BCEI - Earnings call transcript Q1 2020

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Operator

Thank you for standing by and welcome to the First Quarter 2020 Bonanza Creek Energy Inc. Earnings Conference Call. At this time all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]

pleasure Landreth. Senior my and of now Scott IR, is to Director introduce Finance It

Scott Landreth

Good everyone webcast. Andrew. XXXX Thanks morning earnings first Bonanza conference quarter Creek's call and and welcome to

joined On this team. Chief Officer; members Financial Demuth, the Brant of Chief Greager, Vice and and morning am Executive President call Executive Officer; President by I the and Eric other management senior

can SEC and earnings found which we posted presentation, XX-Q release, Investor our the section be investor press our filed issued all with Relations the Yesterday new a our website. of on of

of presentation morning. slides our Some the referenced this in the investor remarks maybe current during

from be aware statements. are uncertainties that risks Please statements and our materially that that could include results these forward-looking to actual many will subject cause remarks differ to

regarding read statements XX-K, our our XX-Q, filings. disclosures other should in full and contained SEC forward-looking You

refer Also directly in use metrics certain release presentation. to non-GAAP during financial evaluating good and our measures in the we performance. these call because are are to investor contained believe GAAP of measures to this they will earnings we measures comparable Reconciliations most

call the with remarks move to and start Q&A. will We then prepared

Now, Greager, President to to over Eric I'd CEO. Eric? turn like and the call

Eric Greager

everyone our Good in We and for Scott. today you for Creek. Bonanza morning Thanks your time us first joining call. earnings interest quarter thank appreciate and

scheduled quarter of XXth. calls throughout hosted our has with Much and plenty and in since in earnings for we time short E&P join calls. call February leave previous the we to Q&A other As you will world keep remarks our fourth changed order prepared the industry for in to

quickly and proud during Creek environment. effectively thanking team to rapidly quarter macro by delivered that for another has to these today's the difficult I their would to begin I'm respond the able employees been like of and strong and has evolving the times. Bonanza dedication professionalism call

whom we last for to Denver-based the been and we've pandemic. COVID-XX of interact companies, and with Most made others. changes from their weeks our those employees from in with employees altered how the their to interactions members home help the several to work activities in protect the limit community many have we have Like order field working

I can working meantime Creek team very the across environment. team's Bonanza confident But in the from when full I sit look day the forward again. in safe operations ability provide I'm current the to the in steady to

From activities. action took destruction. quick operations demand we to unprecedented to of March, In further were perspective, we respond to the decisive combination supply excess early completion and suspend an drilling and

planned XX% to enabled to today. initially XXXX our over million Doing of million CapEx from range so by reduce million us $XXX a to $XX $XX

nothing reduce with our cash expect free XXXX year along strong us flow hedge volumes to our drawn will credit facility. allow exit We on expected with the book this to generate and a year and CapEx

$XXX X.X million We're quarter $XX million EBITDA in off the as during cash million ratio million of CapEx a the the in $XX good million We a to this RVL over of first and in start $XX leverage regard we of down paid exiting turn. generated on million. $XX drawn a with of liquidity $XX quarter

a Despite structure our the in is industry. small among the relatively lowest size, cost

first million in approximately we implementing in expense quarter. savings began operating $X identified have that the We

range our $X.XX per Our to recorded and the first $X.XX have a has quarter we LOE guidance BOE of ever XXXX is LOE to company $X.XX the lowered of lowest per subsequently BOE.

reduced of and difficult the personnel Both on some volatility a during were accounts during the employee as levels. and made activity price reduced quarter the decisions quarter. We contractor side result

their our and own base senior lowered the also independent retainers. salaries across reduced We team management Directors

than million we production range. on was cash the G&A the X% million recurring to and be to XXXX XXXX G&A recurring $XX $XX lower midpoint XXXX to based million. guidance $XX BOE $X.XX expect to per in $X.XX That XXXX cash now our And Our our corresponds is range.

