XOG - Earnings call transcript Q3 2018 | Extraction Oil & Gas, Inc.

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Operator

Good morning. I'm Amanda, and I will be your conference facilitator today. I would like to welcome everyone to the Extraction Oil & Gas Third Quarter 2018 Financial and Operating Results Conference Call. [Operator Instructions] Please be advised that the remarks today, including answers to your questions, include statements that the company believes to be forward-looking statements within the meanings of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. the others, operating the earlier results and filings among its described this include, Commission. its and Exchange financial news with risks matters company that in afternoon Those and Securities release issued Extraction disclaims forward-looking update statements. obligation any to these

these compliance. company are statements I capital factors call and Company's factors drilling believes subject technology and may reasonable, prices, other results materially. as schedules, Investor would commodity Baltimore, While to competition, are to Relations. cause environmental to turn forward-looking to the over they such Extraction's like and differ the of regulatory Director now plans the Louis

Louis Baltimore

today earlier CEO, I'll to the Mark for Thank addition you, quarter. we in also on to to include sure Erickson, our third could our quarter you and earnings non-GAAP filing Chairman call. and measures. have our highlights certain financial glad Mark CEO; this today which good a call, to Owens, remind We're we With President; reconciliations Erickson, go over us company's the the for forward-looking Chief everyone. I'd release Officer; join Form and Tom today Kelley, us of of XX-Q, that provided afternoon close trading. our Jacobsen, turn and CFO; of you on like discussion today's be the Accounting our operations. after in earnings now and the statements, Matt disclosure call GAAP our SVP in Please through statements full our read to forward-looking on our aforementioned Eric to Brock, our Rusty some call,

Mark Erickson

everyone. call. Welcome afternoon, our to Louis. earnings third Thanks, quarter Good

high to this still some outstanding our productive First, Hawkeye potential achievements I of Broomfield the each and by and team Areas. expect has production the year. our made of our demonstrated XX%, over like within we recap would We grow to

shareholders now permitted, to midstream being in Broomfield requiring by pipelines Currently, upstream significant basis to expected $XXX our of are company, which development no to funded future million on laid Elevation, the fully Our is company, with wholly been outlays commence capital We've exposing upside. over owned is in assets. able a monetize XXXX. nonrecourse early area,

continues communities. X.X new environmental man-hours environmental partnering by setting without go a with operations our a million to by improvements example, team recognition commitment a employee compliance Award and over for with incident, and federal efforts being of single in milestone lead with state to to recordable Colorado Our Gold Leadership local leadership continual beyond on in awarded regulations, demonstrating along

expect we Midstream. grow expect generating in free in flow free while impacts the achieve base flow of and Elevation cash excluding Finally, the to QX to our for to cash year, XXXX continue production

Broomfield I wells of the want to the impressive first pad in Now results operated our touch from on area.

that you'll those XX with XXXX to involved, Niobrara develop community this of team from per effort. XXXX all project Broomfield this the presentation, XXXX Referring within pad wells this had ranking of Coyote Codell thick The for acres hopes high Broomfield drilled producing work go Getting presentation, is very investor our County can little way and see been surface our plots lot investor particularly County, in wells by per operators area, sits wells XX,XXX day, rates potential achieving along hard Broomfield important The point having exceeding volunteers are of These we've to Next, to to call oil our everyone X talk been past highest we our new due involved a which In from some we've have and Greeley, the in of in the vertical XX,XXX is the demonstrating very these gross, On about project under nicely open day, a testing from anywhere best we'll in system. you still Niobrara, in we'll IP Trails also difficulties the who the second time, on pad flat XX% late areas pleased constraints from best they BOE to pad the the type Codell XX in of net to, two-mile day XX-day curves is this which results. these results and of gotten strong for thank Weld page that with quality I to to area. Each always is Broomfield drilled potentially profile We've pays permits results returns which either laterals are We're and from lower the related wells, wells. XX. Trails Coyote XX up location section with per wells took our Q&A. show way. the on on page development wells we our the staff which work to in the spacing wells acreage started to the our the Greeley of August, particularly show that, in We've minerals. with other of XX% this XX early area. our generates crude drainage long XX plan. batch of as nearby. this absolute turning zone average X pad's DCP the close oil. of in pads Codell per project again, class but and the the few of After BOE everybody published over seeing. to our in with par benches on a both production want several as our the all almost very benefit Niobrara see are demonstrates so the performing diligently in necessary the production averaging very a BOE acreage

