HPR - Earnings call transcript Q2 2019 | HighPoint Resources Corp

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 HighPoint Resources Earnings Conference Call. [Operator Instructions]

I would now like to introduce your host for today's conference, Mr. Larry Busnardo, Vice President of Investor Relations. Sir, please go ahead.

Larry Busnardo

you second us call. quarter thank the morning and Resources HighPoint XXXX morning, for this joining for Good earnings conference

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

forward-looking I can the find website hpres.com. of we on provided begin, the statements release, you our encourage Before our review earnings to disclosure within statements you which at

find also at the our of release. them end press You can

Scot now Woodall prepared turn the will to over I for call comments.

Scot Woodall

Good and joining Bill our and call morning, overview us today second quarter the thank you Paul and for I for some to the of operational provide handing to discuss XXXX will operational before financial and comments over update. results. financial

on quarter operational a operational our posted in that strong by deliver that driven and with and solid financial execution results line came plan continue We expectations. was our to

successful production were quarter that This all that initial we and and completed large-scale back advanced All on flow accomplishments gives within XX quarter while confidence strong what deliver placed our and the the profile, us of consistent the placed maintaining expenditures. as has Hereford for XX we the wells will wells our with insights flowback have July. program during placed was the performance wells executing an and on planned second flowback. immediate half second on additional in capital had on outlined field. data program include been optimization has geological We delivering understanding collected second the XX our Notable been significantly is

XX% corporation day to our production over the to quarter. growth the ramp quarter the past as and total new This second an over online XX,XXX for The significant current months several over approximately per drive number has will of continues up. wells sequential incline third BOE turned brought production net wells

approximately are high-fluid the We Northeast our XX% type curve Wattenberg continue as completions well strong see base intensity asset above expectations. averaging to initial the performance from

acreage We curve are tracking also strong western performance the Wattenberg early for position that wells type our Northeast million are area. this seven placed delivering BOE and online on above X flank of results

continue we achieve of see quarter cash generating job the second can on half and target and successful approach are flow maintain by entire our investment capital to year, to as Lastly, our great for to highly positive track with disciplined the a a of execution of team. a you

the Execution program like economics. increased top around goal well well would improved a Now, to Hereford asset. enhanced asset performance is detail priority our Company. I of additional provide initiated efficiency of of We performance well our and of this capital some achieving optimization the optimization with

gained validated are evident potential had of investment this will insights pleased asset. the with we'll results be We and the quality to extremely and performance become well conviction our that performance associated program This community. the delivering immediate and

Basin midstream topic of again. DJ discussion has a become

curtailment. we to no So, would Northeast DCP to like during that processing our everyone other Wattenberg gas and to flow volumes continued than proactively XXXX, multiple I diversified outlet remind with

capacity, it's plans. gas gas commissioned in upcoming support new Midstream gas Summit plant which increased development Hereford addition, our providing In processing processing July, to capacity processing sufficient

Hereford. to call with provide turn and details I the we've now our results more over seen at that, Paul early With to will respect the to learnings

Paul Geiger

Scot, everyone. Thank and you, morning, good

of time higher-fluid Northeast safely. momentum results the about intensity office of operational I'm the in our in detail by and both First, half are moment. expand of Wattenberg of sustained executed will We XXXX. and I'd early We're our I the we've in these Hereford delivering and first our like a encouraged to personnel realizing thank number the development year very seen on into successfully more half in optimization the pleased Hereford. for program second and on our stimulations benefits field

of Scot XX to on net wells quarter additional and mentioned, flowback an our on the us XX,XXX the wells total new most over to second placed oil XX with ramping guidance current to placed flowback were This provided production. third positioned beat per production well gross monthly in still of gross very equivalent our during quarter wells we As day, has relative today. barrels July, bringing

production operations. barrels volumes sales volume quarter equivalent At equivalent X,XXX Now per -- oil gross moving a onto day, high averaged barrels current of of record per the over Hereford, field second production has for reached and XX,XXX total day.