working on unchanged volumes. the year quarter for BOE, not interest effective to BOE. offset interest operating per net expenses per It's $X.XX cost for from BOE. are $X.XX, prices. of at or operating worth a partners, RMI that RMI $X.XX directly the And revenue fees were partners from tied but BOE per based guidance is $X.XX for oil this OpEx gas natural per revenue to are working the BOE production by of per $X.XX RMI noting, remains

for opening I up to Q&A, speak the we the would like Before XXXX. provided line to guidance have for production

per March XXth XX price was of the $XX $XXX of initial program quickly $XXX to range a reacted $XXX Our MBOE to our to environment capital million million guidance reducing guidance, million. to by we day, capital a on to On XX million. deteriorating

And reset MBOE to guidance XX of range per our XX MBOE production a to day.

of a a since XX to of million. the end XX guidance have We reduced capital further of is XXXX. half per our to reduction The And range, the updated for range, reduced to second MBOE primary capital in expected resetting of non-operated in guidance the range our production an lower day. $XX we are to range MBOE million $XX driver and

remain levels. There impacts macro additional storage from uncertainties, potential including downstream

of barrels. risk we very quarter. second However, have oil curtailments, has our great little the purchaser our believe job done a crude forced in And moving we

expected, risks. is day. was Additionally, first majority in while specific volumes quarter the price at In one-time mostly came quarter our expected, to higher XXXX other basin than subject adjustment, or our not MBOE differentials a to we spot revenue crude due as differential conclusion, per our of first oil XX.X

flat first the call. We they sequentially. last on X% relatively up being XXXX, had to were And guided, with our quarter XQ

quarter production XQ. from flat to relatively slightly down second be expect to We

that completed help profile, sales And possible. we have flat reminder, far stretch March to and to be an into pad as production X-well waiting as was a our later as in to XXXX this summer turned

slide And investor of All of yesterday. release can full found press our the on our XX be presentation. guidance year issued XXXX in we

Q&A. turn operator I to the that, will With call for the back

Session Question-and-Answer

Operator

question Dechert And of Thank from first Steve you. comes our KeyBanc. line [Operator with the Instructions]

Steve Dechert

Hey guys.

Just there's or you the any if comment around want on where could that on you to provide had a question see are that? guys the opportunities from detail release, just the, low-cost Thanks. I guys

Eric Greager

Yeah. think couple last Thanks on way been deliberately think certainly really last the and we has we And efficiently of patient scale to scale deliberate And engage about that over open PDP willingness us. in think focused cash and achieving focused patience couple been we that. scale. talked way over is have of PDP of we remain We've flow. and calls. The we're benefited about The Steve. that to something the years. like our We've for exchange

as debt. of And scale flow cash we of net think

to and we PDP the that low-cost And upside. when net work that's going we way for meaningful most gaining we so, This about to can't one us. pay or for of have why significant for today. have to is simply debt. we them And many we PDP think think opportunity, can any to a opportunities No scale But upside the a exchange. component consider idea be of like is got it's opportunities

Steve Dechert

Thanks. Okay great. I the appreciate color.

Eric Greager

you. Thank

Operator

Thank Capital. Haas the of Irene you. line question our And comes with Imperial from next

Irene Haas

Hey, good morning.

Eric Greager

Good morning, Irene.

Irene Haas

go seems this question pricing like first really of to the my for kind on the sector Hey, great specifically And zero is low. the so quarter in dynamics. probably be natural is the one debt to congrats you'd whole It job. gas reduction debt liquid

caused Because help give mean first and have you you to from a me can that little comment cooling as it? typically heating quarter what all stuff. – So some I good

Eric Greager

suggest as past, more pricing Yes. you than oil in to about most our – Thanks, the Belvieu. just It and at about NGLs Belvieu And talked are the have think Conway exposure we've DJ realized Mont – Irene. came difference on historic I Conway really included Mont us in between line. our in oil and operators levels.

space an But particular been the natural DJ be at Recently don't little historically on think updraft going but bit pricing I in seen the and levels. basket. NGL gas ethane have liquids it's of enough to across to we've a change overall low in

fortunately us, by oil we're for dominated so pricing. And

that's bit rightly cut the side. processors residue gas of explain on our bit one that of and it's and but the It's differential liquids of environment I little a a I think in so gas a you'll a point little quarter the and E&P's value operating might pricing those little think A this on that in is DJ natural both trucked most But pricing. across liquids. residue to And of out and tailgate the Bonanza you bit of soft Creek. just difficult don't to tends from look you'll something see NGL gas unique of our

Irene Haas

Good. Thank you.

