CIVI - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to Civitas Resources Second Quarter 2024 Earnings Conference Call and webcast. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the call over to Brad Whitmarsh, Head of Investor Relations. Please go ahead.

Brad Whitmarsh

Jessica. Thanks, and us everyone, morning. you appreciate morning, this joining Good release, second and for Yesterday, our earnings your our materials we issued supplemental quarter XX-Q some also review. provided be our items by today Walker. Chris Foschi and These available Marianella CEO, this on CFO, COO, all they call. I'm are our may and helpful Doyle, joined for morning's website, Hodge question-and-answer our prepared brief remarks, After we session. will conduct a

certain follow-up forward-looking time actual so limit projections. today, that always, your to list our disclosures one full efficiently. We'll and uncertainties the please these read Please subject make can we results are most statements one statements work which from and to in through As SEC question recent our regarding to risks differ cause could filings.

certain can to some release metrics. We in well. yesterday's refer non-GAAP also SEC found also these filings as and to Reconciliations be financial may

the I'll to Now turn with call over that, Chris.

M. Doyle

morning, second quarter Good call. to our and everyone, welcome

sustainable and reflect transformed think quarterly Basin, Civitas enhanced Today, are and of I Boe our which provided the our and outlook, address Permian important over business increased our our our how I on starts entry our the past into results allocation Before and and with within improved created more durable year. This to fully we and XXX,XXX portfolio Permian flexibility integrated producing more assets day. quality, per a capital scale important business. it's fundamentally than

Simply amount performance ahead noncore come planned in team regulatory to well clarity costs time, environmental secure and shareholders. And of sales area. and stronger for to results, X%. is with safety performance well walk-ins while X.X% our broad-based we assumptions. At up enhancing noncore and our well above the and operating our a than Cash to we're a differentiated This years top expenses and downtime below all is for moving from our production cycle has than exceptional question DJ. first XX%. were Civitas better production. and than asset plan, is In including inventory-rich Total costs the by our at than our agreement $X about underwriting completing plan, the that is quarter was and ever strong was maintaining to exceptional some Production as results there's Oil to oil performance. third-party Boe. development acceleration, from that better that and lower ahead time, faster same offsetting were reduced or we accretive returns margins, the starting sales certainly plan second an Importantly, time the volumes today, put, helping than driving short Basin. Recent quarter highlights cash ahead of executed drive positioned expectations are valuation, DJ up of continued in operating continue the no more of temporary facility deliver impact increases quartile driven asset occurred a Permian less

basins. across driving Our laser-focused down our remain on all structure teams cost

natural our the expectation line the offset efficiency was delivering Basin. in and cash On by gas in have quarter. CapEx the capital planned as right in Midland the done highlighted in efficiencies our than the initial year-to-date Free are completions our impact Permian. cost pricing reduction reductions XX% in our a job the cost fantastic to improvements flow with capital operating teams drilling outpacing for weak side, quarter result plan, of a less Well

utilized the concentrated open $XXX our to continue portion just purchases. shareholders, For that the of to dividends, million quarter, million under remainder and during quarter market to our went $XXX about $XXX of in the A reducing we in share million ownership returned was buybacks. buybacks

to like year progress as made have come. strong been shift now, areas me has really X of past to about the over excited by to what's lots however, So quarter. I'd evidenced to another

First, is business every the single day. absolutely improving operational execution

outlook in our life. Savings our will is our maximize execution locations and enhanced to reflects the of these in service areas shareholder of additional value. Starting it's Second, flexibility provide from positions half all our with the return benefits low providers asset capabilities. standardizing strength second of establishing capital base framework And our of of by and third, supplemental operational XX% team increasing in our we costs multiple execution Midland improving well reduced extending well XX% breakevens. completion breakeven utilizing X%. drives high-quality are Permian, XX% XX% strong high-grading designs, Basin driving and by materials, more drilling, and up down on and cost highlight having reduces This the impact A reduction the the returns the returns whether record breakevens number optimizing performance. inventory Across a are and efficient rapidly facilities scale capturing basins. to or achievements equipment, track coming team's

we the of where focused Now be today, we days not that would a together ago operatorship that we establishing has create can continuous the it improvement believed if would culture super been on of combination Permian years we've this that sure many It's for a and value with early it. get on months said still ahead. excited to within of the the team I'm are X call year have

