HPR - Earnings call transcript Q4 2017 | HighPoint Resources Corp

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Operator

Good day, ladies and gentlemen, and welcome to the Bill Barrett Corporation Fourth Quarter and Full Year 2017 Earnings Conference Call.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Larry Busnardo, Vice President, Investor Relations. Please begin.

Larry C. Busnardo

Good morning, and thank you for joining us today for our fourth quarter and year-end 2017 earnings conference call.

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

of within Before call we our forward-looking website provided find your to release, statements the attention to at you begin, the disclosure on I'd can our earnings like which billbarrettcorp.com. statements

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

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

R. Scot Woodall

financial and us and entered for joining We on thank defined our XXXX strategic today with morning, financial a fourth a of at you our could operational year-end we and operational, controlling what and clearly results. discuss Good level XXXX high strategy executing to quarter and objectives.

a exceeded and manner. and in to I'm we for their shareholders legacy was flexibility XXXX, completion disciplined organization to corporate liquidity business strong times, disciplined within capital increased maintaining safe proud continued northeast Wattenberg message maintaining in through selectively deliver and acreage, and the Reflecting our of capital-efficient a approach and throughout strategy results efficiency Our fund on lastly improvement to to decreased well across a internally these seek entire and cost while the opportunities improved DJ balance operational capital of we our consistent opportunities to sheet aim execution manner, and execute focused efficient complement objectives, year structure, to Basin operating a our program. to drilling our as pursue demonstrate reduce our cycle all debt, and

highlighted our guidance. than than and were midpoint sales for of barrels, were million which pro for of production initial XXXX the sales XX% XX% Our key greater higher volumes X XXXX forma by accomplishments asset

DJ DJ compared generated Basin addition, growth Boe was quarter our than business extended was $X.XX team as significantly the The Basin field-level XX% and higher higher. in year-over-year. XX% while In fourth further lateral volumes times both strengthens accounts improved $X.XX that and DJ December This LOE we lower highlights strong and the and cycle our target costs oil XX% were combination expands fourth XXXX as quarter position. the acreage Creek XXXX, to of well Fifth below quality Consistent operation of efficiencies were footprint production reach of for with for of is Energy messaging, our a that Basin with completion strategic balance XX% sheet. announced by our million drilling materially per

sheet in coming these program and In Basin. flow, program, year. all Overall, completion the and was to great facility consensus it achievements of are a earnings, translated we XXXX's and than continue an better our XXXX debt our reduced undrawn was December. enter flexibility and Total Lastly, cash $XXX XXXX We with to balance of reduced debt further that issuance debt. senior maturity through of very credit notes million. a cash summary, DJ into EBITDA nearest position, two-rig extended program drilling maintaining an analysts' consisting the million drilling debt good we financial enhanced of operate April via active and $XXX in a estimates. Operationally, exchange in

methods systems, to to continues Our look and of further maximize reservoirs, we year modifications this completion and designs, results. flowback increase, understanding fluid implement to

and reach a the includes Wattenberg lateral fourth central XX the XXXX quarter second the in flowback area was initial unit flowback. of position the Separately, western is This on Recent completion encouraging, are half data pace extended added in of allowed includes located X-XX-XX million on the within total second a eight rig Our the during units which activity spud extended these or lateral which XX began extended extended us reach on wells. lateral our increased highlighted in of wells. lateral of meeting drilling Wattenberg we a type-curve and located Wattenberg. wells and in average by X-XX-XX, within XX the and is as drilling reach northeast northeast equivalent. X-XX-XX, Early spacing wells reach barrels of initial and exceeding drilling place completion northeast spacing located wells activity XXX base area with drilling of to

and This portion I'd develop We an in southern provide maximize of and the Creek methodically to first legacy strategic infrastructure. our the resources like to Fifth for the activity acreage to and our update position. on the growth half foundation business on XXXX of provides combination continue our acreage now Energy. acreage current on are with concentrating our

to value are outstanding an this two We continue about and highly excited opportunity this move complementary fashion. and smooth a in combination the along creation as very organizations asset. collaborative a Integration of view and

increased Creek and organization set ahead We and this for basis. We opportunities closing given about EBITDAX have well on combined Bill cash are thereafter. reset issue XXXX our collaborative we'd the meeting multiple true of closing. on flow excited executed guidance We to Barrett we transaction XX project significantly shortly generation summary, the as for levels a leverage anticipate plan the a for view in company post shareholders we Fifth the and date In transaction Corporation us. the XXXX are March improved that and very of the metrics special the for formal

to provides meaningful cash Importantly, we that retain ample good in a are and development financial position liquidity program. fund our a position

complete the to combination I call achieve and community. the month our the in Fifth Creek now communicate investment we several XXXX plans milestones turn to key as Bill. the with will next We will over

