REI - Earnings call transcript Q4 2019

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Operator

Greetings and welcome to the Ring Energy, Inc. 2019 Fourth Quarter and 12-Month Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

the to turn host, now will conference your over Mr. I of Chairman Ring of Rochford, Directors the Tim Board of Energy. Please go ahead, sir.

Tim Rochford

Thank welcome all Board. fourth we’d is Tim like to my of call. And financial XXXX the Chairman conference XX-month quarter you, the and name operations Again, Rochford, the operator. listeners and to

Vice Fowler, Danny the Broaddrick, Lamb; our Randy on is of Wilson, me and President; VP President this Joining Operations; our CEO, well Parsons, Financial Officer; as our morning call Kelly Executive of Hoffman; as David Relations. Investor Engineering Chief Hollie Bill

Today, us, factors the events operations December recent we'll XX affect that feel it's and we summarize the special cover importance XX, the indirectly the quarter ended ongoing the of financials and that and it's identify, necessary we're the operations months discuss utmost of and circumstances fourth both of for experiencing XXXX. right of to and because But directly all and now, Company.

do broad operator any and XX-month may open we it you the review, over that and So, up then back it in we'll quarter have. at to sense. the we of fourth a questions plan turn the conclusion for And can

to brief Broaddrick, to give going now, Financial For overview. a I'm our Chief us Thank Officer you, ask Randy just Randy.

Randy Broaddrick

Thank you, Tim.

I Securities Private or the the meaning within Act reference begin, that Safe be call this provisions any Reform would of make we like to of may of Before during forward-looking statements, made which Litigation Harbor XXXX. the

would XX, issued -- March Wednesday explanation, XXXX. complete release I sorry, a you refer our to For Monday,

on the release, the copy website posted not website at be do Company you If a will of have -- the www.ringenergy.com. one

share, million. per months ended XX and December or was $X.XX and $XX.X XXXX $X.XX and $X million the ended share. X for X the per months for or $XX.X million income XX XX, the million for Net were was months Revenues $XXX.X

million. of For period, pre-tax loss derivatives on a three-month the includes $X.X net income

million cash share million. $X period for a period. includes and per tax to period, was acquisition-related $X.X million operations For and million additional from the months. and income pre-tax the expense for Net $X.XX $X.X derivatives, flow loss $X.XX equates for three three-month $XXX.X This approximately for months XX-month XX-month the a the net the XX $XX.X on of costs

volume oil MCF, ended months as for three MCF XXX,XXX months Our the X,XXX,XXX the as sales September XX, sales for December three On sales December the September three ended Gas for as XXXX volume XXX,XXX ended XXXX. our XXXX XXXX. to three months was XX, XX, BOE months XX, XXX,XXX compared ended to was XX, XXXX. September XXX,XXX barrels three the for volume for was compared ended X,XXX,XXX months the basis, a to compared barrels

was BOE gas was period For volume the volume our basis and XXXX XX-month X,XXX,XXX. MCF. is X,XXX,XXX On a that oil X,XXX,XXX

equates For $X.XX. received price oil per basis, barrel BOE was the this $XX.XX a was three gas On received ended December months our MCF price of XX, per to XXXX, and $XX.XX. our

the XX-month price received our period. differential our NYMEX XX this $X.XX. was from WTI basis, approximately a the MCF gas On barrel months $XX.XX. for per BOE received price to of barrel was our $XX.XX, period, approximately oil per For per the price the period; On of $X oil, and was and $X.XX for equates three-month

events. previously. on year's that comparisons spend of doing from in the our On period. more the as We prior results for yesterday are released I we time in comparisons calls, conference current results prior current the out same have referenced time with order more news Those made this to refrain put

in flow Again, to but to clarity over flow for accomplishment as publication. believe annual quarter million. a We only in positive company we approximately key young regarding fourth came items budget in $X turn would we excess Tim, I such our highlight cash $X ours. cash That's I of were few like an quite referenced under in before the provide I recent would CapEx million. by a points neutrality, achieved However, back not this that

including Our for three taxes $XX.XX BOE, was revenues. XX.X% period per of approximately production LOE the months or

approximately For the $XX.XX per BOE was LOE XX-month period, of or revenue. XX.X%

Our total These year-end approximately three-month per period BOE of the XXX,XXX. G&A bonuses or for revenue. approximately X.X% cash included $X.XX of was numbers

numbers $X.XX or included costs, XX-month acquisition-related about period, Without per XX.X% million have $X.XX XX-month in per The revenue. of revenue. would the BOE BOE X.X% G&A or G&A costs. was the about For approximately acquisition-related of $X.X herein been

compliant our million. $XXX.X facility. as of senior the December We're credit covenants was balance The with of XXst

We a in redetermination May. scheduled do have

As our release, we and XX-K for have to that our also this noted, downturn. press a were hedges as into done in subsequent latest entered prior event XXXX in

day of hedges floor for a with with only do its $XX. current While ‘XX know what And Even debt, calendar we X,XXX hedged a $XX at the that $XX banks floor floor the it. and will received price a these confident XXXX help that but day have will of our going we a reduce service retain barrels calendar value. year forward, of at Company after any X,XXX a with can the not BOE, a price us decks We use currently management's have of at total $XX. redetermination, with barrels some X,XXX a for drilling, per hedged year not absent remaining X,XXX

over Tim. With it back to that, will I turn

Tim Rochford

Hoffman, Thank appreciate review Kelly X-month operations to I'm All XX-month it. right, ask for I you to and XXXX. our full Randy. going our our CEO, that. for Kelly?

