HPR - Earnings call transcript Q1 2019 | HighPoint Resources Corp

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2019 HighPoint Resources Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s call, Mr. Busnardo. Larry begin. may you Sir,

Larry Busnardo

you. Good morning earnings joining this thanks call. morning, the HighPoint and for XXXX for Resources us Thank first conference quarter

Joining Bill Crawford, Woodall, Financial Officer. are Paul call Chief Chief me Executive Geiger, and Chief Officer; Scot Officer; Operating on the our today

Before I at find can these you our website ask please statements the disclosure you we within our the earnings, begin, hpres.com. provided forward-looking that review statements of on

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

be non-GAAP our reconciliation of be will we addition, call statements at our found measures press and release. In GAAP can financial referencing financial end during the to

morning that, will call. his We on today’s turn that I’ll comments. referencing also to an website we corporate posted be Scot With updated call presentation the over to for this our

Scot Woodall

and Good were the Bill financial operational for a discuss XXXX today us quarter financial for overview morning before first to start some good results. of to thank and XX%, our per quarter strong operational the by sales We Paul first demonstrated on $XX.XX update. year-over-year that growth results. and you provide and of over production to commentary operational to EBITDAX basin and off the joining oil I’ll of call growth margin year Boe. We and our plan, volumes volume operating our growth delivered XX%, and handing nicely executing as of XX% of

we performance, With the guidance. strong first are reiterating year today full quarter

updates confident were operational we in production during and completion Bill in drive be continue number resulted quarter. our half us from valuable to and significantly certainty is yielding high as three performance the high-level We towards project quarter during law pace the activity of updates. this higher to allow the development program that XX anticipate our first the that half from forward rig over Hereford, and on and look with to completion plan Hereford further recent Wattenberg. Hereford the we of online providing profile an of activity capital drilling industry placed to two Colorado is drop maintained a our signing to year will This goals fluid second This we in over outlined, rigs look wells have intensity previously both achieve second Senate significant value weighted program further Operationally, see to We will decline will our year In quarter. Northeast stakeholders. The along a We spending. the in wells on Northeast and that the flow-back that strong drilling and optimum drilling pace As were optimization during return of the the second underway forward should assets. associated data which our will summer. you to bring Wattenberg. provide deliver into to XX-XXX stimulation is

un-corporated Basin plans rural be perspective requires makings acreage expect time, multiple acreage continue we Weld the develop on rule affect that our and able uniquely on focus of fully but highly over advantaged and future development position. the at position not within still control period execute changes differentiated DJ the COGCC to bill Just to of to our highly new areas local Implementation is our this and should located and County. of

Paul call in as safely update. partnership an our Lastly, we our turn over relationship for the now look forward I will operational develop to stakeholders continue to with and established responsibly we working areas our and the continuing to in asset.

Paul Geiger

in continue execute our to good to be year results, in and we the start We've with the for stimulations more Wattenberg. intensity barrels our both the I'll as equivalent excellent development morning in moment. comparable volumes a on were initiated X.XX record and Thank oil over recent Production these first with XX% oil everyone. Northeast the of XXXX first million higher you, encouraged an of period up grew million results touch the we of quarter Scot, over program detail and fluid XX% barrels quarter had of XXXX. Hereford X.X

approximately to higher production and First officer equivalent. diligently snow which quarter in production the have March, roadway event thank like to also experienced County Weld who deferral range operation of and before their estimate to our would a clear oil personal and was tracking safely of quickly. end significant to XX,XXX of barrels for work we I company field resume work and our we

seen to wells turn we have recent DSU I'll from in encouraging XX-XX-XX. operations. At the Hereford, results the Now,

XX,XXX of without As presentation. still interference without replaced section were have which activity implementing half of completion wells well been at wells remaining of XX-XX-XX maximize producing highlighted corporate significant at well from wells in high concept a portion buffer on on days in around of the of control ramping activities nature but and -- in these of have completion of successful western interference The completions. intent benefit XX have well oil aggressively well achieved placed last cumulative on zone After wells These or approximately pressure interference. a average significant barrels are production that with production, were we this XX%. the active began initial in minimize pressure X period, flowback our DSU of a April. completion on flowback in per of these wells see To demonstration production for XX reference, Slide We Hereford. please February, graphic eastern production and quarter, with to flow-back