the up to day, we've producing were per online, Midstream BOE production allocation. DCP Shortly XX its imposed to XX,XXX been DCP's system. came on DCP's until experiencing we turning Plant difficulties Now, after

came the feet their plant back we cut In being prior Our of gross per over almost XX% system total to on cubic producing after online, allocation XX%. about gross DCP's day by million represents were mid-August XXX capacity.

So, our mid-XXXX limited to current allocation as stands comes be planning it Plant to until today, XX when we're online.

current by we wells For decline. go our year believe net. expected that relief natural our by day our scenario, production comes the XX per feet full XXXX, based base will online, per allocation our to XXXX Plant as BOE we only estimate will constrained day, be on on constrained production XX million with Under net we XX,XXX cubic meet expect approximately allowable. grow the existing have approximately allocation ample this we in After

continue area DCP As a be result, tailoring production our rate. to investment in allocated our meet we will the to

activity to will continue area. on our continue this of directing and with acreage, Further, served now in our will We Gas which third solutions parties Discovery, work production Western is by we Williams. our southern constrained for and to part non-dedicated Anadarko's

like Our open I'd the for everybody with processing that flexibility call remind not us partners access today. before multiple Basin. we to it producers thank your Day. tremendous most to the position diversified offers DJ I'd everyone Election time to enjoyed in it's other like on acreage to a by Q&A, And still up amount of

So we don't have any results yet.

that, call on the election. focused keep results to let's questions rather Q&A. and for operator, than our plans With up try Let's open the the

Operator

question Fitzpatrick the first Our SunTrust. Instructions] of line [Operator from is of Welles

is line Your open.

Welles Fitzpatrick

Are in obviously, help afternoon. understand basin. the drawdown they look just those that maybe end can little us a the detail Can with looking to kind day? color good wells they -- compete of seeing little or more what seeing? look EURs you're on guess, the significant might talk might Hi, they are anything about you Can a just you at pressure the tell the I'm -- -- that a more any you us pressure Coyote like for like the bit obviously, of I

Matthew Owens

see Yes, we a Welles, quantify normally But since this to on areas, compared Matt. so far say, to our to haven't asset. say pressure-wise wells Windsor we've not closest or been other as strong the It's Hawkeye. this really in in Greeley, pressures they're is early I what wells have going declining to lot date what Greeley would started seen higher in their our they're see the we be it. North than what as exactly that's but difficult

Welles Fitzpatrick

near flow? one in then makes term on. how potential on Is been for buyback. a you speculation what free just of sense. that to to and cash 'XX do follow you the flow And that talk list That Or 'XX you deploy could to-do There's might the cash Okay. some the free for about guys? with

Mark Erickson

plan hasn't really from stated. our previously what Welles, we've changed

X.X get returning down on most Once would and that all to free of by cash use done, debt first Our that planned we're ratio get cash of flow our way our to net and in identifying shareholders. advantageous inside achieve options paying is we RBL. then the use we

Welles Fitzpatrick

you thank much. Okay, so

Operator

next Pickering, from line of Jeoffrey Lambujon question Tudor, Our Holt. of the is

line open. Your is

Jeoffrey Lambujon

a XXXX? Good the you if other the give others there on afternoon there that Appreciate the And you and Weld? is color apply at based to all, learnings you've pad, any recipe then spacing changes it's on how completions different, are taking or questions. what the program just the first Can follow-up the and and My on in there one more for from frequently in that pressure on utilize Broomfield. first thanks any comments my configuration. you'll done go-forward additional

