Concho Resources (CXO) 30 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Megan Hays	Vice President, Investor Relations & Public Affairs
Tim Leach	Chairman & Chief Executive Officer
Jack Harper	President
Will Giraud	Chief Operating Officer
John Freeman	Raymond James
Brian Singer	Goldman Sachs
Derrick Whitfield	Stifel
Arun Jayaram	JPMorgan Chase
Scott Hanold	RBC Capital Markets
Neal Dingmann	SunTrust
Leo Mariani	KeyBanc
Matt Portillo	TPH
Paul Cheng	Scotiabank
Doug Leggate	Bank of America
Jeffrey Campbell	Tuohy Brothers
David Heikkinen	Heikkinen Energy
David Deckelbaum	Cowen
Charles Meade	Johnson Rice
Gail Nicholson	Stephens
Nitin Kumar	Wells Fargo
Nicholas Pope	Seaport Global

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Concho Resources, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now hand would to conference I Ms. Instructions] like the to over [Operator President and Investor Hays, of Megan Vice Relations Public Affairs. Ma'am, begin. you may

Megan Hays

and and everyone, conference good our you, quarter call. welcome second Thank to morning

today's conference current release statements and the on call and As a disclaimers I'll reminder, call, will are statements expectations. the provide to attention earnings that presentation. we your other based forward-looking forward-looking in during provided

non-GAAP our Our can financial release. may comments reference metrics metrics in also for be reconciliations found earnings and those today

You can release earnings and presentation page of on Relations find the the the Investor Concho website.

give call are going a along is Operating financial our the on me outlook. review and Harper; Will Chairman Officer, Leach, to CEO; begin Joining of President, Chief you Jack and today will results Tim followed Tim Concho's by Giraud. with who Jack,

Following I'll will their take follow-up. Please limit happy and the to your turn With Tim. call questions. to one prepared one to question we yourself that, be remarks, over

Tim Leach

morning. Megan. Thanks Good

tested The to come industry, the but many them. going are the stronger one and companies we're recent of challenges. second this after that even we're strength I out stronger, company quarter of confident Not I'm the believe of

the a progress first maximizing will historically dividend; years, the our we've The quarter. strength in performance think the operational managing this positive also the I as second up the of move Concho to continuing the made flow price of by volatile Against months our real production. in prices capacity. a our while and cash our to through to the negative sheet; capital what backdrop operational in have the last balance rebounded to strong increasing XX%, and anything As XX then ever $XX about us for Oil structure; we've seen. cost rate, price financial ended been cut weak OPEC+ and preserving volatility and spend realizations, on ride. discipline, U.S. $XX capital shareholders dropped quarter oil delivered several with return and production volatile more year, that largest quarter priorities future: several half position the adjusting our but Oil than

and strength flows strong delivered the and we of lower while reflect We our activity. cut portfolio results our cost team. Our cash our

spending. maintaining helped Moving year. forward level the first declined there for navigate In of the to increasing frac we we're patient rigs show be were dramatically. focus starting prices short, ago remain declining spreads to XXXX, as continue we'll before in This same activity and Today Permian. as in are the there And is of that sustained half A flexible. look higher us running up XXX production. year past have XXX will even we Permian more the reduction

we're capital growth. in, and the of industry a setting are capitalized declines effects scarce, leverage be more fuel less requires addition, the market and future industry. of shrinking of In companies, seeing our to capital aware continues discipline, more We signals being for better believe

shareholders. both returns sustainable we for flow production pandemic, of increasing cash vision and the a business, delivering Before evolution outlined growth, the to clear growth our

believe guide business performance While the not to financial and that key We the model principles is there's plan Operating more mutually usual environment, macroeconomic responsibly our strategy, of around delivering people, and operating good strength uncertainty that assets, this remains unchanged. as form exclusive. financial than responsibly the well. will evolution are way. And the along returns the us

engaging topics. We look X% these forward gas toward sustainability gross of performance you XXXX operated in first publish as on our to is trending compared with volumes In important August, in X.X% to XXXX. Our flaring we'll report.

our performance. employees. to of I'm a work having continue great on our a workforce. want communities to work our and was well continue it's acknowledge I that We impact proud They and of perform quarter to This and the pandemic tough the through in the environment. hard

over Before will call Jack, want away I few things turn I come that the I with. a to to hope you summarize

successfully focus we're value long-term losing which on managing the cost the company. structure. lowering operational capacity operational of our this cycle improving we're First, our is without Also, performance, and

and our Next, to that, cash the machine. And we're it over prioritizing me continuing be to recovery reduce With Jack. finally, net we free let will debt. patient turn on our flow reinforcing

Jack Harper

Thank you Tim.

