REI - Earnings call transcript Q2 2020

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Operator

Greetings and welcome to the Ring Energy, Inc. 2020 Second Quarter Financial and Operating Highlights 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, that 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. Thank you, sir.

You may begin.

Tim Rochford

you, listeners XXXX Rochford, Chairman Thank all Ring Energy, operations Thank operator Board. I'm want for I you. Tim Again, to conference of call our quarter today second the the Inc. for financial and and thank

of Chief Land; Joining Operations; who's VP our President; Fowler, me CEO; our David Executive President Vice the on Lamb, Parsons, Relations. VP Wilson, Broaddrick, Hollie call Head Financial our of Hoffman, and Garner, Danny today Investor of Head and is Kelly Matt our Officer; Randy Engineering; Bill of

directly six a for the open spend the may XXth, XXXX. identifying, the months back for So provide and At company. turn we'll quick, today done results the we'll that overview discussing And as over and that the questions we of we'll any future up summarizing have. your the we'll as it to the quarters, call affect have past operator, months two this and conclusion quarter the operational review, the ended financial three in and of current the June it factors concise as of majority second you of operations well

going Now, to Randy with brief this turn Randy, I'm that please. Broaddrick financial said, over to for overview. just a

Randy Broaddrick

Tim. Thank you,

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

XXth. our to refer August explanation, Monday, complete a For would issued you I release

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

of loss share. June of had loss This months $XX.X income expense. $X.XX. on the these unrealized $XX.X million, per three share million items in hedges ceiling compensation $X.X net effective test $X.X taxes, of diluted the income revenues of million XXth, million, included been would $XXX.X and have our we pre-tax loss $X.XX and stock-based million Without loss approximately in a $XXX per million net net after ended For XXXX, impairment or

six of per impairment income million XXXX, of net pre-tax ended in share net and revenues $X.XX. million had share. $XX.X result loss unrealized income a million a loss hedges test taxes, ceiling and on our The expense. been reduction these oil prices. loss our reduction Without as after is The $XXX.X million, net have would June unrealized of million in changes months For loss $X the of in the as result of of diluted impairment included value of the test This the gain hedges we on of of in is gain $XX.X or approximately effect million, stock-based recorded reserves a prices. $X.XX per because value oil compensation in XXth, changed or $X.X ceiling the the result items a of derivatives $XX.X a

a post-CapEx in $X.X cash for cash of million. in During we positive ended three June $X.X XXXX, the net capital XXth, $X.X flow had flow approximately and million million expenditures, months

June $XX.X for expenditures, of the $XX.X a flow cash had post-CapEx million cash XXth, During months ended flow in and six in XXXX, approximately $XX.X capital million positive net we million.

total For of of sales sales three-month MCF BOE. and oil XXX,XXX the we gas period, barrels XXX,XXX of had XXX,XXX a for

gas, of BOE. MCF were $X.XX $XX.XX oil, Our of for per barrel per received $XX.XX prices per

X,XXX,XXX] of of BOE. we six-month barrels, a had For [sic gas and X,XXX,XXX total - for X,XXX,XXX MCF, X,XXX,XXX the of sales period, oil sales

limited BOE. and our higher have received for This we approximately MCF prices oil had would The between per been were gas, Our received per price barrel. production $X.XX per barrel of curtailing the of averaged will be until not $XX.XX oil, late WTI $X.XX per most in This be $XX.XX during sales June. April by of in what discussed call. from limited sales later to did early May. sold we our month produce and further of storing June the We differential

it a to to few Tim, turn like I items. highlight Before would additional back I

of the have we recorded flows With of intend cash post-CapEx quarters to to consecutive facility. positive flow. use XXXX, credit second to under debt the continue reduce quarter now cash We three our

down our the to the $X Regarding million our that facility, credit reduced from credit by reduce borrowings million. that credit time reduced an program. we drew $XX.X under flows, facility bring million. $X during to with to million credit our facility the initiated $XXX for $XXX was facility. amount to our redetermination, $XX will payable million our will process spring April million paid yesterday down this borrowing have We million. drawn $XXX in additional We accounts discount on cash our on which base since But We payment,

debt in million another million. divestiture which to to the down We Delaware $X related the balance status more we the divestiture depth by our outstanding million, are $X be to Delaware later call. using in the another will receiving today bringing reduce of of will be $XXX covered The the assets, asset