Matthew Owens

Yes.

foot Niobraras. different we XX and done X,XXX to X,XXX testing we some the in slick Codell XX areas. foot. to the some and And to techniques was also X tried some the few section. in sand as to in on wells completion of We that tested pounds our other gel per with and this we've on completions, wells early anywhere per like about we other XX from So do these are everything comparing went did a the just drilled under water had per up get loading pad, pounds on X results We

completions very wide the our have differentiation this get we is So results and belt. do under going a months once few more with production we'll we see array pad in tests be if to there on and of any a able

Jeoffrey Lambujon

were of August And then and the like it. commentary release levels the Got that applied production based from by sounds from year. have been on DCP. just one is relative my of a the question operator It on last clarifying allocations essentially of second

guess, delivered peers to to And since thoughts get that changing something credit that and just wanted just growth the operators it second, I I wanted interest in any communicated many your that of your first they how is doesn't confirm have frame? that. how yourselves to give also like I really time on, So given

Mark Erickson

that that, on Parkway was compressor time stations even substantially were That before ramp the the of based produced new August And situation as obviously continually we Yes. addition the they set production XXXX. the during plant higher period the well And was with our as I throughout to Grand that much started. period added. between built on, at period. Obviously, before than rates and mean, changed was in has since then. turning August time

to So into And, account. allocation nothing have what assumed We've we we that is our proper in as any know, budget, the DCP continue but, wrapped changes. that dialogue haven't method. taken you with around of

Operator

question our And of line Heffern Capital from of next Markets. RBC the is Brad

is open. Your line

Bradley Heffern

you're mentioned I some what if got the from guys sort DCP at XX,XXX producing you or to at you us that You of system. you give could the indication before the as now? produced XX,XXX wondering, range to was allocation

Matthew Owens

that XX,XXX the be we back up XX%. curtailed total were would that the were before we to to So

say to volumes, close could which the right believe imply for what XX,XXX. around QX you we're is Now I'd I

Bradley Heffern

longest sort be expect of in million the just looking on, saw the Hawkeye, then curve that Okay. then the the just I you've any I the on time would and there case. of was there? time barrel the And the towards then looks moves goes it Got like what it deck. color if on or on longest, is you you been with would talk at pad type the plots updated seeing the behavior wondering that Can as sort performance And XXX. of it. additionally, why about is X the more that's sort X if history

Matthew Owens

in that that's got up The X there South We've Yes. drilled seeing and is and curves the Codell the The producing X XX X the formations. good of wells. about Hawkeye there lines. Niobrara year months of one We're results X out those north make the made up got then wells that one about Hawkeye production. line ago we second only just of both

the One of is lot the one. a better wells performing than other

area more that again. wells with Hawkeye the pad be in curve drilling we bringing both Hawkeye think formations in quarter what's several another along South this North down. area, that's will So I testing But completing X-well the

points have to So more data QX to this along. a chart lot rolls we'll add as

Mark Erickson

today. But we're pleased seeing we're the with results that

Operator

of Our next from of the line is Imperial question Irene Haas Capital.

open. line is Your

Irene Haas

Can be engaged Broomfield project we have color on finally in you'll drilling. I little happening? that suppose your one a With your is rig, pad

with how pieces this a kind the you So synchronize want how to to just Elevation's And midstream does have as together. rough timing all of put build-out?

Matthew Owens

the first Yes, is midstream ready build-out as are to our will drilling we first those full-time in right-of-ways pads with right But drilling we when the that's the pipelines from now. coinciding go. speak pads. happening the as where the, start Broomfield in turn-in-lines to across we place be we going pipelines take the or lay of Obviously, area the turn-in-lines will

and quarters cycle will QX the go to through turned being for of times it in that wells be then couple will drilling after a first in line. the of be actually So

Irene Haas

Thank Got you. you.