Operating million. for year strong $XX lowered the continues improve. to remainder leveraging by decreased CapEx Now, Full outlook operational of approximately execution, that costs million. by our XXXX $XX

raised adjusting sales. We original guidance sales X% for our have from expectations asset volumes

will that a defer the the total oil summer volumes DJ and some the quarter But a record fourth. longest Looking end with in we completed to wells, and laterals weather a the forward, boundaries through by to XX be strong what's in possible. in push of of growth testament temperatures recently Colorado certainly extreme DJ our drilled walk-ins. X-mile year. Recent safely into the It's half quarter-over-quarter third talented grow expect driven Basin high will continues We that second Colorado. team ever of the to

which particularly with excited date coming laterally. In fully trends in designed, I'm completed Civitas Permian, first us expectations. by still see from the our early, our to we're confirms productivity, while full contribution production line Importantly, wells. to the and the Productivity initial across drilled encouraged production

second will TILs development of deployed free we strength core target our business half flows the to The slightly over than $XXX to continued spacing anticipate The our operators. second of previous zone which balance be cash execution, lateral XXXX and and shareholders. and wider sheet will million, half

of of via XX% than nearly represents Finally, is XX% of after the base market our cash Based flow we've be shareholders We the of return. our of dividends fully in more strength our best-in-class repurchases. on remain to our returned free cap. business $X.XX true the to beginning current $X.X our quarter September. year, approved results, This the dividend. billion Since shareholders reflection to second paid to share shareholder and last our dividend committed returning Board

flexibility we In a the addition, third return shareholders. Beginning component the the provided dividends. return add combination repurchases the variable quarter, way and of Board to variable with will our program in capital through share return enhanced the be now

part Board prior also a this new of enhancement, program. the plan, As $XXX approved the repurchase million which share replaces

should with transactions. At our when run very and We trade compared buyback recent peers businesses Civitas, but asset believe to we will valuation low cyclical compared in we strategy, leverage. be when that remain our compelling at to a disciplined executing

our XX% first to our prioritize return delevering Wrapping remaining made in we've enhancement efforts, free pace the of progress continue hedging this on strategy our will with we'll year. tremendous and cash So the to up, our execute of the capital balance sheet support of flow. the half

your you demonstrate company for to entire is Our interest in of capable our team what delivering. Thank is now happy questions. we're excited transformed Civitas. Operator, to take

Operator

comes from question Kevin, with line And Pickering [Operator is the Kevin MacCurdy first Instructions]. your Energy line your Partners. of open.

Kevin MacCurdy

at When amount the the free versus the flow of to asking by highlight off maybe the to buybacks the in I the buyback. increased multiple NAV variable, deciding execution or the wanted main deck? would criteria? recent share that your start allocate dislocation, you low of Are price you what cash be about looking newly

M. Doyle

Yes, Kevin. sure. the for Thanks question,

return we valued. move our is various are about, at in other at entry, that cases, the allocation the look market tied continued we regularly Board, said up asset NAV, A add we lower-quality look Look and look the we've much we we that for turns. disconnect like that's to this at discuss with peers after you full with is NAV view versus the a commodity our some is prices, And not any to really the flexibility in. trade the Permian how what our assets. talked underlying capital at capital like something This exactly decision, how is framework that and asset As in at is entered and a X.X-plus market. asset market past, year

reflect quality seen they terms regulatory And of the don't reflects DJ. today, does and valuation, the think assets see So team it tailwinds and I in not not of the are the these as we've that in does the the how reflect ultimately, executing. it of we quality

So see of we super in maintaining excited sight business reflected is the we've business. We're highlight we're free not assets it. driving that's you've our to a strong and balance a That's high-quality as and question flow to allocate but delevering yet, other really at got XX% sheet. but we That's be. executing the framework targets the excited, change, protect trading hasn't opportunity cash It been our shareholder a can of at super the on what a will time, to and and super built. proud the compelling here return this yield. I it appreciate lose thing on equity, dig And same

excited team fully aligned as fully we that calculus. this super for know with we we're is framework the it think and through and go So that adjustment, enhances shareholders

Kevin MacCurdy

is Shifting deck, Great. cost you at $XXX think foot Slide extra using $XXX. factor and new cut do in rate wants look do Basin? And in Midland, hear. When what XX in to market to to run your this X% the the the well Midland maybe investor I the that's costs. of the need I CapEx in out well clarify, what it Or just the per to

M. Doyle

Kevin. Yes. Yes. Good question,

half of our current cost current forecast $XXX our for capital So assumes the Midland. in structure second

has just really half the is mix that's took but just this us are done established of of service down we in stack operators look back, questions continued on performance. wells, gains. like as team level scale DJ. What around XX%. efficiency done a how of we'd we we wall, got what of a we complete As fundamentally And XX% to of think of for the drill wells, some about and probably And that That's has the other Design we driving to changes is where costs. benefits today we how we've probably in the to optimization we a really improve we delta. that I couple quarters are again, can X would lot There skins and upon, that basin. that's continue knew over

$XXX to in So what from and continued additional in just any made the a look, has additional efficiency inch. And in. the driving back or again, weakness market. we're is as back, for a and gains. and living the team of it will this take is relentless But us X building Permian this every digging $XXX well. in that to This service about there stepping any the DJ, deflation not is looking claw quarters ways dollar exactly doing very in team every early, We're doing

