Concho Resources (CXO) 1 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Megan Hays	VP of IR and Public Affairs
Timothy Leach	Chairman and CEO
Jack Harper	President
William Giraud	EVP & COO
Arun Jayaram	JPMorgan
Doug Leggate	Bank of America
Scott Hanold	RBC Capital Markets
Derrick Whitfield	Stifel
Michael Hall	Heikkinen Energy
Brian Singer	Goldman Sachs
Neal Dingmann	SunTrust
John Freeman	Raymond James
Mike Kelly	Seaport Global
David Deckelbaum	Cowen
Bob Brackett	Bernstein Research
Leo Mariani	KeyBanc
Charles Meade	Johnson Rice
Jeanine Wai	Barclays

Call transcript

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Operator

Good morning, and welcome to Concho's First Quarter 2019 Earnings Call. The company's earnings release and corporate presentation are available on its website. And the company plans to file its Form 10-Q today after market close. Participants on today's call will make forward-looking statements based upon current expectations. They are subject of risks and uncertainties.

disclaimers in other and earnings and presentation. statements are the provided release Forward-looking today to may company's also The comments refer non-GAAP measures. financial reconciliations appropriate materials. are in the The company's included earning along Leach, On is and members management Operating Concho's with senior Giraud, President Concho's Chairman Officer, today's Will Jack Tim and team. call of Chief Harper; CEO,

one remarks, follow-up. one there question-and-answer Following and be prepared session. Please question a will limit yourself to

go Chairman me and over CEO, ahead. turn Sir, Leach. let Now, to please the Tim call

Timothy Leach

quarter, It we Permian operations industry Last about today Michelle, the advantages scale our morning. Thanks, on and and entire of talked and and execution of creates efficiency good the the good focused is execution seems value. economic how the and scale. like

We are with very familiar this theme.

we're and that execution building us, For and focused capital on that's by team the as strong machine long executes, assets, prudent a core allocation, our you've sheet. driven as balance known

quarter. production Dominator, Production operated production expectations, the quarter out solid focus Mabee, us With exceeded strong early the latest high-end paid of volumes. as well as and oil and We volumes. cost strong production we our our performance. ahead last projects, of also for strong benefited delivered financial control with from including for off Eider of also Our outside the guidance

are As operating expected, which quarter. our capital year, front-end exceeded this the loaded investments, cash flow during

of increased included and The of global scale, low some, RSP the billion most the acquisition numerous validates Permian, have strategic the XXXX. source but supply trades. cost Importantly, we quarter, to $X dominate billion estimates rationale XXXX, reinforces to attention strategic and production with we're The the we renewed program a represents world. on which quality in on activity capital focus made the moves the the laid for on also high $X.X to growth for being importance in the continues last track we out for economic Permian deliver and in our oil

of that with teams validated the This I'll we one asset slate built been much we working owning acreage a consolidation operated details. beginning, new are of our the blocks focused attention the history winner entire has We've turn believe are you is shareholders' we by to scenario. working a to so on tracks in and shareholders me building of trades understood our and any will industry. that over the capital, exciting on of Concho. in business company The strategy It's that, it be of under the Jack we as interest. for value high times Permian With to blocky continue Our have and development through stewards not of that basin. most from surprising the a the and is our large take

Jack Harper

Tim. Thank you,

position strong our a an build. take quickly the start was of XXXX, review for financial advantage a a by in on outlook quarter followed review total First hard of to platform assets, production barrel growth included quarter and efforts. less good oil to fourth results I'll we're expense, and G&A the increase on and Tim midstream production compared costs, Controllable of increased growth and X% quarter, X%, we've Sequentially, totaled up by for as our update $XX efficiencies, which program the the were and 'XX. cash was production operated driven, than interest, non-op a to lower activity. mentioned, in an and worked

quarter million the for $XXX adjusted capital the for per quarter earnings and totaled $XXX Exploration incremental totaled share million. adjusted $XX million Our an non-op included and $X.XX for development and activity. were EBITDAX

just $X.X with. in said, that capital to opportunity we the provided. billion cash but flow And, XXXX. to Tim building that momentum XXXX and we up ended very that range production Of modified we in that increased for planning with we're budget points have as set significant $X.X range XXXX, billion land came Recall course happy inflection and spend capital plan investment we a and very our to