more operating of are trend we Our well results what they are not second doing continue we so, that And the with cost to steps steps become taking to our capital include the only improving structure we program, and and positioned demonstrate outlined company. align a performance, balance also for the our Last quarter our current controlling environment. solid can. Those our business financial we're sheet. reinforcing that we profitable quarter by our reducing

the as well $XXX quarter activity Regarding totaled overall step reflects quarter less this costs. our the CapEx capital quarter as program. XX% in continued well the million, year. The second in lower in first down improvement than

a For well time the operational cost this to we are efficiencies second better service environment. our guidance, lower and due reducing year cost

a expense costs, We With operating, down than cost per XX% cost cash per less do last work than drill or structure. $XXX lease to totaled to expect cost that Controllable the interest unit, which foot to and more respect from to XXXX. $X.XX than includes lower year. the complete well and equip G&A XX% average our

our like optimizing aspects workovers, and We are items, managing cost well all Examples water logical lift. the handling structure. maintenance, artificial include of

cash capital and combined in which flow costs from our difficult our Quickly our $XXX the of program. our capital hedge position These million reduced a of more adjusting reinforcing cash before lower generation. We million, strong $XXX flow. managing made drove and with brings in program resulted free me separation $XXX our operating which balance working also cash combined voluntary to Operating flow to target $XXX was expected million. sheet. up prior to implement costs, are than efforts in G&A decision million result

the to of doubled down nearly cash Our billion, net in and to approximately cash price the per balance of debt $XXX guide the world. year year our built of and to anticipated end resource industry, quarter, our progress day balance commodity second one half direct $X.X the year basins goal another to ago reduce billion was capital sheet, sheets remain a have full making $X.X quick for at $X.X million. leading by volumes billion flow position barrels free of on plan volatility. averaged towards debt to from XXX,XXX million our back million we second net spending. a barrels day Oil quarter the our $XXX we per of $XXX track and And the one in in of XXX,XXX we position best million despite the in $XXX better the in the although We've with the

Our and depth nearly portfolio durability unmatched. are quality,

the we been discipline capital prioritizing private To Importantly, are emissions company. capital driven that, state investment cost allows believe second discussed, meet we confident performance year Tim I'm testing build efficiency redirect our are flow. I a to we have principles to enabling a This minimize to well. that this us cash and far show across opportunities mix to a steps Without by free With our every the to quarter environment and that we're lands. and thus company, operating over control. taking degrading that returns call turn approach as for maintaining challenge, me more efficient good as capital and challenging our regardless question mix has our the drilling working capital we're or the And Q&A. federal, better are of let the operator the us in. without of results investment the program. our of

Operator

[Operator Instructions] Freeman with John comes question of Your line from first James. Raymond the

John Freeman

Good morning, guys.

Jack Harper

John. Good morning,

John Freeman

all more realized far and the of and completing wells, don't trade-off the directed budget? I'm you you just hoping sort that CapEx of you process momentum just into you maybe And elaborate you on XX the you went XXXX. all or which XX all thought year additional up obviously, on obviously of full So of the that whether the you complete kind drilling the so efficiencies how through a reduced took could with sets additional all wells kind all capital to lot

Jack Harper

Sure, John. It's Jack.

investing that the the this also maintaining strikes And production XXXX. of prudently trying base end that as year. like little our production a balance for of base but last have building we capital As between to bit we feel quarter, and we start described stable we we're balance a as budget our maintaining momentum season

John Freeman

the you if pricing of efficiencies a of reducing ballpark you how we think the have on gains And sort to $XXX drop that's less versus is room what little of a now progress sort $XXX. efficiency Can look foot well still made then of service if to that on when drive just areas any, more just due and bit then elaborate cost you continued there's a those more? kind the all at versus much than

Will Giraud

John, Yes Hi, think if both of kind And you be it I just looked just done cost of at to improvement, pricing half coming it's efficiency half work the of those roughly is related of and Will. there's down. to sides. on more is kind some another gains think service probably I still

the team times. cycle really has improve think to continuing I a done job, good

as more there I think, there's work do to well.

year. in On of what the the it here activity Permian cost on service side, look half like depend levels will the in the back

John Freeman

your appreciate Nice quarter. I guys. Great. guy

Will Giraud

Thank you.

Tim Leach

John. Thanks,

Operator

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

Brian Singer

Thank you. Good morning.

Will Giraud

Good morning.