Kelly Hoffman

call joining thank us to want for I And Tim. our on you, today. Thank everyone

We day. foot Northwest BOE fourth quarter. IPs wells wells X average was for lateral X to And the X,XXX average completed, rate about per per IP an that all feet tested of equates first well. those XXX horizontal X,XXX on Shelf on XXX per on We Andres BOE quarter in of drilled and the one-mile our And XXXX. the in filed San asset of X new wells

in three in also We in Northwest Shelf quarter. fourth the participated non-operated wells the horizontal

the ESP in pumps four end stages drilling XXXX, and projects XX the testing. we budget. work of had fourth on in various all quarter of of all rod At conversions proposed fourth our time, And were then to activities, wells quarter XXXX. over were all performed And we additional within the completed from

Delaware XX, of wells XX have. which XXXX, drilled months wells in ending that of the CBP, was and Shelf, of one the the For total in located a December were those Northwest we XX we XX XX new of wells a project and were

we to IP per about about X,XXX BOE foot XXX BOE the on that IPs tested the and XX wells, day, and and XXX those lateral. equates wells same For of average was period, filed the completed, horizontal per

filed on relates Northwest As which we XX XXX BOE of total the acquiring foot. day, those IP wells, April, it completed, were Shelf, of IPs drilled or to X,XXX a wells, the rights XXX per per since in Northwest XX the tested and BOE of Shelf

of X.X% per to the average increase BOE. was rate that you -- can versus Northwest the Shelf approximates see, average. overall compare is the you XXX that than XXXX to I'm As on just production approximately quarter-over-quarter. sorry, That of quarter approximate IP BOEs quarter per that the of the When XXX to X,XXX,XXX, gave day. you production noticeably higher Company comparison BOE third Company. X,XXX,XXX for XX,XXX the in day an net And overall The that's fourth

about XXXX control time we We a lack here till think the program, which Wishbone the and all October took the way some down the to of moment we started Once maintenance I April. took talk we we seeing our from got to somewhat, the little our we and I April. over, up of a take acquisition, began project, back results. spending, in asset over it due was Production immediate drilling purchased it and a that want in was was bit asset. to

Moving here today's little now forward X is to at very even Danny today a and a pricing. high multiyear inventory in We Tier moment. you about give snapshot more have IRRs to the a this drilling with ROIs, color Wilson going and

alone. So, generate allowed -- flow asset over said, in million $X quarter in to positive as us the cash Randy this fourth over

what's conditions call we of precautions to to doing and the relating and necessary virus we're shareholders overall the what's people, issues the just the protect Ring of the to to doing now. Energy. best right believe happening at happening and what companies very mentioned today communities market We the Anything it's the the are we're we taking how is lives. affect we And day that beginning can current to keep Company and that what all day Tim protect our Company. to our we discuss do and aware to the that important they do

moment. going to talk I'm here things these of for Some a about

all Currently, we’ve drilling. ceased of our

year-end, possible decision. and things just but for few on wells to horizontal four the drill drilled we’ve have now, and more out by Northwest we see It's may of that make wells going months wait Shelf. play how next As we're

or or no obligations We commitments equipment forward. have services for moving

However, That's changes that, I color Danny the we prices out selling XX if you equipment on we we're XX to us conditional available the the show a to improve sure days, we're or notice. busy, whatever, of becomes maybe at is to if important from oil, moment's can in and going to making two. These and and end about to get can quickly. get more want move it and for the understands, suddenly, are it's tanks everybody to in but growth we and wells money. a on very start tanks market be the give busy want day in putting line, a reservoirs, plus And days,

can also and we Already breakeven how breakeven of Many under to capital cost And make they lower realize real the for expenditures expenses course. reduce that lifting our we our taxes, and efficiencies. vendors capital production the you effort continue improve intend may cost and realize week including began not -- upgrades, It's some cost, going long to plan costs cost see improvements, our seeing interest, G&A, this will to clearly is of And cost. to last cash of that $XX. a as so every start number. excludes We lower necessary that's forward. LOE

continue going ratchet help And of think scenarios little constantly those see we're We're increase scenarios those internally. And I different stay the ahead a margins. will to help us down running costs market. bit. And it'll so, to different

Our to objective sheet. focused stay main balance on is the protecting here

but to, parties a interested Delaware At positive with the end transact. We handholding. conversations allow We’ve people. of regarding requires a have with just Many year, us still of of they we as know, got our the number quite assets a I and last discussions the continue going they're conversations we've lot may had marking assets. those don't of people. It of lot efforts believe ongoing of on a continue of lot to today started marketing market you to year. to the fast is happen as very, with used very going number some happening. to of others Things a

can To not from only the flow drilling, in non-drilling debt. up And reduce to important. extent say our staying this we're free but can very we we of debt. another our That's oil, It's Absent ability power. our further reduce let we a way. $XX activities, service, confident me at cash serious

barrels of of of has earlier, Currently which have XXXX We in call, relates a takes May. but in with away Randy again, requirements we hedged to stated, the bucks. everybody make a our for mentioning X,XXX is $XX banks, of worth $XX and know is rest barrels maintain at as at X,XXX covenants. it Randy to We line as will already the I banks. close hedged mentioned sure redetermination compliance that remainder And XXXX, relationship $XX this with we're this from hedges, for with our very strong our have those barrels it's of all X,XXX communication the

little going and -- And on and take over more some a color them to hand Danny of a with little that, more Hollie, it let bit to these ideas. I'm give

Danny Wilson

appreciate that the and I today. Kelly, everybody being call on appreciate

contain half my spend some giving written have with truths a lot in may to address I articles out recent unknown by because about going more series articles of too of we flat up some some some have those, I'm today been new Without addressing Ring that first that new have have I'll misinformation. lot time that that have obviously you for Energy a information of also the time. hearing And of know who and come we a regarding motivations part turnover I much of questions the of the market, about with blaring credence, these some issues -- of lot that of investors, a the came concerns and out those. this persons know be

going to into more usually I'm So, would. go a than detail I bit little

to that of of players. the because of that address and One in why Wishbone shale and some is also, -- then was we’re of ramping good seen cost little We've up a And our is as drill people a mention as purchase good, not these the later. articles our the I'll those. economics, failing these. drilling if question also about not to our our bit they downplaying asset. IPs, there quality talk And all that they're the What associated failing they're criticisms regarding so we've program, was we've are with the of seen they're I'll address had

