CDEV - Earnings call transcript Q1 2021 | Permian Resources Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Centennial Resource Development's conference call to discuss its first quarter 2021 earnings. [Operator Instructions] At this time, I will turn the call over to Hays Mabry, Centennial Director of Investor Relations, for some opening remarks. Please go ahead, sir.

Hays Mabry

Thank you, Tia. And thank you all for joining us on the company's first quarter earnings call. today our Smith, Chief call Officer; Chief the Glyphis, George Financial on are our Sean Executive Presenting Officer. And Officer. Matt Operating Garrison, our Chief May earnings a release, Yesterday, our subsidiary, and filed with production, for we earnings LLC. Resource an operational Form results reporting for results X-K quarter Centennial the company first X,

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

of the note and beyond the Securities at presentation in during of can website presentations afternoon. in the could will that would our Risk results these our call our of the and earnings risks SEC forward-looking are Exchange comments detail plans. with Commission, are actual sections March this and report ended under more on be that www.cdevinc.com. for find that filings discussed like XX-Q our are filed to on You Form or the including homepage I with Factors affect control involve which the XX, our quarterly quarter statements and risks Many many forward-looking uncertainties this later statements and

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

CEO. to presentation website. corresponding GAAP Sean will nearest our our found earnings I the a measure the available our release, or earnings over For turn reconciliation any which use, to that, measure non-GAAP be in are Smith, With we call on can both

Sean Smith

initiatives with solid our and was storm will Centennial's in our Yuri. today's light George recent update, turn first first field and a of team's another and to I'll then George provide particularly over the Matt and financial discuss environment review I'm and follow welcome extremely provide high-level then an our On Hays. efficiency you, the convertible quarter recent I'll earnings results. with date quarter to associated including and will for structure. of capital operating to Thank call. offering challenging morning, said, capital it financial remainder performance of in cost winter quarterly that overview the call, note operational proud reductions, gains results, and This results, to of With Good XXXX. cost

George Glyphis

and Thank I'll the March results you, the our notes associated financial convertible offering then Sean. QX the with review first benefits transaction. and discuss

Storm an production Average financials day, earnings production the our per day, Turning on volumes net oil winter XX,XXX first per were barrels the which the a during from barrels a as the lack presentation, prior approximate production from completion to well downtime QX represents of X% quarter. Slide resulting decrease XX,XXX fourth for of reduction totaled X% from averaged activity as approximately XX approximately QX. by equivalent impacted was quarter quarter which Yuri. net

QX We the that low levels production will point expect be in QX. year for rebounds as a

higher of XX% NGL higher we levels and decline million by totaled temperatures associated $XX winter quarter-to-quarter essentially costs. the costs than million, doubled revenues. $XX.XX see February production, lower to coming revenues a barrel gas prices declined pricing All colder notable compared the and per quarter. during were which the from electricity approximately Realized to quarter-to-quarter per during barrel or storm. barrel primarily QX prior beginning drove of second QX. XX% increased $XX Shifting production $X.X gas QX winter and incremental QX was revenues of due of per as were significantly QX. production $X.XX essentially to million and higher notional XX% impacted barrel quarter oil in result production in XX% gas unit due per barrel, approximately $X higher with per oil oil, LOE $XX.X as than higher Mcf were NGL actually improvements by to Revenues storm-related $XX.XX heavily impacted a costs to While higher was the prices. costs, at in expect a increased storm. increase quarter natural of for $XXX.X total $XX caused at per flat million of to with prices Even nearly equivalent and million. Realized the finally, despite and natural approximately approximately realizations than X% LOE by by the month expected,

was QX the Cash because quarter. basis compared per gas tied Excluding down increased described these proceeds $X.XX G&A GP&T our modestly BOE. contracts onetime per as million, $X.XX I a $XX.X to in on per in of mainly was percent $X.XX to are earlier. LOE to processing notional $X.XX resulting which dramatically, prices, for costs, was barrel barrel

