BCEI - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 Bonanza Creek Energy Inc., Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s program is being recorded. And now I would like to introduce your host for today's program, Doug Atkinson, Senior Manager of Investor Relations. sir. ahead, go Please

Doug Atkinson

morning, earnings welcome conference Good third Bonanza quarter XXXX call everyone, Jonathan. to and Creek's Thanks, and webcast.

this Executive Senior and Planning call President Fenoglio, Senior and the morning, Principal of by: Scott joined On Finance President Eric Engineering; and and Chief President Financial Officer; Vice Tinsley, and Vice Dean the of Operations I'm Officer. new the have on and XX-Q with Relations investor SEC, be Yesterday of Investor filed evening, can we issued our our earnings of presentation press release, posted which all website. a section our accessed Greager,

slides that will that our statements the prepared cause differ to could remarks morning of remarks. in referenced our uncertainties forward-looking include are Some actual the results subject November presentation during that will materially. be to investor Please many aware be and this risks

You are metrics financial comparable disclosures our other to presentation. these filings. described GAAP Also XX-Q, will release most Reconciliation performance. our our contained and because this measures measures measures in earnings full we certain SEC to to investor directly in in good refer XX-K the call, to they we use and during evaluating our non-GAAP are should read as believe

with end and prepared the time at provide the We start will for call Q&A. remarks

morning Now Eric? President it's my Greager, this Eric to pleasure introduce and CEO.

Eric Greager

you Dean to of Good highlights over results. for some for providing joining Doug. and quarter and us turn operational I'll Scott thank it our morning, by start earnings financial an for the Thanks, everyone, for call. and our third and then overview quarter

our at ballot on It's cast. grateful commitment the industry. with XXX. to resonated point. and that to conversation working the industry. to defeat all like pleased message of genuine energy and believe the the for with of Bonanza around a of was passion both benefits important last entire in attention and I also I'm acknowledge balanced engage surface that until reduce to public. industry, this thoughtful the the I'd the depends sides First, Creek brought tirelessly and Colorado it's impact our cultural voting us healthy the our We employees a obviously need Proposition clear for we're and has

we an the together are toward communities government great where and deal There done a still term to be longer solutions. industry, to As industry, ensure solutions. to we work need by the workable operate

to efforts. later. performance across volumes Now impacts by Rocky to pressures this sequentially sales will across upstream Dean system point the position. with bit our XXXX. consistently our combined gathering in have operations on intensity quarter. competitive application acreage our touch Wattenberg continues a value higher Wattenberg delivery increased low more ensure minimal of well flexibility help to provides a on advantage driven to But is RMI third our the us systematic provide completions. Rapidly XX% increasing infrastructure Mountain improving production

XXXX, We of are million also end our reserves value. to the the year-end pleased compared increase our an XX% reserves update of $XXX to as This to represents PV-XX QX. Wattenberg proved of proved of

significantly us development We French value the Lake. the of also agreement asset. a moves agreement to closer recently at joint signed realizing This full

make to agreement development on progress continue We the and plan. comprehensive

value With Before provides close I opportunities acreage to create a now want us, excited Dean, remain outside shareholders. rural I over Proposition how County of our about I for of Weld it platform turn with ahead municipality to to the behind us. just our XXX any

the and fracture Wattenberg. stimulation infrastructure when of design the Mountain Rocky provides value reservoir with our and Artificial we combined advantage Our to believe, systems, we grow management, uniquely subsurface, pressure a are Lift our positioned understanding competitive in

XX% to operational than I'll New guidance in a for liquidity of for greater fund exiting clean balance and after operational until won't Year, the his XXXX are which the sheet we momentum, free growth plenty ample it Dean With While we XXXX fourth our formal providing turn XXXX. and program, continuous be that, to flow will positive update. quarter over XXXX drive in of cash development with