Operator

question your Dingmann Neal Securities. line next comes of with from And the Truist

Neal Dingmann

anticipated just should given speak sales you production that impacted My for plays potential trend just I'm factors growth your it maybe question oil wondering, in production first the seems oil remainder that of and suggesting continue really the higher. year? to and Specially, production this to both growth. you're on could reiteration, noncore your the is

M. Doyle

a above you quarter, Thanks. above. last appreciate as I assets noncore are Thanks, I DJ the our enterprise. the for entire appreciate was, at we a highlighting question. as turn and us, to full Neal. get trying turn That traded the announced well. massive divestments a transaction These Sure. full

hit we or our second day, that It a day. So X,XXX impact results, X,XXX a bid. did X,XXX right, barrels BOEs quarter oil of

quarter-over-quarter that company. the saw strong growth and back into mix So take as you -- that a oil put

guide, the over see to both first, first the So out Permian up. as at We the by third I I divestments. taking basins of reaffirmation quarter, look we oil we our evidenced oil as second -- point into would quarter saw growing our say, even quarter would

we'll step-up So in see basins. a both

Colorado. to third June temporary. About where facility the are drive and our going to loaded We of June the third-party out, to there. half on front growth in of That the saw is really of the some in with that don't going capital June We're coming couple half was know them year. A in past of that's going support second are program. things July is highest X/X that. a the in DJ up -- TILs it's quarter, We some history back and and we'll headwinds. about quarter talk oil [indiscernible] the come is have the think to downtime. I second second be but hottest I the

some that's impacting but that's temporary. so certainly, our of out And operations there,

The we're that [indiscernible] growth is to other Watkins second the down drive X thing milers, we're drilling that's of the the every continued that against is performing really into wells. going about well excited well really half there expectations. exceptionally outperformance

some a are we hitting quarter. our reaffirmation of head evidenced real second teams guide. both And as see good into So tailwinds expectations. by on We oil again, the

how for So we we've second confident half. and set with up the are very pleased

Neal Dingmann

question OFS to on And answer, Great wanted just Chris. the cost. then secondly,

little some that I'm wondering, you there bit that Chris, the were want I pressure some maybe just seen saying seeing -- lower are all I on that a Were efficiencies. seem of understand that sure based others things indicating to these reduction you're or flatter. maybe like of to make maybe is You right. and be just costs

M. Doyle

Yes.

in we rigs. the were the year So running entered we X when Permian,

upgrade it's of rationalized So OFS efficiency. capture close frac to high mid- the drove you also seen. we've tier and us rig we some What to year that beyond was fleet. just allowed in weakness us XXs. our look ago, turning That allowed the weakness probably that that the fleet. rig upgrade some consumables, rationalized seen We It fairly at now iron. of X, do to the a but we've top to the crew, When

been however. focus. certainly market. I there's only so would I've that And some in will weakness caution, companies seen that

-- operators higher some on they -- sight day focus efficient rig of what crew, lose can higher much how product more and tier tier In rate deliver. of fact, the the and what

going good, a little little peel drive out a of more claw to capital. team softness, for seeing is and if that efficiencies are bit continues and to we This weaken we're a OFS so planning some that's you'll redeploy And that. not or that's to but us bit, on inch. capital see every continue

Operator

next question the Hanold of with Scott RBC. from And comes line your

Scott Hanold

is drilled question the My those on and Basin, first wells. Permian designed Civitas first

You get a about talked bit to the performance. modifying spacing and zone little better obviously targeting

like is this us a Are wells? kind can in So And of improvement X just X%, XX% you questions like of just is, on uplift out the the give X into factored some like your what outlook? do or that. performance what your Number make the budget think of size scale we that expecting? curiosity, talking is that you're and

M. Doyle

design. great return get we development excited and but best wells you online, a that as that the expected, an wasn't as design think the said, as we previous it to, pads. of operator I pointed Yes, we overdrilled -- cash-on-cash to there City example, The Yes, to the feel one performing know super like They're question. was yes.

take approach. so different little a And a we bit of

at lot incremental what I to that or overall and do too look returns. well a of you that operators does think

of on a tell what with you our And so insignificant. super, would We've forward. this we results hit even but super expectations. see bit a attainable step are fully cash-on-cash you'll uplift built have again, that a conservative focused there the is we're going believe returns. I But And operators up. prior in is team, that's not

and Now on we're well about wheel. super north-south. mix all have our this will team can rock the east-west, we We fully when what of excited But changes get do that change. hands

Scott Hanold

how a how existing lot us have of swap and you last opportunity asset about think your with your you give you that there's the transactions the involved through guys incremental expand much Obviously, give your in very Understood. of And -- to a Permian sense activity switching years. few of a Permian what -- the go us sense continues the assets you trade been to to market. and Can you along in inventory? to have over

