HPR - Earnings call transcript Q3 2017 | HighPoint Resources Corp

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Operator

Good day, ladies and gentlemen, and welcome to your Q3 2017 Bill Barrett Corporation Earnings Conference Call.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Larry Busnardo, Head of Investor Relations. Sir, you may begin.

Larry Busnardo

Good morning, and thank you for joining us today for the Bill Barrett Corporation third quarter 2017 Earnings Conference Call.

Scot President, Executive Treasury are Crawford, and today Vice Senior and me Woodall, Officer; Chief Bill Joining Finance.

earnings forward-looking Before everyone we at of billbarrettcorp.com. within our to remind has our statements read the posted begin, disclosure statements website I to release. This would been provided

are yesterday SEC You our or find they XX-Q, these afternoon. other our which disclosures review also in filings filed in can as we and referenced with the

reconciliation With A GAAP In end call measures now for will during comments. Woodall can addition, found financial turn our Scot be financial be call. we statements non-GAAP of referencing our our that, the to at the prepared to press over release. I'll

R. Scot Woodall

financial This results an to Basin XX% by excellent continues our and driven Oil business another equivalent, on for accounts. XXXX across job Good thank ability and all spectrums barrels Basin volumes to accounts, to all operational XX% and executing joining results. sequentially excellent our DJ million volumes X.XX with Production Boe you on growing sequentially. done on discuss X.X third by all remains our and Execution million We higher DJ speaks to of plans. totaled excellent our today deliver in high, as quality delivered our organization to trend impressive our have quarter quarter assets grew was program. the we quarter morning, barrels, us operating which XXXX our of third objectives.

Basin an improvement. fell $X.XX job as including to on per LOE that costs improved We to DJ sequentially continued $X.XX or to XX% a XX% barrel per barrel sequential great do LOE

and Basin positive enhanced the DJ are results. adjustments completions in our this We have seeing implemented early in year

our XX% these each deliver to by kept a This to shortly XXXX. pressures reach little improved bit in check. touch helped compared adjustments the in cycle We Underpinned on production lateral guidance of more drilling will XX% have to I and costs XXXX as by mitigate completion delivered over has to XX% includes of inflationary success, overall extended detail. well efficiency initial are has our production times QX. year-to-date and now guidance continue guidance gains, in positive the increase consecutive quarter. expect This We from less in we deliver second making for with it an capital. X% growth amounts and of we increasing our

a We anticipate continue growth $XX barrel to in of environment. than operating on XXXX more production XX% based per

rigs. wells we XX very wells. quarter Now drilling with had spud XX turning two operations to a XRL conducted completion active operations, We we on operated as those of

In side addition, on in in the fourth are (XX:XX) XRL that western Section we North/XX of on our quarter. expected XX initiated located X the West that wells will drive acreage position growth flowback

greater activity our acreage and methodically our last increased frac West on been and West. We are amount developing of have being decreased completed currently North/XX of over the X completion times an provide the several Sections the XX% a for to being in years, have of and additional day. south river Drilling XXXX. and number by per foundation stages in growth will concentrating North/XX pumped X sand leading cycle This

sooner, also plugs. generation frac drill drilling faster and economics. has days brought to a days has to cash ultimately costs, a Not number completion required and but to which days, reduced flow wells reduced have of out this production leads We only better first

job by a So team. great operations our

drilling incorporated enhancements into have that design program. our have completion We been in flowback implemented completion and our and

of have Our frac to approximately pounds and X,XXX include lateral spacing feet. approximately enhanced of completions evolved per foot sand XXX stage

consistent days a March have X,XXX XXXX our wells history and completed five the pounds drilling wells These production are management new production in DSUs program achieved lateral approximately of The foot position. of wider XX% we peak completed acreage we production the were stage production to sand will per and anticipate, incorporated above spacing initial also modifications design from our being their in that the our have sand X,XXX of to are result are The XXX feet. of and that of would units lateral frac points spacing at pounds clearly are foot. to the in production with XXXX results. have in various XXX choke sand a XX% increased improvement utilizing are MBoe moment and are on wells line we on than seeing of were and cycle our earlier We results. under central in the little completed like the wells program bit per approximately early XXX previous recent that wells in cycle. were enhancements performing most curve. that, on to is with To-date, to The placed an this or track the positive and take type showing highlight I continue expectations monitor will year the exceed of Section portion nine of to our XX earlier meet tracking program less