Eric Greager

Irene. you, Thank

Operator

question of Thank the from you. Stifel. And comes with Mike Scialla next our line

Mike Scialla

Yes. Good morning.

there? order where right And into strip you with a if for sense now. production need to your you Just kind might flat What spend fourth spend see based in want CapEx to XXXX of get keep are quarter? to prices on would thoughts on what heading say the I

Eric Greager

sharply That's really hurdle into Thanks, in It XXXX, that a capital returns second Mike. make opportunities just will on our with in us have, down investments. to best a we or great we the how come we've there's on But the as strip invest that rate on pricing acreage looks. return does quarter that pricing, time the to services first reflect inputs they on the could side D&C if maybe whether so the question. got cost will above depend XXs. deep And to factor expect as having going the be quarter, allow it's incremental

March, We have as stopped requirement. swiftly completions a in and relatively also DUCs. that DUC those have a DUCs, we activity low because we which inventory you carry drilling non-well about have capital and know That's working we fairly XX

So completions. they just require

or take XXXX. consideration, or when that we a factor into can and maintain of services, of think pads And those number DUCs rate input stimulate those cost probably oilfield you low exit number throughout low-cost I environment the

it far best at year. think probably look this concerned As something CapEx the is of way is range as I to the in

CapEx probably DUCs think come the down something because the to we next have year forecasted this prices we could throughout and have most production I flat of carry the range have because year. profile. with a year-over-year of something in close maintain we And dramatically,

Mike Scialla

And you mentioned guess I DUCs. helpful. the clarify, XX to That's

You mentioned also X-well that pad.

that X-well assume you forecast I second that's half. pad production the that – into think for I baked XXXX

year. possibly then XX price but that incremental more way likely bringing would guess – to I on next You that on? And the Is think right dependent year DUCs plan more that? about the price this be

Eric Greager

the being but our for does about right we second half Well that pad. DUCs include the talk not you're XX baked into production XXXX, about T-XX

out there's So DUCs. coil -- it is pad and unit completed That drilling a we're with right now. are additional XX T-XX that

So excluded XX. from it's the

Mike Scialla

so investment? XXXX anything a would then XX you're And be thinking more is baked the Okay. into this not likely that year,

Eric Greager

Mike. right exactly That's

Mike Scialla

Very good. you. Thank

Eric Greager

you. Thank

Operator

next Thank you. Noel Parks line And our question from Coker the of Palmer. & comes with

Noel Parks

Good morning.

Eric Greager

Good morning, Neol.

Noel Parks

about Talking that -- dollar the with what's that's completion we've completion and kind things. of And component? versus BNC seen is drilling the total component of different drilling Just costs that couple cost had now cuts a say of year for a ago? from the proportion recent what the

Eric Greager

relatively are proportion. I in down Well two down the I both hard. speaking, think they're coming And would coming say

year XX% the a back ago of oil completions stimulation, stimulation in to total the and flow was balanced the that but make are if plugs was in perhaps things the up So tubing in drilling difference. and AFE XX% balance maybe of then aren't XX% XX% out drill

all I down think hard. come they've pretty

see drop rig we the and of seen lot count. on lot get -- of rig in we press count You've drop a precipitous the a

drilling seen the hard. really around affects also rates really horsepower all we've off But And the day that spread. components frac and come ancillary

pressure And move economy. of in puts are labor different And costs. see then sometimes the horsepower oil put well entire crashing which so across regard factory normally, But and to directions now, us economy, right to downward at costs lot on going from we kind input of as a a with disadvantage gas that's general costs the pricing. labor

to be space very as So our you've able RFPs regular E&P an refresh basis. if we on going do I got think to what is, a we're activity,

these and to leading In think continue factor XXXX. inputs stay improvements just also both returns on we fact, in over sit cost to speed will so commodity to to far the in we allows up today on what three environment. us times that time And RFPs we've where refreshed be price environment based this the year, up bake and

down answer So both pretty they've in but dramatically the proportionately, have come I months. down components think think couple of all last succinct they've the I roughly down come come or is