M. Doyle

deliver. What's returns, Sure. allowed laterals, cost down push trade a think, really the made for extend the really foot positions quarter on basis. Delaware trade There Midland Midland or continues overlap opportunities to on could great really are us operator with we've that out into like of And into is got interesting more that per that team sides, we in was both sides, to to I drive scale higher both on Delaware pointed, Midland. we Basin last

are really We and opportunities seeing us. those well, as value we'll let guide

ago of those entered us today, we and with about year first talking the third market, terms In back Any to take transaction. transactions different of the X points. a market you're by assets a followed again, asset much and where closely come then entry the to

absolutely So is critical. timing

terms in in there pursue think the asset after. we opportunities are about of would to going potentially Now market

we would business. think look I always ways to enhance our for

going to the we hear there highest where what out probably how disconnect about You're there trade out I with we've you. what's CEO -- market. is, every bar and with the I the of got high talk what's to bar say tell the on will we there quality have the versus would

the business that. we've we've X.Xx looked compete we higher turning around of do buying trading seen continue that anything and against that We'll is trade, market at deals. to at. than look has the is things where Xx But Some a at to

in terms us. and for future proud So strong have of excited business is We're and of business. we ahead a the built about how ahead schedule executing super that

Marianella Foschi

it's market hard private. say now, entire focus you market opportunity. not Got just our cash right intrinsic the have at public business, our X-year equates and or an when really machine impossible a we that findings free flow it. to in really cap, we When generating saying to period of like a more compelling We proposition, over that's our value. look also buyback at obviously earlier, on look underpin, And incredibly Chris was kind

Operator

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

Phillips Johnston

say Just in very the to variable a And been of on aggressive addition Is that, a be the to near program follow-up Board on repurchasing with corollary to the return you've on capital. formula. safe question the wants maybe framework, Kevin's repurchase share stock XX% prior just it that in to the the term?

return the the greater has XX%. been guess I than total So cash effectively

if debt? when a wondering other with of the that sort reduction promise that in So I'm you the exceed you XX% total limiting with XX% of to opportunities the return formula you'll XX% potential as the amount for see earmarked would market. to the minimum Or more view be

M. Doyle

kick I'll Yes, this off here.

Board generates the whatever will think be our return I focused and and strengthens on management super highest the business. shareholder

Now specifically That's were more the that What buybacks. today component do allow variable on dividend, we it and heavily top the would buying and concentrated the allocate opportunistically to our and does the ownership other to shares. was we our at the today, really the today of working probably more good address to assessment. I allow XX% didn't of some post flow cash has a didn't the that done of to that to accelerate down generally, pay that company fair a of us limited return before, -- back what us I mean, really might dividend post say question do plan. of base think job delevering

this the why stretch same really that's and leverage at is we overall so target. to strong the progress enhancement think our protect can time, towards and leverage and not a a lean where buyback on I in program really And our

Phillips Johnston

it specifics sounds in laterals, so what that the Are on mile? X-mile Okay. the far, haircut regarding some a sort embedded like about and you And good. what's there? production so talk guidance you if fourth then of maybe giving are your Can so it just

M. Doyle

we very X -- take had X to and year was back in last that I'll miles. Yes. the milers, were confident with first we approach the us the

third mile had The we risked.

milers. where play year, saw the out that quarter-over-quarter end X You actually those in towards wells performed of with the the line

And so X milers super executed. excited with how those

we above we are. X type Now risking on as milers. strong curve it's being that Very conservative expectations, are but replaying performance fourth itself still mile the

on tell And going the that of compelling in the up returns. show type X so milers curves you -- quite that's the these up year. I of show could are terms would to towards have we end

from let's And of operational so the super unleash a things any wells these We're sudden, produce. got watch but lateral. focused the area type on, infrastructure We're seeing of excited, game an these throughout execution changers. and now all to we're on outperformance upsizing perspective, in contribution not focused you've potential just

the will just I proof think -- things team efficiently job in results really bringing are then and executing a the has done just the phenomenal exciting. pudding, really, these of results online. the but be are And the

forward, Remember, best back. to some of that's some these And if going fourth so, terms it the the tailwinds of in mile going rock. on plays wells

game got in from of I effectively the There's well is delivering we long a weapon Rockies the about think I talked a as game here the Permian and think ground interesting, a terms a oil in is in quite that team X what differentiated DJ execute, miles away laterals the within ground bit. that reach can fantastic. you've we

done and super wells these to continue see team has perform. excited the what really excited So to

Operator

Our next Cowen. of Gabe Daoud TD the line comes with from question

Gabriel Daoud

right Permian, across Chris, thoughts allocation X Delaware within relative could also you to and capital the year's Midland? plays specifically XXXX versus the allocation maybe now this capital and just allocation on any share capital