during corporate $XX prices. PUD up to to CapEx. approximately per ran completion incurred our quarter-to-quarter funding to X% two loss and QX. $XX decreased capital of company's spud completions total was approximately even and the quarter. notes completions incurred, barrel and drilling crew, which to million vast benefits Of on quarter. related with any and as $X.X costs totaled net QX. rig, was lastly, finance stock resumption million, reserves. spending convertible that EBITDAX X from $XX.X the for activity terms of $XX.XX GAAP majority that and spud a million we mentioning incurred QX, million million approximately drove XXXX, generated March to worth of Shifting anticipate attributable spending forward. the million. development $XX $XX higher, million the X, QX was DD&A million XXXX land In in compared drove divisions XX. We infrastructure totaled Lastly, to support capital to recorded to we Slide outlined free that don't we PDP compared completions cash the and significantly the field a in of Infrastructure and priced key in On of nine and drilling, XX% full And during one upward completion to $XXX the higher $XX.X common and facilities. of result wells significant lower It's Adjusted and going during infrastructure the X-well rigs we Centennial expenditures due one XX flow offering essentially CapEx and commodity

stock the had which million of have we in a of convertible X.XX% net issuance conversion generated facility that the to XX%, to million. very exercise a window discretion. share, combination able note to lien redeem company's the the conversion to a seven capital the the lien were are at significant of the green per approximately The second proceeds raised settled from year, of resulting $XX thereof or and utilized premium to approximately second importantly, be was million $XXX we of markets portion the Given proceeds X-year the note company repaid in par, also $X.XX shoe, price do April, pleased $XXX can notes, A so. borrowings. $XXX we at unsecured in cash, After offering credit been access and senior notes of million redeem

Overall, several $X.XX the benefits key are portion increased company. purchase per the Additionally, of synthetically dilution. and we with utilized a to I to notes very the potential which call future a price conversion share new to happy to capped to highlight offering, minimize proceeds the we wanted

XX, redeeming on XXXX results our profile Slide occurring illustrated First, XXXX maturity with note in our first unsecured strengthened the in we our note by early XXXX. maturity senior this maturity as

second the because approximately coupon Second, the million costs on interest as lien note compared X, coupon convert. X.XX% X% new by we Slide per $X.X to shown on year reduced carried an cash the

reduced portion redeeming million our availability structure we because secured which offering restricted at we eliminated a second blocker significantly On credit March our base, lenders. liquidity increased liquidity lien the X, by the debt lien capital second a Slide positive and the finally, had redemption we removed summarize access our facility is $XX.X note, for XX. Third, our And bank borrowing borrowings. that some the and position capital of full proceeds from structure, to

ways: note; second will notes the outstanding. the our in first, well that with as new the appear we they as present we balance lien March XX-Q XX You still show the actual two notice convertible both as sheet filing in

the of note, because forma the redemption. ended, However, of the end column second quarter, April reflective base lien million subsequent redeemed a we that pro that show $XXX is our quarter also after borrowing we Beginning reaffirmed. to the with liquidity, was

$XX pro $X.X million million in year-end. for As of of XX million approximately $XX approximately and the of credit credit. forma liquidity of had $XXX approximately second from results of we cash outstanding March and million pro borrowings, This a facility total forma $XXX letters represents redemption, of million increase and note lien

to Turning statistics. credit

Centennial's base, debt XX, production the state recent slide X.X dotted in side net metric calculation, illustrated on to an LQA right quarter and our times leverage believe as earnings last compared on measure more commodity You given at additional to price net year-end, current environment. structure X.X is March the the I nine. cost may that profile that annualized, to of was Centennial's call, At box as the reflective the introduced of of and our lower credit we LQA table EBITDAX lower company's debt or EBITDAX red last in of times the recall

we XX program was net the debt X.X at slide, chart X-rig our EBITDAX prices. in bar XX, and strip Centennial's on current the with and the times left below well to assuming expect end year X.X shown as bottom March Additionally, of last that to months times

and efforts. review market and of cash a to to after with Matt for has flow deleveraging significant Finally, I the and take price that, thank a the both hard find It and organic to and solid call financial With liquidity I work a corporate path. have we our generating over lot it as remarkable a taken to wanted of employees their Centennial the economic in repositioned year office, entity free opportunity over I'll strong that the field turn commodity operations. focus dislocations,

Matt Garrison

Thank you, George.