Brian Singer

be your you $XXX wanted you bit that goal? to a $X.X objective. what have returns then to said debt philosophically about capital allocate on Can quickly more you to which debt What longer-term would increase a up Would a When follow that and debt where there get longer-term would to you your talk you growth down $X earlier reduction little how achieving Would million -- I an with to continue subsequent next? billion, even actions? that? an goal reduction. then billion, to lower just impact to production happens shareholders? thoughts reduction get Is more objective are to

Tim Leach

too was that kind stronger talked sheet in priority. that balance in kind a environment of this like past We've about Yes. top felt a we the of

quickly getting other getting all to on shareholders. to that options return goal think to capital look you enables to I how the at that So, then goal, to

next think step. So, the is that logical I

Brian Singer

capital And then to give in projects frameworks either of you're of considering allocated it dividend repurchase growth is dividend, versus share versus variable and to percent of there that a any terms Great. shareholders? more

Tim Leach

we've it's think free had main That's in appropriate those. for we dividend message. by now. traction you message running get tell that And -- at from lot No, in a business flow have viable to is, is pricing talked getting all more us the cash if sheet main a -- just new right kind would pricing level. gives about I'm this past. I can where get I'm The producing the we variable quarter thing and we can business that of have happy our a strong I this so that and we've But very all the mean we like scenario balance future any of especially quickly the return position we optionality this

Brian Singer

well bit one really last my two-parter. then a a And is Great. of on performance little and

-- can seeing talk The from you the as the thereafter? necessarily performance the XX can -- bit to well how or first And anything it you're just what talk And little if not about about of decline their are manage there's particularly performing you're spacing? is, XX first those that? rate? XX a wells maybe manage relates beyond date there's And if some to then best anything you in but to days doing or also, to base

Will Giraud

Sure. Brian, Will. it's

On the expected. line we characterize what same. well kind the in performance The would mean quarterly was of right the I side, with performance production I

of still in latest early would so -- at If look you're we noting, kind batch but their than expect, they're the all feels worth some are density spacing in the did it's projects they XXXX with life, asking a of that in line about that good. less we tests of what those relatively pretty

to slower way a I'd moderate see will talk you I low first As maybe year I come go about continue for but do that. as we faster would still later. little -- at moderate we think still were think that to expecting probably a a XXs it decline, previous than in the pace, to that's decline, conversations, relates that to we that base finding but this

Brian Singer

you. Thank

Operator

next the Your Stifel. line Derrick with comes of Whitfield from question

Derrick Whitfield

morning Thanks. all. Good

Tim Leach

Derrick Hey

Derrick Whitfield

in Jack. the you your outlook, of XXXX regard for guidance providing challenges I certainly the appreciate environment. Perhaps quarterly With to current

flattish recall profile activity safe would that back on the are QX where the your assume you've to the your then. to With now? the year, asked is that for commentary, exit you reason could outlined, year it you seem And of the I be the I about balance comments was

Jack Harper

our last has stabilize of call since for unchanged a we as still Thanks, increased do If confidence guidance second reasons. last But for it production, XXX conversation, half my expect to And anything, that Yes. annual the I for day in range. and our oil XXX left Derrick. our to in couple our a business.

the First positively holding the basis, back number off, cash in exit-to-exit cost on the additionally, and the our focus we mid-XXs of And flow of stable see in up production a base free lastly, next well year a oil And have with our style strong position. by of will I stable a us then our with back about only enter described than ahead structure, production And And maximum most. half that base the rate on along annual I'd we in financial our that improved and say year half production generation. impacts the to cadence year, us better in regard. and secondly, last quarter, allow guess program plan flexibility, X%. of

many think of struggle peers to our will achieve I that.

Derrick Whitfield

made Will, follow-up capital. I price the differently, growth that And the is wider your to back the that adjustments a lower acknowledge on frame second opportunity you view the But to raised is last question. this get relative quarter where the spacing? on I'd investor then to really last Would you're longer and asked for that question perhaps for topic And slightly flattish in what of half circle with year. optimal environment asking is in of change operational based greater Great. like it there an is, and return I And returns on industry that spacing environment to conservative spacing? you,

Will Giraud

we've I'm that, understanding I think to Yes. don't than wider if think the mean, what adjust a question you're necessarily I right. that's kind to here wider moved in given the you'd spacing see if volatility we're factors, program, us I definitely commodity something that and do relatively XXXX. a right of see going very with to host other I also the the patterns in of our run targets we spacing now a after. cadence the business and of and whole willing including think we're comfortable steady asking,

Derrick Whitfield

Thanks, all. guys. Well, done

Will Giraud

Thank you.

Operator

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

Arun Jayaram

think and the of could you was the CapEx. clearly in morning. the the XQ? CapEx and cash Good some wondering about of I I drivers maybe guess second trajectory of free perhaps the was story quarter lower if flow of half help CapEx us the the lower

Will Giraud

CapEx quip also just Jack Arun, of drivers of Sure, the of our the so a in on but was far, over was then the structure impressive it's It Will. down obviously slowing drill pretty as the mentioned completing improvement the on activity course Yes, side. the couple year, cost improvement things.