M. Doyle

difficult coming was would team pretty is into we calculus This this the The year. know because execute. Sure. how didn't

certainly challenge going look the Permian XXXX, in I early The think to in as too real-time basins. ahead, it team be this you improvements at is in have enhancements to DJ. that we're but the changing both to where throughout this we as game going the is is, guide is is and look

good as allocation. in Keep lot of into us side. and regulatory versus the the a production again, are XXXX, we inventory, in and moving the developing the that more on there our Midland, how about asset, so between capital that's the about best Permian and returns some pieces terms allocation specifically, you capital Midland There's tailwinds the side clarity with of DJ in of levered Delaware think will have, mind, on both compromise also impact drive scale that And we're the moving. And think and Permian. to relative going a to we lot certainly, Delaware in then gives

say, Now -- taking have and get develop think but good we looking and into do so to the some was X really efficiencies? operator past, returns, X-mile extend time wrong. we system, we how allocating some developments Good in previous mentioned we're the drive returns, through these the to look, is don't I the the additional to milers to team And that excited Delaware. start me working

Just given the scale excited and everything, we're the going to we're as be Midland, well. that more weighted super to about

to free shareholders, while XXXX, think to for to going broadly maximize production get early it back sheet generate it's as are get cash run I'll run to flat just flow, back business. I we to cash, can. balance We're as free much keep us this it back take going business and our how we this to

have business start with capital I you It when it thing. teams, think allocation you model creates that competitive -- improve super is scarcity. you really does scarcity to capital capital mix. finding because X really interesting And ways have that important a

And what returns. from seeing we're so more that's ways These from women men are we're Permian. the more what to improve It's the DJ. seeing finding and and

it's fun but as of up in so we the be a there system. to lot is set going of lot for And noise a XXXX,

Gabriel Daoud

and wider spacing your in maybe spacing now? what strokes, is us embedded to too that that that's well prior you bit Permian assumptions in Thanks follow-up, broad relative number? the And also just prior Obviously, early the or a a well a right 'XX, or other in design operators. Is that spacing operator? but of like construction Can inventory bit just little for just remind helpful. And Midland as to Understood. then operator a going back still Chris. the to Understood.

Hodge Walker

Yes. Thanks Hodge. for is the question. This

we've that earlier higher it year, a at As on than feel we mentioned, they Chris drilled density would. prior pads probably we this come operators had some from

bench-to-bench basis. at taking designs, incremental a has that incremental benches don't X operating from west, across and that on sure the section. within in, have But sure Every this we're that we X basis. And competitive going into thing. consideration. capital within a things efficient rock with our look that's cookie-cutter we're understand move changes, north the to We make Midland contemplated or on is south, returns like we As We we're to additional a wells We into every those sections, our that vary. per what whole that the well-by-well to within east Basin, well wellbore. we're to returns be section make as

Operator

And your Tim from with KeyBanc. next the comes of Rezvan question line

Timothy Rezvan

I payment. And the your looks venture numbers, start the about on you balance From the want maybe of to presentation, sheet. left on $XXX like deferred big it balance to of billion have million free half sheet. flow, that in $X.X cash

of is quarters leverage So kind north for where we here I'm of on getting at hanging Xx see several looking forward.

Why return kind could factor down pay thinking that? wondering how into you the of So they're I'm debt as was to need XX%? how if does creation. Chris, adjusted speak about perspective. there your from cash curious is just And I Board's return framework. value you And

M. Doyle

this. take Marianella let I'll

Marianella Foschi

our the at there to targets I one of -- have mean, look, X.Xx we conservative out right? X.XXx. committed we balance remain And more leverage extremely sheet,

As and just carefully steps return took question quarters, for that to decisions we Like supporting and transactions, today. earlier complete process. And the take a balance update, asset to to and our taking the delevering No, incredibly meaningful initiatives. our took every accelerate bringing right we it's that towards this and that day. know, also capital sheet us, policy, This progress more said meaningful is derisk program returning Permian point, to that and single to I you've no in shareholder it about seen our between stronger then delevering balance enterprise announced year we you deliberate steps finance debt one. us then was we'll We're sales decision was corporate come shareholders. paying an continue out outlook. like allocation the underpinning why your this we further down and those to cash prior

and our efforts, even with we we Now right the north levels we tremendous out well and that frankly, were of opportunity trading. our pace I plan, us currently see comfortable we're look presents to delevering at when or now. what stock mean the ignore we can't of deleverage

in those So we're our pillars X delivers really components that a in value way to balancing all our maximum shareholders.