Andres particularly carbonate, of the San dolomitized conventional or been is I'll been zone millions unconventional platform. business unconventional zone, for you been me, a has this is us Let has reasons the on XX me between oil. in years, barrels for conventional start interest we give are of bit difference and players which Northwest there a between comparison saying, It's the day and a -- considered the from the The on producing -- Permian Energy Central reservoir. formation, out produced San Basin reservoirs. over unfair. by why a primary of is And the has Ring Basin well-established Andres little excuse several the began

some is much century because of high characterized and the without the so wells to fluid hydraulic are that's unconventional small not stimulation. carbonates oil the through And plays. to without can't it's wells, porosity, flow fluids For lot permeability, because great of have throat been that a that’s and A over also the I'm ability fracturing. through pore they'll produce about opposed between reservoirs. called produced, talking But chalks, unconventional flow permeability. They're conventional able that without stimulation, zone which to considered the sandstones Those which have high silts, those the do all are has the of porosity, traditionally, they're produce deal it. though by much are lower. shale, sizes reservoirs, can't they And when spaces they that's just typically,

fracturing existing the hydraulic permeability, and -- able be enhance we're would using difference plays to our between to what is, already not And porosity they're also creating otherwise those So play flow. the and connect wells whereas our permeability. that's their

done practice, most acid. last long-term over particularly is just and Andres the conventional fact the Hydraulic San until fracturing in about probably So, -- in oilfield as the and fairly XX really years, were reservoirs. completions with new a fairly new on

around comparison been has long time zone play. has to this and So, whatsoever a really no unconventional the

feet, Another drilled a shale wells going players depth Whereas that which of X,XXX typically is are to target feet. are the around to shales our between and to us the X,XXX on vertical typically XX,XXX depending difference after. X,XXX they're

that in even need higher. to Our pre frac cases jobs the shales sand X,XXX pounds of XXX foot, about per use versus X,XXX XXX some foot, pounds to

million the million $X.X about cost $X.X typically the depending spend on lateral, the we shale to $X well, between wells million. length of while and costs, $XX drill Our million per

times I'll more the, cost the XXXX call one was pointed to out rate had was that wells over that failed our What five wells that of than of mentioned author XX% in that the the were to into One did. in truth those double production three mention articles, wells. ours of that of brought half IP

the costs. again, not comparison fair So, discussing that's drill a without

the the add our asset, the of on As pleased our to number horizontal Wishbone for high-quality, an Central Basin results we've And San gave acquisition even inventory. us was very pleased the high-return very Andres an we drilling game-changer greater program acquisition are been opportunity the platform, to this although and of absolute wells of Ring. the to Wishbone acquisition with

Hollie higher our As minutes, to over and CBP I'm good few investment. for the go of going to to the program. it We're seeing And rates, as rates on higher are wells wells turn through emphasize of better. even to a going are, Northwest higher economics now return, and drilling Shelf returns she's our IP that,

Hollie Lamb

Thanks, Danny.

we’ve discover We a refine asset. that to Shelf had Northwest this and and have approximately year, continued asset now exceptional

the have curve, to Shelf rolled our the such production We an out profile we had economics. When Northwest we of at time. the continued update understanding initially

We equipment while completion drilling time the reduced have smart since the LOE deployment. and decreasing costs, the same refined frac, with at the

Our Shelf the at briefly that diligent and I'm has can production exceeded changes review today, production can continued our to presentation of initial the slides But we our until data, updated as Northwest drilling departments, curves able numbers costs. to your been our of will going leisure. expectations. a think the reduce have so to will the curves. be And review completion costs. remain more have completion we These by estimate and on during you corporate what close recently the type vendors do. we to tomorrow, have Due as in our your efforts reduce business conservative

equation, We a Thus had Northwest are to investment. initial that also pump, savings. both of the savings This sides and Shelf. fact drilling our LOE million been reduction long-term creates far, in on model. $X.X $X.X X-mile reduce the lateral drilling a than the operator completion. we've purchase previous savings ESP It cost employs long-term on a a complete of the into translates the for an which includes million able These to larger

at both with performance, combined create current stellar prices. When commodity well returns impacts the robust

from to $XX. a $XX. as These of We $XX have BOE at have that high price and rate return XXX net internal modeled XX% XX% ranges as realized models of an $XX, at

Our affected Kelly both will the that anticipated by Randy and be hedges positively price mentioned.

$XX. create market cost low crude hedged have an an price continued price down Combining at barrels depressed a our or $XX, market. those we oil open have can $XX. with the and LOE of effective of $XX our of example, means would effective drilling hedged above completion even and in This price of ratcheting hedges value crude we For X,XXX with we

additionally We and regards drill LOE updated to the costs. curves CBP cost and with completion

We slight demonstrates assets legacy CBP as costs LOE. and drilling complete from have in We've continued a X.X that X.X are to our in down have our It savings well. that as the area on development seen well. accretive reduction ratcheted

high $XX. realize to We these modeled internal $XX, have and return at same XX% for as net at have models And XX% as $XX BOE. $XX rates of the from price $XX

At this it to over we've to discuss XXXX. point, done what I'd Danny like in to hand back

Danny Wilson

before Hollie. have about. And want that, I I other get you, I Thank few to to visit a things

Hollie do. and year. Kelly up both of took Northwest acquisition to to the And would effort Shelf I XXXX in when in was all closed. early drive in Wishbone mentioned, program everybody, had a we the something to the remind In production XXXX, Wishbone want drilling running April we an sale, the X-rig the that properties over from prior

drilling were positive had As the in we direction. months the over in marketing drilling due early able went we of and all were once And moving April. few property on we resumed production back of and to XXXX, rest immediately and hold a late started again a falling April, drilling, down in of began later, QX trajectory XXXX, the in actually they This were a the get there operations in obviously the to until in -- spike we their took wasn't back and lack caused property the on XXXX, we production get shut until decline to drilling. the a off and then the able

was it tried false report I article they've put everybody reported that this make acquisition another a was was or and that completely on look failure. because production up, out the And our like to to there just bring

for in XXXX, barrels as is This person the said intentionally now. article had in day, the known reasons I pointed out, we April. of to fallen way very public decline, on So, out misinformed properties XXXX, a that and person. they and that even XX% though a misleading per November right which to That X,XXX only address production came or that average January drilling was have want to X,XXX the started barrels oil day, all obviously again the Wishbone was for of that was by it

day In fact, of properties barrels is a and January was of averaged ‘XX barrels actually day which X,XXX the the production XX% a November increase. a on in XXXX, in Wishbone X,XXX