a two Page in gain study real and DSU fiber the granularity XX as from of the the subsurface approach of barrels us wells, area call, process microseismic groups completion. fiber and monitoring data update. DSUs have section we of of within technology. XX XX-XX-XX, are [indiscernible] three of wells DSU Today, XRL development incorporates begun fiber-optic last per all and operation also microseismic to the XX on to and XX regarding we over well wells results wells million and This time gather area. earnings including of XX the allows lateral the corporate by to and of extensive first XX on barrels our different technical from production million detail optic with we our spacing drilled geologic performance, design completion of optic increased of our is in of recall the monitoring There utilizing first within XX Hereford. reservoir, microseismic and this approximately have wells, an group to made potential pre fluid a across pilot per we high-fluid of we intensity XX-XX-XX study On a consists of base our You'll design intensity assessment in DSU barrels Northeast following to foot of of technical picture strong of project the This increase previous study Wattenberg. the changes this tremendous resource XRL oil foot. of stimulation optimize This XX% integrated more XX

appropriation to hours -- recent of be the involve wells our of section. gathering completion the and optimum test. drilling over in that fiber to cost the able well optimization lateral Hereford have target fluid move the cluster fortune drilling will million. placement data we’re spacing the our process program $X of most driven second completions rate stimulation best fixing, and well seeing of loading, the we’ll well an to accompany our Supporting XX.X generate improvement of return, be will program. optics, successes sand expect rig rates. real-time drilling with from to Post-testing, drill efforts continued of designs stimulation activity we return during highlight like our quarter that regarding These execution. impacts our loading, This completion and place area and for to XRL take we record under to maximize I’d As

We maximize Wattenberg execution continue expect drive achieve improvements Hereford. as Northeast averages to at these historical efficiencies we to to in

to Northeast Wattenberg our Now legacy turning asset.

flowback. and wells first XX wells quarter the spud XXXX, For were gross replaced of X on gross

XXXX. performance high production. XX oil of presentation regarding than detail optimized from XX,XXX the our more XX% to fluid improvement more Northeast completions wells to Northeast during continuous so wells implemented of for above consisting improved tracking initial Northeast XX the cumulative has base curve, quarter Slide be X-XX-XX we after and continue remain well of approximately program. XXX of type pilot of the Drilling our see second the XRL future new We production intensity for are completions. the operations program equivalent The through of have portion average Wattenberg See standard reached results Wattenberg And highly completions. days central wells are by as in barrels focused These and the X-XX-XX are wells. on design encouraged in as completed completion anticipated DSU this the currently Wattenberg been

continues portion XXXX. with XRL the western on In of DSU on DSU field quarter flowback lateral addition, wells. the X-XX-X activity the standard or wells be that placed in and The X-XX-X expected X X wells reach to are second completion of in

Wattenberg lead the is outcomes Our toward program way with drilling Northeast continuing improved to performance. drilling improved well economic

Northeast which pleased progress from operational Wattenberg, first our well additional entire well continuous quarter at Similar to delivered continued to our are focused with Wattenberg fluid time to budget days Northeast we Hereford this design expectations, unlocking our on X.X XXXX. Our pleased summary, delivered made performance completion recent we led our In see is the most we’re top assets. which spud of of At our wells during the times higher during to improve development. is by improvement among results. value

cuts, drive return. have wells demonstrated productivity Hereford Our significant cost, to drilling reduced of and high complete rates oil

value we I’ll coming significantly we our generation to turn Hereford believe development. implementing the now call advanced improve the design which utilizing changes, over Lastly, will from technology Bill. decade of are

Bill Crawford

Thank morning. you, Paul, and good

items now As to our were our in and a on quarter. specific and estimate. generally the provide impacted or line reviewed, guidance consensuses results I’d quarterly operating financials Scot that few like Paul exceeded

the expect is taxes occurrence and of quarter X% X% first This an quarter, taxes Colorado production first compared XXXX per related annual $X.XX of severance XXXX we Production adjustments. Production last of is were per the lower resulted a quarters colder result distant weather WTI. third-party this Our that Boe per the averaged than be as in NGLs $X.XX NGL we that quarter. trucked averaged offset NGL processing is during An received. of Boe to temporary offset first of and to lowering to pre-hedged revenues. tax a to during approximately tax of adjustment for to the expense some first due tax the the price had in credit prior quarter XX% experienced of ad realized the valorem Colorado a about quarter thus the price barrel average typical in This effect year. inefficiency of by market

touching the Now sheet. on balance

currently We expect base of are and undergoing our remain million semi-annual current that base unchanged. borrowing $XXX review our borrowing will

us and that re-determination We in provide of next be expect will this week over liquidity. million $XXX the completed will

front, continue of in hedging to layer to crude On take the capital we strength the advantage program. prices support for our recent

predictability hedged added cash our We provide and XXXX and which into visibility are to well XXXX future flow.