Timothy Rezvan

sense That the makes price is stock Okay. where today.

appreciate follow-up, of we've views we surprising deals. the then some on some of my So, M&A for seen that. And of Chris, valuations your I share sort the as

So there $XXX of to as scarcity stable sort obviously for you this just been value Is insight of is a packages. for that. here get what's trying oil that it is driving I'm some what's million-plus curious just Kind has I'm driving these future kind think of pretty opportunities, that? new -- idea of year. any sort it curious because just of

M. Doyle

you Yes. fairly To see been stable. your has point, oil

You of XXXX. weakness bit into see going a little

gap. So assets. valuations. don't we everything. if bidding underwrite -- exactly it's what's Hibernia others on know with scarcity, It's And underwrote it's these is Vencer. again, the Not a how are -- I that's better tell conservatively. them, And we value. how that's well. entry assets this driving our above package DJ at Rock, timing Again, and It's sure those that can as how job These trading head company you close and turn Tap team's trading. at were whole a bit to not reflected our where it's in noncore why our of look full that's scratcher, just just a is

we'll conservative we're generally with I it. could And And disciplined. buyer. remain something have think to scarcity a do

ability a Midland it's day, changes at that just okay, you're buy at end our in of and we in do, the Civitas. of see this you say, underwriting asset of you things. out okay. I past And CapEx. how hey, going we our confidence, may has to way you to means here, of Basin. the you've that's can right? As one longterm, in deliver trading the couple the We where low miss is the on underwrite. to go But line high-quality also and got changing, wells that inventory called going think win sight has that's thousand a and don't back Xx, the some will That have say on everything to why XXXs I mid-XXXs that's we come got team been stuff,

again, And even of we've at think and to in really both so that, sides point walls level. the drive a home Civitas And shareholder a very be change within helpful. of I on opportunity executing the further got is this high great teams that hey, framework company, the going

Operator

from comes ROTH with of Your Mariani Leo next Capital. the question line

Leo Mariani

wanted you XQ. couple some of per to could guys bit a second BOE be you little DJ. of going this well present as day. quantify expectations kind quarter? up follow that on have kind some that's hoping And I was I this had in to you for sounds downtime it of a the that Was in the like thousand of

So a if I don't know look you well. as XQ guys estimate that might what rough in have like of

Hodge Walker

Hodge. is this Leo, Yes,

impacts in had temperatures seen saw mentioned, and June, degrees to in some And July. probably I we impact here extreme in think degrees, Chris XX we've As we're Colorado. going We've some today. be today, XXX

So on we're production. seeing some impacts definitely

that you'll But talked lost kind It's from quarter It's production. see time. earlier This what production. I work in shift about think we'll is is on -- third into quarter. it's referring this had fourth shifted it This production that we what a out in really you're of is gets through. loss what something ballpark that And production isn't transitory. little from to. not that

Leo Mariani

a costs, Midland I broadly guys targets like being those the then, cost guess, the side. see Where over on it obviously, to got that reducing of prominently little able clearly, And assuming are you've a for reduction great sounds company? costs to well reduce done And flat, get of you've bit Okay. kind goal I a job basin. new to on have a well most I that further. putting you those handful which that know do is years? next CapEx of few still you guess percent you the maintenance depending targets, more the

M. Doyle

Yes. question. Thanks the for

XXXX be entered the with we we half rigs As on we were knew really going front loaded Permian, in CapEx. to X

would got making hit like. first XX% off X/X our or And bit capital but than in the we came of capital XXXX of our things a a high of so we've are couple half. the We that spend, capital noisier really little

the tiled is in X/X. till DJ first I that growth we the an and quarter -- the wells, think under half, well as representing with example second we'll XX%. just Now up In about TILs in second setting XX XX half back the half third over

set entered, how These maintenance We when XXX over level. up. But we assets. that. ramping a knew were moderate the half was private a we're has taking second activity. that. we moderate excited as not So company really would about were We guys needed We to

going And forward. XXX, as capital not so level maintenance a

maintenance ton I We're target less XX% one target interesting they what's our the got about costs with and realized, delivered. Midland, on where as at really are. The to, changing capital down a little super because level, -- there, significantly a the a XX% really bit that Midland. what point we've is would what's coming had Delaware. the XX% excited teams about as is out the I the thing swings of we've That's on plate on think

had swings fewer plate. On the the Delaware, at we

additional And the could you'll the on think so see savings side, in dig cost work some we as we Delaware through system. I that

overall a again, the lot what maintenance capital we allocation out as that XXXX. noise of So head level system But figure is. through we'll into we'll of CapEx in there's that work

see think be we're production in but us quarter little try to bit now up, see importantly, and and fully broadly flat assets, a of you'll throughout the in we activity it's the that XXXX, control we'll year-over-year. where cleaner end going I baseload targeting

Leo Mariani

it's where to sounds like guess lastly see color. and punch comes just guess line I Okay. we'll taxes. And I I $X.XX, is the going That's it helpful certainly below it me for be on mean, out.

into in roll to of estimate are maybe 'XX. did little guys high-level a take Are sense still the issue? able a get your seeing Wanted preponderance here what of XXXX. bit down to the you tax as tax you You defer guys we cash