going unaware and wells filed do our that drilled they person, Now, so a look can next production it reported approved papers I'm assume was here able Commission. newly by that time the number, up Railroad give under until completion from this to to permit tutorial will drilling they the that be little only is the production, properly. are for We author

potential life. hope drilling during the it's using wells this The the is information months which historical the to pertinent production for wells, completion the can to in the reports the by search well, the a papers I also the the test, through early after operator’s operator number. are they Once for by contain a search. knowledgeable which a prior file filed not but times permit production peak can and will drilling will normal individual up all that the production the show production from of to And well, the producing. completion the access show the commission, the the approved these approval, during helps. Prior usually begin are not search of time, about until be production ready several completion number initial simple operator since

our drilling question QX, and was all in XXXX. if cash economics, by of which our by generate of articles positive million And the one Another we printing as free has goal was about our cash the stated we of which program? -- financial can of long, reaching why money. should they're that the we the $X words up be In aggressively was been you ramping year author, raised end from tell superior, aren’t our drilling report, in did over flow flow so in

to turned in be QX the author had have that to obviously outspend mentioned false. out would which fact, we continued In

as some non-drilling is we received I've issues job CapEx. the replacing these that conversion program I year not our having the long particular criticism very aggressive or also fluid with is program to beneficial even rod from it's The of the the the electrical cost pump very on whether as costs by the it our very, starting and all it's And to down production are whether see maintain these per larger with this these equipment. move naturally prices. of of savings $XX,XXX horsepower total already which to that and benefits more about equipment, decreased, to been rod wells other not we time to associated smaller The oil we ones, reduces as to $XXX,XXX mention want in have or programs into in from a very program, significant. wells rightsizing pumping mentioning wells or the regarding ESP. ESPs of lower of converting times future important high working $XX,XXX address over we've per and job, savings begun through a is to cost

through about those talking I’m other now. guys

upgrading, As XXX the frac through have our point we our in we with with of other refined we through drilled a the X I BOE an that end time, in used we frac area, the program in began on Kelly we've From operators a house different year, mentioned styles And We’ve efforts averaged during average wells engineers now say, per we the XX BOE of we time. the had of IPs, of the Shelf an of down XXXX. would have in forward. optimum consultation gone foot. XX day where the for like of At feel refinement XXX Northwest earlier, moving that which April, drilling filed and a to process. fracs period

that higher have QX. those is The We concentrations. we going we're using We're design, X frac extremely the we're now and prior frac using difference and sand we're new when one perforations wells -- in between rate, per and injection our that higher completed results to used fewer are the with drilled Preliminary jobs that doing that now clusters more perf using a we're stage. encouraging.

similar very that wells was are per magnitude this of average well new QX we Three the see But BOE the all foot. And that wells encouraged. BOE At future that seeing will year, we had XXX it well. averaged fourth of testing. XXX day increase, in per of results we encouraging four with the fraced on while of can't were was IPs extremely were say -- this or the design end

I'm to going back second our just and discuss reserves. a and now take she's going Hollie, over turn it to to year-end

Hollie Lamb

Thanks, Danny.

layering price base could about drilling. modeled on $XX PDP of reduction had total be LOE, accentuated oil we have by strong As achieved And reserves Wishbone about XX%. April. completed This year-end that time, grown with that a assets We reserved. and conversions we is or acquired mentioned, we since in SEC despite with proven our only our oil, our rod strategic to and an by reductions XX% respect in

XX.X of reserves barrels income have puds as black million added gas. XX.X is proven proved million vertical proven In BOE our we of Overall, have XX% we in which of XXXX, XX over proven consisted drilling locations, oil locations. proven and undeveloped XX.X natural as XX asset, On crude, proved our horizontal locations a horizontal company are BCF year-end and these of CBP developed. well, total locations. identified XXX XX% the reserves, percentage, of barrels approximately Of potential

all have of as drilling. our proven and locations we proven Shelf to we up referred years And of vertical adds proven asset, which Wishbone XXX horizontal Northwest to XX potential horizontal plus this locations, asset, locations. On horizontal and non-operated have proven In horizontal locations, XX Delaware, we've our horizontal locations. drilling XX the locations, potential X XXX many

to going Danny I'm At point, this to to back wrap hand it up. over

Danny Wilson

it. Hollie, I appreciate

have on the completed give little first are Northwest information activity and to drilled the in a Shelf. that on X regarding quarter. our test going wells To-date, you you wells Kelly we color additional gave well. All more the I'm the performing on and

in were the first that have would than -- little a we reduced is activity, did in production quarter. X wells The mid-February, on wells liked drilling which put later only

kind years to We frac two With completion. are opposed had in pace ago were dictating had actually to the running, other rigs we last now line having we operators, whereas get of crews. or even couple share to we of when year,

it's Now, more operators. activity other some of a of with shared the

drilling. from a timing this a this bit see from we're are of only the to quarter, little in drop reflect because of to QX. we we X% the wells That quality about X% So, last drilling, the expect delay, quarter of in on a the doesn't production of reduction seeing

we program year -- CapEx growth here. drilling would had proposed we some have had with we seen budget, The the if in early we out our modest with program moved the higher modeled forward that

However, suspension XX% we that with more program, from event in XXXX our of December December XXXX -- of an in not the do excuse to wells, drill expecting production overall any of to about me, the of see decline we're XX%. the

costs, As to Kelly days. back begins mentioned it's through or position economic improve, easily of earlier, in the better matter event a can drilling we whether oil reduced our prices drilling get in to

just have on the locations rig waiting up. of a one fact, In to rig we sitting drilling

some move the this by in program, event quickly And growth. that. things drilling can So, the we're while suspending sacrificing on change, we realized we

get again, strengthening sheet. But immediately quickly. circumstances event Our can cash work we focus changes, the continues turn that our of very remain in flow to that can the free to we around on and balance back and