Operator

Thank you.

Our Macquarie. the Grigel next question line of comes Paul from of

Your open. line is

Paul Grigel

afternoon. you guys or the hoping was impact time. constraints good lack reservoir on Hi, could midstream over thereof sustained I from the of ongoing the kind maybe discuss to thoughts

Mark Erickson

the would going constrained talk of and probably or XX, kind point to Matt best right I through Triple pad Creek the, highly have to now. a Slide the well example I'm of you is

Matthew Owens

XX, you look out on at where Slide have with Creek an if the Triple there, Yes, called it's we pad arrow.

line up. After to million back the cume able on XXX how X days to curve XXX,XXX first a a amount see the up that change kind several basis on because pressure. months. the this from a so, barrel in first straight wells little choked that started performing bit after was it more now but we when curves can line, were open And well see angle we you track about for days, after or went can a barrel is below was it You we as in line XXX tight saw relief those below some shortly pass decent of curve to year to

think of don't reserves we that been we up we're up that any now open those So we've rapidly able wells. making lost to there. And some

Mark Erickson

the production for C same the as of expect We pad type profile Street well.

Paul Grigel

fill do you'll there and completion in I guess, alleviate weighing you Plant we with that that area that to That's the for sufficiently the that the existing north to are see as helpful. outlook in into to then, And turning the move kind guys up XXXX? production be on of XXXX ultimately XX wells view? your south. Is And on able kind what need to that to of up the in problem view

Mark Erickson

there's add go the delayed, construction plant production would as Plant is the wells for additional some our in system XXXX in reason, up decline. to no we there XX if Well, DCP on planned natural be able or

with parties, we the in have with are infrastructure part that adding third pipeline, the equity private production we So have continue plant field with discussions in that XXXX they base established. that pretty and should northeast produce to the until But we of addition, because acreage flat those. a on time lot to ongoing the have so area. period be backed next here going in get of able grip We're strongly advantage the associated of to better, just that We waiting feel to how kind timing take of or the uncommitted firmer quarter see pretty to things the play over out that. we're

Paul Grigel

and good luck. That's very Great. Thanks helpful.

Operator

you. Thank

next of Our of the Jeffrey question line Campbell Brothers. Tuohy comes from

Your is line open.

Jeffrey Campbell

you hear Hello. Can me?

Mark Erickson

can. We

Jeffrey Campbell

I've which normally I Yes, Okay. don't is. cellphone, the

do expect online? to XXXX when little relief full-year avoid wondering all was detailed. you've investment you reasons strategy half second already overloading for or system is just like is DCP I 'XX the some that O'Connor scared. So a -- comes sounds the going the It

Mark Erickson

remains anything XX% which we in that We're be we about in $XX relief pick incremental could processing interests. online, that about If the 'XX Plant see that for whether new of of biggest going change, accounted or it would million be could be up. beyond area our to plant XXXX The guidelines. XX. the day a to 'XX capacity allocation at our XX%, net We've pick comes up our would that

Jeffrey Campbell

Okay. I that in My got allocation the of as going it's the It to Broomfield have any question other like on well. Hawkeye how south. color to going you're was wondering just midstream about sounds investment. around kind a investment capital elevation to you've if question you're is target buildout. assume I effect do and some going both

Matt Owens

we can that before is that elevation built later. in planning area plant acreage include that have other timeline the Yeah. We're done of would hooked then carefully that to our and completion around processing discovery is drill that some drill or CGF the go buildout gas We do western the processing straight buildout. can being some outside and

Jeffrey Campbell

Okay. Great. that Thanks. I color. appreciate

Operator

Thank you.

of is question from next of Gomolinski Morgan Jacob Stanley. the line Our

Your line is open.