William M. Crawford

We financial cash entered Thank and $XXX great with position. a you, Scot, in good and strong liquidity delivered excellent on over in million all. results morning XXXX and position XXXX of hand

future The were a our for into translated positioned metrics for with EBITDAX throughout time financial and front the improved last increased the and years results significant flow industry, discipline but operational solid opportunities financings and us. in several cash us of challenging our capital Our year. well generation

unit touch on our X guidance This of recent at briefly growth over and over XXXX guidance. decrease and the approximately original at low accomplished on most was MMBoe pro averaged midpoint forma XX% DJ was our our with a a of range which our LOE of original XX% of was per end me Basin represents capital Boe, ahead XXXX Production XX% guidance. per was basis. XXXX highlights. Let the XXX

cash million to year. expectations generate were to demonstrate of ability operations efficiencies. EBITDAX and We million, which above flow we $XXX headed continues discretionary Our into significant generated as well an of team $XXX the

improving was above production fourth The Now, to XX%. to DJ commitments, was September Basin outperformed DJ maintained oil in acreage no side area oil the or we as per the oil, to have which X.XX oil foreseeable XX% as on the We the delivery represents fundamentals. a translated with also less increase. midpoint differentials also turn highlights, which slightly of DSUs are in that and XX% MMBoe, on guidance our futures. DJ than for Basin and XX% our XX% $X.XX year-over-year DSUs flowback GOR two Basin weighted which lower production of improved was averaging increased differentials a totaled sequential production and peak quarter Basin initial We into WTI. sub-$X NGL WTI in of Fourth market a volumes price our in quarter would basis higher position production. DJ located expectations. prices expect barrel, the the ramped on were placed marketing grew western

low differentials which our allow to of low are the cut, strong generate Our high peers. us operating high oil and costs at end margins,

sequential Boe, over $XX.XX the For third margin quarter. the XX% fourth unhedged Basin increase a quarter, our DJ was per

EBITDAX cost consensus of proved program. the a For million the flow the DD&A our at generated high the additions positive discretionary representing of strong were Boe a slightly and $XX DD&A adjusted post lower in depletion estimates. drilling to of return fourth quarter. pool. $XX.XX EPS better The rate to from allowed per and reserve line improvement. of wells of which primarily highlights us result was efficiency capital fourth margins greater decreased This lower cash rate to quarter, the for than a XX% we quarter, in to year-over-year This million, $XX

on Now, legacy DJ first asset. our for Basin quarter outlook our

As following assets Scot combined transaction. mentioned, close we the our from plan full the year to XXXX guidance of Creek Fifth issue

MMBoe. first expect X.X We quarter production be X.X approximately to to

December. As a only sale as reminder, not this include does DJ volumes. associated also our the This Basin with Basin any Creek Uinta in Fifth closed includes property production

our gas that the We're into natural greater are as gas Our east. quarter needs, line impacted an we gas line seeking and the freezes represents modestly fourth additional in to flat constraints. process and somewhat December respect by production being provides with flexibility to guidance agreement always high associated with third-party from pressures processing entered gathering we outlets

moving of currently our XX% about are XX% reduce this direction reliance the system. DCP We on to our to volumes

to We have the Sterling throughout system the on volumes increase XXXX. ability

costs million two is other as to we which for is legacy quarter rates. expected be total $XX to $XX the XXXX operating CapEx generally to first Now, operate to All run the line fourth are to quarter million, similar our properties. expected rigs continue in with on

the on to Now, balance sheet.

This $XXX XXXX. cash balance protect year with a activity. We maturity million not We combined profile and continue our the nearest to cash expected is manageable the late to on XXXX debt until of flexibility with hand. maintain sheet being fund ended

us We Fifth borrowing in to quarter credit give the assets. also maintain to We to a Creek integrate proper or credit reassess the plan base the the $XXX time next on million facility. facility so undrawn

remaining of position of was from proceeds times. Our December Uinta our completed $XXX proceeds connection December. We the of exited million in X.X net cash sale common and also Basin in year the completed includes offering in properties stock with debt million EBITDAX to of that was net with a that $XXX

protect the continue prices. and support. current for strategy to strength our provide futures providing in have On return has cash predictability price our our at rates in us hedging program we the of future into advantage and worked support investments capital strong of to the taken are forward flows to strip market that increase well This we layer capital front, for

or our Fifth positioned ready take opportunity the updating late summary, press You transaction. our to to can the in integrating that, questions. about in our we find hedge the continue a are In with Creek we XX-K. we as successes We March. us full position summary excited and of updated Operator? everyone release outlook us With well forward XXXX look in our of XXXX now ahead are have

Operator

Thank you.