find our position the a release hedge XX-Q. can updated of the in full You or summery press

our outlook. update on an Now guidance

be We should to about of quarter expect volumes. production total making XX% up oil MMBoe sales total volumes X.X with the second for X.X

associated facility guidance in with updated incorporates commissioning gas the downtime the processing expected Our natural of from Hereford.

work press expanding processing commissioning MMcf that, is XX day $XXX in this expected Scot of is Midstream to to million have quarter repeated. of operating downtime Summit for from summary, components total can take XX second $XXX production we're which experience to MMcf its later previously per Capital to expenditures based a on are stated, ready we our upgraded. a to the is we plant we and million the quarter With planned guidance facility Paul in track reiterating Hereford find plant. day our all gas per on The and XXXX expect which activity Operator? plan In are during questions. is for our a As release.

Operator

[Operator question Stifel. Whitfield Derrick is from first Instructions] Our with

open. line is Your

Derrick Whitfield

for Perhaps Scot.

Bill to for the implemented? Senate the Colorado additional the you expected could signing changes rules recent With and the at COGCC speak XX-XXX, of Clark

Scot Woodall

regulating will Sure. and emphasis the environmental overall be of the the fostering [indiscernible] commission industry. Kind an rulemaking county. XX of there’ll on one changes getting health little and pipelines that has of the said think to months. general of that all to the I industry about bit be but though, local and of safety. And commission is and you really things signing kind municipalities. of to unincorporated going representation a months in more control about know kind portion versus control and on mission And to and numerous and the we’re there over next the in on XX is course been all And less deal kinds makeup more wells being change industry with of local -- of emphasis well

expect really have to and think executing minimal we impact going we about our to So, us drilling as plan.

when of XXXX was of ago, permitting, QX permit the Robin direct couple here XXXX. proud of terms I QX In the a rate to weeks of pretty permit rate he identical was that [ph] to fact met

they we fully XXXX. permitted plan continue as for it program business to So, kind and of for to a be have usual

of on most unincorporated So, can put very them portion confident feel I being impacted should and be meet acreage out we plan and largely go based people. the that in least business our the position

Derrick Whitfield

fully so, wells? be flowback? and of think of the specifically should set of Section to your that on say on wells we XX it that’s have put That’s And really Hereford those the design Would if then, that the Great. productivity to about helpful. And production wells. the aspect every fingerprints to Section over wells first fair XX shifting very how relative and

Scot Woodall

to first XX I and latest I’d XX trying really to be the yes, where we are are implement going guess, design, answer, technology.

you’re got And see, going see start XX Paul of volumes in Along results from to that, different what foot, barrels so, kind are various and with Northeast we the XX per ramp-ups, fluid going with as design looking at see And mentioned, up going sand that mimicking you’re the of to we’re to positive fluid pound so to rates. XX volumes, X,XXX testing that spacing between in you’re wells. going ramps the Wattenberg.

XXXX. XX XX. those in So, think of there executing an will as think we half back design XXXX all us and lead on I of the going is going about into and optimum And lot to results

of then else. the months think nine and go thing drilling operations, optic you of one and get So, we and six results then to And this you those do trying it’s typically and can how be about that when and of to or do would change all kind we completions our to about evolve with going for you production microcosmic. latest fiber evaluate able technology something we’re change

So, that’s to we the curve advance really learning think going going forward.

excited. I’m So,

the in middle execution Paul of now. As that mentioned, we’re right

strong pretty how hopefully and out results about go flowing we’re going strong right going data have now, it We of forward. execute to and we have pretty and direction

Derrick Whitfield

very Thanks That’s for your helpful. comments.

