CDEV - Earnings call transcript Q4 2017 | Permian Resources Corporation

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Operator

Good morning, and welcome to Centennial Resource Development's Conference Call to discuss its Full Year and Fourth Quarter 2017 Earnings. Today's call is being recorded. A replay of the call will be accessible until March 30, 2018, by dialing 855-859-2056 and entering the conference ID number of 9488549 or by visiting Centennial's website at www.cdevinc.com. At this time, I will turn the call over to Hays Mabry, Centennial's Director of Investor Relations for some opening remarks. Please go ahead.

Hays Mabry

you and joining call. full thank Company's on and quarter fourth year everyone, all us for the Thanks XXXX earnings on Glyphis, are Chief today Chief Operating and the our our Presenting and Chairman Sean Mark Smith, Executive Chief our Papa, George Officer. Financial Officer; Officer; call an Centennial the February operational company Yesterday with results we Resource XXXX reporting for a filed release XX, subsidiary, Production and LLC. earnings X-K our Form earnings results for

we earnings We during to presentation will also that reference call. website an posted today's our

Form You Presentations are beyond results Commission. the are and risk Factors the involve are Securities Forward-Looking also Statement presentation plans. and that like in in or can with call on XXXX SEC find these which that actual our of detail of our Including at to and filed and Many ended of homepage uncertainties Annual website for and was with comments yesterday. more many the would our control earnings statements the filings on under the during our that this year XX-K sections December www.cdevinc.com. Exchange XX, risks the Risk discussed could I forward-looking our Report note affect

non-GAAP our they and expectations measures based periods expressed to we and Although the that believe guarantees across on are reasonable help comparisons with of results developments financial are may may refer We also assumptions, or not facilitate actual performance future peers. differ materially.

that, to CEO. the the found corresponding our on Mark in to our And any available we For and reconciliation I'd turn Chairman measure GAAP earnings non-GAAP measures like be can over a with nearest call Papa, use, release to website.

Mark Papa

call. morning quarter XXXX Good Centennial's fourth Hays. and to Thanks welcome earnings

closing operational year the views will this a and call an strategy results, oil George be will financial from quarter with as presentation liquidity full and and will my the the regarding first follow sequence function our then then, follows; XXXX provide and I discuss update Sean quarter, comments. of our fourth guidance, Our as macro macro, on will

George ask will results. I review to financial our Now,

George Glyphis

Mark. you, Thank

During our successfully execute the program XX fourth quarter we and continue wells. completed to six-rig

high-end increase on of averaged our from As barrels oil fourth compared XX,XXX guidance. slightly production third presentation, you a totaled This per the barrels equivalent and volume XX% QX quarter annual quarter day. was XX%. Page day, the full-year volumes. XX% the total Average the XX,XXX as volumes can earnings approximately equivalent to oil increased production Oil above percentage per oil X of reference of production for a approximately drove

forward, price million expect totaled currently from our $XXX total $XXX We These $XX.X XX% will well of of combined driven $XX $XX.XX production incurred quarter-to-quarter production by have QX quarter capital can transparency. we on the third fourth percent oil compared barrel the we a breakout in sales depending or $XXX liquidity million to G&A which end realized was our swaps by a related slightly per per G&A completions million our shift higher million a compared $XX.XX The or increased million, year-end, greater percentage quarters to was to per QX increase which within from including On upper million price in $XX.X $X.XX drilling XX% disposal of a of notional $X.XX profile. D&C a income Boe result shareholders position. so on higher number the per $XX of initial going basis $X.XX issuance primarily anticipated senior million a of go processing forward because diluted to lateral basis for in production approximately QX off expenses as $XXX The to lower three $X.XX or of quarter to per per estimates full extended legacy total the totaled a were doubling quarter-to-quarter million to QX in Gathering, XX, million volumes totaled on driven third was higher higher to oil DD&A QX $XX.XX for million per common per QX. before more and the compared million Cash during simply improved a and operating of conservative. too to to and share were QX. on this compared was expenditures diluted share unit our on and County. cost of D&C approximately per interest Centennial costs BOE. guidance higher borrowings Cash up basis X% we approximately were laterals. notes to facilities November oil Reeves our per extended our while how to significantly. higher in last in GOR QX approximately in and went primarily $XX.X more annual as costs unit unsecured revenues the transportation EBITDAX the area quarter than Net as laterals $X.XX Going flat higher oil QX. [water for relative totaled which quarter. allocated a begin for D&C cost total trucked]. in volumes, extended previous for which Page including $XX.XX a workover a primarily we capital in drilled of This driven cash volumes hedges drilling was and of increase increase approximately $XXX solid compared of guidance $X.XX to prices $XX.X a realized This totaled This higher at expenses XX% expenses forward. a oil fourth and range much expenditures significantly was to the Boe $X.XX approximately to compared on per flat unit QX is was quarter to and Boe were fluctuate be $X.XX this primarily compares for exposure quarter. the numbers by basis and as result quarter. in compared at or XX% essentially

