden

Hi, Matt.

John Lambuth

morning. Good

Matthew Merrel Portillo

balance the appears sale profile build Tom, one beyond be for a a and XXXX. free Ward you program cash material your Just towards quick County question that capital of have post cash a to asset flow large me. inflecting fairly

of at your are especially and sheet that guys discount you that's how use a looking balance potential under-levered given the an curious value. equity Just proceeds at sale, steep asset from to trading long-term

Thomas E. Jorden

will shareholders and we'll that. tell our cash my with be – nothing said I it in sheet Matt, the the we're remarks table. opening to going of you our There's also Well, rarely that and end trust off long we'll balance decisions the me, balance making XXXX, in say table we've that be be going table. do a we've say on that of – will things capital, portion are disciplined. good, and with the And that flow going deploying our would prudent but on a I And to remains all depending that history cash in the that shareholders' can that have deploy would already lots is year. but I'm happens returning had And question on XXXX. it that. at said to on opportunistic. I've here, is before. cash we of that's I certainly what money to some of We're certainly the had

to So tell trust I using I'm I you cash can this don't have something The us specific have on is for us. just that going count prudently. a specific that think to you fact you answer, morning

Matthew Merrel Portillo

look to Thanks, Thank you. We'll guys. in incremental forward color some XXXX.

Operator

go ahead. question Mariani next NatAlliance comes Securities. The from of Leo Please

Leo P. Mariani

Mexico. guys. you by obviously to bit some them; you had in dig guys little New that to I there's well a weren't very in been results Hey, hoping very surprised strong of said I was you know some more strong these over there any which about if can several What to industry that? just last results. made kind of were us design say to you of major to maybe tell months curious But the or see completion better changes led drilling wells. sort

John Lambuth

Well, shows our this said, I of with on and completions just think I lot well design as results. is say we do our would John. a science through to that our of follow-up our Tom what completions, a

it in proof how I our when designs. design And the I to frac is themselves. think we top are results comes those think notch we

we they And fair, these So proud our here. wells, very them, team neighbors eye lot through we to drill our mean and and that I'm results be with how where shows they how neighbors. I I learn on their land have them. from do they an keep a of our complete think we

Leo P. Mariani

I guys Okay. if were just XXXX have in little bit now want position considerably. Permian to diffs we're completions talked back last narrowed diffs in And guess go where you think a guess to quarter's slowing wide. I call, where down potentially I about a

get Just of where on wanted stand to that. a sort we sense of

Thomas E. Jorden

conclusion our show in the communicated any sensitivities a that Permian mirror up tail. I to of came what Well, poorly around activity in lot ran We was incremental our chasing till call that's would diffs half last we and when diff having wouldn't that activity second this the narrow. the

they we're that So as with predicted. We're consistent differentials level have a see forging delighted were the activity. narrowed to of ahead

we're was was I think driven. at live see through glad But fear as thought the of them and baked talked to than emotional rather the perhaps that data we narrow. we're into going that we it some time, to

Leo P. Mariani

color. All right. for Thank you the

Operator

from Please of next question ahead. The comes Energy Hall go Heikkinen Advisors. Michael

Michael Anthony Hall

in the very modest this some year. update. multi-year sensitivity this context as capital process you of solid guys capital the looking year is come below of it numbers bit case as current you deck, Thanks. kind planning about keep program a well disclosures on on guess to Congrats have a next I little program program. current strip, you kind think think of on and of slide the I to I similar the wanted than I XX. just back good a our if growth the outspend guess the mean, I have a That pretty in

basis? I then how any So going contemplating much like, generating – really flow trying sort program of calibrate not, just – process to to or are you target on cash helpful. just through about how think be on us guess free we free guys are thought in for like place? is would the go-forward I'm can be any want flow think there should additional particular this relative intended Are slide how to you a anchor to XX If – around we metrics any cash much

Thomas E. Jorden

the billion slide the maintenance XX, the Well, $X.X CapEx, capital. million growth on $XXX completion on sensitivity that's drilling or and

look We top one traits. my you when we target is so, investing it always capital, when to at growth; don't broken about And I'm – total most But level a of we sound talk going capital our charming we look total like includes at which capital our prudently. target record, returns.

commit flat plans, on we mode. go to development deliver really we ourselves when opportunity talk a outstanding such that the returns giving to that plans and into we And look about those about can as multi-year so, we case that's at doing

and this a in of and but can outlook. a Now, fairly not got – we giving we significantly, at that's the is modest flow thing We nice very, healthy, be amounts assumptions. program can robust grow you some cash will when good – investing additional capital very on commodity color price significant we've

our have What to desire we want returns. upper do invest really we money So get industry-leading is lower our don't grow. bounds to or on shareholders' to

and I return to stripes. our changing capital speaks Our think, on that history, not profitability, we're employed, and our our