XX optimization X,XXX field total project completions, to per development project During to the per every implementation to stages, within XX of of foot, quarter, and the variable the completed XX-XX-XX. including XX-XX-XX aspect loading evaluating of fluid XX feet, we spacing lateral XX DSU extensive barrels DSU The per sand second treating X,XXX cluster successfully rates foot, loading over encompass pounds of spacing X,XXX and XXX lateral of to XX cluster. feet stage

will gathered XXX well per data over array, completion performance. and drilling data, work, total, enhance of During analyzing of wells was were to spacing XX this we're XX microseismic terabytes In to evaluated. project generate from X mile this while square DSU which

than resource Foundationally, XX confirmed million barrels greater is which in that oil gathered our place thermal maturity study from significant section, and Northeast data strong to reservoir and saturation hydrocarbon of characteristics of Wattenberg. XX% a approximately the per XX

completion accomplished which optimization over several we stages of years. single generations This the a monitoring immediate very real-time observations were on in on optic instead the project with completions applied the execution fiber performance In well. the later wells, program. optic the as are during during insights We in gained same by of employing technology way, job fiber provided this of enhancements pleased real-time

goal well that spacing value development. primary maximum project and to the for of determine design in is resulting completion Recall future generation

spacing the volume leading learning from opportunities include the We stage on rock inclusions and date. as and our the are project materially execution the in completions. rate, clusters us increase to design Specific resolution to is resulting this confident design, that to to based date changes stimulated

through products ongoing both were opportunities flowback advances during optimization well completions, Codell designs for these formations. economics well further customized quantify completion well of of real-time support position. of Niobrara early results this fibers monitoring improve the during Very Some and to the will

lateral recent Development seven in of at results, to placed on well eastern completions flowback density barrels of of foot X,XXX higher wells included per of pounds June. were of well wells the lateral DSU XX-XX-XX on on intensity approximately approximately sand portion DSU XX Moving incorporated fluid foot. per XX per

controlled production flowback, XX after approximately early average two-phase volumes achieved the oil, of equivalent barrels the well of have of During XX% XX,XXX which per is wells cumulative days.

early four better of been on wells on density placed DSU Very of per well, a XX-XX-XX developed than spacing. DSU. pattern into wells adjacent or and higher wider of design Hereford which pad July. on the DSU productivity completion wells density have indicate in of than The portion the performing and as These flowback The previous wells were improvement wells XX-XX-XX, completions was western well a and these XX significantly initial eight custom remaining these higher used anticipate data DSUs. fluid pressures on

XX% per These completion that XXXX. foot. flowback wells DSU placed the portion intensity last fluid of of the Gen-X XX approximately were production days. wells to volume April which These This wells of eastern after the western of Recall have the located achieved in of offsetting two-stream DSU. barrels of lateral used barrels six located the the in XXX cumulative average the XX-XX-XX lower total XX,XXX on oil we wells favorably compares approximately of equivalent per side was on well,

rates maximize in We're supports well execution, to our which efforts improvement also drilling of seeing our continued return.

trending Our recent well under in spud driven These drilling and for below have portion Hereford million. are of $X days nine rig averages cost downward. release are our the wells successes to

we Northeast to Hereford. achieved drive the execution efficiencies historical expect as We to continue improvement Wattenberg this match averages in at

to turning Northeast asset. Wattenberg Now legacy our

in wells quarter For spud on XXXX, the Northeast and placed gross XX wells gross Wattenberg. second were were of flowback XX

XX% base performance through barrels high-fluid the of We type continue see completions, oil than more XX above the Wattenberg XXX reached of continue after intensity to wells have intensity as approximately average program of production improved to track XXX,XXX Northeast production. initial -- pilot cumulative wells days high curve. These well

completions by the the X encouraged first remain performing the These million as In Wattenberg of completed be with results June, a consistent XRL future additional curve. intensity type and barrel program place we highly X-XX-X are flowback in wells our We high-fluid oil Northeast continue an for western new as edge Northeast portion to of equivalent the the acreage. utilizing in on western DSU this the acreage we EUR design are Wattenberg wells seven on completions. standard use of to