carried finally working Additionally, originally we drilled in forecast into QX have good some a cost previously than of higher land interest work from team some Centennial's wells result QX. by over as and

successful the three the separate high-end we higher shift after towards were course we associated in of extended having lower that expected as mid-year during laterals unit solid quarter continue guidance exceeded our and greater significantly Our wells. on D&C out cost in range as results the was increase anticipated generally production single said, year. costs fourth stronger occasions the as of unit extended because on cost which given primarily cost Centennial's closed a XXXX. very guidance our annual guidance they Per returns activity will production of came lateral generate to activity. with noted than we That section would

fact, to feet. XX% average In year-over-year completed length approximately to increase lateral our approximately XXXX XXXX we expect

built development program a Our XXXX solid beyond. for our accomplishments and this foundation during year

In we with offering, of facility at notes a January cash debt million the and you $XXX $XXX reduced our senior and of X.XXX% used the from credit the December can base And under XXXX borrowings Turning million to $XXX position. with of of reference $XXX At coupon maturity. voluntarily our and revolving we and we capital $XXX markets liquidity program. million bond on offering offering amount fully the Centennial's current a of revolver. items accessed unsecured the XX, XXXX nothing XX borrowing presentation, a from to November balance repay the pre-fund portion Proceeds and we sheet of development had with Page of to million. million approximately drawn

which As million had a facility. debt QX debt cash times. at availability $XXX end, $XXX X% EBITDAX to of capitalization credit at million to liquidity under annualized we net was approximately the net plus stood includes X.X Centennial's result and year book of

continue significant to levels We low will going prioritize flexibility financial and leverage forward.

XX% is which oil The Page XXXX. on of per is our summarized to an XX. guidance rate XXXX XX,XXX XXXX to represents midpoint growth Turning barrels day. That guidance production from

and the we and the D&C wells, revising is per to $XXX throughout level for Centennial tank midpoint tied to which of course to XX% million of the to total will budget total XXXX. for previously anticipated also and our is includes of to The wells Approximately a function day. our facilities drill it during additional our of D&C more target D&C estimated well related approximately million primarily services increase minimize SWD We XX prolific infrastructure of performance additional time construction gross saltwater primarily million and Non-operated injection for benefit are primarily change construction over enhancements pads trucking is $XXX expected wells production seven-rig budget. build-out related spending. This infrastructure gross CapEx approximately CapEx. million our is cadence. we Importantly SWD is oil XX for of $XXX disposal. to expect an the which $XX with budgeted these costs D&C facilities water of as to This the as batteries. our well is enhancement $XX disposal and seventh-rig our XX,XXX the a to We've including This operated expect to XXXX $XXX capital at a XX upgrades, allocated of well complete or February barrels rig CapEx and guidance approximately budget, to D&C With from million XX,XXX operated saltwater does constitute added remain existing XX will million continue pipeline. our not utilization in at XXXX.

estimated is Lastly to other seismic million. $X.X and be CapEx

Turning other be $X.XX to XXXX during higher $X.XX guidance with inflation. to reflects Boe $X.XX is firm our which water actuals gas. residue per per unit This range handling XXXX. higher at than from GP&T for levels cost, increase some general our is expected and almost to cost expense $X.XX Boe. costs estimated is associated transportation entirely anticipated This arrangements and to XXXX lease is operating

Delaware continue order Centennial gross of capacity goes drilling in place in year the after gas to in we the needs transpiration monitor stock-based and for to of future G&As result G&A and of challenging unit activity into is and notion in per of gas basis. Cash of out measured will Non-cash per drive production agreement $X.XX growth volumes natural ensure compensation at $X.XX barrel the Boe cost is expected estimated to and to an more agreements production become as ongoing as costs securing down. a XXXX $X.XX past per F&D extensions XX delivery over X% taxes has will is per or several entered Therefore, Boe. we at year severance to Boe of XXXX ad basin, believe by. market. to a DD&A valorem estimated Reeves pipeline and our to estimated X% XX at essentially to natural $X.XX revenue. As services slightly reflect all leasing that are at projected estimated County higher

basis. Finally, production unhedged price oil we fully fixed on gas and are natural a

hedges will various Matt roles Concho as at Matt to Resources Concho, over Management domestic Exploration. his the Senior technical gas benefit we entered total on Occidental as Manager in differentials year over and We and team vast natural effective XX greatly public operations. member call And basis Board Sean? Most Matt sales for to to Smith Vice call company gas knowledge over President a Sean of Prior in I’d represented of Hyde, January. turn recently, XX% welcome future into will including on spent Independent international as the the turn Permian. before like financial growth. and Oxy quarter. years Therefore have of at that, to minor behalf oil Asset than His and became with team, I during to tenure newest entire served of review reminder And Centennial's management some the but basis have Petroleum natural relatively Permian less Sean of exposure both Executive basin of experienced revenue fourth the WAHA. the which acumen Mark I our to X and