bids a Turning the sales assets. due process shortly. during to commenced remaining our marketing third process been The divest of has and robust Utah, quarter we to with

employee. summary, involving an organization. the in we've XXXX that a utilized time a always is outcome, where we end single environment first At organization transaction our from a well for to X,XXX Pinning transaction will This strong that manner. announcing We XXXX. this to was achievement reached execute very milestone beginning is we proceeds ability year efficiencies proves my solid a executed is of. achieved our a the to conclude environment. program. outlined work are trying we also fund the deliver year to everyone great fourth like corporate potential field entire by maintaining accomplishment to deliver a organization of can operate be time are by quarter. have targeting and the comments while the in a as as successful safe a in to expect a and and an guidance days our without testament results October, healthy expected manner to safe objectives of of increase in of capital by It proud we This our history help significant on today to for significant I'd part lost our in close a the In be the finish accident a the

the cash We position and to provides increasing fund are development ample in debt. turn retaining over good to long-term program financial meaningful a Bill. now our that I call will liquidity without position

William M. Crawford

and Scot, good morning. you, Thank

and plan, which improved generation is to our strong business Scot flow translating As EBITDAX financial and execute on metrics and continue just into post year. mentioned, results leading we to cash this quarterly increased

year Quarterly expect the production as this was corresponding guidance in oil total with continue momentum above next significantly We to volumes. increase well. into

improve by In ability our LOE. improvement as addition, our evidenced demonstrate operation in team to efficiencies the continues to

benefit also realizations marketing crude our We quarter. from oil the improved with price for efforts

All of these generate our while operational margins items entire allowing work positively hard also Basin our our tier to of asset base, to the returns demonstrating DJ impact our execution peers, us top relative the organization. and our operating quality of

were generated discretionary well cash we quarter, and EBITDAX which of million $XX million, $XX flow third of above the consensus estimates. For

volumes in a current I cash in will hit cost Looking generation and an Scot or EBITDAX go trend upward over flow that few ahead, structure. environment, our did this price on. I maintain anticipate now oil grow as and highlights would decrease production not we

per efficient a peers, a Basin depletion rate primarily costs $XX.XX in low a the of lower oil despite on to XX% sequential capital is representing margin third quarter, of drove the DJ This with Our us pool. at drilling Basin strong cut highest X% to in recycle quarter the rate the operating Boe quarter the basically the Boe, High in result proved demonstrates and drive was of commitment deducts increase margin improvement. and likely reserve wells DJ decrease third unhedged which a Basin the cost an quarter being the additions a sequential efficiency. focus decreased DD&A DJ over per helps our to $XX.XX greater WTI second flat. DD&A ration. return highest during in This

we to MMboe, and MMboe approximately we're activity total a which to production to our of for benefit levels. we better X.X at contributing. range full-year fourth to mentioned, quarter million, to to to is realize of $XX This times, the Scot with This to MMboe is wells There's million. $XX in higher less production slightly outlook is expect for the the CapEx of number results a doing quarter a million quarter less. the and MMboe, to to greater Now, increasing as X.X in continue XX% expect being expected with due representing cycle current capital, guidance we XXXX annual X our well XX% more growth results our just And change, we quarter over to rigs. activity third be $XXX change X.X continue two improved run the full-year fourth fourth of XXXX. as CapEx than to higher so accomplished of $XXX million completion growth as range production outlook no production continue

down efficiency and to million million previous We have of from narrowed $XX $XX further $XX $XX to $XX $XX $X to the million. operating $XX for range to million from $XX G&A million a million to LOE million million, the million, range reflect of range to to

balance the to sheet. on Now

manageable a until profile We on with undrawn balance the million our finished facility. being $XXX debt cash not of XXXX. nearest flexibility with and review base to maintain $XXX with ended semi-annual we and recently late our our million continue to credit borrowing We change no maturity the quarter protect sheet hand

end with on our supplemented which Uinta to will We be sale XXXX used hand the activity. million pre-fund be expect that this proceeds $XXX to cash of expected would with over year

we year's ended to calendar greater these we with less expected would I than foresee and next net with debt never this multiples growth. expect end year year debt being net the With than similar note of EBITDAX have to that the proceeds, sales X.Xx. our Utah with a

in cash we into to On predictability and support provide continue flows. future visibility capital layer hedging front, the our program for to our

production quarter, of oil our fourth $XX.XX For the XX% at we're WTI. swapped is about