President, over And to I'm our Fowler. David to going with turn that, it

David Fowler

very thank much. you Danny,

remain looks what market, M&A prices and would last holding were gone say would a precipitous us M&A robust most as I oil but of unpredictable yesterday, pursue saw to drop pattern without we what leveraging potential we the due to times. be XXXX navigate no have opportunities these market-aware call talks going all to in sheet. commodity into week's for prices, we're the in a that make to their we able balance Many everyone see speculating ideas that Despite mistake, value-add in way our drop further forward

per our becoming growth equivalent you've I recent XX,XXX times. our And achieved day. as like as was Randy of Again, morning, one that of to discussed barrels earlier, in year-end we million. a with XXXX, would averaged about of heard, years $X cash this our surplus cash flow we remind net over of as so mentioned best oil production positive, everyone objective did

people about positive is exceptional XX flow when only volume to day, produce achieve you of into peers have cash a achieved recently low per or XXX,XXX free take many times our consideration would BOE themselves. free our Now, feat over what volume flow daily position consider daily with a who many an cash

reason this has cornerstone stated we The what are exceptional well is the high Danny flow Shelf, success of achieved economics our detailed, the and from this is or the again the free both IRRs is Hollie CBP proven and foundation and milestone. cash primary true, and just our Northwest

me horizontal since everyone, our remind been drilled Andres end we it's years only at the three Let XXXX. San wells first of pilot

of Our of or many Wishbone San horizontal have County the locations. along assets addition valued Yoakum highly years the CBP Andres drilling the with assets many, secured assets

such on entry $XXX acre, as, was to mix, was just $X,XXX all In addition this end. product achieve to key cost wells, the $X,XXX a was return low illustrations from higher also Andres heard us oil added high which started our and in Again, which about rate reference to that an horizontal our the of elements for different San milestone it XX%. of you are ability other peers, acre, it's which utilized our have with our there to high make acreage, an several

higher production of a percentage corporate our on of in higher XX% oil you peers, product XX website. per mix to our on compare page realized When results BOE a that our than on net mix, bar you The illustrated the as deck, is goes which peers, XX%. graph product Permian XX%. of our and to price stream to If liquids, include that XX% be our about or going they're into to below typically that oil

is short XX Another key cycle just times factor of days. our

the we Now, of XX deck. our Again, illustrated to XX days page was what that's on be in XXXX. going corporate

make we that obviously, from we also the The what revenues turn, time that define from tanks. That's spud time can to to to that coming me see the the we'll well. quicker and the production, quicker a a is. count that the Let well cycle see we turn ability that time well

that early days days. the from XXX Typically, is revenues start and we be time maybe we well the as can as time about a spud to XX seeing

to time on period XXX-day comparison, we can that XX to CapEx the dollars return see In is months. what of expended. X X in a is the cycle So, that time on middle Delaware Basin

So, does has as debt. don't IRRs times Short you it ours. don't doing in tremendous it as can cycle one month affect And peers we that of a see much impact. negatively for other be have also reminded

days fluctuations us also in months. times enable quickly to weeks, and cycle respond commodity not to price Short

Andres its San Another new be and reservoir is decline grow requiring a to attribute profile drilled lower wells conventional of production. to less maintain

invested also note to to dollars own years, in that out produced and our transport our early You'll pipeline oil and infrastructure build gas. water dispose we CapEx the

off paying it’s and transportation As costs. lower a lease result, in now

of highlighted An lot people's on area especially is a the G&A, side. conversations administrative isn't normally that in

our low conservative Our by C-suite G&A bonuses. all our relationship in to salaries is peers, salaries, director almost of and as evidenced

per only just results mentioned low that $XX. All the all-in a equals factors in of cost barrel structure cost I've an

well-positioned referenced. we It in operator Now, Achieving a weather other that day. maintaining Ring that of storm. to of XX,XXX the position cost we're are flow low accomplished I belts coupled when environment say it at not to confident Though volatile, free tighten the price environment, it energy even low factors Permian, be our Ring today's interest we that high hostile and can is might in most includes lifting our no $XX daily proof have the illustrates just costs, that projects the production success, BOE quickly is a of volumes taxes, this only and new is cash CapEx. is to adjust one expense, profitable some drilling all about a net level and is in, easy G&A a and with task

to with Tim, you turn for I'll it back And that, closing comments.

Tim Rochford

All you, job the and Thank right, a of great points. David. everybody. The team illustrating And you. did discussing key thank entire

And and we get that the with queue, it we because flow can turn did growth do. through applaud, we said all reached that quarter We we're execution, actually did operator, But to anxious I exactly year. production by start what a the the fourth back we we not the to I Q&A. cash. to Before we way, consistently know surpassed so the again, in reviewing with it of only with team, cash neutrality, the surplus it we’d

concludes that that operator. for our that have, turn to presentation. operator, with back really the We're to questions to listeners So, open the it going and up we're going may

Operator

[Operator from you. SunTrust. first Dingmann Instructions] Thank question the Our Neal of of line comes

Neal Dingmann

as at look well, of of redetermination you those when not with color of I with dive it intertwine at into, continued remainder free to more for of Guys, the far how kind and -- any obviously could the but just you, first Good liquidity year look more guys obviously could cash Kelly drilling to I the coming Tim maintenance this, little you of stocks around right the you as Randy, just -- together sort CapEx alluded if sort is team. maybe, give the trading confidence CapEx, all morning, my and of mean, with all and you question, liquidity and Danny, a you everybody could have and just the flow?

Tim Rochford

me Well, Neal, just is This start Yes. off. Tim. let

we -- the the come as on we our environment say our we a Hollie by we believe know, in care couldn't take we asset. But efforts right Danny somewhat hopefully to of mentioned not into we this course, a and to was, ago, I continue with release back now pricing. we the have clear drilling release that our knows service that measured that modest now. It somewhat that conversions that deck lot, off to me ceased That's I sell that that saying, it earlier. everybody think the can -- yesterday, of CapEx play. with out by we're week budgeted itself, from drilling were confident Let the start know for and monetize Delaware that can look in we We infrastructure that debt, and $XX have will call

can they environment. current surprisingly, Kelly very today's just as tell the with pricing see as this serious mentioned I that with last that you, still think have we hopefully, a parties couple of some even weeks, beyond earlier, vision and I goes interested we And environment, do

continue So, to we're can that hopeful that. we pursue

reference that environment, gives higher then, And pump ongoing us than rod $XX. that sub component to the And maintenance of that that keeping workovers, environment hedge at the with along $XX pumps, some mind a with the et yield conversions cetera. the CapEx in and the with into of $XX much

wells a the from Xst, value when So, point we're were for of assigned hoping it differential redetermination up enough keep relates there's now now. number that fall, basket of or last value we and until Neal added know with I value from added last been that pricing and that's drilled that October completed. that as been the of to the the the to versus assessed have then don't

was I change. think at and our then price a maybe little $XX, deck

having going it, keeping communication to think group. out So, banking to and it in to to this. look And we're maintaining We're we'll wait have trying see of with May. going job But, going of do the we're in we forward. pretty stay that's great front what good like a

Neal Dingmann

I how much on comment several you just else. about infrastructure include and not What need to items on drill you the rods if and anything, just Danny mentioned on having know, just that other you’ve does some guys it that it, costs back could pull -- could And the of said had? you necessarily the

Tim Rochford

Danny? Sure.