Sean Smith

and quarter delineation A. and George. quarter basins solid northern fourth positive successful downspacing test, Wolfcamp the Thank The the Delaware Bone you, test results Avalon Centennial. southern for We brought two represented Spring strong an in and a solid execution another tests including well with online both

number third the Centennial current quarter, which XX Even the of we spud six overall in the the XXX the to of in wells. than wells and the Permian were XX completed quarter. in in completed basin, During able market service stages light operated which rigs more double stages tightness is complete oilfield

More overall our this importantly, while we were able to also productivity. accomplish increasing well

County on third or appears across the significant barrels during Wolfcamp Bone Weaver day is Reeves X, TXXH third drilled Weaver with to Sand recently producing remains of of position. A in codeveloped which similar Sand per completed Based well day day flowback was encouraging the the Slide County. completion Weaver was our C about Reeves techniques. approximately its which be online. enhanced X,XXX strong, Bone Sand our equivalent using we could oil excited we X,XXX Spring Bone as Weaver approximately and the targeting We're over third represents oil Spring this per first Spring to to productivity. with regards A with foot to XX Turning a believe the an portion on This our initial our barrels Wolfcamp be results lateral X,XXX the completion of

During this we several the year, expect the tests zone. of to complete remainder in additional

lateral. quarter, the consisting barrels XXX in would Centennial of an approximately this additional for XX% the online company's of acreage, the XXXX environment. Big the that in Carbonate of drill well adjusting foot of Spring lateral, to XXX continue short during an plan Big house lateral lateral and with per feet extended barrels third and equivalent oil year. IP of also IRR it Therefore, price XX of XH oil or fourth an the per testing XX% was XXXX zone Miramar generate we day at Notably, long House estimate approximately big the drilled commodity today's a the will reported oil interval. we Bone brought C pretax by During a Located House

it's per A, of IP approximately per these foot XXXX the XH basis, per in XXXX Located southern IP were On A. lateral XXs drilled West XXXX an Reeves the entire Wolfcamp County of XH XX% delivered of acreage day wells development and Big and in the addition Spring, through our Sundown Lower In XXs with continue Blackstone oil Wolfcamp effective area, of length to produced was of lateral equivalent day oil. Centennial Wolfcamp XXXX Bone feet to roughly portion the oil XX% average respectively. achieved deliver with oil XXX oil. well Chief upper the over results the position an across equates equivalent lateral day County. XX a of per of barrels Targeting length per XXXX and basis, to IP approximately Reeves of barrels consisting foot XXX well This XXX barrels this impressive drilled of of of of oil XH foot the per lateral on an consisting On a day. the in barrels

section an foot approximately X equivalent Lastly equivalent in XX% per XXXX reported consisting XH. the and A respectively, test per and IP of Reeves barrels XH House impressive of also Centennial were oil XXs initial XXXX approximately County, These downspacing per House wells at and XH XX-XX XXX implying eight of wells over of generate day With with barrels per day, XXXX XH drilled Big zone. oil. foot the Big laterals, both oil spacing

XX wells achieved days its cumulative of over approximately oil Additionally, barrels XXX of and per these per and XXX,XXX during day pad on the basis first well a of had barrels oil XXX per two oil barrels thousand production day foot of online.

XXX our foot essentially As is a all well reminder current predicated of inventory on spacing.

Centennial downspacing additional to additional While test early, spacing on test perform this our during prove XXXX. positive inventory could acreage. plans

September operated Basin. the Centennial Now shifting program year results an initial during of are last Delaware Northern and to drilling positive. commenced

of approximately oil lateral Pirate and had operated which per achieved length State well the with This well oil XXXH targeted of XX Shale feet. XXXX XX% barrels was Avalon IP a an the XXXX effective an of approximately Our first day equivalent cut.

Bone foot in online, of days reported lateral production. XX wells well. XX,XXX During these over oil XX XXXH XX pad XXX just XXXH oil. its per per for XXXX of averaged Tour well during represented XXXX equivalent first the State feet approximately The basis, lateral feet drilled Bus barrels lateral barrels On and two of averaged second an Pirate oil day a of wells approximately IP the of produced length initial per barrels State XXXX XX per the These and Spring. day of of days

to proved support delivered Total Centennial acquisition. to XXXX continue the in Due per equivalent Shooting oil in XXX performance drillbit our Furthermore, one growth underpin $X.X asset reserve reserve position the to at to a combination throughout production the and through reserves additional the this barrels to of rig of an OneEnergy F&D and during our XXX% solid basis proven expect expand we operate oil equivalent. activity, County and and cost Lee organically Mexico our year-end on XXXX. well We forward zones more look results wells throughout million XXX% Slide in initial position. XX, approximately over strong these decision to to increased XXXX our increased than confidence completing PV-XX increased of $X.XX our replaced attractive Year-over-year billion. value XXX% to XXXX. of proved of barrel acreage