Relative maximize described the spend a year throughout should progress spend the is an of raised our production completion were our XX% ahead decreasing for commenced we continued two-year approach lot of quarter, across That schedule. and the program our projects we be of capital our count plan. year. project, spacing, a of is We've XX-well contributor large-scale to many momentum. is rate to XQ to outlook rig during the nine provided still economics full-year deal in highest capital outlook we to confidence to outperformance great made on well growth optimizing oil the midpoint, recoveries. quarter annual plan portfolio. allocated is in Approximately, techniques And, the year. of in production clearly about production which, remainder that this you and including as we've would the 'XX drilling level all increased last important and Dominator As have as the has expect first to timing performance a of for At guidance first development February, account intact. and strong XX%. quarter, and the the projects, Full-field This

efforts. marketing Turning now to our midstream

systems markets. gathering building and, with an the ownership, joint Beta I systems. Our I transportation key for provided a the experienced regional a And the based our announced formed announced sale Frontier Basin. create midstream Midland to storage recently $XXX our competitive of our Delaware November, and on for Last expect teams provide We've framework investments allocation. Oryx we to that with value. build the sale Northern to recently the additional platform capital in in in Connector quarter. shareholder construct venture efficiently net we the production support the transport Crude These and growth partnered advantage proceeds a we We of Southern million second from and

dividend. our set affords We of value sheet, excess additional including support preserving portfolio balance to first returns to opportunity, the enhancement. reinvesting cyclical further grow strengthening cash a growing in and The operational shareholders, and our priorities flexibility business and is business

sale goal to balance a well Our the our have achieving with we're on Oryx that and goal. to way is fortress sheet

quarter Our the give program business development confidence and the our us the of great and company and of team. effectiveness results our outlook our strength for first in

questions. ready are take to now We your

Operator

you. [Operator comes first question Our Thank Instructions] JPMorgan. of from line with the Jayaram Arun

Your line ahead. go is Please open.

Arun Jayaram

a From Good Permian to embroiled With morning, quality, it scale, major of be Yeah. be be Concho your Big eyes, pay looking like given for in the war be our good to fit just seem team. assets, are looks M&A, cetera. acreage terms to would a Anadarko. Tim, Oil willing et in coveted. valuations APC's looks NAV-based bidding pretty valuation, it to

that you you I think value thoughts So and was M&A the generally stock your wondering could the if of relative perhaps current your the and perceive about NAV? to maybe on gap

Timothy Leach

Yeah, Arun, Thanks.

are As the that Concho, so I make attractive, the remarks, execute, of can team the what blocks building or et core said us in our assets, prepared cetera.

look And so, it's Concho to something surprising as very that Permian out at you attractive be that the not everybody. as would pops Basin,

I think we've that's what the kind XX of for a validation last on been of years. working

acquire we we're a here always lay is, available someone some as tried like. to we ownership so would company, public are to they every day, and if trade what out single we for So

shareholders, for company this hand, laid through other in long-term our a the value how for our strategy out we execution. build we've On can

trades things under scenario. our look my lot that do when our recently NAV it of value comment the and think and any I demonstrates our focus can nature things kind like of we of I that's and through calculations been think like at that a sheet we So and on have that, win you building that. balance through

So in we also that the I shows value the think proposition built. machine

Arun Jayaram

to the outlined that company XX% give of XQ, who Great. spent overall some Can up partnered some your you it its And plans more thoughts CapEx year, spending non-op just robust around just given majors budget non-op like pretty this confidence and just you and on in spend? little this, CapEx the the but full-year bit just I a is budget XX%, my with on us Jack, non-op of seems the you the Permian. the follow know CapEx CapEx. alluded in

Jack Harper

Sure. said. Yeah, we're the just to I we've committed laid as out, budget

a partners non-op and and business capital of the industry nowadays. Our firms business style your the their - in block in we so have have, to come request that transitioned similar

there's us, extreme the lot as a of non-consent. well - manage as partners for other ways also Fortunately, through to that capital

So we and plan go forward we manage that to budget. as land the

Arun Jayaram

Thanks a lot.

Operator

question you. comes of next the Thank with our And America. Leggate Doug of Bank from line

Your open. go Please line is ahead.

Doug Leggate

is your on go I morning, execution. cadence all the we're the year. guess as Good we interested everyone, question really in through that and the you. Thank congrats

completion our that can help understand be I So cadence us terms I the gave start us of before, fuzzy some of on idea bars if is clarify that. with trajectory those I trajectory you in know more going any but appreciated? the I wonder but give you spending, could have could you that will activity?