operations As Permian Uri everyone field across Storm some Basin. is the created in the for challenges winter aware,

the told, the sites, some storm, tank drilling notable impacts experienced on diesel operational we team financial Prior from from of to field. team's touch the our storm, maintain the to highlights D&C to empty on of most prestaged of This will touched work prepare operations to Because George ability fuel our batteries our and I delay events, delays a weather. drilling a our minimal the days All While the the for were storm. on to operations. from standpoint, ethic. two of testament three we able for incurring and in weather-related of best is resiliency only coming this, the our the of

on color program improvements and material in very on work on fleet, our our engineers happy operated the completions to provide focused I'm for with some facilities been one frac X-rig we drilling, that quarter, costs, Moving a now and today. have

can see the by you reduced XX% XX%. six, As we length period rig days, to spud release increasing our to by average while times year-over-year our for on slide XX.X lateral same

new County three well the our string in backbone been Reeves has working casing and cost Our is program reductions Texas. in for very

a efficiencies stages has large, pumping team X,XXX in completions program, excess day continued per Our jobs seven while averaging in of still their pounds foot. to drive high-density very

well our below averaged just quarter, As of XXXX initiatives, a XX% our guidance material the cost lateral result $XXX costs a foot reduction of per $XXX and of from per our the $XXX these lateral to midpoint numbers. range foot for

our the further our improve which believe to cycle upgrade rig times. we will walking took we opportunity fleet to rigs, Additionally,

look raise and We efficiencies program to bar. focused continuing our to driving will remain forward on the further in

Additionally, our all high-quality that to while has for our upholding on for focus pads, costs standards facilities multi-well reduce emissions. our designs materially air new group continued

disciplines of culture overall ownership cost. Employees Sustainability the We taken have line. they the entire of per since these has tank multiple worked cost project inaugural pad facility multi-well ESG to believe bring are our Under taken leadership, by with the Sean's our proud the a it. have can of across and a in we XX%. across decreased in roughly at In nature with report, the are well the the pleased largely facility, more attributable structural be finish very costs, and initiatives collaboratively For ESG has across hold this Centennial to Corporate central battery, design reductions of QX, and released company. are we

flaring quarter, a during weather going achieved to XX% goal company, that more and strive report our the we'll in the we of to QX, we focused on happy gas remain Despite produced or capture As challenges that volumes. I'm our forward. minimizing

to Going we at one can that been options, taken that we've field a areas sought additional further, all doing and historically problematic have capture step hard we are wide. improve gas gas have thereby look takeaway ensuring

are our rigs dual QX, May, drilling our fleet fleet XXX% frac dual structure. equipped Also, By we our from our of with fuel the began we to over both dual and expect cost materially impacts Additionally, well. frac This emissions converting in fuel utilizing the of rig reduces positively as capability. of have fuel. end to

standpoint we'll expect progress date fully regarding see reductions these wrap from remarks. our our efficiencies, to to Sean to drive cost both In drilling I'll our program. efficiencies integrate for it CNG excited and are as these into groups a to look we continue to in the We turn and emissions now costs the closing and for over and completions ways about And up and further program. an closing,

Sean Smith

you, Thank Matt.

seen can I and I out Before feel to flow outlook the generation. with we recap cash slide certain remainder it's goals five. of Last August, map be discuss as some important capital our a associated for free our road heightened efficiency laid year, with of accomplishments, on recent the

goals team these that goals Over and lowered D&C of related control I'm to optimization cost by or corporate all relatively improving efficiencies higher and last the driving year. our time short our and design changes, a of XX%. managing cash through Through almost to meet out continues efficiencies, amount Specifically, have well improvements and LOE liquidity. laid pleased sheet cost to structural balance and we say year-over-year our proactively exceed margins

reduced and lift. our convertible $X and well stripped lowered to gas and generating sustainable we flow results free transition cost quarterly essence, the to have a by primarily liquidity flow. to evidenced substation past we've attributes expense cash the compared profile. result interest a as company while cash debt helped quarters. all last have recent company LOE Additionally, these In year, actions X.X solid annual positioned roughly have The to the Through substantial sustainable Centennial out of our million offering, increased and transition extending and our hallmarks of are three of maturity free electric Centennial as notes of

the a and for improvements, financial year As of remainder these result of plan simple. quite the operational game our is

remain Having year, and multi-well X-rig extended underpinned of pad the of at base now position, First, program co-development we development turned our this efficient have to XXXX. our continue beginning will of level we operations for this with by laterals. to which stabilized our committed acreage the be production will

down well cash to to us flow base leverage, this expect to us the We specifically, strip organically. and delever provide X.X assuming to rather steady LTM anticipate to debt with prices. a generation, current our allowing continue our More pay times net year a further below debt free EBITDAX, we reduction material ending

demonstrated delever, slide the Lastly, to and have upon We U.S. look to will technical our evaluate In plan basin to are to team. but scale for building capable they game improvements accretive continue few continue only to and quarters. we Thanks go we'll extremely size an and opportunities financial listening, on Q&A. our forward closing, now gain our the on we potential over and further execute XX, and in assets continuing metrics. if oil and to high-quality to past premier