Delaware The high net acquisition a XX. position acquisition as position existing contiguous earnings net announced on seen from to in represents by As approximately XX%. acquisition our XX,XXX acreage, our you to in interest with operating $XX this acres saw an XXXX over of we roughly working increases Northern XX% Largely of County many Slide Lea the OneEnergy our acres. bolt-on for million release, of

short potential laterals wellhead significantly XXX inventory to add conversion laterals to increasing extended contiguous enables on locations Northern become the our bolt-on acreage this IRRs. Furthermore, the Basin. of GMT existing the acquisition approximately Additionally, gross we in Delaware the estimate the XX will

it and we and acreage One, are parameters. this only operating excited and the metrics, believe acreage. our three, all will acquisition the criteria We financial all better or of to closed as to as Mark must an prospective these portfolio. three needs three acquisition must needs acquisition. year. our Two, X price said OneEnergy be be be before, of as the our attractive integrate transaction on February good you As we it not overpay heard consummated inventory for must add current this than will The of accretive acquisition

for Reeves approximately the net acquisition, In addition to acres to also plans XXXX announced million. divest County $XXX we in

divesture on this the see the can is production, you impact nature March divestiture transactions Combined out as the The non-operated X, non-operated position represent minimal for County located in target conditions. expected position The ways County. closing terms are improving Lea quality existing to and As is willing Reeves this working our in of assets, current Reeves our our had these position properties an hence swapping County. interest divestiture customary in largely production close portion to on to of with in is Western upgrade slide, adjacent overall were on low to acreage subject reason not and acreage to these to part it. our does the inventory. quality essentially high Due we we XXXX operating or a

Mark Papa

Thanks Sean.

around between of by this fully prices year. also in and growth demand to goals and supply over to our to caused barrels year. and some some macro U.S. agencies picture million Many oil the second global of we up I day expect have I'll Since thoughts regarding provided tightening just was a a oil operating it to X.X company, functioning slightly our X what Oil the year growth. forecasting them the strategy. fundamentals now relate million to made Now one-year-old Centennial first inventories Centennial turns on oil focus we perspective oil regarding how XXXX U.S. accomplish as recently provide supply responded and

actual which than I as noted, previously growth to is I future XXXX U.S. will will less response predicting supply support global forecasters are follows. and price. many demand As Centennial's be expect picture the currently oil

regarding remain to unhedged continue oil. will We

our XXXX to we’ve XX,XXX from target production increased based strong our per on oil results. XX,XXX Additionally, barrels well day

these plan. in We XXXX company I capital our night. you’ll our Slide goals. expect rig XXXX XXXX nine to exceeded of articulated presentation count accomplish which goals we from focus without last we not also this ask our on outlines pretty all of these is the you met in released X during or that fossilized significant previous to easy commitments goals March increasing considering were each know we or

as The know and in comparative drilling volume particularly relates but high operators barrel established here X company. we Sand spring there's ourselves capital put, During three XXXX per to capital efficiency is cost. that's and of about Slide goals, quality amount zone. a lot a in improving raised acreage in I Spring analyst commercially a mid-cap no Delaware. inventory provides the inventory on point Slides notable. incremental added accomplished to significant on XXXX cost tested the discussion Difficulty]. going of relating other foot promises. Simply on goals this as on we've discussion point bone efficiency leader now XX several efficiency. make that Slide strive estimate levels to our level with our oil Southern with of key no time I’d our deliver IRR results true capital efficiency. and XX we’ve to we and compared for the well going increased the Bone our new estimates, well [Technical results really our CapEx technical about we've lot point expenses consistency added is our our XXXX that incremental key which that essentially a capital particularly high two compare at with basis here Bone we XX improved and oil We M&A, completion the transactions. times, technical this technology, a inventory IRR productive outperforming year’s I’m pleased we've XXX% this of is With one outlines Spring zone, and

ROE's expect in through and year. XXXX we'll for and Thanks have debt and adjusted to price GAAP listening highest the we We oil industry reasonable go the now rate ROCE’'s a compound positive generate Q&A. environment, XXXX in to annual this growth oil

Operator

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

open. is line Your

Irene Haas

My Congratulations on your with understanding question a and acreage this do as this to good have feeling early, for Spring a county? target is B) you the do extensive has carbonate, to how for really A) quarter. third Bone particular

Mark Papa

I what third know maybe extensive the play would of Bone carbonate what say is Yes, today one, over single it or would want number we home don’t say roughly acreage. I two-thirds well tell on to I’d Spring’s that a based baseball our the play, I is sell now. say about first what run. right is - in is And I double, it’s a you not

our in have well modeling first would lateral pointed economic a we economics our that rest of as lateral It out the with threshold doesn't As that’s the we the compete slide the case short portfolio. of mile in was portfolio. presentation, two our would meet long the with lateral the rest competitive

to productivity are by in target move So lower a probably of drill maybe our and going likely two-mile plans probably bit this we bit in and a the this the little the in lateral if improve section, bit can see the that a quarter a we fourth doing we’ll section also. little carbonate would year

third And this we're Bone I’d see as something that’s - identify Bone Sand whether would we other potential this have Spring fit by juncture carbonate about in here portfolio forward. Spring the target. Bone that our say and for and we’ll At just Spring a so to third really is the very test additional optimistic one going year-end XXXX and