In the addition credit payable. reduced to accounts reducing our have also our facility, outstanding we debt under

the accounts of is quarter. Our was balance payable That $XX.X million at end now the been to year at reduced end $XX.X million. second

Tim. June that, back to hand of I had XX.X at XXth With cash will also turn We it million. on

Tim Rochford

to right, this in how overview. out I'm you just on things are to update just generally. us turn for give ask Randy. an going Delaware and All that going Kelly Kelly Thank Kelly? to over and

Kelly Hoffman

it. joining for Tim. Thanks, Thanks Appreciate call. the everyone

- didn't, some the life of to what's death. for you Executive of course of foremost, me the not activity. But Delaware, Vice Operations seem first And you but to case. of Danny through You I know, we status our of Engineering. Lamb, President it that's if current want the They're I do, like some events bring our to I know want happening. up-to-date operational hear to we say, you, walk minute, when on and Delaware quarter and selling I in I'd or our call going you everyone but a of the and of our I and might know, Hollie are that's listeners the so, it's before not to the turn VP over Wilson,

additional $X.X $X And Our our have million is and acquisition. had multiple us very an proud asked to for the has with get million expressing groups continuing not this us. prove additional buyer buyer during has forward. to to a of excited which flexibility an this excited buyer that, work done is has extension We've spend say. account. an continuing we that team and recently spend they're us. with possible agreed for asked ball to move bank money put an to fund the lot recently times. us, in order have effort additional is our financial wired now and conversation non-refundable to is expressed in released The that million for money That's during the to we the and recently the and and and that money, collaborative released to them extension. escrow. deal with buyer they've process desires And to fund this desires This a XX-day extension. of a And Also This job the working we're out my that these Board of in to to best forward now hear have continues grant to $X.X with getting deal entities this with. they're time in us make done And buyer us difficult that the allowing I'm the to they've

to I they've in XXXX, what difficult and really that can were data, like year-to-date, effort the we XXX experience to Just collaborative idea deals see see, you see but with This group we in amount be given and all give and times. you Management, I'm record I'm Board a that this XXXX, why that can to you That's were some is us. both these with look could think I the the XX. the public from out very that the the of done say when XXX. looks inverse proud XX,

an that, I'm and quarter. going Danny? and second to with can they the over turn on for to give Danny update So Hollie, you this so operations

Danny Wilson

All Kelly. right. you, Thank

operations our drop in limited prices. prices, particular, to commodity and the dramatic in was in QX the July, oil in due in mentioned As activity update

quarter. As limited pickled to decided with go to down, and mentioned. in Prior week shutting beginning all May, hold we mentioned due when in sales to we issues drilling restart wells. the dramatic to no In of almost just prepped And leases of wells these we production took April. drops or no we of as our the that in in Randy limit prices, to to key the shut back in enough release, the last we activity our we of step had unprecedented almost the production all

for improved in During of the this that were these million end there in process monitoring the began time, during online by was were $X.X very month. Because CapEx the to the spend of May, the $X.X operational original with between issues spend work our of as up constantly production back we million week prep the plan the production the $X to versus restart. the in And of the only month, activity, April back start lower month June, million. few to most and and quarter first was and we our differentials. Due

this completed program for quarter, to the X For to continues yield us. and very rod results conversions, we impressive ESP

allow or to reach this over our continue Platform no activity from Vice crossover lower Our and year, production our cost dramatically rod half of of spend. program, Hollie per which to it also failure cut well Basin now day. Engineering. Prior nearly become about point us to over to Northwest cut half BOE end horizontal on to $XX,XXX an XXXX. rate the run have early to half well approximately Lamb, with XX% production the us I'm we Current we CapEx the turn our Shelf turn is our spend on year-over-year the where to wells rods work last going drop To-date, workover time. from and production method, the less. President with through our in the plan in we our has see XXXX on year converted to in at X,XXX to QX we continue and drastically over been work the of allowed has production of lower our that drilling approximately was will planned anticipate as rod we to and the Currently, Central that, around And pumps and $XXX,XXX. in to continues also CapEx And average conversion wells will optimal beginning