William Giraud

Sure. Doug, We is today. XX this little we in the I XX Will Giraud. mean cadence. talked we're averaged at Yeah, about first a the bit quarter, Hey, rigs

the We expect this in be summer. to low-XXs by

the level So just that's cadence. from a high

production, still the As majority relates on hold, the a the it has wells the to fuzzy putting the half wells on of year put of back production. the bars still

Doug Leggate

I we're there. directionally guess think I

give it kind I'm obviously it activity is the seems maybe, So target - I'll rig of activity just terms well, appreciate a about the to some you're as those would for that sight - I sustain portfolio, of visibility that you on talked there on level? that if map specs of What and us level lateral could give on well inventory of And something my backlog. I development And on Well long-lateral across of wells? all leave is low-XXs not to say lateral you parts I sight pretty of the in those we the really one executing wondering never ability us the guess, - one is, line Thanks. well, there. line that if haven't, you second clarification. your may. is that of count long

William Giraud

that been past, of as investors one probably right. not those in That's the we Sure. things would

ended have I longer have would we laterals than to I think or expected. able we undershot drill being up -

So Midland push be think, I that the to and average. push X-mile answer sit average to the beyond Delaware here closer and as to that I'll on give miles you able today Basin in in I we will we'll Basin two think we the is, continue

One of are to cards ability and swaps big continue the our these to wild get trades done. is

more of the thought expectation push but time, we've in drilling long we of our we to scattered average get position would in the Delaware, we and on up teams our and given buyers to away shorter into here so... trades able - been of well, that able Northern really do work continue more to those because the a be future, the good laterals march swap been be from Delaware beat and front, Basin we the we've the my just For more do laterals and can we'll lengthen to is X-mile relatively

Doug Leggate

Yeah. year, kind questions - to something still that's if your of capital the for I'm about right. of really be this guys look on. portfolio it till cash as capacity an NPVs, free free looks what understand. quick will that sustaining - I been the can of cash because lot your third if like? the adopted can, hold sustaining and There idea were front All it's been you you leave idea real - seems comments of a think me. I and you for the going of a to there. Thanks I like is, indulging have to focusing sure. some So what be we sorry. to Can story, give what be Thanks. seems get reproduction do I'm just until end the exit we've one, us of model you been it's capital something flows

Jack Harper

Jack. This cash and forward forward. sustain can that production like year, roughly we that XX can cadence feel going half we This feel we and was Sure, flow our implies of we is a maintain like going rig Doug. our about

Doug Leggate

Appreciate guys. you. Thank the answers,

Operator

of Capital line our Markets. And you. with comes next the question Hanold Scott RBC from Thank

line ahead. Please Your is open. go

Scott Hanold

Yeah. you. Thank

just, progress projects, discuss you through gotten forward? those that scale in guys larger you're go you're learning have going as you these - apply you you going through So learning them this? is what you how or have from regarding general, changed that this about there As that get to - configuration spacing anything can or

William Giraud

on. going lot Sure. I there's mean a

and and you As misconception you answer, think about the the development, delineation different is cycle, sales and so maybe the case. now of I the that not the reached phases development think that's definitely there know you've stage a discovery,

all from learn to these projects. continue We

dense And of we've square most that in example, a because and the more so tested. it's using the some Dominator activity one, version of a mile also our single just good extreme is spacing

project And ones of well so, and did actually yeah, schedule. job and that, this fantastic a couple a on putting quarter ahead that the bringing teams production of large other

in So and and manner to much figure with of activity different also how in with to tinker one them. We're zones in design landing we're spacing possible. combinations we're landing still continuing continuing efficient whole concentrate spot that the and to zones out most continue play completion to our to

So to got there that is a business learn, think, competes competitive same a investor you've for at capital. lot I but really time, the

learn. to able as and exciting what - we've And so do returns going continuing to compelling to about the I been think really thing to that's deliver do continue are while

Scott Hanold

you specifically seen with And I then the have have some Okay. it. on problem initial of mean, on results. that. you've I what appreciate just

closer have wider is you is seen that what the Dominator space think, what mean, in I I optimal? in to wells? the Like, most space. specifically compared the

Timothy Leach

more range at resource than It's drilling. - we the one, almost drilled On to in on that that zone look XX% kind at densely we where zone. going our booking the you of and depending typically you're also where are basin in

quarter's haven't returns So talk we hit of, look where be production we us. a, for that'll - days we batch pretty of about, will watch next critical certainly XX to but included wells good of kind for