Jacob Gomolinski

for Thanks results. on taking Broomfield congrats questions afternoon. and good Hey, the nice

Matt Owens

Thank you.

Jacob Gomolinski

I where see guess to to to decision data production it shocking visually August use was quarter curtailments due production their to a you DCP the in and for little allocations. bit the came that the maybe August determine XXXX versus

in the our grow. It think they're date sounds and DCP was like August you hinted these producers allocation don't at remains goal incentivize last for little allocation focus there said your at the XXXX -- seems making was on if if arbitrary. decisions? answer know with a I XX%. It any to how I single-basin room negotiation to Is if misaligned you

Mark Erickson

understatement, And it's put Historically, not allocations after out with which that, To be system, expect taken we they come the the most though, -- them with there again to surprised the this new we the stretch any discussions when the there would I way is or based believe -- the close us fact, to And we no told on of at be than saying point, we've do upon do, get associated them and our a plant. will in operated. It's our DCP they've XX%. made to surprised. greater none that have time led safe then XXXX, we the based throughout that communication DCP. during on with why we out not allocations And going were by would say we period decisions were of especially anything us to allocations. pick think had is don't we're what an say say, would to date same we not very in very, necks investment were we're

Jacob Gomolinski

it. Got

got and you those CapEx and stick You've system carrot elsewhere? own a given obviously your can a move have elevation dollars

Mark Erickson

We do.

Jacob Gomolinski

I And mean then you request you say options hypothetically, appreciate vote thinking somewhere -- would results about look talk how should basin diversify plans sort then maybe get and you PDCE and long-term to other we maybe the that of or if not you to the currently of to the -- that would not of were sort are just the later. to go about vote just be mode could talking divert options, have and into but out you I of about be sort the or develop and -- there we'll about what speak plans to run-off I your pass, community your know so is looking did to would Maybe be? you thinking were the investor maybe

Mark Erickson

we some this a numbers. into significant to a starting started quite But year basin. number building permits have Matt I'm through bit. Yes. the about And of walk going in election, specific We've going talked a ago, this over

in the core of be the will grandfathered think the strongly that In highest We basin basin. the in feel fact, we of through. the number permits of permits highest and those number very hold all I

today? of and election talk a have that attached be we're will it. some our value substantially a in into our will at than PDP But specific go debt inventory to equity to permitting today at you numbers. at substantial very But discount to strategy expect going with getting the -- high year end and a scenario that worst-case to it a about Matt, permits. So our want has our of look through we're where little we specifics, assume this higher do the Matt as bit assuming we

Matthew Owens

hand very been Mark additional like permits We've XXX permits We've now, about approved over for position the with in our in Yes. permitting X XXX strategy. pending. with core an active year of acreage secured said, our

the we X if some could years, drilling more So but not of And we what approved a next on still inventory permits XX next Extension have believe that permits in at through that, that to days, slightly X-rig we in get should over And more of area. another we days. regardless, have pace. approved could slightly about Northern XX depending outside do XXX our we're then about over get increase able also, the

inventory So that quite ensue runway long a legal tonight's is we of have if vote. any there after issues

Mark Erickson

yield permits that appreciate highest talking NPVs We're these are Broomfield, our Hawkeye. value located these areas in per in also highest I whole about some Greeley, the inventory. our And the are areas. of that mean, location

Operator

this for And to conclude turn the Erickson at Mark time, I'd Mr. session. you. question-and-answer like remarks. does back the closing conference Thank any this to over

Mark Erickson

everybody to the please stuff you're and can participating And the Thanks. call today. We for Colorado we from need up voted, and now. to get. every if right load polls in vote head Bye. haven't your Thanks

Operator

the participation gentlemen, does in thank for today's program. conclude Ladies conference. This you and your

great You may a Everyone, day. now have disconnect.

Extraction Oil & Gas (XOG) 10 Nov 182018 Q3 Earnings call transcript