Hollie Lamb

in focus Danny. maintaining reduction We're to positive our CapEx, on continuing Thank flow. while cash you,

and quarter first wells, as excited second horizontal to have As back Danny currently and we In Northwest was in expectations. this converted completed overall $XX of wells, of very Shelf Approximately QX, capital spent we drilling. months because expenditures the million And year. we said, additional drilled exceed for million The Danny the QX. so million wells to to $XX.X the we've we're mentioned, X in advantageous. $X.X rods in it spent economics XX continued are our has get to X six

on are Our change. current based CapEx minimal subject plans to they're environment. for economic But HX of XXXX the

$XX As our signal case. price in mid and a the a previously it's per drilling, still return stated to stabilized BOE on would calls, the

our mentioned, approximately Randy is differential has As $X.XX. average oil

looks And markets the like. outlook right yet, in moving direction. what there not the but the we're it's excited about So

mid on Our area. internal XXs the return is XXs at to the mid-XXs to range rate depending low XXs of upper from

XX turn We I'll this, have completion drilling wells it these over flow within to program And prices. modeled to a at and David. with XX cash

David Fowler

report. that Thank Appreciate you, Hollie.

to underperformed the of by half probably earlier, flooding likely, XXXX we to has to As this But M&A either a oil pushed increases in OPEC+ continue until And to puts to significant primarily talks large XXXX. vaccine the strained. we and further cause in an and It's the increased overhang. been M&A demand consolidation more take evaluations year. Kelly mentioned that a see global remain markets and dent confidence that'll inventory past pandemic the see approved, probably our get activity more in going the that consumer the due at elections place activities second and

The it Additionally, since Shelf and oil County. and well level investment was had Platform Gaines assets in elected we development to in area a focus located construct large electrical facilities, County. a block Northwest a second SWD acreage required that to our Yoakum a the in southern upfront have predominantly not renew accommodate the was our place infrastructure northern would quarter, acreage a CapEx in already to to as we Central not acquired gas on acreage program recently Basin as of

X acres. as addition and and have With XX,XXX inventory. over acreage acres inventory XX-year a shelf Tier a Tier XX,XXX that's of X now gross just the high-quality net us of gives that drilling over and a reminder, the We XXX locations

Now to tier and locations versus hand, extending Tier X that in capital our current element any wasn't X acreage, was we increase EBITDA in of affect that, economic in have reserve to you're or same high unexplored the dollars mostly mean this I'll underexplored, there it Tim. these see the no if use horizontal way just And allocated in these will locations, price there's on and a a we in that stated proved - we would turn but rate from shelf. numbers. top basically it reserves no reserve And now risk, the drill our not use in environment impact, wells so determined reserves of published return back to were good that growth notable proved of Tier proved the case wondering, higher with

Tim Rochford

All David and thank you, you, right. everyone. Thank

So quarter six that have. it second going and listeners for Diego XXXX this the operator portion and may back to over Diego? of to questions ask any I'm it the review, open our turn company's concludes to to up we the months'

Operator

Thank sir. from Our conducting time, be question-and-answer you, Neal first question this your we question. Securities. Dingmann Truist state will session. with a Instructions] Please [Operator At comes

Neal Dingmann

know back, kind for guys you to be what prices of give in of question kind morning, us an nice. shelf you plan Good decide that my that in? or you're still rising certainly come like? regionally You up guys. you when if know, idea of Could will Danny, may Kelly, it so, the look you targeting

Kelly Hoffman

ahead. Danny, go

Danny Wilson

We Tessara be in but of that the bought have commitments a be some activity we both be the do Shelf. it the Neal, University will question. on It'll the the to Shelf. areas, but great a Wishbone acquisition, from Yeah, that's Asset with mix the drilling Lands predominantly Northwest of bulk Northwest prior will

Neal Dingmann

Very good. year. successful this guys on just And were just one follow-up you hedging very last

it you Your well go-forward about the 'XX? just how get you still XXs. feel thoughts kind or in Kelly kind into Tim, on or general, a basis low on the been in Randy you of of team just as

Tim Rochford

year. commodity barrels a we to this for probably open on the hedges 'XX that as probably as tell him. for Neal now, we that's of do rest I with in we of as number the mid good that time recollection you has to in XXs I a And on. exact the believe, day. X,XXX, well, Yeah But my front I know, said, place goes To to maybe somewhere low question. think X,XXX is you that locked for have in see about, more now. can extent that Randy space, certainly add down we're improvement positioned in continue well But the hedges are we're or the

on barrels be but 'XX we XXXX. to as into add then we're and explained, just looking we as I we in go component As $XX will as to you know, at near X,XXX locked that

Randy Broaddrick

And it floor a barrels $XX.XX. with is X,XXX of an average day

Tim Rochford

Yeah. Thank you, Randy.

