OAS - Earnings call transcript Q2 2021 | Chord Energy Corporation

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Operator

Welcome to the Oasis Second Quarter Earnings Results Conference Call. All participants are currently in a listen-only mode. [Operator Instructions.] Please also note, today's event is being recorded. At this time, I like to turn the conference call over to Michael Lou, CFO. Sir, please go ahead.

Michael Lou

Jamie. you, Thank everyone. Good morning, are operational reporting XXXX we second our and results. financial Today, quarter to our We're you have delighted on call. team. I'm joined as the well Reid Taylor today by other Danny members Brown, as of both be of Securities Oasis including Please the answers questions, to Private we your Litigation statements to our within be that remarks forward-looking the Petroleum Oasis statements Petroleum advised and Partners, that believe Act. include Reform on the meaning materially actual different to subject risks uncertainties results are in to cause earnings calls. be those statements and forward-looking These our from that and disclosed currently conference could releases Those reports described annual Securities our risks as Form on and release include in among our well quarterly including Commission, report others XX-Q. matters on that we as the Exchange in Form have our XX-K with filings our earnings and statements. obligation We to forward-looking these update any disclaim

During reference current on call will call, to earnings website. applicable reference over GAAP measures in turn on find non-GAAP website. can to our With which we We releases the that our the to our our and I'll be investor also found presentation reconciliations measures you can and Danny. this conference make may

Daniel Brown

interest you, morning Michael. and your all, for our Thank call. appreciate sincerely to joining We thanks Good today.

thank I should started, our work the executing accomplished. get and be impressed. we've all like more our months continued we proud few over better to and couldn’t people operational objectives very I've Oasis about our on busy past and and been be I'd I know their the also very got I know strategic all and team we for Before organization. entire to to hard dedication the company

to position great succeed going a in forward. are We

our call. So, turning to back

feedback community to of the plans. I opportunity reacquaint is I forward As we valued to I been look and your setting it's to conversations how myself the priorities thought investment with our the continuing your influential many strategy, have enjoyed that dialogue. want about and and Oasis and emphasize mid-April, joined in and in

over to high-level our operational it let a hand I me Taylor discuss highlights, before Now few give to thoughts.

use volumes with the expectations expected strategic plan. quarter, be that company activity later will during under the is with First, than Even takeaway Oasis announced unchanged quarter, position significant Michael cash we during our determined is offset our of as all in below eligible second-half costs full-year tax operating XXX our income Internal its call essentially below discussing our exceeding great time loss news and capital second to Code the in the solid to expect main original expectations. expectations. more delivered quarter the the Revenue plan taxable is net and Section savings other another the this XXXX we versus but the to Also beyond. spend prior

that to our acquisition Second, we closed divestiture the we end and close at of June late the sometime the announced in Williston in sometimes May expect Permian third quarter.

be the a to issues we and don’t than process. is just the generated would the later date. adjusted early parties we originally modelled, this with the asset little While see approval the downwards the purchase scheduling flow is challenges All effective aligned, with since cash any close in the price by are delay due

in our and Because your the are my I'll quarter Third, detail keep last Oasis our all comments story differentiate that to material. length beneficial think at continue objectives adhere strategic to brief. IR these stakeholders. we spoke we to and significant about included I

conscious mentioned risk producing ESG while dedicated before have engaged are barrel leadership, in sheet of management effective a being Oasis we focused ESG, on management and shareholders, capital the that cleaner on strong our local speaking communities summary, with value interest. of in of low enhancing stakeholder assets. to and and aligned So our a with balance And maintaining returns we've cost

increased efforts. providing completed in, to And our committed sustainability pleased to have announce our report. on I'm that first Importantly, that we're we to transparency also

and available release our have it to read press will does have place presenting report expect history core nice different to a be initiatives formal improve corporate forward. it job on Oasis' a our will a we our really of through values, We responsible citizen going to as soon being encourage website. everyone in and I performance

social, touch our around Partners. the in and has strategic dedicated ownership always large Oasis we OMP, actions these in our versus ownership midstream providing I proactive sheet. Oasis' light Oasis disclosure taken Midstream topics differentiated been our Oasis our midstream aim to our increased wanted given ownership ownership of to issues, which took going step of While environmental, remains in briefly to on accretive and Oasis more be forward. of Oasis midstream we've year-to-date. governance of March, strengthen transparency simplifying balance and company peers midstream In both many the also was important the

million simplification sold clear down $X to dividend per of shareholders. units the and in we its to Oasis' X.X Following transaction special approximately a share June,