Marianella Foschi

move down Marianella. a did trend The you next to year-over-year. quarter. -- a obviously, completed shield year, the look an That little lost in down is actual up, primarily first cash right? an taxes guidance cash was bit cash with but little the perhaps to We the trend or we not as acquisition this as Leo, assumption having take on XX% taxes. a bit somewhat related conservative materially. It's expected as tax year, And slightly not sorry, year midpoint of for next acquisition down into at the the about having then on tax

Leo Mariani

going to trend up a there's you a is think Okay. still And still shield? or lot that decent amount of

Marianella Foschi

the As in range [indiscernible], you're million to somewhere at $XX so, looking $XX million, about probably $XXX $XX oil. million or

Operator

And line with from Abbott John Research. question comes the Wolfe next of your

John Abbott

being back want and just broadly year-over-year, about go discussion to this want to make flat to Chris, just I I production that I sure understand.

I program cash oil into cadence sounds So And -- to I potential is want -- cadence to is understand the flow. XQ. year. idea just a I'm more increase expected level-loaded production it free maximize understand XQ gradually from the next like But in to you trying XXXX.

Why not think rate year-over-year. not you flat hold do XQ Or sort of that production it's the is flat? about And So a that? possibility? why how

M. Doyle

Yes.

I year-over-year to keeping Or think the said, and probably a keeping and flat ended we or at we going thanks flat "Hey, XXXX, moderate to cost exit to for service But look we're a going whether we're the between bit" the overall production -- It's little that's we would saw outperforming us flat, I and production flat. multiple up team question, the John. that's back guideline. when point iterations, big the entered And commodity. again. let disconnect year,

long-term a value. work of excited steady-state going of at a allocate for capital allocation the ready or to to we'll see model XXXX, bit flat shareholder do but We'll we're we gut and keep have fall the a and more a broadly lot forward. exit makes to this point, say would flat as the all But starting if paths to ultimately different it direction. program go going have I look to So little get sense the to check drive capital to to

John Abbott

Appreciate it. hedging. question And the on is second

it oil So And to to the hedged XXXX? you you at sounds the how extension hedges. add as want more are you there, of thinking you out in look be want sort like macro about

Marianella Foschi

have you don't curve hedges that's or combine the when a somewhat low-cost point. with that, to we least you the expect Xx, in recently pace period now, the basically, right, as within as We will long the basis. lower. a I'll make structure program back question. point that of add prices that next John, the of month for And QX couple at right? Right this roll from a months this XX% just have have program low leverage, rotated [indiscernible] we to at hedging XXXX XX continue progress our we underpins have in on to with initiatives, want go-forward that which above balance is attractive our a we're to to a of along of side. ago expected driving hedge the say, through see that with meaningful continue our have need XXs. Look, that business, sheet months beyond structural we our XX% really us hedging target derisk rolled we're to on delivering we down at with leverage delevering Thanks very hedging Look, at to And a about expect Marianella. the we we on to of want when XX-month

all that those of over pace leave components delevering free time and cash our I frame. our with comfortable flows think us extremely

to as basis. we'll a continue and go-forward see out, that's roll rolls we continue quarter it in So what then, on to will between now the and us target

Operator

[Operator Instructions].

Our the Oliver next of with comes from Huang question line TPH.

Hsu-Lei Huang

program it about bit little the kind pretty optimal thinking about this this levels? capital XXXX. terms you coming all year, For early to and lumpy all approach level of about back first was still we you been know the picking are more weighted any and about on be how to a program activity how side of going thoughts sort ensure back load Just year's question, front-end to is my XXXX half I of how wanting at the is in thinking But thinking always forward? as of stuff it's early the along talking

M. Doyle

the for a Yes, an anomaly. Thanks bit Sure. is of little question. XXXX

side could as we and to by we may CapEx overall capital into head in that quarter, baked into reduce production redeploy think in gains half, I hit this redeploy to on the what's interesting than that strengthen are exit, million, strengthen rather not did but we additional is head the where step what's $XX we as 'XX, and back not XXXX. strengthen, as capital the there second capital

this is as we highly DJ, beauty just this we the we team XXXX. confidence a as functioning into head of got can in, with what that's that the think we've now done is I we've delivering can in team lean lean as

to look cash flow So could whatever that balance savings capital and it the and be additional long-term for reallocate we we'll we'll do free take is to to come look opportunities sheet to could redeployed, back strengthen redeploy or the to shareholder are opportunity the of to capital, there let's 'XX it. is and value. But take some us can all what if to at that for best capital eyes

Hsu-Lei Huang

get or in set in especially quarters Is could Midland. the more way a Permian, savings? the I to second That in color question, this wanted operations the know makes you simul-frac of some about but of all that hit kind you fulsome if Maybe thinking much, for on. my on haven't I sense. coming an are drive this just kind too And opportunity to more about Okay. implemented something provide all you how could in talked