Noel Parks

component as already I'd has harder? come Great. I guess so ask come sand far just the off down that as the from far peak? even It's

Eric Greager

because down proppant much and low going do DJ I lot to depends you're compression moved brown bringing as Yes -- sand more so. it if go. it in where We've demand in compression all because proppant has. the subject closure of both strength hasn't which a down and using rail, kind then of down our infield by And a it us other there's as like pricing Mississippi know there's been activity as on the locally River infield to our precipitous it you if -- you're driven. are, lower diesel think we -- be to But And allow drilling it's expanding come been use stresses you drop it's if fuels. you're completions. very a But has -- doing you're really

Noel Parks

And are have I've that the not. on own to the some guess and providers, basin, companies I their this so larger for equipment it a most the comment have about topic you. And is heard I gotten DJ quarter these lay but been cost another inclined to going debate whether improvements to that been than biggerish breaking rather scale, Got getting keep barely the but Thanks. of thinking service That's up durable around just actually question them fleets. lean has actually be talking in even down the are helpful. more thought outlook or as about try that the have somebody service they said things saying is they

of being gotten the things really Has the of to companies if basin And wondered I the more? stuff on more in point don't equipment know be are other had are a from shift you've sense any just over give availability even as coming it seen I any you where of whether result? any basins And that. might the not service verge where finally to dramatically. dropping able

Eric Greager

in really we -- Well, direction. seen a haven't we either haven't shift

two needed enables to the horsepower, RFP-ed to key frac recently provide several we lease very of in proposals willing competitive both And the that that one to DJ well and we providers So work. we retention for stimulate. look were

I what to cyclic rate obviously few think the push oilfield last supply of has early just a a was counter Labor general the happened, oil to gas for floor economics chain. and -- in changed costs X%, of running here their in some has X.X%, in in services back in unemployment backdrop the XXXX, in been companies Colorado, past is that ability quite again, that through has and put up running low X.X%, while, the has dramatically X.XX%, high the right months. the

crew now that unemployment against And you you work, put area. Denver what to means pay X% have is, in if Greater you've got want a don't frac the that a to to rate

downward contracts And they sand got well. flexible can wages. Water they've flexible. on local So as push are contracts are pressure,

to up, and and the as keep they'll operate do to that they at functional, back extent as capital in the got so to pull the see make when sure we fleets are that to and They've fleet necessary. have in close maintain to will to this equipment function breakeven And pricing activity activity. costs updraft ready their an to be equipment

negative, updraft. for it's factor the not about. I'm or And about that D&C activity. input something lot am We've I is, acutely on because costs cost durable don't on slack in something entirely they'll little the a operate whether But oilfield of and been supply on on more I down There's and more the their been happens And worried left. incrementally. will our to very think chain supply their to not as push but it's available supply worry prices has lowest seen I the able about an gain what ensuring as services a not they've able array push it. depend is

Noel Parks

the And Great, great. last just one.

the similar little side you public I operating basin, there if sort the that seeing -- what non-op curious, we're are were activity a among operating in public? had your the variability saying levels. for of, and sets private But On was seeing partners private. you among a of or don't lay just downs, you shut-ins non-op of companies your bit are behavior as the of know I'm

Eric Greager

because driven their equity-backed it's such. term were and such of like large, are, limited pursuing sponsor-backed and private Many already just meaningful -- had tightening By availability capital loans of the to availability portfolio capital. to we many XXXX through it's companies Yes. experienced things and by

a how if drill debt enough price term PDP to assets. a decline flip taking stuck loan off in isn't you're to And significant in complete and difference make again, this the only the to you're you the and wells environment, with

and activity oil what So is, of environment. environment, privates price result we're the as most a pulling seeing the gas on the back of price dramatically

Noel Parks

lot. a Thanks Great.

Eric Greager

Noel, thank you.