As a back things it there's the relates of the happening there. to half year, couple of

that Mabee interest. are Ranch, where second the rigs X got interest working working activity including half on on has currently XXX% in our we've bit little First, higher more properties, activity a the

low saw amount XQ. a of non-operated capital very Second, in we

I think year. that we'll in see non-op expectation come so to of us the our back see still And activity the half is,

kind And capital. so that of another on toggle was the

Arun Jayaram

with range. Great. it, does kind $X.X Please translate billion you influence of of I could publicly CapEx just call on terms XXXX me And in think how on incorrect now CapEx? this sustaining stop something views Will, that about a mean, and how I'm sustaining and, talked in I the thoughts go-forward if guys your have basis? that just view

Will Giraud

proxy kind maintenance million year, about being of We're We've $XXX that back in to a rate. the the going quarter for talked Yes. here capital. a lot half that of at good run a be

the and really quarter costs cost. focused capital think we're expense I we can is costs on are shows right they on what controlling now this things whether that or control grinding costs, G&A lease or

And so that's on I number. a keep that But working we're have. now, to going to for number good think

Arun Jayaram

commentary for XXX. to under just at numbers just Street oil CapEx? on wanted would at XXX Bloomberg, just on we $X.X which XQ, median you second for half Jack, XQ, of in Can that If XXX numbers your they for the half your oil thoughts current average clarify oil. the clarify, I Okay. look second billion are

Jack Harper

Yes.

numbers you think And that earlier. ties I seem those with said to just from think me. what I I referenced consensus reasonable

Arun Jayaram

Great. Thanks a lot, Jack.

Jack Harper

Sure.

Operator

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

Scott Hanold

generally Yes. in of half is Thanks. the good be rig level side? Great production maintenance more frac you are all Maybe Would the on bit guys. running or little maintenance think the need CapEx year, or quarter, a the another at X that that's capital rigs to X that on you slight levels? about follow-up add crews question, maintenance to second your frac a to and

Will Giraud

Will. Sure. Scott, it's

as now; activity, X I probably number. X can that to of We there of of I as it's a right just kind bounce that's around talk more interests just tried But and crews, a X is in projects. good mentioned, X activity. between good think for and terms straw a different a be rigs, different working completion in bit little we noise than because, capital man

Scott Hanold

Appreciate that. capitalized oil then, into that market a what's it. better view us guys your you that this how XX,XXX-foot give position, that? does occurred that, here, companies play considering especially are Got we're are And obviously, Tim, going volatile you on Can mentioned in. M&A in better in had and forward Concho

Tim Leach

on I seen consolidations business industry. -- Well, running think do And we've mean, we're efficiently. in happen focused really our our I

that, just they are they deals individual if are deals different. individual think I are all

run going is to or consolidation can But don't the debt. have to one in better be any less more lower the these cost do perhaps And and happened. just with efficient. by think to to get have the companies industries more that deal I to and be able last capitalized than general, characterize at deal efficient going So I industry, you get think to

Concho. happen. And positioned see well where with we're not property base think I'm Concho we'll is so the sure located. that affects really I that and how have we

I time. think for long we continue what can to a very we do do

create continue think right So one is to our company what to a mission with number just I got. efficient now we've more

Scott Hanold

Okay. over Appreciate constantly. several you you just you -- of anything I'm that guys at curiosity in out seen the months? market But look last market are that. the assuming change Have

Timothy Leach

price as that an oil that far the ever second business were so Well, I plan their worst yeah, had think mean -- was the industry. I and we've few maybe at our plans the in and everybody was looking quarter business industry, very as just quarter as there were viable movement

I that the forces re-evaluate think So industry itself. to

Scott Hanold

I appreciate it. Thank you.

Timothy Leach

Thank you.

Operator

Your SunTrust. from of the line comes next Dingmann with question Neal

Neal Dingmann

all. morning Good

guess is on, Will Tim earlier. I two based my First, well you questions and what said

mentioned capital. returning talked And -- not you First, talked Tim a talked surprise will or then about had just shareholder maintenance and question returns. about about -- other

even the So million I it you just anymore what of And on guess, efficiencies. -- come keep again just and back do more. that production it anticipate do Tim I'm both seems the down just not are to basically capital give like or an wondering It say with that excess? today a of any better? I'm sounds first that just like its would this and questions are my per that second $XXX it on would the same if maintenance go shareholders? does just quarter continuing that Can you maintenance you capital. to Or -- with take let's job you the think, then, part wondering adverse come up, And that get capital. around guys I my doing prices million grow this My bit incredible is down $XXX to be, question would and

Will Giraud

day environment done Tim mean efficiency year, in, I cost what only deliver. drilling we Jack the But the and of some of to really I'll take to impressive. gains, let teams. gains. not we've completion the And be optimistic say then positive our to advantage And I program et to continue far also service cetera time, more second. we're will relates continue the that. given or part as have been so take time to it been take able lower of to improvement able cycle grind the do I'm that. and to measure what And out time it's the enough the And first can't they the of things advantage machine have over flexible that per about and footage will take this

Tim Leach

opening Yeah. signals I your we price the kind from be Neal, mentioned, that think very the and other increasing do much any on of require before question as to is and stronger going I market activity very a cautious longer answer to at we're such. the

Neal Dingmann

So last Tim one let me ask one.

is dividend look consider So -- it a called variable you'd you does mean potentially would even that that be would something though is at.

throughout to year time you'd when return something And shareholder time you options? consider from the consider

Tim Leach

ready talked that. Yeah. about of our we'd industry to But of do something positioned a it. really well be I'm the throughout like about to concept being mechanic not variable think talk the dividends I and

Neal Dingmann

Very good. Thanks guys.