Imperial first The from Jason Wangler is Capital. of question

is line open. Your

Jason Wangler

that looks morning, are expected, you in Was you everyone. guys and types those at the changes is you things you say flat you well of it completion in any with included into what like keep could you performing the this guess the costs seeing efficiencies. year? to running, kind are Good more be? to as are look head And Is I as more expand that you're curious, those going you that as wells maybe there tweaks, would on

R. Scot Woodall

bit. little a Sure,

think which back and foot. we're this, stage stages of foot forth between I of so like to X,XXX sand or little feet X,XXX pounds pounds or XX bit kind into a we X,XXX to be per plus lateral per like kind minus zeroing on seem lateral. in still going XXX And of spacing, translates of

So, enter into are we we where those of seems like as kind directionally XXXX.

be may where stay. we I on budget like operations hold At around little throughout overall of bit And cycle expect well team, the kind like as times, looks pressure year. much least through expectation. to increase there's we're an X%. But XXXX, think costs cost did that's of would my of we primarily to reducing in It I those would flat I something going continue that XXXX in to a think, and cost so, our

Jason Wangler

Okay. mentioned guess and the – you pressures freezes. And mentioned the I as line Bill's

Creek of see year that kind the Fifth or you too, that impacting on? is you activity As combined as goes do company between something the that be the see deal, easing you get plan may the how you with forward, going

R. Scot Woodall

kind along of two lines. points Well, those

of that sheet to lot or less which would through word there allocate good own for us outlet the ability Fifth about is DCP So balance pretty and transaction capital could pace to us a organization. controlling another there flexibility, flexibility, the the whether give a talking system. sure, keyword in we gives our this obviously, flow having that we're of development, Creek like And more up summit us

give us does later be account combined and I think options, that will forward So, to more March. we choices surely as into and into taken putting more look company that out guidance

is worst experienced, we that Specifically that things kind the to the of think behind us. and probably line I pressures

So, we DCP curtailments going we forward. on November, were probably more December see and what impacted with January in than associated

have for and signed we've those up. with If continuously contract you remember, gas, volumes ramped another another outlet

So, other of be think couple that we in of XX million that somewhere X day And over may going arrangement November, a we're outlet. to we a through only million third-party a have currently day a million moved other XX around volume there. in moving day but April, through we'll through million

that behind got is really behind some the volumes we've said, of more But bit us think kind I and QX. into issue did and translated I we the it that issue little of fourth So, kind of like in of of the the quarter a first half us. impact think

forward. we year So, look robust a for going pretty

Jason Wangler

it I'll turn you. back. Thank

Operator

next The from you. question Stifel Derrick Thank Whitfield of Financial. is

Your line open. is

Derrick Whitfield

year. strong a on congrats and all, morning Good

R. Scot Woodall

Derrick. Thanks,

Derrick Whitfield

QX could processing associated your Scot, last freezes? volume of and perhaps building constraints impacts line degree you discuss third-party the with on comment,

R. Scot Woodall

first we've said acreage I the had of impact. those work have putting I next speak or Yeah. behind I still to most is I in remarks, is large, of and some online area think weeks. Clearly, the is couple able still third-party But QX, that we're of other arrangement the gas of curtailment one that like to my us. ship through think so by prior most XX experiencing being issues by we back of position our There But some this we everything trying through as is think, today. and over days most

Derrick Whitfield

you're in basin what pressures and to to Perfect. the you're taking offset some inflationary could of you pressures? those self-help measures guys seeing And speak then,

R. Scot Woodall

continues pumping under be Sure. pressure. Pressure to inflationary

of so services, it So it's part a mentioned over in days, are of cycle every per to drill improvements items. kind cycle drove and of XX%, fracs drilling completion we and seeing things. I drilling leading whole inflation make the the lines. plugs, timeline, the XXXX ancillary the like it's day, little but But along in some that's before, some lot time probably a rig one just in by those that's the tracking of much to But not as time whether we're times the to other We're bit facilities. out able of XXXX, number and the set takes drilling continuously completion of other

due offset those some So, able continued of that I'm optimistic our those be inflationary pressures efficiencies. team will to to