Our approximately is midstream now units. by our ownership of million OMP holding represented XX.X

can the to unlock see shareholder. actions is what Oasis' we take Importantly, track we continue additional we evaluate to value for

more for position some amount slides of that But at our I low XXXX. detail high-level, on want to a the strength on supports Finally, investor through new and which reinvestment plan emphasize highlight years I'll ask flow come. inventory to deck our capital a Taylor and speak a rate these of free cash have our we inventory to in items. compelling

continue for free uses this possible to evaluate shareholder-friendly we will cash take approaches. we flow, As

increase upon So seen institute Williston intention the XX% and far dividend acquisition. you've fixed year, this our Oasis closing to first our announce it

we'll above connect we value. front program. see we special repurchase to provided the share instituted continue between be a active mentioned a And and price good dividend that intrinsic on and Additionally, share paid

turn over some So, operational with to that I'm give Taylor? going to to color. it Taylor

Taylor Reid

XX the the strong Thanks, Danny. second XX volumes, and in XX performance operating with a In and Williston the completed quarter, capital across wells cost. Oasis saw Delaware. we gross in

and sustainable free operating focus resulted strong cost well-designed cash Our base performance years and for flow in come. reductions, on in to capital efficiencies has

On have million in have recently we made tremendous In side, range low wells from down the $X the well cost Bakken, XX% early about past over the seen couple years. we progress XXXX. of the

While we're select other pressure steel, kept been areas which offsets check. such well has we've in in in costs overall seeing areas as finding inflationary

for allowed to example, XXXX. we cost For remainder we reminder, during capital cut frac X% set efficiencies in of the of locked second quarter, time record We pump expenditure as the in our On for had Basin. year. steel, a Wild us returning which budget by the for day. record a guidance a more pricing Overall most have in

in acquisition. recent me a Williston touch Let

over quarter, new Fort top pad of on were operator Berthold four on the our second across the the brought validate Results quality During similar DevCo the locations view assets. of area. wells and tier acquired in XX strong the

We third expect the in late acquisition quarter. the to close

We third volume stabilizing the the acquisition include early not capital year XXXX and at to of volumes. plan our quarter assets reminder, does acquired overall levels. decline company in volumes before into any maintenance guidance a As let second half the

excitement Our will fourth the barrels XX,XXX acquisition. acquisition. quarter the quarter reiterate average production to includes guidance I day this our accretive with full equivalent like of of per

assets and operate the be a manner. the in to new that sustainable in continue dedicate we we focused which resources the operate then on We communities for

approvals now affiliated Reservation We look and with Berthold of are tribes. process with complete third are excited received quarter. by establishing the The tree tribal recently forward about the on end the Indian to of We to expect and Bureau especially operations the close Indian Affairs working working approval to Fort and the

properties the and with our teams look been engaged various this assets has Our employees will operations we group welcome we and the integrating new to new the later on year. forward

of are XX year, in back in currently most online complete To of of which for the a to expect half running strong come day. quarter this a can XX fourth We XX,XXX equivalents October. set and run and up per the rate will wells average between

to of for XXXX -- per XX,XXX is $XXX we As we X/Xrds volume expected with expect E&P year beginning the the year the second decline quarter would of about into step-up production Full completions. before the day. year XXXX, trajectory with increasing approximate we the look average with fourth half as approximately of to XXXX, as capital from compared oil million. a in expected to production About similar equivalents

XXX up We As in a to the strong of can free price quality hedge book. $XX presentation free in in the assets at about to a to rig and below million returns current cash million substantially a and higher. including first that $XXX XXXX support for inventory. $XX the our reminder, expect $X.XX like barrel prices, In Indian our identified about quarter be of most a fourth per $XXX we of per flow rig our number E&P is oil the as working and plan is approximately the oil pivot are locations, levels to that current organization assets the expanded be in disclosure of would XXX three-mile flow CapEx volume below We've our second Of along substantially plan I free gas, on sustained equivalents Hills locations basis. and at our Easing support generation and tax impact better with approximately on of laterals XXXX. time. calls XX,XXX our in to $XXX flow South increasing day. support now that number. a over will it that approximately illuminate cash running million would generate cash on discussion XXXX, taking team our after all We've for our of keep to current of these to investor