Operator

[Operator comes Instructions] Our Wangler Jason next question from from Imperial Capital.

open. Your line is

Jason Wangler

to of rates. or you presentation; wanted ask continue may kind the other on higher like that Is response similar high-fluid maybe think just looks a a of perhaps in mean I part see that I they’re kind to as do something terms at rate. going faster of the you production of maybe be to curve the the kind think a well bit little at as it just of peak a looking you completions. well wells,

Paul Geiger

mean, Hey, wells on we fluid flowback. those completions, back intensity know, for drilled Jason. This higher these is as Paul. you controlled I

so, you production peak month our ramp have from second fourth as might of we to And anywhere go. a

see those in As have continued third ramp months. Wattenberg into Northeast to fourth the on completions, the out and you

first month, to I flowback important less higher well, following continuing month think, month you compared cume as and fourth whichever first for month, our look of in are a well. controlled as that and at generating to the cume. in per got months mean, whereas understanding than is as you I highest wells, significantly third it ramp controlled the is typical flowback throughput, terms second,

specifically, see there don't but see from significantly production know the we quickly, all overall across. more do your do up we and enhanced that we factoring see to I the those anything just way run the start question So, curve. across

performance you intensity like opportunity Hereford. Northeast stimulation what to mentioned, in so, Wattenberg increase see first at Section And very we on XX fluid saw see And those our higher excited specifically, look as percent which Hereford, Scot to is plus those overall. are that XX

Jason Wangler

Can you’re an that? talk cash the just just And Scot on obviously obviously, you just, the that’d focused you half facility be those assume focused where Thanks. color may be proceeds? area around but on, that you’d draw to with the on on of flow year. Great. I’d any focus second for of kind in free credit

Scot Woodall

Yes.

I would of to get -- once exactly the think, facility value credit first, ways be payoff kind we right, point. would all that then I shareholders kinds think to and of look the returning at other we can of

Jason Wangler

the if one CapEx sneak as you kind of just or the And happened , maybe get as look of think think just smoothes there year is think of going what a that's that well. the could to end further, just loaded backend size scale term. production, I front you was for years more, you out and will Okay. last that of obviously longer that and curious forward? I a think kind guys you how kind that way you plan Do work guys the that Do loaded kind about

Scot Woodall

think it You in But kind eventually quarter where that is would field. if of first out pressure the in Hereford you going well moves recall, we built the forward. that

flowback some so completed And and of our barrier operations. them from without kind them we putting build existing intentionally just production on pressure that to left wells

referenced, on XX of we’ve think kind to just wells XX month, some XX expect in on we onlines and QX. QX QX. we I in the that the than delayed exceeded opening I in think So, in more put already in comments, putting I than wells of And first But QX. more my as on put

high how of we this is profile. the have those clearly, of speak online; production of to of line we year’s sight great all half about a such confidence that degree wells So, second getting

Operator

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

Larry Busnardo

have that more we think the into just We’ll I that. queue. one popped question take

Operator

a Mike We from do from Kelly have question Global. Seaport

Your line is open.

Mike Kelly

I for of Thanks opening I morning. Good in. missed me part Scot’s guys. Hey, apologize, getting comments.

wanted obviously bit So, now you wouldn’t a QX, on you little But, you were QX? maybe that? We dive and this. than and that where what you to getting would a into does just if bit QX are expecting mind granular more. to little know the trajectory QX look, detailed like for for How CapEx you maybe

Scot Woodall

Sure.

guess two So, I things.

rig also, in down of wells laying I plan kind obviously, the So quarter, one, rigs on we a into completion-wise. then wells put of slower half second the which we three on in pace so just had a we year. going those And put And second drilling XX XX in QX. the as lot ran the on of one quarter, on than we more what said, things expect QX, to we of in

have accelerate kind the the additional opportunity Hereford some in and data bring to gathering We area. equipment of the [ph] in

that additional as So, crews we trying data the gather as simulation have to quickly field in possible.

kind and you that of diminish levels which so QX. as that to QX see also spending And to due move should you into leads the then

kind to really of -- going everything, of going kind plan. So, is

are QX, in Hereford we but on out. we’re I track and targets meeting that the in laid that think accelerating the little production We bit a CapEx both for

Mike Kelly

expect drop-off or Okay, QX be similar and QX should would in the in terms larger great. look QX -- of that pretty And spend in maybe CapEx? a there