Michael Anthony Hall

a pretty guys have in I'll through production as level guess, say? on lot fourth wells you came near obviously sustainable lot a of on we term, as that. production. I'm quarter, of uptick do quarter, head think oil of you that follow-up, XXXX, you how trying into the let's sustainable more in first the third oil on here to wells Is just half big come think I the of a see Okay. maybe a coming that

Joseph R. Albi

We've mean, mentioned had frac down fleets us very our Yeah. This dropping about quoting at some volumes six down discussion talking October our we're tapered for that for not we confidence I'll to seeing, in call. we obviously are oil to is October take completion give and and that in this initial in volumes early high Joe. But level, those early results QX. current we're results going what be that. my a for stab I the here from XXXX three. activity, I

end play into So, tail of early XXXX. the to some that's and going of into QX

Michael Anthony Hall

Okay. time. Thanks for the

Operator

comes The Wolfe next Silverstein of ahead. Research. question Please from Josh go

Josh Silverstein

bit get the questions consistency Yeah. Thanks. where Is you half the already of then then in on Good first path. that but you you asked a have XXXX XXXX to starts A morning, guys. little ramp of transition mentioned been a lot a of that puts flatter something in consistent this on a and that growth bit the comes it's towards outlook, bigger of then?

Thomas E. Jorden

any XXXX. evened perfect by a to take but in we'll or given and soon, by to state ideally But activity get year. quarters color we're going do what not said ready when steady level have – haven't two I on quarter during state on really And subject us we we Well, of and quarter not well to ramps so have is we'd steady a call. world, completions to not get and out large It's there. are three quarter that this the

we that, you that with only we we our are plans. definitively can capital – you there. give let defer that So when show committed you that the say today goal I going and XXXX is us I get answer But if to to although to leave we're

Josh Silverstein

is consistency consistency goes, or going just can continues stay is then we're a to if as then count terms and certain – crude the it? at a free more grow grow to count the or stay going or rig assuming well still cash $XX, to with flow does level, far of in price the activity oil goes is growth in count it. it of rig flat terms Got And as at

Thomas E. Jorden

a and of foresee. outlook cash the have a function Well, that outlook I going function of to to ability and mean, grow It's we grow function cash But on ability on demand. it's don't within do to the have we a do have our we It's what our our optionality flow program. commodity prices. our supply of assets significantly be a It's fairly and we our deliver. the function to things certainly business grow of flow. our

that is not question, away I want at I'm it's to that take you but your from So answering what discretion. our

Josh Silverstein

would Yeah. still from And there? Got in maybe what XX-XX been of it's reason it of I that there it it. think terms in any going kind forward is is or XXXX allocation, much capital just roughly to shift guess maybe around split,

John Lambuth

they our forward. Basin But commodity have is which Leota by of said returns John, as Delaware the this be given That's being are, we to what we larger excellent Meramec and not XXXX. and are that flight right the inventory with the how reflective such go in about chase we're is would such Well, the and not earlier, there. say capital of talking as as where And far, oil we're is that But reflective are where they is doing And best prices and project prices reflective return now, now. again going do Tom of we really the we that's I in gas, it'd Delaware Anadarko how top say returns. if the probably announced. just in opportunities our stay again about

Thomas E. Jorden

them Yeah. But Basin seven or XX Delaware are of rank the type and as in or past, we top in six the in the curves, typically four said Basin. three Anadarko our we if are

is our allocation has on every, every, and get well So to competed for returns we drill with directly schedule. capital every our consistent our capital

Josh Silverstein

Thanks, Understood. guys.

Operator

of next Global. Kelly question Please ahead. from Mike Seaport The comes go

Michael Dugan Kelly

Thanks. guys. morning, Good

Thomas E. Jorden

Good morning.

John Lambuth

Good morning.