Operator

come first Dingmann Your will Truist Please with Instructions] Neal Securities. [Operator go ahead. question from

Neal Dingmann

thanks attribute some in these primarily done talk Morning to but others jobs what the about likes. this? wondering DC&F improvements details. just all to nicely. is I'm you just frac been specifically, first this, a asset through your maybe wonder, and just question my why it's the is I mean, you bring Sean, could And down and bit smaller guys cost for -- I some done very of continue have

details. like just more on hear So your I'd to

Sean Smith

Sure.

and D&C have He's for champion Garrison pushing Matt In the our been our efficiency. costs tackle down fact, actually increasing that. I'll

why how a maybe, bit talk you that? doing little don't So Matt, we're about

Matt Garrison

Neal, Yes. focusing been we've like of flat the main on really Sure. focused one our and that's on time, things.

to also evaluating very, size, been We've profiles. program, fewer every hole. of addition guys drilling with the the pipe our been have the of to that bit down We've casing hole bit actually, far We've in able side. drilling things very regard on Our selection. with to element some strings gone change in

our have continued sand pieces we've all just for cost continued there on contracts it's to steady to sure good side, completion a place side. time the downward the in the pressure and that effort On for got make and reduce nonproductive pricing

bit So than of people a our after it's of time before. team we lot really a and a are It's function just did to -- better faster the it's all aggressively little things chasing that those flat itself. little really do opportunities and all

hope you. I kind that of So helps

Neal Dingmann

No, great wondering the -- but if Lea activity on, in on area? thoughts Lea too going just have just details. And don't last, County up know I'm much then any you area I

Sean Smith

as XX% that Lea this year of before, about is we of mean, part in a timing. just And of the our and remainder talked about I spend Texas. we plan Well, function to in capital

is Our dollars had year running last a Texas the two in years. infrastructure up and to asset an from New perspective. Mexico We previous bit position our mature. Getting more spend some

feel like that's it's Now Mexico. and place, time accelerate we the right New in to

to going year. this we're bit a So more emphasize that

Neal Dingmann

Very good. Thanks guys.

Sean Smith

Neil. Thanks

Operator

will KeyBanc. ahead. Leo The Please go Mariani from next with come question

Leo Mariani

Hi of quarter, half. speak just quickly to downtime quarter. high maybe of that? there you that guys, of I wanted kind eliminated? kind guide, in growth of to modest of are kind kind the of guess a that. you second in get some growth? to And to then maybe just was up you year, bit have the the kind of all But quantify have rest Can It I midpoint me appears a on production the second the level of I of move production would the looking expecting to just know for little the hoping significant ask to to year. expect quite first to was is I guys you would bit cadence in here kind that

Sean Smith

and Sure. the on and I'll the follow-up, certainly to question, did if that we storm But timing need our That's production. can that see winter modeled We on if obviously, expect I touch to down to we can. how be QX. then rig based QX cover Leo, it we impacted of activity.

As started online. it get last of wells up a drill we but pad takes a December to second we those brought rig time and year, in mentioned,

we which, Q-over-Q storm So due minimizing additional that then had of And decrease of that. production of related of but Matt production as in outlined, downtime, activity. portion to fully Uri, great we a just on a top job lower expected that that, timing to winter did was

were If we you that half how due decline to about the of was just the based and think much so levels. about down normal or on our activity Q-over-Q, other half winter was storm

Leo Mariani

Okay. guess, And helpful guys That's for high-level I you for a sure. just question maybe here.

You very in X-rig to here program committed certainly XXXX. the seem

mid-XXs. little think if Just trying prices bit to a the prices in commodity continue we with maybe this see high longer-term, oil to

of Is of volumes in 'XX, as you As growth kind drive market to little a year It the EBITDA business could balanced likely to a look of OPEC year? put kind be has next that bit could more bring their more back on. so maybe in hedge where lot which capacity. you a of of to their is much potentially a that much and just kind some order higher maybe