Hebron. contribution include finish see beyond. in a Alger, and In South Wild Painted city strong Hills North in with and program well Indian the of we'll of Williston, substantial from XXX. Will terms and average and Woods, roughly Reservation, locations the in an IRR Basin, across our XX of and the the Indian a XXXX specific program Indian delivered projects, were drilling Economics Berthold Nesson, XX%, Fort the South up Hills, XXXX XXX

on over given low much I substantially decline recent volumes modest, the were PDP This years. As we the profiles shallow relative important decline remain support become growing when come is fairly the is lower Slide to volumes down expect that free program our costs to to past as well relatively and and Also, rates our have XX, capital than generation have decline is quite flat. few our flat keep you intensity see noted earlier, quickly. can cash as history

structural result should spacing well. year. the the wider service cost high over savings intense to and from efficiencies more from eight Plus spacing our others improved times, structure decrease focus as on concessions versus nature, of resulting now while business in per DSU this across well. improved cycle and the to declines Well costs well-designed, our gained in of increased wells Some are relates to in shallower the XX a six life years. We're capital has has planning five recent efficiency in

our expected of XXX is laterals. XX% three-mile approximately be to inventory Additionally, well

over analog the only XX% more seen as For and we years a over are XX%. next extensive engineer four there the XX% The near-term results a an three-mile number years, for three-mile has several program oil in allows steady approximate increase improved capital. are to basin the increases that past program. laterals evaluate The with increase our in lateral compelling as to EOR

quarter. well and works opportunities well we the in position To to add move should to two-mile forward. second from close, laterals these to lateral executed as acreage blocky of of yield the number for increasing more inventory operationally three-mile Our we respacing

which now Our to project inventory, legacy to board, team free the allows impressive financial third of has back asset performance that, to on discuss quarter. over is some job With a done Williston and The to to tremendous close I'll returns, highlights. cash the significant track performing in in the base our acquisition project leading generation, call and an the return shareholders. well all we're Michael cash across to turn

Michael Lou

Taylor. Thanks,

acquisition As quarter. excludes the Taylor the with from includes close to mentioned, quarter guidance of which expecting Williston cost any implied we're are the guidance volumes fourth a while while We've is in quarter end performance May, what full acquisition impact update at guidance provided third the in third a less expected. acquired than and capital in spending this line bit from quarter are better the Operationally we of a expected assets.

the reduced free effective the the from will asset Xst, consideration flow a reminder, from cash so As through closing. April Xst transaction the April date be of generated by was purchase

with million in price a second Additionally Oasis the $XX quarter, down the approximately put of million. purchase original deposit $XXX

in averaged with zero as XXth, Oasis As quarter closing our have borrowing expect million quarter. crude elected particularly has of million team million $XXX CapEx high-yield Oasis $XXX do was unit the good of fabulous commitments guidance. of with do in $XX strong continues into expected strong drawn and job Oasis per our second of debt below to increase to $XXX marketing base cash Currently, May. low million G&A were the LOE approximately Oil had and but cash quite June $X year the per below of in And E&P to approximately related LOE market managing BOE staying as per minimizing at volumes outstanding BOE million were the offering we expense $XXX the of remains for Both in was unchanged. to to guidance continued upon our back the realizations in decrease million million 'XX including as conditions the $XX.X million. and cash base LOE nonrecurring under elected items. expectations. gas the of E&P quarter acquisition quarter were half commitment second the and realizations the quarter fourth end downtime. $XX.XX G&A the increase. E&P $XXX to borrowing of expected a is a a E&P job. tight for our

closure Taylor of by higher spending timing, we which The record our lowered had and the interest efficiency by remainder capital in expectations guidance partner wells to noted, frac CapEx We full-year into be reduction difference The unrelated can during guidance is versus As items. X%. quarter. other explained timing. acquisition the

quarter outlined guidance asset May acquired fourth in on track base. meet first our the On the the to full remains quarter includes which volume of Oasis side, volume