Scott Hanold

some efficiency reach point flexibility a on does is - to And today, operated mean, piece. obviously, better clarification a your got like non-op your then With activity big I budget, do sound one you've on Okay. the obviously, just from might given into doing to service that what it on operated but is chance CapEx. had discussion manage at there it's industry - comment oil And what prices? that to you higher guys - the would, into say, inflation later cut year? if like bit activity dip little a a these do you the oilfield the

Timothy Leach

cadence contemplating the period this and, that already our operated are cash big that to in bit free more importantly more activity roughly we've to today. normal a we Well, activity we flow year or less a plan our next confident and being land as next of The but think little remains laid out in intact inflection over cash spins Scott. Sure, two-year we're budget. that year see flow pairing we the fact, into year, a back result head I of

Scott Hanold

That's great. Thank you.

Operator

question Thank from comes you. our next line the with Derrick of Whitfield And Stifel.

Your go line is open. Please ahead.

Derrick Whitfield

all. Good morning,

Timothy Leach

Good morning.

Derrick Whitfield

in a Perhaps for Tim discussion or Permian Jack, over the last several weeks, oil among gassing-rise has producers topical prices. become recent of light the

of While gas to comment on might risk netbacks face you you insignificant you and is exceeding how where to could a period position or respond Concho one mitigate negative how relatively stream, months? component your two revenue with

Jack Harper

Derrick. Sure,

about we the revenue we need of do here and we and will with, those our start natural a true large that our last but in sales large that crude agreements slide portion be to see shows kind same revenue, holds in we providers, communication it. move And than gas, for gas. of year Just the we constant and to breakdown like were our have comfortable of move X% gas dry the talking our firm are with talked less feel you and when we is gas that about providers able with to

factor this our a as not that plan do to we year. So see slow down

Derrick Whitfield

up, a Great, follow-up Scott's then perhaps conclusions. as question regarding for learnings really thanks. earlier on follow And my Will, and asking

now thinking look are As project you pad size, you at size, about that optimal post-Dominator? guys how

William Giraud

a square transitioned Dominator I this think into a you us I as seven attack you in drilling how you've two Like that we steps kind if go was project two-well do inefficiencies mile, where to three-well for a pads, and you've the so on. started is that and said, a effort We've if kind rigs and and small, those. couple started and into can of running have watched where of determining project of time pads long jump an line down Yeah. we pads so highlighted see development, watched see don't Dominator I mean, two-well point. then

bigger be of one because kind just of there learnings, And us maybe will so, size to initial size but be out those the the the less little particularly than of XX do I be try Delaware would range those big of for to the the rates an in But that today wells facilities in probably XX will to a that average It lot project from and bit standpoint. more. kind Midland X that in are something return think a whole of that. Basin, economic

Derrick Whitfield

very Thanks for It's helpful. your time.

Operator

next And Hall Michael of of the you. line from Heikkinen our Thank Energy. question comes

Your line go Please ahead. is open.

Michael Hall

Good to to expectations for additional the I spend for capital you'd if curious guess, us be provide guidance second the second willing you'd give something a extent given think, morning. first in Thanks. heavier the to onto quarter, I willing be be some just just to could in maybe I the around quarter, quarter hold - was the helpful. rate

Jack Harper

Good Yeah, Will way on - that first XX our rig expect at Jack. XX averaged morning, is in down. and count quarter what Michael. should our we're you This mentioned the

certainly the be be then down will for it it tailing of but highest year. the So rest the throughout year, the quarter of capital second but less, will

Michael Hall

anything with And in the rate has of the should or first guess, trajectory XQ I'm quarter then then 'XX into context also you gives the we that very of I increase? exit Okay. exit bump? XXXX 'XX what, been on line, read confidence results, of, momentum that I expectations and number if curious, kind just you XQ one, in had That's the rate. more is kind what say, helpful into you up the just trajectory. fourth quarter what obviously, on exit And guidance Street the was curious rate strong I'd took

Jack Harper

Sure. Yeah.

out, more will less modestly we ticking fourth back and, completed the laid we had wells in second quarter have As up we the and the therefore, third but quarter. then in first in quarter,

guidance the help as that end new as implied our the in we quarter So by year should is fourth number.

Michael Hall

is That Okay. helpful. Appreciate it.

Jack Harper

Thank Okay. you.