Danny Wilson

are No, nothing look with in doing and do the yet. to But, half about million in think QX. the deal And taken anything we're something that's Yes. $XX out that the question. wells. work Neal. of Those about had everybody haven't rod The probably know a range that. spend of we now with budget. spent we're the to at I looking we've and the really We million, know being earlier good finalized with the program. changes that on to already came with Look, wants right $XX mid-$XX ESP Obviously, drilling The our one we million existing range. at budget’s in conversions new a

first lot now is getting of wills a on But, the mean year converting rod. them I an opposed on that see been rather as we've especially just jobs to these we pulling last of think dramatic the what mean, been seeing ESPs. rods, in can about on very for properly drop jobs things I during Are these just a sized wells we're pulling year CBP that are quarter, I half -- we've that to about example of this aggressive, our some done the -- and you working as on last half now than have and converted -- rod costs

XX continue $XX,XXX you difference that forward a spent. in look to program. well it's We're at versus well, with to $XXX,XXX that well if So, going at the money

We pulling are back little bit. a it

budget going million to looking fairly aggressively still it the we're out going of what But million be as rest But, to year like. see again, a already $XX moving $XX kind is not potential are to that. you the forward, of aggressive. of spent at We been in look of QX, half

Neal Dingmann

details if one And there. one Great I last could.

year-end to all are thinking you think year-end, you I just Just, you see think -- want assets, But year-end. talk where the mentioned, year-end I just sort question talk wells. we how guess, David more parts, not the drill I you just to should about going same Maybe potentially maybe it to of about sort guys you that. all we you sort than about just. but how two for decline. you or could about should be more but will and how of a any of see for Kelly, know, know you decline? in of again, it dealing the plan you Could the quarter Again, your this with potentially year, take looking to mean I decline? How I'm just

Hollie Lamb

That's a is mentioned really this -- great Hollie. Danny had question.

the know, I'm didn’t you case In Sorry. girl.

have B They've phase, that into that on and wells XX% steep further new high we year, year-over-year don't next range. this mentioned to decline. and had year, we're that of their halt lesser flattening it's drillbit up see don't the in decline. now had We're because anticipating hit drilling but pick Danny a to If XX% factor decline already So, kind decline. in going have we

pick I drillbit up neighborhood if XX the the didn't would following in XX, we a somewhere this of to anticipate So, year year.

Operator

Our line of Coker of next & Parks Noel the from Palmer. question is coming

Noel Parks

forward? the about going the in was would you was from you necessarily variability I improvement wondering you will or just assume at just what be that that with the forward. and you new new production of of frac I production in every that would high So, when source arrive production wells. be well had EUR? the just were design, wondering, the performance, variability different going like said you but geology be frac it don't Will what brought forward future successfully design, essentially be big same talking

Danny Wilson

part part we've so then answer used that. we let now of I'll And far, eight I'll that. No, of of a wells size EUR the frac the that have Hollie sample address to on. new

the have yes, Now, success. on we in And frac And is have. come having relation area. variability, The other landing with they area different geology. equal, have we some zones. multiple do Not particularly several the the we we in developed are In areas, tremendous have operators -- zones, will job depending every also landing area, this the we through Steward.

wells dramatic that the be pretty that using are on far that and the seeing that'll When question the geology. your -- difference XXX, change is increase past. superior, at very goes. new day frac far. So, the to much are we the a and on to didn't -- completion -- look the in But, as done which it BOE prices we've we the as are a job between we’re that XXX answer really that’s for wells the results superior so The

we'll think I type I'll reiterate also with we'll So, think Hollie BOE mentioned -- earlier that. per start curve for everybody, based see think continued day. seeing I -- that success our do is XXX on and I

see, So, that. you far exceeding can they're

EUR small the But sample ready not the curve. the size we're However, yet type because Hollie I’ll of let change question. address to

Hollie Lamb

XXX basically the you Danny where Northwest thick. omnipresent. We've feet the not San these we about factor the plays on big how potential in a So, They're and as five structure. land is geology benches, Andres depending horizontal wells. Shelf The alluded, identified are in

section. every five have or don't in in every You five well,

and a And there based are more EURs for statistical conservative at curve. on is And so, do us approach. completions. that is best The take build the then be as changing in we zones data landing overall variability EURs verified, look thing play. we'll The can type some to

seeing pretty clustering. asset. the We benches at that all are looking exploring But, we're consistent and maximizing

Danny Wilson

rates. higher just Yes. that more add bit. injection And and a was Noel, sand job bigger I think, to The frac to little the

to can't reservoir we're of Again, only think I are they had expect each to mid what I part opening because the be. really increase tell, going a more just we I since we're that zones. part But, is going on these with EUR of would we've the well. feel wells larger draining QX, like

Noel Parks

do industry, an Great, of how for are many Northwest running you just idea platform have perspective, Shelf right thanks. And the across roughly in now on some rigs moment? the at the the

Danny Wilson

good That's question. a

particular don't our drilling in play are the field guys or there? of you, Hollie? all I any Shelf, operators drilling haven’t who think, that’s the I of now, Our -- on about, do can speak anybody really offset I reported know Northwest

Hollie Lamb

in always are We a out contact there. of operators constant the lot with

believe their have I any of interest wells. just Baker to been non-op quick our interest listed they availability. drilling in that's source don't non-op Northwest Shelf, a trying up am and count, rig They of And I now. And in have I'm operator. Steward rig right enough. on We count talking not Andres Riley, the wells. look and in San are the particularly on to good them have by