to which During the full-year forwards ranging original the savings zero taxes that income an our carry for to estimates quarter reduces the exception obligations. second balance of $XXX million million A for to qualifies $XXX we year-end determined its which versus and 'XX, XXX, our reduce $XX cash By an XXXX. could company's the of from limitation in used future IRC on Oasis over Oasis million NOL to guidance. the NOL Section be tax under quarter

the approximately of second expected the million a to and Oasis Additionally, July $X.XXX plan be the the sale $X also a to dividend of we tax per taxable and paid used given the separately, share, in dividend Oasis NOL's its per not I from quarter this just expect increase. Williston were unit. we fixed discussed. $X.XX is to our shareholder our sold go is this the dividend quarter our tax its XXst. special quarter, other second Upon upon third per NOLs Proceeds vote unit protect from earlier raise fund next units used $X.XXX implemented three to is of attributes. away we fixed to acquisition, transaction will closing XX% the declared will a designed company quarterly dividend continued benefits share of normal or plan per year. years declared preservation when up during OMP which NOL to for at putting This availability shareholder $XX be Also down the meeting. X.X for This or

repurchase our common I'll as I'd shareholders. program repurchased to thank an the also the on for team Additionally, foreseeable that, call as over invest as to Jamie the sustainable In approach objectives. and XX.X corporate cash its side stock back cash look on the of the questions. we've the hard for we'll work significant generate strategic forward, flow balanced free and the to like to capital returning hand progress key in to in forward well and a to for share continue With million place, offering we enviable substantial take remains in closing, we businesses $XXX -- to-date. position future look million

Operator

go comes first Hanold Instructions] Scott [Operator with your Markets. from question RBC from Please Capital Our ahead today question.

Scott Hanold

on Congrats guys. morning, Good the quarter.

declined the I out before acquired I thinking Taylor the bit a talked assets it the about like think shape maybe next want a obviously in And when year. of to and little about you start obviously obviously little you activity bit reinvested. sounds you're

of be big Oasis to assume going rig we about those would you're together, kind legacy all picture are on and weigh as think adding the assets. or I rigs So, second this

So, bounce to is quarter the kind and you're structural the about how one shape completions the year? second down contemplate? maybe sort and then the well Is of that XX above of that this think going first dip sort of right for average to in of quarter And the shape? that way does many

Taylor Reid

Yes, Scott.

Indian So, is out those October bit times yes because to in generating we're we're there. going push good in second as And completions of the start just to South and cycle now question. start fracking rig of drilling in a those going to Nesson XXXX. into the going Same Hills be because and October Adding right naturally well.

going drilling the start Nesson South and up comes Hills. new at there So, starts about the in South Indian rig at to is when

both So, you XQ about. like those getting of depth terms in of of you in pushed talked completions kind

in to well So, we'll kind completion, activity. of today. the based with And a timing XQ of rebound increased Xth it's and as we'll going off bit, you this combine equivalent little more in then year this we're But around could XQ obviously of said pickup let XX,XXX then, bit quarter just year. assets the come a from a on and XX,XXX well that, from did then we that above completions, a down And QEP the be level what that. so there. kind dip from next overall year terms we assets was or into probably XX a internal

Scott Hanold

in XX+ clarify completions, are all legacy those Oasis that is And right? properties, Okay. to just those

Taylor Reid

Correct, yes.

Scott Hanold

And strategy's you a think pretty how of a guys variable been And fixed opportunistic things a money it, maybe comfortable forward. kind assertive about shares bit about where special giving portfolio the the into next like guess dividends with I back also of you've is forms. okay. and of does good and do point-in-time all you something my in consideration pretty that's and or equation, then, dividend is backs dividends? play feel buyer like used increase different this you things return shareholder at Obviously on to going little Got have that continuing question using

Daniel Brown

is question, the this for Danny. Scott Thanks

of sort creating be It's I So, principle things. going on these around think to our value shareholders. for really guiding

returning the component recognize big at cash end day accomplish but a that. we're trying of the back that is that's So, to what we of

So, we've our or that demonstrate commitment to several that actions of done where concept. hopefully different forms sort our to-date

in all I think we're we'll be balanced approach. our

sort how above all the a dividend, the You've should seen with special do that us a possibility would program. of We're of does of that, would a variable taken want with with how how fixed so we approach discussing far share a repurchase to look.

create we'll end the at most of continue different through all to But what's these the for shareholders. to so, our is action day think value our concepts. the do going we how guide And

Scott Hanold

appreciate I you. it, thank

Operator

Derrick comes from next [Operator Instructions] Our question Whitfield Stifel. from

Derrick Whitfield

Good morning congrats and all, on update. your

Daniel Brown

Derrick. you, Thank

Michael Lou

you, Thank Derrick.