Operator

of Scott from Markets. comes RBC Hanold line from next the question Your Capital

Your open. line is

Scott Hanold

could just First add on that maybe just you the if to thought I finished.

looks get codevelop success a just more you in or you to Wolfcamp little bit and As you our just in activity XXXX of the the would third at to be forward. look program Spring Bone A incremental question plan if going Spring? like is the A to be shift it’s terms you very Wolfcamp Sand upper it your Would just and heavily and do A Bone to weighted going that that -

Mark Papa

for right rather we bone would this A probably ourselves guess preliminary know Wolfcamp make looks parent-child question. thought had and to by setting excellent you now the kind here sand It be for the like third we upper if drilling that that Scott Yes up of seconds. XX - are the

that And you're and pretty turns going have good as And Spring in quickly more like this less really wells we we alter upper Wolfcamp sand this our it second A program because weighted a of from correct, sometime for XXXX, it well we’ll upper confirmation define heavily to result would year if expected confirmation would now we right well. we our third drill A Bone the third out so then is will expect of to the drill for but towards our net-net Weaver Sand program then we’re probably half and a initially bone well. well

likely half likely to guess wells. that's occur XXXX. less that could be And skewed this last we’re my in increase wells will So of not that in to bone is the they'll is that A more the provided to we occur best of and that the wells going wells second such the those mix number change of be night but year relative to seconds sand upper and the third estimate XX what

Scott Hanold

the cost pretty Are comparable those well between two zones?

Mark Papa

is slightly shallower just the costs mean just can comparable. third that the grenades horse say I for Yes. but the using not much well bone yes so are hand you

Scott Hanold

or count. decent is on forward the to doing be for wells amount is down benefit I is of should a well the give infrastructure you’ll guess number And that just size the that some question there basis year assume we And spend a that to context go this could road well a be with associated that, XXXX, that around a little you spend. us on CapEx infrastructure

Mark Papa

to want you do question. Sean Yes, fill that

Sean Smith

and you of I cost. can buckets think majority think but two is the that of of which kind infrastructure reoccurring a spend - that

down there be have Majority while wells online. and associated will shared build wells with bringing to So the this we some out as road in some continue are we will capital because reduction infrastructure costs individual field. these of

in reduction percentage number years. So forward a decent later on there of although going kind a it’s some I be basis think will

Scott Hanold

those those spend And think Page then is infrastructure income average system, ranges the that XX show on your on net net you well I cost on presentation target right?

Sean Smith

Yes.

Operator

comes Subash of the next Guggenheim. from Your question from Chandra line

open. Your line is

Subash Chandra

Question when cash or view et with have just or timing free flow some CapEx maybe guess Do required on conditions updates as price outlook I targeting updates. you cash flow free be the and neutrality first and you of to production cetera. the might revise

Mark Papa

Subash, - our a Yes again little we bit out in zero essentially that view again unusual debt. started with is we’re company

net debt XXXX. as flow know obviously is X% in outspending So cash current our you about quite are we so

will likely in roughly outspend $XX XXXX based our and should We of in there. on based flow achieve neutrality WTI price XXXX on our that's cash model we

be we lot outspending question this because is to where we knew your we in company Genesis so see to we is debt, is mode that's designed the net out real mass net to we a to bad critical our get company. And roughly - certain we exceed a debt our a flow come cash had a barrels is never XX%. of mass total calculations reach XX,XXX meaningful modeling a a our cap I’d And XX,XXX to of critical define and oil by day

net or companies and of your about there strange a of the should find questions bit we companies reach yeah XXXX cash one projected outspending lowest it we by debt And and lowest we’re to so even XXXX that get XXXX. I neutrality be net the sometimes flow one But when little through XXXX. debt

Subash Chandra

to she Irene's extensive it it asked Reeves versatile think the spring might bone you channelized guess repeat across on might sand County? - carbonate I And or or is the be question how blanket that

Mark Papa

Reeves question On sand think operators sand third County roughly very I covering some Bone offset [Control] certainly we again I had rough Bone had to probably the also a Noble be and three-quarters of have recently. - The that good looks pretty believe the number. results and Spring acreage Spring