Operator

from with our Brian line And next Singer question you. Sachs. of Thank Goldman comes the

go is line Please open. ahead. Your

Brian Singer

in the from both return quarter, the in planning budget the greater rates …the the production activity. guidance? the full-year remainder activity activity non-consent, And of given to first of during your are keep specifically non-op you guidance and non-op within CapEx year to operated

Timothy Leach

Brian. Hey,

you alluded on is Jack kind for but half variety mean first the the It's question, of think kinds half around the just lowest swap. going thing One of think the on manage your deals. year. the to in around easiest think And the got mute the a it. hanging some fruit capital were I strategies our part I non-op of I the back answer, second there's to we of capital. that we're I ways to of it's those of

of kind efforts economics then, you answered don't the pretty if your look Also, that I that's the think that there most will we looking will is of swapping something I into. basis, hope as question. a And to we'll sizable noting mentioned is on, purchase on non-op I I like that's adjusted-time just capital well that. private non-consent. project that of it's on been a think always bores certainly we but extreme so, - and has redouble we - market worth And big our emphasis, of point growing

Brian Singer

Yeah. and Thank you, apologies.

how of rates return? activity non-op the whether rates they was compare the half operated first to return, The of

Timothy Leach

all over They're board. the

those we that entire we incredible and on are very really what us the as have things. good because not hard as others are we're Permian. But asset and looking good like non-op an are There and across participate to essentially gives partners intelligence are advantage well, other them. in swaps Some

inside sit us we it get costs results, benchmark own at and around which actual helpful. and so, lets our look is people's very And actual an as performance

numbers always those exposure more it, can as projects get partners as moved individual capital this, have we've So an inside to and Jack quarter having some development, liked but, bigger. to non-op still the of in referenced,

Brian Singer

and be latest see others is, - as and And, consolidation consolidation And announcement, on as Thank reflect of my less center in outset, how has we willing very at pitfalls acquisition first you the helpful. now to in and anniversary opportunities here you you. the can I become follow-up consolidation you highlighted experience for latest this Concho? more as Permian your That's the front reached or scale a RSP Permian strategic for you for the of makes well, objective consolidation industry? and how

William Giraud

Yeah.

on the take me one. that before wanted. call that said Let one got we we I've this

we to me also year it it glad a met - the have folded it. in in all doesn't is a how highlights hair we on reflecting Permian I'm that it anything after did and objectives like it did, really and deal difficult to well, bunch So of but our that the find

And on so huge so, for the where other that very because and anything and I need as our are think look around bar I opportunities high trading have inventory us this in we be. and is of is at we main the think, we to to Permian, strategically, focus alluding we a wells for

Brian Singer

Great. time, you look a learnings pitfalls Permian for long you as consolidate that to companies look others seen the long-term consolidator? having as And assets, you've different see at do their if work different they

William Giraud

has we big acreage highlighted is striving of the building That's of the blocky that success strategic our blocks for really team to everyone that difficult The I and really, things can execute. together. been think the what put

about it that a And it. talking before. lot so, we've And I doing think times harder than many is said

I need be So focusing long. to this that so been we've on where are happy think we strategically I'm we for and

Brian Singer

much. very you Thank

William Giraud

thanks. Yeah,

Operator

from you. question our next Dingmann comes And line the of with Thank Neal SunTrust.

is open. go Your ahead. line Please

Neal Dingmann

just mix. firstly the question morning, details. Good for on and thanks the all, My oil

a of you'd looks different trend that of the can seeing the - X% I these down trend was it bit the you think and increase, year? quarter-to-quarter, sort previously the the see laid for like look about, just a know of then as it if see sort for of, thoughts - it little year, for bit a steady kind think like mentioned remainder rest rebound of quarter I comment oil the out all could the you if you I

Timothy Leach

we do. we production absolute bit again, expect on a see growth it as in quarter, be Sure. terms, a forward. higher little short than it quarter And, did depends answer is, the mix it of wells. significant but - this to always yeah, oil The it We this going was percentage, yes,

Neal Dingmann

you sell that, what Okay. that? just want great curious about other question sure, you your just of a the like what or sort realized it going Oryx. on return deal the longer - make and any you is can - then it And it you've color a than is by forward going I just just up to lastly, was, signed obviously My involved on talk on contract sort just see mean, lose of is that, terms sounds didn't term you forward? selling I'm the you beat of, but how really add sort to

Jack Harper

holds long-term place, sale same years in put a Oryx. two in in X both hats ACC or have with and E&P for were ago, to the our that are similar cases. terms those left The year they deals Very Sure. originally commercial on were to XX place

Neal Dingmann

Very Jack. good. Thanks,

Jack Harper

Thank you.

Operator

of our from comes question the with John you. James. Freeman Raymond next Thank line Then

Your go is line ahead. Please open.