Derrick Whitfield

the procedures color your you with me, on any stand one regarding have XX on and work the with And where Fifth Great. evolving acquisition teams Can of netted then lastly the at view you for DUCs to the Creek acquisition. that now flowback opportunity the another? are your offer time how had and D&C

R. Scot Woodall

Sure.

process had when the whole votes so the the expedited SEC there in in XXth, has middle lines, think for process. of Creek So review the a very about you the I just kind transaction, month. gone shareholder great going the through think we'd Fifth along of And got those general, set

which the Glass Lewis that got We smooth. tremendously items out a shareholders. recommends of report the gone Directors to the Board for the for this Lewis put of vote has all that Glass So, our morning in

So, that. we're excited about

things. with that the track. approval be from Creek as worked So as tremendously kind of as has XXXX Fifth and organizational through tackling process, to for whole event a on issues putting plan the been together some seems business everything well a we people collaborative Working of

great to guys. been of has that all So, work those with

nine up. of The Going those completed specifically Of and year. in that done Fifth you Creek in of three last be the DUCs post by were December online to placed brought DUCs the XX will closing. December remaining DUCs,

well. go begin end process very really the have have collaborative of been April the rig need a the have we the by almost as to DUCs. think of the working in already a for fashion those of Hereford secured of XXXX think we secured and with probably I I and position Similarly, services that to all there up beginning we there Fifth so, people expect running April for Creek completing permits up March, in to have drilling already And

put outlook getting But forward as those and and look approved and the all board, as with in that business to new we that items that announcement it intact. Obviously, conjunction continue we well, seems I So, will transaction looks seems pretty a outlook of the say plan with everybody. December post would post that we smooth. like to on process. that our I through the that still sharing closing in it's back moving track, through like update intact still the is work

Derrick Whitfield

you Thanks, it Scot, for I'll the turn to back detail. guys.

Operator

from question you. Gabriel of Daoud JPMorgan. is next Thank The

Your line is open.

Gabriel J. Daoud

bit just DUCs on disclose, guess, from able is following question. everyone. a Fifth post you up production Are Maybe I current Good the coming guys three little what to morning, the Fifth Hey. Creek Creek? online,

R. Scot Woodall

They're shaking no. their head,

guess So not I yet.

QX those the we'll update when we volumes in for So, later guidance do guys probably March.

Gabriel J. Daoud

Understood.

R. Scot Woodall

probably it expectations our But that we meeting I'm sure can can just say it's during much. process. acquisition I the I say of that how forecast

Gabriel J. Daoud

one you. Got then oil year. does on for around, Got XX% How throughout move to I guess, last for be plan, guess, you one I helpful. guided then will Creek Fifth me. it year? the mix throughout you. in you. Thank the as is just and look, by of XQ, ultimate the the that That's but kind And The and expectation it's I oil is that cut, And flat the know impacted the year? sets that higher XXXX

R. Scot Woodall

probably Yeah. of doing way the That's right it.

that that to production they're you of half probably rise comes QX, and on see that weighed so as a is So, QX probably QX. Creek line back Fifth would oil, rise since think the I heavier

Gabriel J. Daoud

Great. Thanks, Scot.

Operator

Weil. Howard Park Thank is you. Carrere The Scotia question of next from

is open. line Your

Park Carrere

morning, everybody. Good Hey.

R. Scot Woodall

Good morning.

Park Carrere

talk gave bit guidance guidance yet. late But as those as did little or little XQ was realizing Maybe line hamper Derrick's question guide than try thought? to it last the you a about further to a you you pressures official year, relates preliminary can't different, your bit expected it ask

R. Scot Woodall

It's a We curtailment little our saw bit of the the that's full basically in basically factored in year. but QX, expectations. line way that with in we

the that intact probably that guidance said, we December So we or like outlook the all out XXXX. I – still reiterate I'd of for that put in is

Park Carrere

Perfect. contracting can what term last think What's up going do of that the get maybe longer to the one, just XXXX? through ceiling? gas kind And pipeline you you then Okay. one the east,

R. Scot Woodall

move more the day think to that ability a million We we than XX in have June

Park Carrere

million. XX

Okay. Thanks, guys.

Operator

I'd Thank call you. to remarks. further no at the questions for back to over Larry Busnardo are like this turn There closing time.

Larry C. Busnardo

All right. Thank around We're all have so for today. again any questions, you free to if out. us joining day Thanks. feel you reach

Operator

Thank you. Ladies this conference. concludes today's and gentlemen,

may now everyone. You Good disconnect. day,

HighPoint Resources (HPR) 28 Feb 182017 Q4 Earnings call transcript