Michael Dugan Kelly

the positions, love M&A honestly the quite think like a (XX:XX:XX) willing your producers and seem you've to big E&D Historically, to of current year the high some quality some seems thoughts idea take changed really sound bit market and and on dynamics hold in scale have would too. hear a really It of bites I there. last in good I'd insightful to smaller some of is may And thoughts. provided kind really have being little there's kind benefit stock, this

Just go thoughts Thanks. if that's you of part forward. equation as the have and your evolved wondering how optionality

Thomas E. Jorden

– that that – optionality an to upfront we answer The always who the to in cost so. hunt the to opportunistic our mean, these I challenges an Very on for existing the assets part company we're things are But we're fully we've of continue to on returns, been always business. core on your – we'll part of always an and equation. that focus program make about that's be is the going a maintain sense fit is said and in hard as our do with the important invested that focuses are predict always and full us business a for hunt to least with things specific burdened our past, return hunt things at Well, knows. for question, because episodic returns, capital for they in strategically. and or the cycle but us We're tend

Michael Dugan Kelly

cognizant particular in map was development you have the here from I be that, you curious just in is that looking back, XXXX. to consider entering move All up, and I you where was if any upside enough. And the more guys for my might comments that when where come interested associated with fair additional And one things on front said, full program zones. mode Okay. at you areas your say preclude there's into to you follow have into this right, won't you you certainly the development of for but hold full

John Lambuth

That's what that would able the are good. cautious. zone that's a determine Basin. section, say, beauty a times, of matter happens to that's so we we I we throughout hydrocarbons know above frac We that's say, okay, – it. because we're when then that in we why first us is helps the said, It's Delaware rich what delineate at that's of Well, are No area. what call what good. zones But

very hydrocarbon keep feel very Culberson hydrocarbon We no it. about now. there develop some where column. just with is to is zone those that know, define We we areas because good that where we feel in strongly ultimately we're County. moving have we how Contrast Reeves what wells say, to So there about consistently up barrier is trying frac natural that high and going

it's position, So mode. we we trying to to it as and address varies depending we're get before cognizant quick upon very but development our acreage of as something again can

Michael Dugan Kelly

Thanks, Got guys. it.

Operator

Please from The last Palmer Coker comes Parks question from ahead. Institutional. Noel go

Noel Parks

Delaware, to was fine. the you a particularly regarding about little I wanted talk And bit about bit side. more morning. cost a I about want the long-term But Good Hey. STACK, to the planning if the guess that's thinking little talk Meramec. the I

through multiple that do the where where the cost well far you years, of hit on we side down you As it planning how plateau from the are out your kind bringing of and of you cost run point becomes Do have curve any of close, equation steady kind that state matter Is learning the quarters, longer? is thoughts that of because going on something that's forward? something that costs that? is a

Joseph R. Albi

to quarter I dropped that just costs seen in last I'll this it. price that efficiencies. through matter Joe. we've guess to of is have flat. you even And they've Yeah. just to is the fourth stay cycle our here stab fact the quoted take The that well at increase fairly This I due managed in a

comments in that's do that you challenge of stage to why two-thirds cost; organization the optimize realize and continuing regards result does to not to John our of it's see organization just hear reducing you just our those flow kind planning costs, in completion made Our that how could are cash look costs. us those And if – and costs with well total the that's we look at was what forward about And look possibility we equate AFEs get there be we standpoint. cut our from inflation spend. to to what AFEs, current that to for a also as go dollars we were if you at cycle, we the the at you to

in we manner. the same pricing, much like the just cycle look So cost at pretty

Noel Parks

your do regarding planning, certain where sort there or like build the is certain of year by a out infrastructure assume the or to of range again, more done. turning Permian, And industry you the less years Great.

So seeing what out there or what for table differentials infrastructure today third for state. have Do especially your when of in assumption you certainly an model variability off more is sort quarter, considering we're the less isn't steady now you good?

Joseph R. Albi

understand is plan What and larger well do prediction try are of takeaway to our on to projecting what Joe a what into kind ensure with of everything like are from don't the might volumes can again. scale what that the systems, that we're some be We capital takeaway to that associated products. for is those perspective. internally our This and going infrastructure we we tie plan look do

So internally but that know question that how if volumes I our is of we fully sales. don't answers predict your

Thomas E. Jorden

for we'll things be things expect sometime loves steady occur. those after peace industry largely population the and U.S. will to state We after world our that look that

Noel Parks

Okay. Thanks a lot.

Thomas E. Jorden

you. Thank

Operator

Tom conference the over back to closing to any for This Jorden concludes question-and-answer would turn like our session. remarks. I

Thomas E. Jorden

Yes.

results our that and measurable I stewards leave forward your the business, hope from you on questions So, that the everybody for fantastic creation you, I focuses you've talk we asked, reminded in I real really execution, focuses Thank and we really perhaps future. value deliver focuses on we're about and can want participation. take are you look good want assets. continuing appreciate to to company to great thank I you. a call, if of And away we've nothing just our on our that

Operator

for today's call now conference attending has The presentation. you concluded. Thank

now disconnect. may You

Cimarex Energy (CIMXP) 7 Nov 182018 Q3 Earnings call transcript