So to it's acreage just you courtside our to. it of that more on The a pervasive a when it and zone is not sand is the use elements Bone kind on sand shale. around our acreage area of is on question our Spring the but word third obviously

like put we’re in that. a in I wells, unit is going a pro-well some on as a meaningful IRRs one-off wells that third this sand out so the development wells and is this Bone do looks many This so XXX question that And a to will And as on acreage. this it the so pretty deal that four XXX unit. it you would acre attractive. quite something acre six turn have comes the is noted Is get say what not how our you to to result forth for significant be going is work could it’s on result. look so But Spring spacing pretty

this just touch XX carbonate to knowledge about for nobody a third minute excited The XX carbonate for tested carbonate mile result. maybe we're nobody bone area the our well. to has in So the radius or our on pretty this probably really around nobody

semi call I’ll really carbonate kind So the is of wildcat. it - a

nobody has mile So this basis lateral is we’ve it a a if large is so that commercial true for probably to original on a you test got – will that tested area. meaningful X that going a be quite is well and

to that that just also. that have established pretty see so, neat plays and we out it’s So we have a do how

Subash Chandra

is than so pair Wolfcamp. any the you decline could final between Spring said. the the target want Wolfcamp just in would sand may different spacing the viable be somewhere Wolfcamp the Do And sequence year? Bone question and as the to still know the intervals second of rate questions look that sands you the of you all you this different a Wolfcamp with And sand think zone

Mark Papa

you sales or shale's Wolfcamp you the talking or are sands Wolfcamp will about… The if

Subash Chandra

X, thinking down acreage to probably Yes, gets and it’s closer Y's the of I but if it you know? was your and Texas, part about northern

Mark Papa

so Spring really Yes on paying of one course Y potentially and B on be target our two acreage. new intervals could pop to that going guess Yes, not we’re couple up on of really I the a not got that Bone are likely be another our But C test on X, our and we terms may that’s intervals. one acreage. that’s Bone our Wolfcamp pay targeting there that acreage Spring in we are doesn’t or the potential may intervals exist that acreage zones a are other

Subash Chandra

do And the rate similar is to shale? decline think the you

Mark Papa

history horseshoes say you We've sand and third and fairly some I’d know yeah of got bone this similar. yeah some on again are grenades hand production

Operator

of line from JPMorgan. comes Glick the Your next Michael question from

open. Your line is

Michael Glick

Your things how perspective. things out? playing customers are do Del you signing on gas think the think maybe do out the gas you up you macro some when a STE, basin getting see in about the how from in side do sideways And get terms in of

Mark Papa

developing to County. head will Alpine that to the lot Alpine - that's certainly be area in hub Michael then casing And I a high our oil which a of obviously put Apache everybody that be. going proceeding development lot of is high and long-haul the good coming move Reeves knows got a pretty the into gassy gas you mean yes, question, very with is going much played gas from

So and XXXX, long gas we number for the number XXXX for long could issues have getting gas away that you our our have from one, concerns two timeframe XXXX, on getting to some haul haul. some that

you're out for that as to we XXXX working additional commitments on things for seeing least XXXX we've and of some at some parts transportation in that doing XXXX kind that have of for increase in got estimates we're taken and there. transportation the so XXXX, for there, And make our firm GP&T sure

NGL have all of still off of XXXX say have your moved right oil somewhat put some would got going and XXXX out kind gas And and us there'll degree be of comfortable to you lease, Reeves question. work off comfortable problem. do probably I moved XXXX oil on get on you on place XXXX, in you it's the the the pretty comfortable, not the now XXXX. you've we Lease can moved probably kind So We where - about is is think NGLs to question, we where but issues a question, post are concern and a you infrastructure we gas your additional gateway off of in over lease County, we your get the have lease. one some then get

macroview, That trick of that's really on bit disposal you're seeing disposed a significant that make produce something down Michael, also hand, have that pretty their Players get produce, of the well Can rid that of our and feel, have, particular can't you in we up that So the water disposal. two year calls, We the we focus issue of kind don't a sure you properly off every barrel up then you on course water Delaware somewhere got continually say, because just amount as to our other oil produced we we've because is have get water to it's or as some earnings LOE see other the little And noticed prominent, it. could that you has our you your water water. because to shut for water produced produced in and of disposal, we cost. road, the issues we'd disposal reasonably of oil good moved also. of

Michael Glick

do mean, for potential ins in the shut you years? I over next the and flaring of see Delaware the couple

Mark Papa

not believe that, that I one And I Yes. that yes. producers - potential of have mean, we're I could on with that producers. the see those some deal to a

Michael Glick

more talk placement continues productivity mean, completion the and the least into maybe just the to striving right. greatest continued I gains? you trend Could about up side on And that's then and these lateral and it obviously side.