Hodge Walker

this Yes. question. Oliver, Hodge. for the is Thanks

the Basin. move point of process of towards operating back the the looking efficiencies, efficiency team your we year the we on the to on team building record a way delivering really operations and equipment, this designs team this we the optimizing end done, in Midland the were has now in side, what and this what at to plans your are this incremental and building towards to and track in can bring continuous continuous out of really I and What place through in were the the leaning think optimizing table improvement capital for that question, seen the done? are simul-frac where improvement. To putting being things completion Going you've is strong the

Hsu-Lei Huang

be that any And in into would of category? plus that outlined be of sort Or savings from the target Perfect. with that Okay. already? simul-frac would kind you -- embedded today

Hodge Walker

number, that is that $XXX will they're go-forward basis. not savings The That incremental savings a -- there. to date be in at on

Operator

Parks of line the from comes question final Noel your with And Tuohy Brothers.

Noel Parks

ones in largely vendors because sort versus what from with One thing hearing use I'm XXXX is of at acquisitions going earlier, towards as wondering the slower. And of looking for wondering contracting head service series remain of negotiations more services, I I'm has feel was happening you inherited the consistent people your Permian, but I I the there? was like hearing maybe

of wondered I you roster your with of where stood just sort So providers?

M. Doyle

a That as lean be days basins. I much more and start That Sure. to significantly X you you we on the who filled table to that's go completion from of are It's their changed, that example, is well really well. show successful today, I'd say, are X quite off the together. in up executing means When the here's X year. at into from and the is would they can will means X between beginning hone again, efficient. exceptionally We really rigs or when want what's rigs we can previous service improving, negotiating have side. efficiencies. yourself the interesting, per what Midland have to say guys, align and this the the drilling and from that in margins operators, to your an and in Very be you on drilling super partners side we're team different and excited those partners that completion

inter basins, around hey, scale discussions I in think then subscale. We other No, companies your seen building entered you the do toe that? you of, we've some right, start past, don't. the dip thing as and just this in have had

did in in It's big, Midland. we in Delaware. the as the we quickly what you can. establish did what go You That's you as scale

team. say, a X Midland and there's positions got to lean now, together you company and with in scale we a DJ, back our in look, work say, basins so win Delaware the of proved technical we right, be can we ready to because How service the we underwrite and weren't that's and that what And high-functioning like step weren't here's that do to it's functioning that first X And after team, and the going together? at way we out a felt underpin high beginning position in was providers the year, quarters.

Noel Parks

asked circle to That's got really to that And earlier. about back just interesting. Great. something

you've how little a I approach, development drilling bit In forth. about guess, of infill your so terms and judicious being changed more,

your difference So more understanding is broad strokes, technically pattern of is engineering biggest in the development rock philosophical or that just prior better that? And more the with driving operators?

M. Doyle

Yes.

got inventory. think will with I how out tied interact there to a it's bit number It's There at believe philosophical but is the that, inventory change. big tied understanding right? we and a of we as got both, subsurface. companies we've look one are gosh, to an little to engineering, another. That it, we've reservoir it's our It's wells expand of

cash-on-cash at seventh So guys and wells for on off well, of eighth losers, a solution are focus section the a peel on their let's X returns. shareholders. that's better focus those look return, drill money look at couple Don't wells, increase our the a well, inventory,

that's big a So change.

rate. the these again, day Take not now. change. And And at a new X can't X-mile great. the into a where it operating wells versus change I've think don't done. we've do -- on, into swap hey, lean focus I That's big in a we ventures, then hey, that X-mile the got look in final make got to team as great. is, them The other look that your right change is in wells Use big That's basin great. mile, is got land not the X X. X the look, advantage. is pads low Iron's into to push drill lean a team, other DJ, take you've to wells, to me, we crew operators just another

So let's upgrade.

day little works. XX%, iron, a got efficiency amazing and, get It's rate, that crews gains better spend better bit Let's XX% more you how on overnight. get a woah,

digging facets yourself That's attack. I in we're we've then what think really figure of done It's bit, DJ. doing so Permian. back And shareholder what feel little in on and the value in drives out long-term a go the the business, all what

of I question. of the a And appreciate little so I think the bit all above, it's Noel, but

Operator

Whitmarsh This back remarks. call hand closing does conclude session. over for to this the our Mr. time, Q&A At will I

Brad Whitmarsh

look forward to seeing if conferences you so have you third and reach safe. road us and any follow-up, don't joining additional the I and and a everybody bit for for have a please great road at your we be on shows. to at in here in Civitas. day, interest quarter, Please hesitate Jessica, the We'll Thank Yes. and you, out quite appreciate stay

Operator

that gentlemen, for Thank all today's and joining. Ladies concludes call. you

now may You disconnect.

Civitas Resources (CIVI) 2 Aug 242024 Q2 Earnings call transcript