Tim Leach

Thanks.

Operator

Your KeyBanc. next from Leo question line comes Mariani of the with

Leo Mariani

up a just flow. cash pretty second certainly your guess It the cash free terms be message guys. follow the I seems was in to clear, of in Hey of building year doing you'd what half wanted year, a a play I little with mention, that bit sense to late? like I kind of equation into into But how debt. of guess, get guys, of here. I next just going forward Wasn't I to heard the net buybacks guess I wanted might word reduce on you maybe share

Jack Harper

as end think of a circumstances is further in to call debt that do cash Yeah earlier, one dividends, which of get reduction is really perhaps think, opportunities, increasing of the work But effective. share next to point to on range the time like, see or look Leo, our what with Tim we alluded we've this determine I at past is beyond And and year build. the to buyback between on most little this have Yeah, Jack. substantially year. that can bit this described in the we there a what I by

Leo Mariani

words side describing roughly I how you the you it in talk know to we higher volumes at kind at guess oil don't want mouth things assume activity kind I reasonable And muddle Would but year-end? of oil into stabilized think say, Concho along continue the of that we've play into is Okay. and as should And of to your be next oil stabilize situation flat. tough put you get if it's kind would much about, your are closer price to we to out fairly that that a can guys $XX. year to here needing as obviously this get flat I some guys price start fairly we And $XX bookends to mean, year. it out. potentially to as play to sounds like I be volumes next trying how -- grow to Just on But again? just can XX%? of

Jack Harper

and as a Sure. be bounced year, prices can a of could we When do. and environment we have our we can at when achieve have came And into business same currently price. into done the costs what we strip what can about. think the year And out the a the came and business lot changed at we this talking we described objectives $XX, things business look viable be done that do, around plan lower the our could it's at clearly now $XX in

Leo Mariani

And -- not, you any still just maybe this quantify And if on the at those can lastly back shut-ins. Okay. off-line? point? what's all Are online

Will Giraud

generally all on. It's

Leo Mariani

guys. Thanks, Okay.

Operator

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

Matt Portillo

all. morning, Good

Jack Harper

morning. Good

Tim Leach

Hi, Matt.

Matt Portillo

Mexico? moment? you on permitting remarks, prepared federal other just think avoid you just much I should permitting to Can New about lands, the And allowing on your a How is you of on then, relative running mentioned the the room acreage how around federal acreage? acreage there your issues? non-federal discuss And federal slowdown at briefly inventory potentially you of to have or we quality profile the in kind reservoir guess in drilling if thoughts as

Will Giraud

it's Will. That right Matt, now. topical very obviously Hey, is

to we worth a do we onshore and permits years' a federal two have probably is know how hard process limit the for though, to one drilling I front, new what in that hand our think it's might enough of on federal administration exactly permitting of development. we're in challenges believe acreage. one to From

in run quickly in acreage probably confident years. shift And other think number next importantly, any significant New our to to capital over our can Mexico we're scenarios the our in though, unable I over more efficiency to we an feel portfolio a event develop federal that our period. we've we without of acreage impact five capital

Matt Portillo

And question for, Tim. a then Great. follow-up

flow Just specifically, if of thinking curious cash to cash to around philosophically relative longer drill drive And, below allocation term, there's capital potentially flow longer-term cycles. of to flow. how I your you're the allocation about a to bit, cash kind capital plan through free reinvestment generation profile that the continue was

Tim Leach

quarter in Well, just I think, as second such good the shape. I mentioned, I'm happy to through get

free just see business the into over time. deliver flow looking period reinvestment term, longer being as able far a more back we of cash to lower with out As rate long a

how it So looks much we anything that generate business. I talk good free like that a just or but as about long of percentages over a to don't flow think we're prepared can right cash time -- now, period it

Matt Portillo

you. Thank

Operator

comes Scotiabank. Your Cheng of next Paul question from the with line

Paul Cheng

and be your that, market? need with that the when other from And companies to not? targeting, And you do maybe will be change Tim, generating you longer-term also you you asset on target flow total reasonable you. full that can you yourself? also the peer, be Thank that for capital cash are cycle believe of that out on you a morning. and if needs approach -- for for in And said the that that order I that will think standpoint, XX% Good free And attract employed? why agree. totally investors, return. What's the general that more a Concho? to overall that the cycle. have business and say, industry flow the not, better of better to Is also cash We targeting, some a be disciplined investment, return compete share they think is that to will