X,XXX of have barrel have per also higher. at day about We XXXX XXXX and $XX.XX oil in barrels or hedging $XX at swapped per started

remarks of with turn in to position the find press hedge prepared updated over With and are it a the we XX-Q. that, finished or our full can summary in questions. our the You release

Operator

you. Thank

Our of of first line Corales the Brian Howard Weil. question comes from

is open. line Your

Brian Corales

job quarter. morning, guys, Good great and the on

I in you now about program, the and months? I'm about, release you chokes the have previous and, than a is peak in guess, chokes a talked choke the the to. declines talk earlier the used and mentioned You've you Can you management change to for seen well guess adjusting I little the production it Scot, opening what assuming any outer

R. Scot Woodall

Brian. Sure,

the on are the that two production, – we occurred five are just have have be XX And would XX probably or three really peak changes last pads, we there, the West. guess pads in six. we that I the would that XX month where in really say, I So over most typically months would intent west which at see that reach or believe,

And chokes kind those of western little so pads a the previous kind north the getting aggressive in and bit halfway the started through up pads the were two more flowbacks. of to we with

and we if two western for from So don't still did thinking there are months. trending of on pads, reach or earlier, the it like XX in see the been comment but three production so what early is direction. we're It's peak first days going online decline that we would decline in on those place probably to they seems they obviously it's that early rates since early two a maybe impact little these on be the not. to just to might pads to an what is month indications north a really really about a see right two pads, the have take about But yet,

Brian Corales

And more. then Okay. one

seeing still seeing You hit you $X.X kind yet? are also the any average numbers all any of where of costs is Are think, I you million. and currently are inflation the – well mentioned, cost all that

R. Scot Woodall

that and number – of been drive efficiencies think foot reflect to QX spacing. in the in that that pressures No. million the X,XXX per the QX and pounds the expect what (XX:XX) we've That's stage probably by we that averaged any foot cost mentioned does and XXX so and does the same I we so and sand we lateral inflation mitigate able $X.X

Brian Corales

guys, right, All quarter. on job good and the

R. Scot Woodall

Brian. All right. Thanks,

Operator

line the from Palmer. comes question Coker next Our of David Beard of

David Earl Beard

Hi. quarter you on on Good I jumped an and morning, on but the the gentlemen. little give a Congratulations did Uinta us sale? update late,

R. Scot Woodall

to we we and in expect close really is just ongoing by the and year. briefly, expect end bids the Just shortly, that the and get process the proceeds of

David Earl Beard

a could completions, you to completion to design follow-up you think really then bit you maybe on or Okay, completion then you're what run changes question, year of for great. and most want discuss the now any a next in in thinking Brian's relative do through year about little of And what have altering XXXX? the

R. Scot Woodall

we're I more part, data. from are. a sand think to for we pretty see one stair-step but most We pounds, X,XXX of months need before decision. see of where we make maybe that need going to there's more anything, few comfortable the probably with to actually X,XXX maybe we data some pounds If

wells the we're X,XXX think that on completing I executing now right in we're the foot pound and the So spacing kind now. of XXX stage

David Earl Beard

All lot. Appreciate it. a right, great. Thanks

Operator

Jason of Imperial Our next Wangler the of question line Capital. comes from

Jason A. Wangler

morning, guys. Good

bit great. and on a just yet curious, call be quite you look nothing You would the We're XXXX, formal a talked of two-rig there's but as a the lot in been about they've wells. program efficiencies the

see how and spending of Just triangulating do two-rig around the efficiencies you gained what activity program? on kind you your the

R. Scot Woodall

Sure.