Mark Papa

the I've up X,XXX were that proppant on getting front pounds got zone generating point a per technology XX% now the water. and be is our to we've X,XXX and I reached we're like between laterals in think side, lateral supposed foot, kind of now XXX% One of on slick Yes. we're two and answers to we're of that. we just where

the our optimistic per that I'm get companies. a continued or three forecasters technology or that on with our got not sure and our And our a productivity that's the foot over I'm that think of year well reason in U.S. total last we to next technology year those completion convinced where we've So, XX% not And see just I to scale, may in think go we're improvements. a per frac growth per see year completion what technology frac technology lot one showing from we've to next other lot that presentation is improvements such in of kind or results compared state-of-the-art. year two to oil per to of done over going to relative slides per to But a get disappoint U.S. why because rate as that I XX% or of production. oil macro you're years, production going several productivity well

Michael Glick

premium any question, as do a position your thoughts just you guess how for I stands appetite trade it corporate to overall out given the have the then And or group, today? of you you about And do M&A? last feel

Mark Papa

us big our look At good I relatively out these of I that M&A transactions making about two - and are for transaction. think I more think an feel we very non-operated position, us operated. M&A did today a be outlined position, don't improve small, but land our this and juncture get into to

beyond some developing putting the M&A double to XX,XXX that I'm the in out transformative. about big with Bone more and I'd excited XXXX. So Spring of right company getting to us this and like inventory our Third Sand size now, and post Then saying,

particularly big at M&A going say not we're it's So this would some transformative I to likely juncture that do

Operator

of [indiscernible] Bank next line America. comes Your the of question from from

Your line is open.

Unidentified Analyst

just employee and capital. if thoughts on already linked that you've updated shareholder wondering as how could for thoughts the E&P? Mark, So value return it to elaborate you And to see to versus just get debate down compensation wanted you capital on works And on the creation return an chain? your outspend

Mark Papa

all good just return cost the of then capital indirect if Yes. the we covers ROR accrual really we And we ROR. and all bonus the We in CEO program. costs, year capital employee those got the at including not is a bonus kind field is what the down on land did to the to linked higher And entire direct get end do from we operators of where to get drilling everybody we a lease capital take program if program, which the costs. ROR the got of than our

company and is spend the know So everybody's otherwise. in bonus it money much capital going program everybody lease like down focus does in be operators to company you to lower say if a on the than make too you

there is This is EOG. program I place same linkage. at a in put So the

a So EOG. program was it's with a existed clone least when of at I

the again efficiency I'm big that just ROR really what others well because biggest big trying for to company. because to the want compared come not And to how I many I why really value try in I big of to a company how in focused so deals, into M&As because most technical capital really really become to ties corporate believer to do destructive. company kind really create why or on that's that's I'm that allows efficient. Again spend the I like organic a that does much are our me of is a to to quality our tactical attractive have of on more because corporate I kind to efficiency. to are make M&A. value. best terms I the is by think the is we I already and debt. essentially the In XXXX at believe in Bone not the to as a this the go slides that theory things that no to call free out we've on really it this that to was the the our things things want so it's me a box technical added Third XXXX in with of about in our most mean the point acreage Spring I creating that inventory, those program bother now make we just and don’t will. Sand really Delaware in opposed capital this think you so inventory that is this designed I of the it this, get and think value I Basin. presentation be kind because all

amount when kind the of of have So I starts to level is, cap what of max net me. and XX% net to ratio of off debt one, my that total scare total the attention anything absolute does debt cap to have doubt

long below feel I comfortable. pretty as level stay So that we as

will I share just believe to are some that price. drive those maximum So guidelines us

Unidentified Analyst

hear planning one oil quick Sean well for extent you you the on are in-basin say Sean. I river did sand what to use cut, on XX%? XXXX? And the And then

Sean Smith

our comment, and is we well. pumping in- do approximately kind what to wells cut, sand in In been XXXX the look oil we've and On on XX% plan as basin the XXXX of doing to it at up proppant regards of and oil that's weaver. of using XX% tail-end in-basin the that

Operator

Mike comes question next the of Global. from Kelly from Seaport line Your

line open. is Your

Mike Kelly

issues And their are your well to top spacing is stemming So too interference would hear experience. company for tighter the as how for whole core your on industry to move assess risk these me you see Sean, that earnings a child parent relationships market you love these I if risks plan Thanks. as you and thoughts a fulfill into mitigate development? how you

Sean Smith

assessment We're pretty currently spacing, is going what think surveying have by our our we it's whole we're the proper as inventory whether to do to quarter probably entire and of third a XXX. XXX good the or inventory

had issues do those or there Third did parent/child are Sand, would not? And there then issues with what As on We're all question Third XXXs on come A up parent/Child parent/child those A, a we upper this particularly spacing we and there is with be if to lower right now promulgated Bone if about doing you some on that A we currently XXX ago based know see a Sand Bone together. we've lot tests tests. the inventory and year a and issues done was our upper of two

it's I Ford there. too parent/child the spacing Eagle stack middle last would just we're interference now and believed of these even of have similar a industry, issues out real. is seeing in because the pays across we're that a earnings answer tightly. and I always lot Delaware where certainly much well clearly come to seeing believe promulgated it I with of got in the results days lot companies the there several most in real, have So, are that And some say in is basin and question, the well

have of wide to wells now spacing say my a to see you'll that previously some whiz, after I than I year two the over and going predict, or companies could has my But going spacing thought the be are and So, said. had I what next lot tight? this that drilling more gee to be say

think in this Centennial. at All space studying Wolfcamp. list an that is for I inventory issue. it can came is, I So kind spacing which glad of promulgated a we our just we say were very we with very the set is of a real conservative XXX I'm first think I out

statement. generalized a just that's So

Mike Kelly

and we've bone bit, a appreciate Spring nice pretty lot having with not started operators tested? Switching Bone to some but the also success topics Third sands front. formation something want than I Delaware already is you that across acreage plan see Carbonate And to Eastern that. your different some little third it? other if a actually the that Felix just of call in hear are talked I Shale this carbonate kind confirm this test you to and Third guys if Bone that this you potential And