Danny Wilson

And only we’ve the on been aware not mean, quite Noel, the really I for company a while the on drilling CBP. CBP, anybody. of Yes. I'm horizontally

Operator

Rice. Our McIntosh next question is Johnson Dun coming from with the of line

Dun McIntosh

Most of my question have asked. been

do prices a XX out of And field, in rig when TIO kind you all -- the walking kind for of I in the of and you think in think the call, in call, of clarity, about to everything did the later earlier on talked having a job bringing back. in then do And a bringing point the just you great come call. days. the get you But, XX spud mentioned I days. event through

color how running recovery in could next about price quick operations a event XX… of back of up you the there in kind on get and Just the any

David Fowler

No. little that longer XX controlled cycle We in typically Yes. rigs we're as frac only mean we we occasionally there, the in time would now, Riley, in of we to thing it's field. frac in few I somebody XX mentioned, And thing. frac the had a mentioned everything were it crew That X operators was range. I I was is crew with coordination the when the and let said area. -- go other and days. XX And days, somewhere share running, a about our incorrect. controlled this small we little And for I crew, time. we the a Steward and in The somebody a and communication activity, obviously, work more sharing. there's just But mean, with the -- else. reduced kind because

San a too that's a But, It's company vertical I too rigs big drilling rig Big the use. uses use or that Basin Andres for they've we for wells. Shelf, else well. on nobody the can X We called Spring. a one have you, literally tell Robinson drills. shale Those sitting rigs, Northwest have the use out of X small platform rigs next Central just that We for these They in the location. of the modified

up. it's I it just So, mean, matter a rigging

and the our constantly. completion have manager phone Our or been on guys drilling superintendent

can drill cost tell, now in economics. we're the you As lower using our

just little it we're But $XX, to are do did XXXX, to come going We it we'll a to down where, to point think, $XX out work figure like way again. did at I reach costs have there's those going before, in to barrel. a farther. bit a a going it

sitting very back get These on turned So, can work. waiting absolutely. doorstep. our fast? we are go vendors to They Yes, to around it are

So, we can get it up quickly. and very running

Operator

Roth line of question of Next White of John Capital. ROTH from coming the Capital. is White John

John White

rods on on your devoted Congratulations to drilling. much stop spend as putting and and a be as helpful, might would and consider continuing it budget liked execution. would stop the you you quarter CapEx Very I and CapEx And nice. you're out on for your you addresses out, you on your -- change items, be as more for congratulations pump infrastructure drilling drilling number seeing the having press for -- understand year from the infrastructure I the a rest -- get noted spending back people? the a much an in just might shale operators those standpoint can helpful release that precise and quicker of operation mean, you than I to but your

Tim Rochford

are John. actually. working a You something a that's great That's bet, we that. that's on that we point, plan good on doing And -- and

out, Just a us so time certain little more standing. that we'll pretty we're when that put be where give we

John White

I to group. wanted Okay, know suggest the And good just that. Luke Drilling That's I yes, Crownover. Robinson a guys,

Tim Rochford

pleased a very just is so. they with obviously, By to way, equipment. rig running, in We're Yes. Steward texted and their listening the us. They have clarify,

Hollie Lamb

There rod running. rig a you is go now. There

Operator

line of next Bond Our comes Andrew Partners. of question Global from the Alliance

Andrew Bond

for in calling Thanks our questions. for I'm taking Bhakti.

so to you're far how collar year? you exercised of this your have able If many share contracts

Randy Broaddrick

is ceiling. and a Sorry. say floor have I what to want costless understand when we with and exercised, you collars

-- based into with they price. it's haven't -- So, play, declining, the on price come we the they’re average

anything February not not collars. I'm up -- payment. So, you receiving as price meant what or exercise. most the was We for did likely the between end for a or January that by March receive we'll sure pay Does

Andrew Bond

you not Yes. help like kind more to of as exercise, detail. contracts I guess just the then -- Would follow-up, get maybe then, those little can helpful. exercise. Maybe a a that's

process, there the then a or of the process lowest your kind prices below of whatever or -- prices, prices -- be kind would call is out while paid the there just Just floor do off? it decision spot are below first rolls is

Randy Broaddrick

same XXXX are our floor. for the of the collars $XX all So with

that basis, we compared And is so, $XX have on average that the BOE price we And a times receive hedged. X,XXX to that a monthly day amount the floor.

then So, have a hedged. it's that automated volumes to finalized, the there's multiplied for kind it’s floors of process. essentially exercise. compared by the month price an is And those we Once no a and

Andrew Bond

of word, of makes That disappear figure kind calls, of will, lack first? and guess, helpful. to of just puts different figure out trying which sense. these I'm kind to better I a That’s Yes. of ones for levels trying out kind

Randy Broaddrick

really come a the But, them I a we of at month thing. guess the guess, X,XXX. I time. None they off have disappear

the talking same for all If the will stay year. about you're ceiling, the those

We that amount. have

as as is the So, $XX them. for floor, the all far of the same

$XX price March, so, we for will say else... how the BOE I'm then ends $XX And being not up a sure the receive times X,XXX day.

Andrew Bond

I trying here I to understand I’m on below missing their guess, makes more the maybe No, Right. the out XX, figure but That the -- gain perfect call so price. no. sense. I'm something

Just change prices foot gains the price? trying will to for figure as volumes the out those you're change are will getting as how those -- below --

Randy Broaddrick

change. won't entire going year. The average for The the same the price ceiling is stay to

Operator

Thomist question with next coming Our is line Capital. Logan of the from Moncrief

Logan Moncrief

that using of million. some kind spring are to the just reserve published the up, the of calculating gearing back mean, K, of the redetermination, banks strip haircut assume at $XXX sort guess, of kind is, report the way that. you'd be at I envelope kind on in that that was guess, PDP of around Focusing there'd I I I'm value The question

mechanically base do question So, with come how that kind how line cure I much options lower you that deficiency there? time the on than of in If right now, of what's that’s the guess, is have cure you borrowing does kind they have and kind the drawn do work? of to any to what

Tim Rochford

question, Certainly. good a That's Logan.