Dean Tinsley

We completion to everyone. yield low morning, and completions in driven gathering successful another good that and from consistently Like Wattenberg with production continue the quarter operations drilling, increased had production quarter positive said, strong Eric Eric, by XX% and third sequentially, wellhead Thanks, production pressures. results. recent

On have our over system and system of year system consistently Slide pressures prevailing you'll over last Meanwhile, flow been has XX-psi. pressures. keep see in have deck, which a resulted old for and X around for RMI new pressures gathering continues the lower, basin assurance RMI system both to RMI turn of remained averaged the XXX-psi. and volatile in RMI Our of outside plot pressure Pressures wells. have

this have compression flow assurance gas increasing strategically been for gathering important to we accomplished did processing and ramped as as gathering drilling in number due additional and delivery single to as to the Said we Like points placing late of This crews. blocks. northern has a had our other have another curtailments from third-party well and as new We to with Energy Cureton legacy delayed XXXX, especially not or frac our way, contracts by well up rigs two as with or two processing. provide we Sterling processors. well constrained

operations. onto Moving

the four feet on very driving We Our rigs Drilling two further depth drilling completion a and measured efficiencies XX,XXX rigs. XX,XXX done of XRL continue with and operated X.X tremendous and days SRL efficient processes. in to a into to total these teams have quarter and in to during drilling in job days. our under be feet

XX% rate drilling average daily XXXX from our has levels. improved fact, In

fleets frac completed stages two nearly We also quarter. X,XXX the and during operated stimulation

which speed, typically into enables producing production RMI on involves cost stimulation pads and existing operations, facilities concurrent tremendous scaled adjacent Our efficiencies. and

from year-over-year LOE beginning sequentially. fruits our in XX% Regarding LOE, decreased are the year, efforts XX%, now we as earlier to the of cost has and reduction see

compression our been rates Our and non-recurring compression compliance the replacement costs have emissions go-forward fleet rental and reduced. in third air off quarter rolled

with foresee our anticipate volumes, we Combining cost forward, go-forward operating a production to increasing going unit downward. we So lower trend this costs. baseline

Moving well results. our onto some of recent

French are have of on provided Investor recent The We updated production XX, west further wells continually per spacing on investigating maximize XX-acre we to are the wells an most for how Western wells the acreage. of and these our eight performance legacy and scheme updated were Slide our spacing on the our pad value spacing continually validates On our is designs type acreage, providing drilled XX, we completion data six of performance the and XX-acre On these evolving in to well implementing of equates K-XX continue respective value ways XX our our several compared leasehold. we production of pads our year-to-date. their This Slide completed acreage. plots November the five-well example section enhanced from Lake outperform curves. Presentation. Also, to wells in

in are are We area. looking of development forward Lake potential the and very resource to this encouraged and French well performance with Greenfield

results not we portion our our are results. operation. the utilized design from continue solid well our enhanced initial Although encouraged to four third of the legacy the on segments B-XX of all online by and on in position. very in investor shown We production brought summary, of eastern group presentation, pad In see quarter we XRLs our an this completion

utilized are completion type wells significantly previous an performance improved designs exhibiting curves. over enhanced new Our

remarks. reduced and benefit flow Additionally, streams for cost margin am will and reliable culture. our a operations assurance I very and base combined Consistent I safe Scott? maintaining also with as the structures environmentally growth and Scott proud responsible financial by solid growth. of favorable from RMI. technical and continue deliver EBITDAX call to to to the production we now operating the a new provided teams, over continue production while his results, for platform turn provides

Scott Fenoglio

Thank you, Dean, morning, and good everyone.

in below midpoint our were guided cost where came volumes of significantly range. Third guidance quarter at the

Specifically, the of XXXX decreased Wattenberg a quarter XX% Boe per to quarter second Boe XXXX. LOE approximately for per unit of the on in basis from $X $X.XX third

RMI the $X $X.XX decreased quarter. quarter in per per Boe Additionally, expenses previous for Boe from XX% the operating to