Derrick Whitfield

my tax is that your and best I your first today? to roll-in price how the With roll-in in value does specifically on change portfolio more stock inherent wanted crystallize view on in strategic not but really focus the question, reflected to your

Michael Lou

of large Permian the work asset with Yes roll-in a around tax loss -- question. Obviously Look, a was tax how there is -- that. for Derrick, there the had of great created us kind a as about lot was well. it's sales of think and the we tax done

perspective. we'll And $XX year. is over shield a this of the the can taxes forward along we'll whether $XXX from income shielding asset kind going that's of in had year with and this save taxable assets with of from beginning that's year. actually in this you we of its sale, of just key simplification oil a back to own the kind that to top There that, we election of of range. large that on be considerable used that as strong of taxable flow was continue pricing an we additional million taxable fantastic, income cash to in monetization's the And a of million million kind that coming transactions $XXX or higher So, $XXX hold over kind future NOL the cash kind unit about position that can just company, update which work million mentioned, prices,

value. of great to capital to in So, flow. And lot mentioned to position gives it's that the terms for of best decisions returning to make a pre-cash company us continue as in of way the higher to to shareholders be a shareholder drive in Danny kind create

Derrick Whitfield

offset sense. three-mile any And XX, more case question I'll follow-up, the opportunity beyond would first could focus laterals if evaluated? Taylor. page with competes commentary And Makes plan you an to on from was well. wondering well Referencing this how you in Woods your three there study is area Painted portfolio my you've lateral this offer on the improving you performance when the think the pursue to NOL perhaps

Taylor Reid

Yes.

I'd forward Woods the about. then and been question look the talking especially Painted Derrick you we've four say inventory as you whole So, as across we year know look in of over set this plan general next really

with Some brings profiles we capital of five six important to along here. and then we capital that Talked lot to costs, these being improving to capital EORs. efficiencies well time. wells improvements. able so up wells as about be efficiency shallower went XX decline bring the that's over factors One, And eight from expect per to down nice a spacing, wells to

those things of overall profile. helped all So, the

of Indian XX, to Painted about In And later happen years, the when at three-mile South will Woods Painted And into then, XX% year. be And in all next look to We're the preferentially move laterals? wells year lateral. first Woods those going terms done three-mile we Hills. wells we wells when Woods just -- well our this of you is program that over position. Painted actually are as note, we And laterals. will the three-mile the in be three-mile of over for the drill close and drill XX% four first eight next in

in capital a but to you're economics, increase uplift XX% So, in spending XX% seen about a only nice up reserves. increase in

really increase we'll and projects. nice in economics doing so, those And

Derrick Whitfield

time. helpful. Thanks your very for Great,

Taylor Reid

Okay.

Operator

a question next your our And Please follow-up. from with Scott ahead go Capital Hanold is from follow-up RBC Markets.

Scott Hanold

more kind just a could on I'm OMP elaborate you about bit how think Thanks. of little going curious forward. you if

guys probably done on But you can quick to more manner. a think of really work simplifying us pretty give good a be thoughts I the that available various you there and to you you kind are options all to for the position kind get guys in? is that timeframe into final your flourish But have bringing of You job in to of wanted there's it done. at a targeting

Daniel Brown

This the is question, Danny. Scott. appreciate I

think how look trade. I we when at shares we Oasis' and

We some the see parts discount shares so. Oasis is continue to and other and

say as on wouldn’t for doing I We know future. -- this near options illuminating expect go have that with do the with in we share value are our you I'd how and that that haste, doing we're evaluating that on diligence we Oasis shareholder. we about the how more we're

I think a it's timing whatever path little we decide to going bit. go impact down, our to

we to timing on I don’t we're But do the more a looking at internally expect specific that know and And actively to future. in it. share commit that want so, you with

Scott Hanold

that Yes. ultimately able be structure sort is deconsolidate, some to of deconsolidate, still some the Is be it own as one to -- P -- is the is plan end-goal? to too effectively so way of would the you're you our as a it find goal own long and you'd in that