probably we're XX that because rig. growth wells right, per to in XX You're

rigs, run than probably two XXX So more you're if wells. you

to drivers, that and think and be XXXX will think try we to what deal, from of XXXX, as I about balance the that the of commodity help sit, are as consummate where spending, some proceeds Utah some So at and and prices also cash the drive looking funding. flow we we

some actually plan that the couple will and deal So, by see positive get that next and XXXX. close goes drive provided for levels as probably spending weeks in of year-end, bids we we

Jason A. Wangler

up Okay. you you noticed there was quarter. comment kept G&A the but the you, Great. in maybe, if I anything Bill, And one for was spiked third in could curious just much kind pretty just line, on. side of it there

William M. Crawford

there's variable had cost, as compensation some well costs. kind release, obviously what put and legal some No, compensation the year having, I just the we some kind short-term in of variable there with press think of was we're as

Jason A. Wangler

appreciate I turn back. Okay. t, I guys. it will

Operator

question of Stevens Our line KeyBanc. next of Chris comes from the

Chris S. Stevens

guys. Hey, good Nice morning, quarter.

R. Scot Woodall

Thanks, Chris.

Chris S. Stevens

As increase, guess, guess up. start to rig show starts of we that as the I impact completion second look into year, I pace of your to should next

the So, in next what's and to the outlook that for it where over quarters oil average few expect would XXXX? mix you maybe

R. Scot Woodall

same place. in roughly Probably of the same – kind the

much I that. it's it'll think really in don't that range. XX%, I think of XX%-type move off

Chris S. Stevens

the nicely anything I rate that as this then thinking And just okay. year? Okay, quarter? to going forward about the guess we saw to there we this the guess mid down there is about into DJ in next range. you're come quarter regards that impacted LOE, $X how Is it in run a head that or I good

R. Scot Woodall

probably overall Rocky's, the and pretty think it's QX higher a probably rate. year, the a good on a pretty It's QX are Obviously to just good sometimes rate. little weather in but run I run for an the probably basis

Chris S. Stevens

Appreciate it. great. Okay,

Operator

Stifel. Jeffrey comes from line Our Mitchell of of question next the

Jeffrey Mitchell

morning, and congratulations Good all, quarter. Hi. on the

XX (XX:XX) job tested tight stage spacing with as XXX feet as stages. another So,

recently color that three placed on Can spacing with wider flowback been have incorporate what more tweak? prompted with you stages. all on this DSUs provide XX feet the slightly XXX design some However,

R. Scot Woodall

the last we future at and or a spacing how and tried would of think drive over tweak then completions. I then we two just do unit a to results looked wells the year that on have the couple drilling

of So DSUs tested on results. a stage a spacing and you're waiting XXX-foot those in right. We really couple we're

XXX it, And XXX forward, maybe at we'll cost/benefit associated we'll go feet. ends if having and to feet XXX then doing analysis or going stay feet, we're so, see the feet up XXX a with the

a So was wanted to just that we go data collect. point it

Jeffrey Mitchell

know the past nine over then per all million cost and spacing. average I tighter or And includes that that first higher volumes of of over the you sense. incorporating well average, mentioned on perfect makes months completed It well XXXX Okay. of costs proppant stage $X.X which

(XX:XX) believe self-help are to So of will believe the percentage do you market? you percentage – carry directionally, program? do how XXXX saving realized I the And guess versus over to-date what what cost

R. Scot Woodall

there costs Probably, clearly service have is – up. gone a

keep to a of able think little by efficiencies. more those bit in I kind check so we've the And been

million, So XX% a of and of so well that that $X.XX from well mitigated with efficiencies. cost have inflationary half probably overall probably number we through the an cost or XX% experienced have or

Jeffrey Mitchell

and/or south? the versus the I assets of assets you XXXX directionally Perfect. that should Okay. know Has I And to all the this the in we then half XXXX there. rig about northern recently-acquired activities past lastly, recently-acquired about legacy moving first thinking acreage changed begin to plan drilling a the guess, the down talked down to the during, the in in how down south between be operations

R. Scot Woodall

the the Yeah, part. would be we core get activity most up to say the activity do still I half primarily I done think that'll recently-acquired will have as in But in said. plans and first I of back the

we kind acreage our you kind remember round of a to circle the some acreage And plan actually lot the southern XXXX. of presentation position. that a If of kind some there of There's of of we in heart on of concentrate materials. activity one added maps, in there on investment

Jeffrey Mitchell

answering Okay. question. thank for you Perfect. my Well,

R. Scot Woodall

(XX:XX). On page think XX, I

You bet.