As lower and compliance quarter were the by in regulatory of compressor impacted completion operating replacement costs favorably the you Dean, from program. and heard costs the unit

are us installation complete, one-time rental and swaps have the forward. we With the going favorable more costs compressor rates behind

are on a and that in operating trend We volumes, unit to per progress the believe improving our pleased focus continue increasing with made lower. and very we've will with continued costs costs cost structure

we allowing us For are are commodity expenses operating to well to quarter, benefit volumes. guiding lease $X.XX the fourth Boe. and undertake prices Current of maintenance our production economic, servicing will to per continue $X.XX base that projects

quarter. the operational EBITDAX $XX.X in Given XX% performance, million our strong sequentially increased to adjusted

have first During XXXX, of million CapEx. of nine we invested approximately the months $XXX

running growth quarter move frac and mentioned rigs an will and CapEx we deployment we which two Dean production in As result are crews, XXXX. into previously, as in during the fourth now increase meaningful two

of guidance to expenditure for maintaining We million full-year capital are our million $XXX $XXX XXXX.

third nothing drawn the with sheet Liquidity our and and the in positive quarter remains continue remain strong. below the exceptionally $XX million balance quarter $XXX our XXXX. forecast was fourth preliminary at Our cash one-term flow debt-to-EBITDAX of current cash million our approximately on in end pricing Based RBL. metric capital with program, to to throughout Company XXXX the XXXX, becoming of we on

flows. turn and natural hedging appendix attractive that to predictability November XX-Q and of With Investor both and are end, revolves our hedges our our at hedge our I current WTI oil future continue Form placed the cash we gas, will CIG recently presentation. philosophy layer to To prices. Q&A. for around on call the operator Lastly, providing to for position Details hedges that, our in the and included in of

Operator

the Capital. Haas [Operator from first Instructions] question Imperial Our from line Irene comes of

Your question please.

Irene Haas

Yes.

how to legacy will Lake, granted So stack the for feeling start? proceed a formal the I having projects bit you I not little that going then project, when XXXX. French part How to a would first. about western worry now are of provide as kind would mean, without rolling your to up? really would little you logistically infrastructure explore like And of to guidance work

Eric Greager

called in Best done the what way growth continued XX% White a imply Irene. year our of delineation we've in northern of we've of in south XXXX the about plan process would our on well budget acreage be Central again mix And about considering is think still a and building thanks, to to our Tail to guided terms the development bigger we're development to we've and one think XXXX way acreage. our in corner drilled of and bit this west XXXX little that think say up that let's production well that acreage And would in about something Yes, count. of West, East. that, legacy than the

that You we announced northern might our accrued also quarter earnings acreage. for have and agreement call, gas during recall our the we gathering – that last

It's in. teed do see discuss discuss delineation come and matures. how more wait So pilot But at too we will continued are Tail the to when for We encouraged believe we've point soon and the work. got we results. and to in that up data continues White northern block this have to time

the building and about is a you infrastructure now The on be because of agreement in gathering and going then other a late to the part plan this joint of out we're area, development then completions considering and think XXXX we've French got beyond. onward way large is drilling spend in in development Lake, that XXXX to expect this and place the kind can XXXX to the Greenfield

Irene Haas

Okay, that's Thank you. great.

Eric Greager

Irene. you, Thank

Operator

Our SunTrust. Welles the line from Instructions] question [Operator next Fitzpatrick from comes of

please. question Your

Welles Fitzpatrick

Hey, good morning.

Eric Greager

Good morning, Welles.