Neal Dingmann

Thanks, good. guys. Very

Operator

Our next Please McIntosh Dun from question. & Johnson question your comes with Company. Rice state

Dun McIntosh

Kelly. morning, Good

Kelly Hoffman

Good morning.

Dun McIntosh

quarter about kind down question what spare the full full of production going first quarter of versus early half going you're of that your of as too you trajectory I just a may kind X,XXX kind the in into start to might it to some pre-release, was XX% fourth at of believe being where say year talked of third about over 'XX? guidance position or you My and third for Could today, take quarter year on year kind you you're the up second kind that BOE be year-over-year. exit

Danny Wilson

gave Yeah, year-over-year this number Dun the number. rates is I is Danny. necessarily. exit a XX% That you Not

is BOE probably or I than us. know, a slightly at be looking know, per And third for that. You be something this number then, day you for to think X,XXX X,XXX less that quarter fourth quarter, might - around going good second to we're

Dun McIntosh

just then, clarity. little And maybe a Thanks. David great. Okay,

you whether or Delaware You know, half talked closing about, second into it's the about 'XX of, assume talking and sale I you're 'XX. the

you deferred you you talking 'XX, about are XX had the you're sales But, asset know, early talking days. You when mentioned there? about additional

David Fowler

take Kelly, been did you've you want - to go since that and

Kelly Hoffman

Yeah, yeah -

David Fowler

front the On end that? of

Kelly Hoffman

Yeah. extension just Delaware Hey, Dun that think XX-day the respect the is And in market to I general. in was course. the referencing David

hears of lot deals, things of the we're lot lot a seeing sees time, we're a and by he all know, getting on different door know, You you our knocked people. things a David,

this process General prospect, calls, a the with to down Counsel some come this have talking turning land in buyer us even As people of company. during come the calls to fact, have and others of that been to particular we've matter our

we've the we've to and that's we're going up a for. they're just to group And number locked get here, day, job, at there's so of end And spending look, tell it had they're the start people, in got good larger a a closed. money line people and to pursuing doing of this

interesting to the might So and But us acquisition you think of in the to he might that's know, how exciting. was it market pick referencing sees, might the things same been mostly David, not. just at up, time, as how general market I

Dun McIntosh

right, you. All thank

Kelly Hoffman

Thanks, Dun.

Operator

comes Thank with from John Please state you. question. [Operator Instructions] question Our next White your ROTH.

John White

Good morning.

Tim Rochford

Good morning, John.

John White

area? provide you could approximate breakdown impairments, the by an On

Tim Rochford

can Randy, to please? that, respond you

Randy Broaddrick

calculated really by not area. It's

of full considered the full value that a As against reserves. is the pool cost accounting the company,

way there's really any up. practical to So not break it

John White

would if clear, new $XX. drilling sustained wells mid the in Hollie CapEx, you on start And you prices saw Understood. was

prices $XX and kind fourth if we year above remainder CapEx in for could stayed what below say - quarters of this But third Let's expect? what would say you the the of $XX?

Tim Rochford

is way, at look let's kind This Yeah, of John. this Tim. it so

that that minus did plus Shelf. review could now our we're what what north thoughts more those cash what - XX, the of we've XX% out a as that a between as be modeled sustain made high that if that you again that know, going between to now realized end, even here, range. to on And the in and a on are with we question, even do or that that, prices in and any that. year John's look or accelerate continuing I'll some of XX% solid of think that by end and And rate absence Northwest year referenced a Right again. both $XX you absence Danny price were and Hollie in or in flow and Danny, could, we seeing and drilling touched drilling? we're see stabilize XX we potential CapEx plus just, that if XX%, on hoping a here to on, drilling, we you want moment in But the at could were have a platform, now question, look we were we're that we to year could touched program review return Hollie, of look to of just, we something and depending as the And improvement. realized drill wells price out just range, within XX, them internal just Let's fit I to model really down we $XX with that's could on expenditures thoughts thought for to our felt drilling. plus yield we maybe realize, know, and now minus and going to that, that at comfortable Hollie we she end, ask