Daniel Brown

to was within there deconsolidation read got of Oasis think shareholder OMP. value know the don’t is we've on through if I end-goal I make deconsolidation is would The sure end-goal. the I is value a say the

those so, is we don’t of And likely steps we share for sort base. with of that deconsolidation where one holdings issue think confuse the the toward our

end-goal. it Oasis' not value the by the the about really end-goal So, I getting but of necessarily think that's is part The shareholder. seen

Scott Hanold

you. or to any years, $XX also what to in with closer few those those $XX of guys right Okay, now. to have in assets inventory inventory another those size are I'm what development commodities or of demonstration is the of In valuated, things versus one the the plan locations that where the difference the your identified Operationally, are question of that's at greater you you purposes over incremental Are that guys price for more certainly of kind have And holistically? referring new understood. obviously the a the $XX. between next

Daniel Brown

Yes.

So, this same look if the at about previously. plan it's you the talking inventory of period, in sort inventory really we're

much And deck Wild so, and on a level. focused we're we're just And talking Painted Williston a early reminder of and price at what's Basin, North as included Berthold, that Indian Fort a and Nesson, environment, lower $XX South city on in Alger. economic that not about Hills, Woods

chunk and And the to about East talking and Really we same here we're economics did $XX robust inventory. -- is big cost spaced. emphasis were those. robust on of the our -- we South then that area the Currently, set things $XX get Dublin Bank three-mile to we've go about. same laterals, in we're very And it inventory and those $XX capital other to in bit areas, So, at let's an up oil, incremental South then to from -- Red XXX did the got talk Cottonwood. the and a Woods, and Berthold of additions Fort being look, the what really it's this and there and pushed Painted down West of Montana, as

the And you be at a next just super and year. goes thought those so, out. drilling we're of we'll let not we've got XX resilient years pace going doing until get to year's of highlight five that get to to inventory four know people was important out projects set it look those But

Scott Hanold

that. for Thanks, Understood.

Operator

Johnston next Our Please comes go ahead Capital question Phillips One. from from with your question.

Phillips Johnston

guys, thank Hi you.

on capital. just really from in Scott's and me regarding of earlier a one Just question follow-up question terms it's

$X.XX and around free that indefinitely. in be forever years. in We showed but oil well half to gas, XX% still and below the flow $XX sort And of yield returns our had the thought we of ratio range model. several if sort of So, kind X% remains leverage cash on somewhere have next

is or towards give You a that more I returning policy question my that to cash is so variable far there reason of shareholders. fixed dividend backdrop, options guess question is more you wouldn't cost have But false. aggressive around fairly or drawbacks any gravitate my guys been you any given even taken without those guys you approach either guys the buybacks. issuing do in see aggressive downside might formalized

Daniel Brown

is Thanks Phillips, this for the question. Danny.

our we return in I And us different as make they leaning appreciate capital work. as this taxed board comments. about to most that projects. on does return variable best think with we've we and to program. the with structural We're I a of forward group so What and again and a -- have that such of pretty within world capital, been play in discuss from dividends management a sure grain try such multiple we do continuing think make what how

so, I say this ongoing. around our thoughts that are would And

We thoughts that think really as the And about And we this big around principle to from although and and we're again, value our develop. creating we programs. to action's we component of firmly most our a are that shareholders. capital the can the guiding going those evaluate is believe continuinjg to returning as continue we're

Phillips Johnston

you, Danny. Thank Good.

Operator

for And floor to turn today's over and gentlemen, answer any and question back at ladies end to session. the management we'll this closing remarks. time like I'd

Daniel Brown

performance to value. today. And made working sustainability We Thank for I'm strategic on thanks our through hard for continue time stakeholders. remain Simultaneously our for joining this in shareholders. and going to believe drive operational see the responsibly Thanks, all of intend our report. accomplishments to we've the everyone enterprises we're for the initiatives, benefit will you more be of benefit but much you proud year the call. Jamie. values your to continue of operate as the And to very and our

Operator

you We for with do attending. conference. conclude that today's will thank gentleman, and Ladies

You disconnect lines. may now your

Chord Energy (CHRD) 4 Aug 212021 Q2 Earnings call transcript