Operator

Our BMO line comes next McSpirit the of Capital Markets. from Dan of question

Daniel Eugene McSpirit

pads and follow-up decline Thank changed? And will how rate question, to the from whether the from much up risk choke choke the history you, decline just the the conclude itself deeper opening If management capital intensive? gets you that, what's could folks. the production as the more becomes morning. rate we revisit to need two Good business a western has if

R. Scot Woodall

six production. (XX:XX), see after to peak need we say, Probably, months

at before is three pretty that is least months decline like. comfortable step if want production a the of so see months, something rate in history peak get Obviously, change. to three probably look change. of a get what at so or I kind engineers and it's we aggressive engineers hard, this looks probably don't to think So that minor of you this step very the

So doing. something, think what But got a I comfortable it. we in of post you do to we're feel tweak you as always, pretty when appraisal

Daniel Eugene McSpirit

great Have day. a you. Thank it. Got

Operator

And KeyBanc. our next the question of of from line comes Chris Stevens

Chris S. Stevens

here. the for Thanks taking follow-up

half wells Just I central are the in you river there the to drill how of here acreage? some on any compared south XXXX, those northern first look the wells guess or might expectations as of

R. Scot Woodall

really much up conservative. we've so thickens C too a the I don't in our put guess, always expectations in think terms We our G&G would the little tick-up and line, that We like probably of Probably actually Niobrara bit organization think I Chris. would varied probably – which engineers it. is – expectations are geologically. of a

probably place same see. the rigs, then and we we've on with I quarter the those will drilling position down all with we're take expectations been we'll a and acreage So two wells kind year we're completions kind that of the into bit. number central there and a of running the have the little said end of now, first of at

Chris S. Stevens

of expect we GOR (XX:XX), sort Any differences then? should in Okay.

R. Scot Woodall

We're wouldn't so. the that I to moving west. really think not much

think don't noticeably really I it's So different.

Chris S. Stevens

lastly, just there? thoughts any sort line then any on And Okay. you there, pressure tightness out of experiencing are

R. Scot Woodall

would on impacted Things line is Yeah. terms pressure of the are to QX production high-XXXs, or I up nothing line in Obviously, now. There production that guess, pressures. some results. mid- clearly right in pressure

Chris S. Stevens

Okay. Thank you.

Operator

JPMorgan. the Daoud And of our Gabe comes of next line question from

open. is line Your

Gabriel J. Daoud

Good Hey. everyone. morning, Good Scot. morning,

something you a question year? like fund pick continue is prefer up on, or just ability your on. to outspend to more proceeds proceeds maybe Uinta the continue try Is do to excuse acreage to that next – me, use bolt Uinta for use that guess, to for in picture the that to would XXXX, the to potentially and some you'd a it I Just to

R. Scot Woodall

the Clearly, basin. we like

other So we'll opportunities. I look think at

our of are group just land reviewing to And group kind so and of always land opportunities kind geology on. bolt

see of a normal we'll kind themselves. present I I what guess of it's business, So course say, would opportunities and

the probably help targeting You're capital proceeds first. in matter, more right, would program that think towards D&C funding the but is Utah I what could

Gabriel J. Daoud

Thanks, Scot. everyone. Thanks, it. Got

Operator

to And Larry turn remarks. I'm you queue this in it closing back no like showing at for to the further I'd questions time.

Larry Busnardo

us joining All today. right. Thank you again for

always, you we day. we have look events. a at here feel you if future free any As investor to anything contact Have me seeing questions please about good today. And discussed forward additional to

Operator

Ladies conference. and gentlemen, participating thank the in you does conclude call. This today's for

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

HighPoint Resources (HPR) 1 Nov 172017 Q3 Earnings call transcript