Danny Wilson

that about out talking is Right you basis. want XX point to know, to that now, that I a XX BOE Tim's and that when range, is,

mid dilution, you not the have be, caused into that the oil by somewhere So know, and know account in going take in to to when is to you differential up to means lower but the between XX XX, you gas probably XX prices. and that's

for we $XX far, of just of plan can absence range we million In need CapEx to going our to would the million have when million to sticking in. kind the out the spend so of with of $XX year kind of our be the so that, that's to still remainders that you approximately $XX be. spent and figure we're So where

John White

much. very thanks Okay,

Tim Rochford

Thank you, John.

Operator

comes from next question. Coker question Please with Parks Noel state Our your Palmer. &

Noel Parks

morning. Good

Tim Rochford

Good morning. Noel.

Noel Parks

with particularly doing just anything you platform inventory. know, certainly in the on was Shelf? you're shape But You the Eastern you're leasing it are active to I as or the wondering, degree good with on

Tim Rochford

David, you want to address that?

David Fowler

right the we now Sure, new glad going from maintaining lot development want for most comes activity that just to. into the expiration, we I'd we're part, shows up that you we're a but not leasing it renewing for the potential, we're that and good Noel, Noel, beyond. to you going know, there's on. of good hear be course, like, you this you any promise acreage on acreage as year And, to keep know, know, next focused of morning. for

Noel Parks

And, just along cheapest sound what again, for you know, else way what too level about, a way meant XX that, do? had more most the this can the the of cheapest great. of know, what down rebound take permitting cost-effective not price better, anything of do? You in can know, advantage at next, terms sort XX in the you I questions but at you work of just might to expensive? know, or you've Okay, you that's you but identified like I'm XX, oil thinking I yourself, road. best like kind you what's you sort can would happen of mean, position I'm wells already mundane got do way the lines of thinking other prep you and and you've

Tim Rochford

Yeah, maybe address for Noel. that's great Danny a question, Hollie, you could that and

Hollie Lamb

Absolutely.

drilled, to waiting permits are you those So surveyed. be we'd have know, approximately XX

areas You CapEx minimize issues. those long-term in infrastructure have know to we

gun prepped we're go for waiting the line. be finish And going kind just sprinting of so across and to to and we're that and off ready

Noel Parks

Great.

answer. might was sorry, I'm about Okay anything somebody there else said you else and

Tim Rochford

Yeah, and mentioned I Danny - just Hollie

Noel Parks

Okay.

Tim Rochford

gave a that, referencing but she I maybe good pretty response. They think

Noel Parks

great. Great,

I next back have jump the I wanted you modeling or like rest do you what the into of and the think year? or as heading Do look you just your as in. thoughts year I expectations that's, any And is seen a there of go again? may still Or getting, there be drilling the the behind I as heading as maybe of some process through you maybe the think we've of that lumpy gradually, production we differentials also do the kind kind to think worst you us? risk what - online, far shut-in do mean, rest volatility might think Okay. industry know, of but towards guess,

Tim Rochford

know, basis. watches a that I Danny, on daily

So Danny, maybe you can comment on that?

Danny Wilson

we a very, Noel. we out I that's to as the in know, have foreseeable be you be no Really with expected know, other is good the saw zero And the CMA to future, deal you basically the that's very particularly, differential, differentials that the and look all that future. then features, at right steady look question, and the forward some WTI-WTS WTI, the into mean as two information we differentials main differentials can role. WTS do seem week Yeah, the last I is you look now,

April. know, long obviously CMA to in back the commodity other don't which compared as as a You is some role especially gradual very jump see down up and we huge prices are as improvement. saw The component we long a as the is that these just minimal or

I lot know, expect in or one see a to of big those. way you swings the So, don't other

end on the pricing, least year. wise and between stable know, So you at the next into I year think differential and at fairly looking of some now we're