Sean Smith

me on your ties touch And because as Sure. portion into well. first second that question a let of it

year. balance will mentioned our portion, for in as for quarter the George year. cadence the producing his QX, be the You production mentioned of lowest

the next into what's would I'm looking at as of we up about guidance and year, are the midpoint data, I say, well live increase have the quarters. and pretty quarter I excited material we in from a which QX. coming would reemphasized suggest QX for think

that's with obviously, on focused slightly our So next think many our activity price to commodity free I flow are a I comments. can't year, think for forward-looking comfortable we going if Relative But we too forward, production environment. give cash we helpful. feel generating even in elevated very

we're for year, generate. to current keeping going And we think this plan with so by our X-rig

to we think $XX million of released I million $XX order previously flow. cash the in of free something

cash free substantially on $XXX Now than million this going commodity of prices. we're think year we flow to based generate more current

X-rig program down proceeds a debt is to generate material free flow cash us of just allows delever. the use So to pay there and and organically

the not give good into this good feel the plan too the world We'll for but organically. about to feel delivering game company about I'm much XXXX. how see year. going look looks how ahead So then, we're

Leo Mariani

you. Thank Okay.

Sean Smith

Thanks Leo.

Operator

response with RBC [Operator Chris Instructions] do Please Capital ahead. from go have We a Markets. Dendrinos

Chris Dendrinos

thank you. Hi

long consider, You future? that year to what foreseeable target of I Is, commented X.X to term, your then guess for maybe do increasing before for reduction target cash kind you debt the of of guess, leverage like is times. would reduction use flow X.X about kind get only I activity? free guess, the for this times, it's you level leverage and I

Sean Smith

current I I have there, deleveraging is, question, think our on number Yes. prices. quarter, commodity to to be even have Sure. by think as based prepared current is prices appreciate and going efficiencies since our improve held the And in as well continued I in year-end our times strip Chris. the remarks, below put at prices, X.X that we

as that XXXX. heading organically. that, The the feel toward good wood get we end to that X.X right we're get next times stated then XXXX. direction of times And of we'd the get as like kind sub below we into there we of phase So in

we're targeting. what that's So

So our of targeting We'll lower those about reduction right proceeds leverage before use of anything distributions leverage like to is that. we lower for be now. metrics or growth and talk or some debt

is sheet. the now toward So all really right the of use proceeds balance

Chris Dendrinos

Great. Neal's guess walking of Thank upgraded D&C following and to rigs. In to these on costs regards just then earlier. you you. I up recently from And efficiencies, kind question

might you well to guess, balance additional may the where rigs that walking progressing you comment And You upgrade benefits through the I be or guess, times. see operational think costs mentioned I going the of some of improving that year? it's you cycle Can here, the kind on have? any,

Matt Garrison

move rigs, lot really walking pad Sure. do there. faster. I'll go around is they a one us ahead and what to the Those that on allow take

like pad pad, to to four it increased the a to lot us so if and rig faster field, than per allows somewhere the rig day three mobilizations another. our Also, mobilizes on hourly terms the add it on demobilizes amount transporting on per to between around, if of everything So demobilizations. and things move I or down. kind we the trim not -- is day of time two those wells, in as but operations. multi-well up, of like that historical that just one one to it and generally from estimate site rates, around And allows mobility run is and have savings just built pad's down just allows with from of spent of moving those kinds pad, of a wells and What another really time -- a to cut of also kinds in-field well savings do to really we you us simultaneous

next be While staging of performing flat next -- we're next we're we for the can stage moving drilling, to well the on the job. reducing operations time previous that the the focusing continue to well

So for we're of we allowed work To in drilling operations. really way field. we out could can to the we to more wait in of Instead the be get actually ops working SIM of before the simultaneous at rig. start of something, had kind the the past, level kind

as savings it's kind really a multi well savings. anticipate So that compounding pads, with particularly of out, the that's effect of plays seeing we continued where

Chris Dendrinos

thanks. very That's helpful,

Operator

I any Smith time. turn comments. to this the at conference like questions to closing no for showing I'm would And over Instructions] Sean [Operator

Sean Smith

with of listening to call. you and thank Matt Hopefully, today's for to want pleased that myself everyone just heard and our was very I QX we are George performance. what out

think the solid. I numbers across very board, are our

to for and we're ahead excited on what's very second back And quarter beyond. look the forward in that. I coming think all reporting

there the out Appreciate any follow-up think up questions, but are we'll time, that everyone. questions come if I please your reach future. has provided, may been us, in So and information to answer

Operator

[Operator Instructions]

Permian Resources (PR) 5 May 212021 Q1 Earnings call transcript