Jack Harper

Paul, its Jack.

that little Let bit. a me piece out

part to have can to we we I generate exceed the generate a that question, of and our returns we think first that. the business think on needs business returns need And capital. that do our of cost

So we're free efficiently to of and this that's point said flow had number allow do some that one. for to our question And, I business at with invest flow. reinvestment. going part again, on flexibility to more our guess, back call, the increase to think we of type that things second we've of percentages cash And, positioning your cash

over percentage necessary So, by lower definition, to or a grow flow cash maintain our time mean production. of would that would be

Paul Cheng

better you you of on thank do in with the to one terms the cost than compete do in be think you I'm will of trying the see Jack, competitive? employed, there return to much But who better your can be that, of need you the be just what few to are what targeting? order the obviously, expectation is you capital for how market, capital. to from that, company,

Jack Harper

taking, I'm on evidence the cost in I structure, Well, drilling we're the and and our our very that the the our for that completion seeing you're side. hope oil actions competitive, in better. the so more of realizations efficiency And

those that is things. we're all expectation the on going intensity of So to my maintain

Paul Cheng

quick final very A one. question me, for

inventory? from federal a land, an if federal the a percentage the your standpoint backlog inventory total not what looking total from but to position, as land at, I'm is For inventory land

Will Giraud

our net -- XX% the about acreage. Sure, total is about Paul. acreage federal It's of

higher federal acreage, Lake especially than is it's that. in standpoint, good acreage inventory an generally mean, from County. I so And the

XX% between probably of So total XX% it's our something inventory. and

Paul Cheng

Thank you, Will.

Will Giraud

you. Thank

Operator

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

Doug Leggate

been on asked. Good morning, guys. DCF the the wicked have Well questions

So I appreciate you getting on.

say would couple the per point sustaining breakeven where differently your million quarter? maybe at a of oil Ex-hedging me try capital. is -- just $XXX ask the slightly this on you Let on

Jack Harper

Doug, Jack. it's

at a shot take me Let that.

to I program think that our breakeven our on to in somewhere and dividend high-XXs cover our is mid- range oil. the

Doug Leggate

Okay. That's great. you. Thank

finally model, Now in up terms businesses these a around I discounted value in shot your I've take business the the be think whole established of cash how to free at obviously market in comments got to the the and flow. particular waking in because might is business

a this morning. My where forward? level is growth all great when how XX%, the this, industry pressing hear the process XX%, was. market some question just think do been XX% So broader comments do if reiterate recover, is all desirable versus about probably you to obviously, I and have your mean, oil planning Tim going of not prices and you

you you reinvestment yet, there do you've on So your your because cap want think long-term, quarter second offer than you're how rate? you parameters the into quarter, philosophically are are I there the market? on to what spending? process there the second Is a think not feeding that about but rate? about know more Is to when that thought about your a survived survived what cap the the just growth

Tim Leach

Right.

for For future. most this could success show worked industry how all then would in Well the how of we That's my by our our much and going not reinvest our a it's time. career, flow long cash how we grow to production. that's work

thought of barrel cost cost, those in into And think focused are industry market. measured that philosophically returns able more the to to your on add total think and reinvested growth. to what a business I the does I and time driving cash I reducing the down was that needed so as mentioned the our on aware it's a to of whole those flow percentages over staying of of in going price percentages to are I also of be be it things, signals your production, probably show types going what continued what be efficiency business,

grow shales that really U.S. we thought and as cycle, entered bad as everything time. at they of balance as much out this a threw production much So add one as really that did no could

in in more I And have the is place the distributions, business less world. going aware think reinvested to percentage cash of to and fundamentals their demand And I as producers takes more you're into order, flow think is think shops yes, lower what be consolidation supply your about get everybody and major I cash total flow growth efficient of bigger machines. the required talking so

Doug Leggate

ago from you early X.X market two talking about model. years you've Tim, business started Shale the when the Well led

it it's through sticking time. to So And congrats great on this hear. tough with again

Tim Leach

Thank you.

Operator

the question Tuohy Campbell Jeffrey from Your next comes of line with Brothers.