Noel Parks

down curious extension guess basin with funding And to the really as going know, go initially be you Delaware you the was buyers more I a make they're change as wanted just they there - they lot the nailing to of approach a they just way looking dependent they assumption process the touch then? that And Or sources? one decided on Great. of they're to particular to start back expanded folks, had needed was to is so here, far the has asset. processes this transaction now a that in different participate I going their and source? the a of gave, it did since

Tim Rochford

Noel. good wants that question, up. Yeah, to clear Kelly

Kelly Hoffman

down. Yeah. creative a well having very to done. nowadays. in number of creative Yeah, to know, are of no, as people these funding sources a they're are they order people coming had And get And, you get realizing, deals lot

you of $X.X them mean, were. that risk, up that I flexibility I the put referenced was have willing opportunity they're gives to if closing of this in group number we'll now, have, and I'm be and a - at they seeing know, shoes that, it make heard that we here. as if a ideas result might you're somewhere I and enough as sure million fortunate key is moving own and so one And speculating sense. that's I towards were people and the he points their that to hearing know And a of count non-refundable, them you you still We're the more asset.

Noel Parks

Right, right.

Kelly Hoffman

guys cover commercially day, which, And I that remember, a us million, they're help just the the lot money. $X.X the are of system, giving at mean, of could permitted. end they're me these additional signing not that's disposal deals if you spending

have they surface outside that the on six it's we're it, if we as not saying and doesn't want I take financing up non-refundable straight for. costing close, some of doing mean, to just deal at the bottom $X deal. water. people additional out that real have selling are could hope had million the are kinds these is going reliable to things from of just money standpoint, line creative this them closing. all plate, resources number proving it by moving hard or a coming they're only them that with and five like us have like hey, And are said, towards in these side, probably they're And people, we'd but our stepping these as they're a So people guys I that's I coming good and an you wiring think are say, about

Noel Parks

to it. great. And comment on the degree you Okay, can just

deal the money principal, like to anything assume the that it that operating bringing team you are do of financing, you sort is fund not then to wings has and like, they're and know, and that basically private an the So in a folks operating they're or folks the safe negotiate anything? with, they're looking or or

Kelly Hoffman

No, We these long them know involved. of a business several been in the have are guys that time.

And XX now. the past in so years business an the around some they've operators been and of for properties them been operate and

Noel Parks

Okay, great. Thanks. That's helpful.

of me. And how that's get kind unfolding. for it it's some Just context all for

Kelly Hoffman

Noel. Thanks, Sure.

Tim Rochford

Noel. Thank you, Appreciate Noel. it

Operator

Mr. with Capital. Our next Moncrief, question. Thomist line open. state your Please question Moncrief comes from Logan your is

next question on state move next from ROTH. Please John White we'll comes your the The with question. to Okay, question.

John White

Hi.

wanted Kelly, the that or from Is had $X.X that the you've buyer follow-up. asset. Delaware the seller you amount Just total received of to mentioned the you received? million

Kelly Hoffman

what Yes, far. received we've that's so

a that to million it better based lot in directly camp, for in So us. $X.X to the more, put all made them and then non-refundable $X we us came then wired they transaction released on again, that with were and an they to would idea order escrow And could help if up a things around them to escrow willing sense. their turned and a make us with the at an you that originally put extension were happening in million know of

$X.X yeah what So million. that's we have

John White

question going through doing Basin previous saves work back clarify, Delaware the actually buyer your you just releases. asset. That once to again, the And commented press Thanks. on is

Kelly Hoffman

now arrangements with between going But water, spending that out them close well than at what and as other the what to they mean as need above the extension, lease just moving. we through days. I making time we'll there that close point. asset in They money they're then. process, any I putting diligence that, you they they're we've what move is, you're quickly to down working also deposits, said a see do this property the doesn't due course. number on and they parties us. the say by getting of I have And not of could Basin it out like listen, They're although XX-day I along they're been possible. they've know I take given on our that things other That's happening mean closed haven't that take there to money can spending of And us. as they in Well ball and taking making over Delaware as mean, do, work third-party arrangements, say yet. anticipation almost to XX ask for. They're it's When contractual know, with times,

John White

right, All I appreciate that.