John Freeman

guys. morning, Good

Timothy Leach

Hey, John.

John Freeman

anticipate like, thinking are your question for example, And of zones of answer, time with long-term point about spacing to when we development know testing Square got figured all this plans optimal spent then do sort like sort Bill. a testing the of but different the of landings, you of sort the sort a all You within horizontal sort both and out? planning, the reached the you've what and you where difficult Gettysburg did individual lot the you interaction between of I effort those

Timothy Leach

mean, say we would think say, but I keep to continue I I I would know today, learn. it as Well, we we that going,

the not so, mean, continue - uniform, is will gigantic of, geology. And we a sort Permian I

changes And within you move to so the basin, of sub-basin. there parts be as a are around different the going even

continue of spacing also with benches, the within think resource our expect will differences each - that the will comfortable to I very with to the in in is so, which we but base across play we of be X bench, there feel but X generally estimate, And benches. kind between I

John Freeman

of Great. just you agreements guidance does oil And my have follow all this then like all production item, is at all quick of the waterborne just the like a steps things of that that will marketing reflective that of year end prior housekeeping the - previous it that, toward kind have done, guidance? day a pricing, the up, all you is the differential the get XX,XXX given, in recent reflected

William Giraud

It are is that market. in the dynamics out it's currently reflective of and all the of John there

John Freeman

Great. I appreciate done, it. Well guys.

William Giraud

Thank you.

Operator

Thank you. question Global. And of Seaport Mike Kelly line with our next comes the from

open. is line Please Your go ahead.

Mike Kelly

Hey, guys. Good morning.

Timothy Leach

morning, Good Mike.

Mike Kelly

I and slate past or that was there's your blocking tackling kind guys in if some in there larger maybe what are standard new opportunities. mentioned potential in create you the Tim, could out kind of you've you Thanks. as I'm for interested of view you horizon? deals. prepared this to on is if guess opportunities remarks the done I hoping of trade you just these characterize

Timothy Leach

interesting sizable say, operators last others year. of think trades are - out, those hard to and Sure. it's different operators the most significance some and on to to that a We've pretty done. focused did that's lot importance awaken we're have this, XX this a get built I better We team trying than of pretty

more just the think, X already year of trades when we're the last lot lot come, to on your and requires which that, better. a what's trying do question bit one detail. maybe to and of kind to two a we're two these look there a quarter there's so or But section are one heart in that we've working that I picking attention a pretty, maybe it's more really bulk to and first section year, huge plans of make a But but closed a this of significant than part kind I at up. the little here getting the is it's our got cadence to there, horizon, lot or on, for of the like there are a big but bigger of way more a that we've trading our also business, of

Mike Kelly

to seems Appreciate or on Delaware? returns seeing, Midland track kind up, help that. keep if now I'm Xx Delaware. Thanks. to the accelerated have curious you're up notice to curious Midlands but about rates that just now Delaware the get really at of current every if almost your return your quarter XX really day can't rates what And kind follow oil look We XX compare end the just to doing, Midland thoughts at, versus and the to the metric rates but really - XX-day of continue we

Timothy Leach

it's a there's component Delaware the higher, tend also do in decline to to Midland fair also less rates be terms in the that mean, and I be capital of expensive a tending remember Basin point wells they the as Sure. initial not but fast.

as going mindful maximize be, quality they as an back because the a of slide. not just we So and set initial really and that interesting assets not really, rates who rates wells rate return we you standpoint they XX-day we're as other well which ourselves rates very are XX-day this of also, as and used both each is flow the to good from project the to are of moved XX-day think, these like into point, and, operators development, of suites have important even like being really for to a a with returns indicator competitive especially having large-scale highlight of facilities the we I or

an issue So out that is there.

Mike Kelly

guys. Thanks,

Operator

line of our Deckelbaum And question comes next with you. David from Cowen. Thank the

Your line go Please is open. ahead.