Operator

comes you. Johnston question with [Operator One. of from next Capital Thank Philip Instructions] the line Our

Phillips Johnston

the planned mind Hey, asset But thanks reasonable back for front some into Obviously, the isn't rig in recovery this right and the you a guys the and year price is of the Oxy timing oil is when exactly that terms to half XXXX, in you the stand activity now. Friday. do off acreage? of in sort half and of think table happy realistic French year what Lake back of that and of assuming develop up of

Eric Greager

interest those opportunity, top it two the greenfield development. Thanks, partner DJ best of is the rises one large-scale our some news reservoir remaining factors returns. the of Lake greenfield – reservoir and of only good the and very the French And returns our working as the of not to few and the very it a of greenfield partner's We're consequence both if high-quality Phillips. in oil development remains our remains – –

confident we're going development there. price get to activity we're And when supports so that meaningful the

strong a relationship We So is the our really joint with enjoy agreement partner. do development great.

now Xst, to a thing out anyone don't realistic in think on January I start-up is spud. think the rush terms is, to I of about best times, think And going

expectation. to because build us if and efficient to mid portfolio to a in updraft mid-QX mid-year is then good substantial for probably and But the be opportunity to sustainable is and a think again, to this But it of great really our I kind It's think that it's price reasonable highly really top development program realistic So and XXXX about any opportunities. there's really of rock it's could looks of reasonable maybe going rise a QX. a partner.

Phillips Johnston

That's Eric. Thanks, for all me. Okay.

Eric Greager

Phillips. Thanks,

Operator

Stifel. our Mike And from you. of Scialla Thank question the next comes line with

Mike Scialla

your in thoughts that. curtailment you Eric, shut prepared And on wonder you any your just well? there wondering, much And could voluntary small I force ins? have remarks some the if looked mentioned – had DJ. how as quantify of if you so at

Eric Greager

Yes. Thanks, Mike.

We're production combination the to production the that by intervention And that as we a their Our shut-ins expect tend wells value. and fact these have shut distribution fully an in about of surface low this day the uptime. costs. be low virtue would continuous the been of a at rate not contribution. couple would that wells And a but wells it's to BOE variable a tranche of the we've intervention, a portion first. may talking of that's or and but that environment they total It's rate needed shut limited have money. in in you higher deliberately of meaningful terms of wells, wells deemed meaningful that out to wells, would number hundred of intermittent have in And we price of the maintain the

would forgo would We – just intervention. that we have

hundred it's it's So BOE a couple day. a our of wells, but something total XX% like

it's a allows variable off obviously immediately. those meaningful cut us not rate. costs And to So that

Mike Scialla

there well you mention did I happen the And force as some of you that curtailments to then thought were out Okay. mentioned minor -- DJ?

Eric Greager

haven't any. We seen

curtail don't being were anticipate talking forced haven't we remarks to been what the to we about the think in and we forced prepared in curtail. future I was

darkest keep the the In flow in the month discussed cash of other the given fact almost low we just all and wellhead. production to the at than were wells company generating we cash even costs positive on able intermittent

to we ago anticipate shut forced minute just shut forced we to. We've we been haven't as a anything being and in. haven't been forced in So but discussed voluntarily don't

our moving successfully is cushing. purchaser future through oil our already fact nominations In

Mike Scialla

get over course to your now Okay. Good. balance borrowing And the redetermination on I the base the revolver year. plans you're think through on going I the your of then thoughts just want then for a and right the

Eric Greager

Yes.

And is We've stress So far I whatsoever they've the concerned, lead mean know and don't I going meaningful with with got we drawn and don't yet. I got indications other any the stress. as ongoing we're We've as our stress guys. balance over anything names. of in paying to million there's XXXX. off those RBL bank got that conversations no be $XX anticipate just of

Mike Scialla

Thank you. good. Very

Eric Greager

Mike. Thanks,

Operator

And Eric I'm back now would further showing closing Greager over I any like CEO, to the remarks. no questions. to turn for call

Eric Greager

us Thanks, interest you in for again all your Creek. and Andrew. joining Thank this for morning Bonanza continued

Operator

participating you thank the may in you program Ladies today's and conference. for now disconnect. This conclude and gentlemen, does

Civitas Resources (CIVI) 8 May 202020 Q1 Earnings call transcript