try can. we to address let's best as So,

that adjustment look what expect completion suggesting, completion million that to, on than the the $XXX on, Obviously, the the side, value new And the the which change. making I earlier you're would rather that based we on the $XX as have result wells. to going last base, in since is that’s favor third-party was correct, and So, which -- pressure a activity So, you're a to number that flowed side is difference whether reserves, our determination, was think is back make the both so the you're last drilling debt. a up determination over, and October thing the that reference in mentioned as is between at up call as consider on Xst you catch the well put one last to we also the there's is that that that full for looking evaluation, given like? of going year-end,

So, I it make that remains be will that will today. add to to the we're as to basket value. And seeing doubt seen. whether or that's not be strip up the enough

I closer can last numbers tell probably board XXX you that and the feel as be that we've to run still to preliminary week, we some are we maybe recent across million. going as of late that

were week, on course number? if run that is Hollie were that going Thursday, XXX to they know But you on we Of I we here. working Wednesday be I somewhere when strip that it. can million that help last or depends me deck think like where and

Hollie Lamb

put hedges. strip around it ran of the I and that XXX million. And then last for in number with PDP week Yes. the adjusted us a

And so, are as we but, In boring Tim mentioned, that jus redetermination. were May, has near fall in our

Logan Moncrief

resembles that So, increase? up, that your would something here borrowing use if is safe would strip base to it that go assume they

Tim Rochford

-- not that all. am I I expecting at No, don't

share back similar for example. we're we October PVX and or before with think, of if on or round the -- our the -- it and XXX the that if right years, from was what with was suggesting PVXX, numbers I PDP they million, you at same on as as that stay actually Xst, past I'll parameters is adjustment in

at was Our about PVX Xst PVXX that at that was right at say, XXX. time should at October I year end, XXX. or But was,

So, keep they with were in $XX. mind adjustments, that

So, with those fact, adjustments now, or we would in that down. come base could anticipate could that realistically

taking guess we other that place we our as try What is, flow that? do question cash okay, of we that your free to what part to speak. are Well, options? I can is, about the well, have do respond to

some a in where not whittle feel we but we're So, can now, significantly, away that we position degree. at right principle to

group do So, that. to I think demonstrated it's show going we've to go a the banking be to can long ways that able we

the check? serious believe in -- asset. are we've to door, heck they’re that very but consider. the an who mentioned, going they're would banging time Delaware know you to that a talking that, is door parties the those today Kelly down, you from even been they’re sit not and still that that write And it to the front for at we're as us for though some not, numbers Well, marketing Aside at say, maybe or reasonable environment

if well, we been very that's option. gives So, outspend. has but million million, new base adjusted of And look, back Logan, bank don't comes borrowed plan, $XXX and don't the we have your to a $XXX and an little course, very, to you've that says a plan liquidity,

we're of thing, we within not strategy The flow, -- stay one is we're our manage hope and the So, and the adjust going can. that best to going is, strategy. cash within boundaries stay that to that's a

Logan Moncrief

just more and that does just flow on -- draconian about a range little like let of perfect. declines. and Hollie talking you generated stays appreciate QX of cash in bit you was cut activity Okay, And this significantly $XX, questions. where that some I QX production my kind your This scenario what taking the from just this And terms cash to $XX production, one oil scenario, in under assets. of what of flow But, scenario? be gets look kind

Tim Rochford

about QX? talking QX you Are or

Logan Moncrief

'XX -- rate of an exit kind 'XX of production. QX QX of

Tim Rochford

address probably think best to I Hollie, that. you’re Yes.

Hollie Lamb

looking that -- and we me of each at us. have one I that neither our of on us Danny and have are in other front sheets cheat both

Danny in mentioned, to that going as and from reduction so where -- unfortunately, currently So year-over-year. it to we XX% XX% be was are

we can calculations, So, the number. do back don't of the we napkin but that have

Danny Wilson

Yes.

I think you kind somewhere. of shoot just could for

at And year, should in QX the about from you number, this it XX% should be to ballpark. shoot just our kind of be than XX% If you less -- that. for look

Operator

Richard from One coming is Capital of question Tullis Securities. the line Final of

Richard Tullis

Hollie. Northwest cost one well frame a oil well importantly, of more to back maybe you price Just to that guess, or cost price really or little me. quick resume probably looking bit for Danny Talk combo Shelf? drilling. to get what for lower Can you're for even in of I for or up a best higher about kind us higher oil drilling lower

Danny Wilson

I we everything want this lower the these not through mean, out Sure. before, these drilling, a on through mentioned point And commodity was guys, question. pipe, -- like in And that to business. prices great that's No. a of on don't we XXXX. -- we down the Richard, -- what went commodities I on but went on this saw go vendors to

in at any see run costs payroll, go see down XX it to point the free have that is. go be down, our down to bit whatever -- pay it's days. it then and debt, clarified going to We would have probably can and I little next some They're obviously to they're where to a maintain cash what to points I -- their cuts And the everything depending can pricing. these might that XX service So, point back rebound sit the think, cash take everybody for any these think, we to also going back if just to prices work. they to flow will do can on whether excess drilling? through and their models our we point, to in to down of we get lower get time

had next from we've down work, get Typically, realize deeper the about as but that a We we We've I We it at Tim, from to don't and if the I going have been already since I've vendors senses go OPEC. think, vendors can calls we how costs point little of announced a takes after the been line calls where we at months to those the other seen in the in had the six to to through business their least continue typically surprised already a I've we've with slashing. were forward. getting they don't reductions - a XX%. and responded. to to would the and -- surprised because been anywhere a expect I lower to Russia we'll vendors prices. in business, on downturns to back for be rest are have out and all the mentioned get point the if quickly XX% is, past better Kelly I've what come reach basis. weren't they on they're go day feel, to going going limited get these to

Operator

turn I to the will over We the any back now have reached management remarks. end question-and-answer session. call of closing for the

Kelly Hoffman

distractions lot Well, that we Thank of time. you, And listen, busy it's out operator. know a a there. there's

you. this and you stay again, once So, your us listening giving Everybody, in well. morning. time thank for Thank

Operator

This concludes today's conference.

have time. great You at may your Thank participation day. lines this disconnect and for your you a

Ring Energy (REI) 17 Mar 202019 Q4 Earnings call transcript