David Deckelbaum

and Jack, everyone. Tim, Thanks morning, for taking questions. Good my

Jack Harper

David. morning, Good

David Deckelbaum

I as believe you of seems beat just you rest was frame experienced beat the Can are not all through and beats non-op to give do how of, bit of, you've that that necessarily discussed. on you some achievable sort we to color think does timelines the the know that which head XXXX? and - credit you and more which curious to, those XQ your initial And the how considering sort I'm the timing production, of being little you activity, can that for improving the efficiency give of that guidance assumptions guess raised do do a the you on, into year. - attributed there's relative you've your then

Jack Harper

the the ahead these combination very say in that we've of couple getting project a highlighted, was of I'd first pretty Sure. the a schedule. of sizable things, a which couple quarter, was on non-op beat of significant, also

But, was strong so, underlying across unique the a And results that. see of in something to little maybe portfolio. really all quarter to there that is, continue I we our mean,

And the I us annual the think, gave confidence that's raise so, overall to guidance. what

David Deckelbaum

necessarily more guess I of bringing It contributed those drilling Fair as specifically it time? a time sound projects before function doesn't on crews I just like all enough. you more was what days, to on just allocated guess earlier? having location

Timothy Leach

that up I it of something gains to pretty was that's series No. smaller a add mean, meaningful. really

we more think I executing really ways at service are and costs on projects, of it's both good our as and large-scale do efficiencies - that more teams find and they'd to these grind timing.

really of plan, that we're this that's early course, into getting quarter. expect opposed them - I of drove those but more second anything the what in We quarter into to to as on our find baking not projects that, think

David Deckelbaum

anything per up color. outside a sequentially? look Midland follow appreciate time? any when that Is midstream targeting it be, my on more are And the the just the cleanup could just you of longer there? there there color my foot, and of function - Is is would rates second just that explain you you constraints, OpEx, decline a add productivity of would the I being at zones

Timothy Leach

initial signed rate relatively the ago and moment of a piece managing of that just a different just I your limited return a a a that a back facility - mean one quarterly that's maximize looking about is question. to effectively within XX-day single flow long-lateral into talked that rate, of bunch of couple of XX versus is a the your to wells also you're wells We've coming previous sample having there things Sure. of There's at size number facility it. just period. on

pickup you're especially XX, but And Also it. I when XX, into this, initial to see of read the a there lateral lengthen piece, linear generally in you EUR, kind a return, we that, in increase the you is time. XX increase So much your rate, same last is doing laterals, there in the at linear huge push the don't is think as referenced of just rate I wouldn't lengths. you too continue

David Deckelbaum

responses. Thanks it. appreciate the for I

Timothy Leach

Thank you.

Operator

question line Research. with Thank you. our Bob And next Bernstein from the of comes Brackett

open. is line Your Please ahead. go

Bob Brackett

find that? already, I you has A if been comment them. hair give types mine the of so on made about answered number of a hair of some bunch you could target? might dig Could into What color having Permian targets on a on

William Giraud

we at was falls term guess. it the broken - art, up a I That technical buckets of strategy. components of into that things or look Yeah. it all It's our of

it necessary there of of is that So not the it larger up not size would rare a The the execute, to and team are integration cultures. commodity. that mixture pricing the and companies get scale is can assets having get a the then having that would be broken culture be the execution and the contiguous,

a so, And integrating is thing. very together difficult cultures

see on that don't You a spreadsheet.

Bob Brackett

Great. I appreciate that. Thanks.

William Giraud

well. Very

Operator

of from And you. with question our Mariani KeyBanc. next line Leo comes Thank the

ahead. is line open. Your Please go

Leo Mariani

Hey, guys. the follow activity made bit you I progresses. I regarding, wanted a declining as the with guess, little that comment to levels up year

very because you'd just you kind early I will up a we if to previously think CapEx So, a back I similar of clearly, you the a little XXXX. of first in XXXX wanted bit of in it activity that - kind XXXX? sense dynamic lower bit, can out into just half, year, to know of ramp play second said that half that Maybe Do XXXX, to the year, I be fair can guys of of that versus head the kind describe XXXX? as in guess get expect how this kind

Jack Harper

we when the down high count pretty the the similar. level, very look a average but it's as At we've at Sure. we year, rig described, count over see trending rig year-over-year,

a a year. So it - back in up, down maybe of will moves on-average, similar, but but it's little before next little the up terms cadence very be

Leo Mariani

I of guess, of in guess, those production than at I looking of know guidance, said QX benefit kind like of looked your the in expected just Okay. production. kind kind mean, I number at with as quarter, in it respect second deck, you expectation to XQ. on versus guess you All with folks right. that percent brought it's down that few a quarter, a but slide came on more the second looks wells I your I which I late should, quarter XQ,

putting a bit number think production expect you color XQ? the bit around decline second just little on guys quarter. maybe, fair provide, the you I XQ versus still of a in a why it in little to more Can wells you are

Timothy Leach

Sure.