Scot Woodall

I I of guess. pretty in think I have front those me, similar, but numbers don’t it’s

Mike Kelly

kind sense the a to think intensity of think those then, be best-in-class potential levels, resource? really when the and the when Hereford you get really for really higher wells, of results, you with tell, will each fluids the we good completions what frac do we And looking we’re do Okay. able to barriers, Scot,

Scot Woodall

in All the done QX. work will be

see data probably one, you’d a bit QX time in we little and like of least so, analyze probably at the would captured history. that production to And real

could of we be guess. it So, probably in degree to without probably confidence the speak will maybe higher QX, my

Operator

next comes Our from SunTrust. Welles question Fitzpatrick from

Your open. line is

Welles Fitzpatrick

fairly about line wells are and with to five in in On those performing similar, can were Nios those you each the talk where other? Coddles Section XX,

Paul Geiger

is are. Paul. This they Yes,

the by Nio seeing haven’t flowback. split between not similarly. the relatively or we’re and and on way Nios intensity that seen see on performing stimulating Coddle frac got They’ve do Coddles. we gets completions. wells, the got walls, They similar But, protected those lower we’ve so were we yes, those differentiated You in

Welles Fitzpatrick

how any And you last talked to been or way those relatively not then, obviously Okay. have Is you just or quite rates can quantify controlled flowback. peaked there to flat put one either that, even one, yet? pressures maybe

Paul Geiger

talk bit can I a Absolutely, about little that.

we’re there talking As we at to-date. ramp you’ve to got -- seen wells from about flowback, the our a two what look Hereford, controlled we’ve from peak three-month the at

managing management that recovery flowing of liquids of through bottom maximizing there. pressure on We’re kind

target in talking monthly to you’re not the So, about which will rate likely or as month; the and be third the being second that, first that cume month third we month, is the with highest very second similar. highest

we’ve as a their ramp taking standpoint. so, months, third look seen how then through flowback that's controlled we’re from those and And at second things those

Scot Woodall

Welles, Wattenberg. And development Yes. Northeast went just the through same exercise remember, in kind started first we when of

and we higher check controlled the And back longer, solution gap hard the didn't that all taking and the and gap wells. so recoveries we net EURs. methodology once at it and we to looking you cume that flowed time. and producing And way pretty largely present values that right production of first oil obviously And led through was wells, those remember, flowback higher and solution think gets maybe of handful them

you going so, do in we when is same think And this that we're area. the exercise in lower Hereford. are there it And to way application just GUR here that strong a

and remember, XX% plus on cut. or the Wattenberg oil plus you cut the So, minus is position Hereford is minus or XX% oil

for flowback early the it's technology months. of right think that's couple the going these through we and we of doing why the application process so, are this and times And controlled

Welles Fitzpatrick

details. I appreciate wonderful. way. sounds on wells like helpful That's really those still That's it. are It Okay. the

Operator

Palmer. David is question from final Beard Coker from The

Your open. line is

David Beard

had gentlemen. Hey. Good I morning, questions. two

you’ve was answered Section XX; first that The on that.

your line. talked you about line after down or good sheet cash Bigger in levels, of priority after maybe of on balance So, terms stock see debt cash to up? of buying you wells. credit building the is the pay What's use about some free credit those picture, how absolute the flow do and think back that cleaned use to progress on proceeds

Bill Crawford

David. in at Hey, the feels to we’ll opportunities. we look to that positive and Obviously, It those rates very like good with to of of when program. going get position, Bill. all that. that is the assess but capital be the good be flow we we’re to This Obviously, situation, of be returns hedge wells, disciplined that cash

so, we just And into XXXX. later this get assess as and year we’ll that start planning out our

David Beard

on Fair enough. guys. it, I appreciate Congratulations the quarter.

Bill Crawford

Thanks, David.

Operator

showing questions I'll now this remarks. turn time. I'm Larry to Busnardo the closing over call further at no for back

Larry Busnardo

Have joining for good over feel again Thanks additional us the you to and any if days. out today have day. next free several questions reach a

Operator

and thank for program. today's concludes you This gentlemen, in participating conference. Ladies the

wonderful have day. and disconnect may You a

HighPoint Resources (HPR) 7 May 192019 Q1 Earnings call transcript