Welles Fitzpatrick

opportunity French JDA, an contiguous or partner to that importantly and at concentrate It's a of results guess your their thing? out for take there Lake more see core up to owning them those you end on whole a as to I interest and Is area. the continues there guys desire the good

Eric Greager

that operating we've way week around conversations it right a of concept, and X.XX the The think creating. to now, of had on to the would basic where own they the they'll up been, uncertainty And decisions point I kind think make conversations come hear this Welles. up have partner, their say because I we I that looks concentrate. just was All had number this hypothetical.

we've it side if really gotten develop the time. minimum or you opportunities that And really represents. acreage. boards, pace the what as and there really in And to maximum development fact we development, of restrictions We that, over agreement, of we like. joint For a will be like result the like like us, continued

scale Lake open of are And And mindedly. Specifically or we at economies continue definitely and looking our scale operations we if Board. grow that recognize grow efficiencies and certainly means gain the the in that ways if present we'll opportunities advantages want acreage. taking acquire we and efficiency certain think to the that themselves, not in scale our around to they there up, to we'll across look for French and like I whether

Welles Fitzpatrick

Okay.

test, think unique there? makes it's west that more And that kind over on can bit thickness of acreage Now, then or that think because broadly a XX-acre you that's something little on legacy that's total apply do because you you is that the the sense. of

Eric Greager

with the inter-dependencies Yes, that's stacking been there a artificial back and We've put the on of legacy and in continued very design, these do systematic performance. Central our across believe This tests. flow continue and the I pleased density is our on lift, West, also test and Western test we'll good testing the question. design density various we're stimulation spacing, place and acreage, completion into are parts all acreage. to Legacy acreage opportunities spacing, stacking we Legacy

XX or thoughtfully and in the resource every in exploring our we'll wells reservoir to responds optimize section XX testing that, the but be rest another acreage to way the place, per stacking section in position look resource will work to per area that designs one continue the and whether it's you the at assured. So and area, wells all arrangements recovery. can we'll We'll maximize spacing in across

Welles Fitzpatrick

I Thanks. all wonderful. That have. That's sounds

Eric Greager

Welles. you, Thank

Operator

question comes of line from Phillips Johnston next Our One. Capital the from

Your question please.

Phillips Johnston

executing many sort not you front your steps PV-XX you? enterprise and that's companies program in is what a to There's there whose thanks. And guess of close gap can just below in close of value I that discount beyond kind planned question it's help trading your to big guys, pretty out E&P Hey, My take XX%. of case, on is value.

Eric Greager

Yes, That's perspective, as just executing we completing can. pad-over-pad, That's ourselves my a question. and we question, and Philip. as fundamental. the we From and efficiently quarter-over-quarter, have ask to thanks, great continue same drilling it effectively

rate quarters. We continue having conversations during do believe, getting the a unique out, to time road, our like we with which opportunity to the nature I get in also spend more conversations word out which well opened oily grow our improving And at to with the to of the earnings really that out as releases you, because I'll word conversations value shareholder we this to need have as is and the necessary with on and have runway. try the many performance means degree asset

interconnects All think And this we in is couple for point conversation processors that with have others this one and met in and met do by I of the And as to of direction, to four need things you gas are I've to to these I continue infrastructure, the with upside. access ample of scaffolding that underpinned with of same industry mix this with things some Mountain the really takeaway, the last think as conversation. us. have folks months, Rocky XX I added over with many a

this and quarter think the I in call the earnings will team this of reinforce asset. help performance the

We have to doing that. keep

Phillips Johnston

PDP oil report? decline side, it's as just XX-month the in put agree. reserve just What's the report, on completely housekeeping registered that Maybe that embedded I with you Yes, XP out. reserve follow-up, the

Eric Greager

have not that and then have in up with that now and me. I'll available. information sure is make you and to number right here, that I look Phillips, sure front others right get we'll I'm of back

Phillips Johnston

Okay, sounds guys. you, Thank good.

Eric Greager

you, Thank End of Q&A Phillips.

Operator

you. as All thank for your well question-and-answer Thank And as ladies [Operator We you, session program. participation. does today's Instructions] conclude this gentlemen and right. the

you. Thank a day. have may You great

Civitas Resources (CIVI) 9 Nov 182018 Q3 Earnings call transcript