I Will think, described it earlier.

bringing other fewer are on We year. quarter the of than second in the quarter wells any in

that come And previous higher production, wells so, quarter modestly it's a it's put back just from on not enough timing. But see that to fourth declines the guidance. didn't you offset with so

I expect. that's think what you should So

Leo Mariani

Thank you. Helpful. Okay.

Operator

next Rice. of And Meade with you. Thank Charles our Johnson from question comes line the

Your line is Please open. go ahead.

Charles Meade

quarter like are originally bring you things guys Tim, ask guidance pace, - reporting? XQ I did more did complete would you actually quarter of operational out and back Yes. gave how for Good for more XX a as people I - XX guys your your XQ had imagine you which and hit could I your XQ. quickly guys drop versus you I that you count are the XX out So for count guided but on you versus this rig whole by taking appreciate as you right projects average taking morning, XQ specifically, the of contemplated. team would on up and XX, quickly, these all it rig playing guys more your that think versus earlier laid question, that averaged things than you lot to to last there. now at If But - you questions. go you to

the other that filling of So those picture what the pieces are variances?

Timothy Leach

some sharp. But thought just I'd mean, is mean, we standpoint would, from exactly the pencil mean say about not I to rig XX I level, say, today. at May. point first a landed would quarter I on we're that Charles, it that your I our Well, activity where it's that

into the we're the So we're summer to low-XXs - the as move moving still we're we here. quarter and middle of pace in

year. the budget land our Jack this emphasized, at call, as are beginning So, to the I going think, of we

as And best so, to to we're maneuver accomplish that. can going we

Charles Meade

for follow-up Got did try it. to That's a you on sales How just on Wolfcamp in us there. lower XX helpful. A wells? to many of help what the the going have? see Did landing Dominator with contextualize And those we're quick zones kind then you

Jack Harper

- It's tested very two zones there's spacing West things. half landing a total. are see of East if and can five you so gun actually that interesting It's you look at of barrel those kind and the test, in half different

East half, half. more West stack over traditional the in is of over look the a zones you If landing there three

Charles Meade

it. Got That's you. Thank helpful.

Timothy Leach

you. Thank

Jack Harper

Thank you.

Operator

from line And Barclays. you. next Jeanine with our Wai question Thank comes the of

line Your Please is open. go ahead.

Jeanine Wai

everyone. Hi. Good morning,

Timothy Leach

Good morning.

Jeanine Wai

Charles's question just to Just following now. up I wanted something. on just clarify

comment or year to-date? seeing the in thinking you're You year that released mentioned of to stay just plan down about back where if back XX here in and was the in that this I that already you efficiency to the operating you're activity how the operator this last quarter, rigs reference wanted that half to getting pairing to are your environment was starting response the to it clarify of within budget. kind

Jack Harper

last - working lower with is the what but comparing about Yeah, to that. was line we from the willing interest it it's operators, to XX, going budget that quarter, we I'll that different activity be requires and but we're to not I answer land will and that. science talked going It's a than different bottom other if do perfect

Jeanine Wai

just efficiencies to you better, utilization to XX dip this schedule projects your more envision XX there's development rigs? of to And efficiency bunch the Okay. a digging And how ahead I runs in that do the say, trying to bunch to, operational So, in kind what versus for perspective, sales years? you you adding decision that between And does like or usually well, environment then, of more, year? to mentioned whatever, changing cost we the operational of end and just terms evolution of example, a inflation of and just guess, making - large see you service non-consent, you the the below or can towards this could at prior go if I if XX% you know the you rigs transactional how I current levers that heard were to things do that little into or you rigs year, and/or bit like like does pull? where below the keep other that, that a changes guess, just the the how from time, factory so allow reduce does push some people - have trades you operators of ratio year from non-operational crews,

Timothy Leach

expect changes I you Sure. of work waterfront we we for some budget. think options don't I a be But be stick and no. answer is, making mean earlier lot as the I question to these loss - do operational is to there in expect have a there different covered of to of the the the efficiency you

Jeanine Wai

you Thank taking Okay. for my questions.

Timothy Leach

Thank you.

Operator

Tim Leach turn you. the conference Thank remarks. any this back time, questions at over to would like And showing further I'm further to no I Mr. and for

Timothy Leach

we've this prepared again, execute years. on time this over all deliver as to Once - a and most is able you. is the exciting we're Thank as said, for Concho, I the work

your company. Thank you. to talking in you again the interest I next So quarter. to Look appreciate forward

Operator

a And, ladies thank Everyone, you gentlemen, have great today's This does conference. disconnect. in participating conclude you the may for and day. and program, all

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