So on there based they're the offset work acreage. say

Kelly Hoffman

These so Yeah, where very they they're advantage take of do how some operators, to position acquire that very operators experienced to water we be assets. they're to experienced gas want putting the themselves the just in But possible not business. a once oil it. also just it's and pursuant are they assets, and able the to do

John White

not My E&P primarily understanding sources company, the company. was are from water a some an that of they

Kelly Hoffman

looking out not have them partners entities previous the several substantial. familiar end think if are operators. their they you're that And fields currently or some of as also they of have that part sure oil These that names, I are there, operators. at that organization them sources are with and where have day, gas guys at. of are are are one so at just you're looking these I'm two what the But operated

John White

Okay, so I'm you. But at sorry okay. to coming keep

Kelly Hoffman

right. all That's

John White

your Does previous suggests buyers? multiple comment there's

Kelly Hoffman

No, we one have buyer.

John White

at Are financing just traditional at and they more. bank one looking non-bank looking or they financing? Okay are

Kelly Hoffman

they've they associated or with. the or weeds have know group past currently I several haven't which I within funding the as with which to But working is with group, answer time. worked point don't they're mean, this at gotten that. the I people go going have I that into to had them specifics to in that

John White

for taking All - Thanks right. my Thanks.

Kelly Hoffman

You bet.

John White

Follow-up.

Kelly Hoffman

John. thanks, Sure,

Operator

Our from with state Please Thomist question. Moncrief comes Logan next Capital. your question

Logan Moncrief

guys. A questions. of couple Thanks,

deal? current divestiture? First, day include credit barrels facility of the would divested the XXX around to that facility on And are down roughly divested? other the the little to that Delaware tied based question day on be Does expectation that might then with an come there second number a reserves credit current solely a credit the that production. capacity bit be is much a barrels on words, In the How the X,XXX facility. of

Tim Rochford

to Tim, million so and by It million that when million. of $XXX will reduce facility be is we will take part I'll the the of the of a reducing $XX Yeah, closes, question. Delaware minimum from ultimately base the that the latter Logan that this the closes, sale is, $XXX ultimately

instructing explained an we today, million As paid wire will $X earlier we on or as yesterday. to what instructed was of in additional now be that's top the call, was of

next So as this of our balance outstanding down $XXX X or - wire will to be excuse million. me,

will reduction down will or an But $XXX $XXX along So million to go reduction the additional that. base, million the further the be another million. with come will on or the $XX million $XXX Delaware outstanding that base closes,

Logan Moncrief

Right. go And on the then - ahead.

Tim Rochford

part question. address can that the other you of Danny

Danny Wilson

that the Yeah, have spending a we've money longer we a quite money buyers' held on to point not been done Delaware this where but we there be the so out workovers spending money, any of were Tim out there needed were in was the a on there. and anticipation because - in our we no of few off Currently and Logan. spending

of accounts total. production X% So currently for the that about

So substantial us. to upon be will value not there But the that with some mentioned, so off associated Delaware I'm be Tim closing will sure will drop about line. X% there a it's will the and and overall come hit as

Logan Moncrief

Yeah -

Kelly Hoffman

reference the date. the you spending that Danny's may know money effective you is know, didn't buyers' the if on course, of Logan,

Logan Moncrief

days it the is Yeah. And end QX What still the of effective of is date? end or effective that QX?

Kelly Hoffman

It's August Xst.

Logan Moncrief

okay. Xst, August

assumption a So we're just kind that that you And expect just giving that. below of of good then a X%. that QX, you so number? kind slightly some QX and That's like of is like production X adjust Is numbers about said for of model? our when looking in color in pre-acquisition QX you here at, to by mentioned kind kind those know, -

Danny Wilson

correct. is that Logan Yeah,

Logan Moncrief

Perfect. guys. Thank Appreciate you, it.

Danny Wilson

Thanks, Logan.

Operator

no this for Thank questions are to it time. There I'll you. you. Thank closing at remarks. further turn management back

Tim Rochford

you, Thank to as also the are us time. that We Okay. want busy Diego. we in that everybody open. We it's a everyone thank today. doors want for to past, our And know joining know

is know you you And as calls available. Relations management, that calls, Bill that Investor set have if up we can do Parsons is with So follow-up if to well. we need

and a support. So your appreciate have day good

Operator

Thank concludes may All parties good disconnect. a conference. you. This today's day. Have

Ring Energy (REI) 11 Aug 202020 Q2 Earnings call transcript