Jeffrey Campbell

restructure the Tim, industry's for efficiency and the and the And losing of of seems Good consolidation it rationalization a obviously There effort? we've of what instead the the just behind losing selling are morning. scenes so wondering about of to just is capital patients reasons providing business continue industry are was folks if some assets. I'm your sense with capital lot one creditors to because this talk any. and forth. had the

Tim Leach

debt commented to markets closed, to Yes. our industry. seems Well I are tougher. there available be equity public equities yes, closed, any that the just I capital Private wasn't --

has in a much think And be future there not So will that I I signal. in the sloppiness there as past. been is the as think key

Jeffrey Campbell

Okay. for on similar be roughly comment. or basis? that allocation between new you my and present can with on Shouldn't change the if Delaware capital Midland might the And conscious the you. Thank follow-up, to the federal remain administration leases unconstructive

Tim Leach

land Delaware I land in kick also New in big but and don't in have a -- it big have and probably the position we and I'll to Mexico private also Will, state the position a Texas.

could So basins. those our between balance we think we keep two

Will Giraud

mentioned a probably the in don't know Like about I you do. good might of approximation. challenges comments, that's I what think talking is administration in I my one a new think it exactly and

have you'd they you. come kind take to so of to as facts the And

Jeffrey Campbell

I fair. appreciate the that’s it. for Thanks think answer. I

Will Giraud

Thank you.

Operator

comes question the of Heikkinen Heikkinen David next line with Your Energy. from

David Heikkinen

flows about then and commitment? expansion as you as question Concho's on overall Can the And everybody, Good my for joint your capital the morning taking One Solaris financials about impacts think the that Water question. forward? you talk venture. thanks of

Tim Leach

will County. capital out drive a that us to water what Lea the lease be ago it we're you're and bonds going should at with opinion side both to capital lot is the to big around on side still where are expense hi. spending this over on dollars And down will transaction entity increase is as then build us -- opposed on need it's trucking to get utilized to but gave recycled It the any very commentary water of percentage around operating model of to And continue we help have extent to older water. one the that pretty opposed this infrastructure our with would our The and of to to it's around longer get apply of I individual Yeah, conversation it our low the third-party goal the them quarters themselves couple important pipe them we've a handle of Eddy move needed and in benefits use. Sure, rates. companies we all mean expanding did done basin County, big now into the where of a the will help to also term, the water built it ourselves. to and This as water time. infrastructure

And are drivers it. the so those for

to existing think capital of agreed it an to important increase equity piece owners entity. the also commitment I the their that is

and standpoint. think in I burden So sits it off very capital take the helps a a good of us position from

David Heikkinen

Yeah. It’ll share the burden.

Okay. guys. Thanks

Operator

Your next question the Deckelbaum line with from Cowen. of comes David

David Deckelbaum

you're year give footage at? active it I digits annualized this should I up So morning, been that and Could that your you're into Good be, target I next I us LOE? time. edge. see sounds guess for obviously guys. parameters of commented impact well had this follow-up on you If cost areas. then your just mid-single the leading going How in down for below to be Thanks David's some would County you'd sort that more similarly like where you quickly Lea if has around And year? one we my question. cost think guess that could ask, we just to following of

Will Giraud

Sure.

have I standpoint. from disposal of the a on and some sourcing mean, things we're question, water both the portion that the been sides LOE doing capital it's water around of I big noteworthy the think On improvement and a both

to it be see are baked transaction. that we fair We modest into will to where a So amount do incremental but we benefit, today. already are probably of where with expect from getting that was

broader completing wide aspirational. It's of on the laterals, go a we're laterals, and to is not the As cetera. long your program the the kind equip question annual future, where et talking short they number program, drill costs whole in number. It's about

of trend year over will the tell where course goes. and back what's in driven And And terms down do this from by half in Permian year. in so level activity an the but time that we'll I next the continue to it happening into I be the that think of also will think of year,

David Deckelbaum

you some to going if that less some I suspect maintenance side? you there you do more on pressures think Do mean, see where to you're going to inflationary pockets everyone the is are pressure? similar all, there's pricing be that cost holding or service still mode

Will Giraud

dramatic slow production earlier, our our Yeah. strategy made down of this have over seems a where I to been mean some base. more a bit out have to try a our like It point of has cut to level Jack of they course peers and year activity. capital V the

year and production of will then some level a deeper the if back V are about will pretty peers getting we of activity helpful decreases. some do -- like of I see from of out come how this of seems back some half try it But so insight And maybe it. in this modest they be earnings them terms and think thinking level into season kind in

David Deckelbaum

I appreciate it guys.