Sean Smith

a that Bone carbonate. Bone a this Bone I'll it the confirm than carbonate. Shale. different is Shale than Third is Third different Third Bone There is Third That

And We have zone XXXX. on that in acreage. later test year a potential early Third this perhaps perhaps that target may Bone our maybe we or shale a

Bone So, yes, several section. packages third this there like in there that are are

acreage. will that test confidence gratified our give I'm that some might because we so, And making hear people to third are Bone they us the that share work more on

Operator

line the Jeanine last from And so Citigroup. Wai of sir, we coming have from question a

open. is Your line

Jeanine Wai

Centennials little of CapEx day on the about talk after maybe with do oil the to hitting dead and to already is kind can terms but production discuss oil response target, trying comments old critical what is that lower narrowing a a bit on increasing I do outspends faster? your a target, fact mass you that? it the XX,XXX potentially horse XX,XXX then that In related am the your target beat the you versus just to square of price XXXX and not here, new thought to And it a of you to forecast. process part keeping

George Glyphis

just I XX,XXX target XX,XXX straight Yes, oil XXXX really can to been I've any have case. taken kind by you one, can't you in said Jeanine. that following Number our a a - But if our mean to day. line targets, was production was XXXX barrels always you - predict and pointing straight if of what really line that,

were so, for there those saying to the of on you barrels day of kind they're XX,XXX most I path in And a that on anyway. of - analysts, were you a broad XXXX think

that instead up fessed where path target just straight of of our is, line So that toward fact the XX think us production the I now XX we've for was confirmation of kind anyway. pointing

XXXX. to really in be going. it's XX,XXX got you what to guess and forecast whereas XXXX, nail is straight So and a can XXXX you're you if line, do take much been what want will it's we're years for couple the if be last production is where our And to you - in all likely proudly

just because a straight than can And that you most guidance line. really So heading because Well, turned XXXX line. the pretty out where guarantee is, we I have But expected the the it's analyst fact a that be pretty exactly no big much was will why reason expected. of where everybody much everybody better straight the bit XXXX, of provided surprise said, that's the well kind XX the we yesterday exactly were wells we just expected. for because that's

as earnings but XX if So today, we're well And bullish expected if been as at look bullishness, Difficulty] underlying heading for oil. a I've over to haven't my at consistently and that the it drill, previous XX you listen WTI of toward just looked up at kind to really I we that we're macro, more look my say of any we [Technical the wells calls the fess intended I of XX. production to. oil months on mean morning, bit so generally may And getting it's number you I we’re interchange. this know I same

$XX be higher. by continue to at we'll So, I believe XXXX WTI or that

the a we And environment, drives the oil gap constituents load of CAGR one so out income. think along any price that company price highest rising reasonable that E&P certainly with we in because be share to of want and will for growth have oil your

continuing so macro is And what's towards the drive over oil XX me to XX.

correct far oil macro. have directionally so the we on And been

bit unless, a with you So see the will of conserve a scaling and going little I opposed capital. as to in macro, reasonably forecast aggressive oil growth if to XX stay change back oil to that in we're

direction… that's the So

Jeanine Wai

from not ask line. a think think quick is Spring I'm XXXX prior up you and to your checking been but follow guide and some do that, prior said versus at like just still factored somewhere, And are that that’s I almost just afraid question the Bone And it's commentary Spring to of a be it your if you in to target of likely into continue they the Scott’s has case. straight the capital have I again? to it And great touching sounds historically allocation success Wolfcamp that the kind Bone

George Glyphis

you're Jeanine. think right I Yes,

XX. At questions. Spring going third the this and from anticipate to I Bone You'll back I XX come growth we'll up not have results say, not be afraid do if point we we're spectacular do Sand, to not ask anticipate in that this

Bone Wolfcamp. some as from we'll I Third just think opposed coming that will of all happen that will is, to from come Sand the growth the

contribution growth from a - will come So it'll different zone. the be just

Operator

back over hand will the I Papa. call to Mr.

continue. may You

Mark Papa

a much over Thank everyone We're now. we we around little from for but listening. you kept to forward talking look you three months hour very timeframe, the sorry one bit

Operator

call. Thank you. conference This concludes today's

great Have a day. now may disconnect. You

Permian Resources (PR) 27 Feb 182017 Q4 Earnings call transcript