Operator

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

Charles Meade

whole there. morning, and Jack Good Will your Tim, crew and

a a to angle. a but recovered of different along through lot gone wanted here, question one whole have other ask of I from same guys lot just the lines, -- You ground but

from pace? of along you If that on rig to you eight to your place, months guys for sufficient guys the rig you add able were six and already swap to of completion big want that XXs production have four or in those be lines now swatch crew chunk high four to another in the WTI would

Jack Harper

is Jack. Thanks This Charles.

the off, first pretty hedging we on way Just that. piece, the about go mechanical about we're

for price to won't add And waiting we so hedges. particular be any

and the to we're the future We -- all doesn't in reinvestment what right lot like. But the and more the And kind will and the of signals continue production getting. need that alluded of we it's activity mindful seem all plan on things on now Tim be to a be signal. world adding going of at to have really us looks around the of quarterly look that to think as here I and

Charles Meade

and comments Appreciate Jack. me. it That’s from that’s helpful,

Jack Harper

you. Thank

Operator

Gail the with next line Stephens. Nicholson Your question from of

Gail Nicholson

last you months most think When improvements XX is look morning. that guys what over your do current cycle you the achievement? achieved Good you the impressive at time

Tim Leach

to as And that to to aggregation you a today small lot lot opposed any say are them. Gail, the there's of individual gains I of piece. a getting have we where think one really is of

So I'm success good than other pick it. right the think, challenged on say, are at focused having one the little are to and I a teams things just to

Gail Nicholson

there's area look you time that at When one think there's could incremental that that achieved? cycle you improvement improvements, do be the potential more

Tim Leach

No.

got basin would of challenges be the the holding the if in gains the be that increased the one that activity some in big if will holding see point or crews and we've the of so half quality probably a rigs probably and increase focuses think back does year. activity I big focus of you

Gail Nicholson

Thank you. Great. Okay.

Tim Leach

you. Thank

Jack Harper

Thanks.

Operator

from comes the question Wells with Kumar line next Fargo. Nitin Your of

Nitin Kumar

is addressed topic the thank questions I Good was and have morning, question. lot -- of for one sequentially. low LOE my that asked you cost guess taking my this already, but hasn't quarter A been quite been the

should rest you've the term? we in bakes somewhere we think to I workovers I we the think guidance Is long $X year between $X.XX. that XXXX? think for should an how about for activity. Or maintenance LOE? about $X.XX it target so but of or your should deferred number the stick How achievable think with some LOE and in

Will Giraud

the around quarter. just doing what generators kind and were lift. on and of at We're and these it's Will. things power things off things doing improvement artificial at $X.XX around process quarter see that and we're the it's improvement around of $X.XX a in other combination getting of kind try some ESPs we're and generation including second dramatic of and we water, of first And Nitin, drove Sure. pretty you the in if look

So probably that's about half those should gains and the sustainable improvement. be of

basically second in to trying with conjunction piece referenced workover The our is other half curtailment came an stopping unnatural program there and through sustainable. you period the as the quarter from manage that in not of so kind

is gain If kind half in. not. it you of that I half is dial helps of that think So and

Nitin Kumar

have. helpful. very that I That’s Thanks, Actually guys.

Tim Leach

Thank you.

Jack Harper

Thank you.

Operator

Nicholas of question from line Seaport Global. the with comes next Pope Your

Nicholas Pope

Hey, guys. Can you hear me?

Jack Harper

Hey, Nic.

Nicholas Pope

that you How kind curious the highlighted are talk hope and want question provided. emissions a doing? to And you I'm just had just real I kind kind you how ESG that the been activity that kind I on gas. pushing I of reduction? about with I on and is lower guess it's gas how kind the to I processing you a capturing of guys brought much have Because achieving number X% on things. been flaring gas all on was quick of mean year. think how versus sustainable know reinjecting that the going it's you of just could is And slide the being flared? X% that of that you is down a Where you do -- machine that you and side of lower? great great have kind trend that of all based

Will Giraud

at in that. to couple And our here I'm that. team the lot shot years. give you operational it the of of it's -- Nick, a the focal for a for in credit has a take been and doing That point company a Will. got going to field really guys major especially

around any having You hookups. know, not flaring a new is well key big

produce being And that oil the to numbers in side. been the unwilling to in that so sure when oil coordination And with you production midstream gas partners making great the there there's gathering. you're also ready frankly new down have our go pipe we have unless on we're gas to getting

a happen things the a the benign quarter around standpoint. an And really as impact and field daily upsets coming the plant here basis in on a typical activity more operating and off environment definitely in as the second just had typically. was that you of what's is worth so rest left achieve flaring. it from to goals that decided it And have production we The organization around that's has barrel that

Nicholas Pope

longer activity now you're Got it. activity sustainable that? in you think back that's the numbers And term as right at do own basin? sustainable And do the where are your as on up you ramps think

Will Giraud

lower. it grinding keep to is goal Our

Nicholas Pope

Got it.

all Thanks, had. Okay. That’s I guys.

Will Giraud

Thanks.

Operator

turn time, I to At would back management. this call to over the like

Tim Leach

being Once again, of talking company for the performance the you look I know of Thank to next busy very Thank Okay. you much. the and is a in the in forward season. quarter beginning this the earnings to in. dialing interested very proud in of our company you second I'm quarter.

Operator

Thank in teleconference. you participating today's for

all now disconnect. may You

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