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

our Wattenberg Northeast which release, days top Our Hereford our expectations, most the the of from curve execution continuous entire recent during focus our on drilled sections and we're rig wells' to The results. see well drilling averaged demonstrating in spud this of the under our pad several times pleased six under efficient high-quality among four team also delivered to process. improvement is hours, Similar to development. throughout

the hours highlight HighPoint's averaged day a quarter XX like also in pumping. over pumping hours would in that new our of over record with to XX all I a day. crews quarter completion single company in the set operations per team

pleased we quarter the the in XXXX. made operational are To by summarize, of progress second

came long fully since We Hereford have in a the of October first very XXXX. ever way DSU come developed in online

year Hereford demonstrating to of and wells as well our significantly the the in EUR a of the leading benefit of few during track completions. ramp-up significant newest as our a We're increased and months were ever our approved wells improved the are we productivity of indicator expect past from deliver highest wells on pressures performance. Northeast the on production that number of second placed half production and productivity over high Wattenberg HighPoint's We greater

now Bill. to I'll call turn the over

Bill Crawford

and morning. you, good Paul Thank

from quarter Our last we results operational reflected performance second financial strong year. sales second as increased XX% achieved the volumes our quarter that production of

came in us placed fracs shortly outlined, as a gives confidence provide our this toward production significant half fluid number year update expect we our of of volumes Paul ramp second July's achieving we production over the during up from on high-intensity production were high the months. that an the I high growth. will the that couple benefit of guidance. last As on

due million to operating margin of DJ should Basin costs. $XX.XX In EBITDAX generated high operating a low oil the $XX basin lower WTI delivered of names highest BOE, of per differentials second the among cuts, be and the and we which quarter,

the like few now items touch to on that a I'd impacted quarter.

WTI. in fractionation to of see weakness prior NGLs a result and of and than prices averaged about transport quarter costs. We second XX% This is higher lower continue as quarters

We this as fractionation later see some to expect year. going increases capacity improvement forward

approximately line with is in run and which Second taxes of X% reflective revenues, our quarter rate averaged production historical our expectations. of

year. taxes of pre-hedge the production expect for We X% to remainder X% to the about average revenues of

than completed in our future We base unchanged. review during XX% cycle. XXXX more sheet. balance oil and protect than position expected of barrel. not million cash flows of expected quarter of the $XXX and second our semi-annual our have added strong protects to XX% second volatility, borrowing from than per our at the changes both fall do half borrowing our hedged, the us expect investments. capital on any predictability Now with ourselves we $XX oil periods base and and greater price production the of remain To with hedge This in in a oil into We more provides production XXXX visibility

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

the third total We of the the production a Now, midpoint, new volumes. approximately oil XX% X.X at to our making mentioned. of Paul of sales growth be quarter about as volumes total X.X XX% an significant update anticipate we up strong for to from represents This with sequential to number outlook. benefit that wells MMBoe, guidance

July, a on full-year track We are in confidence day BOE giving for guidance. per with of lot XX,XXX our us

account million and our to front-half third We as activity some find first you to actuals, which quarter for can half was our million are adjustments Capital for in to the have expenditures total $XX LOE minor made loaded. to release. G&A $XX the completion press expected guidance

Scot flow full-year the our capital cash positive to be mentioned, are and and the year. to in as half capital committed guidance, of discipline reiterating we We second expect are

in all, All half and business guided. executed on year the that we in up have our plan back ramp as will confidence of the production we

$XX hedge a and per underlying protect debt ample next our cash have with are the at a by stable of we financial manageable an and the We position liquidity supported years. that majority over profile several position very barrel flow

With that, over turn operator to for I'll it the questions.

Operator

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

Your open. line is

Derrick Whitfield

spacing should learnings how XX the Thanks, D&C from XX Paul, Perhaps and design on about Scot good current in morning. optimal Hereford, for future or we beginning wells? based and section for think with wells

Scot Woodall

still a Derrick, what Paul said, guess little early. I it's

forward. he bunch as the next been both on of over fiber data and one saying that department your that gathered and tilt think and over that hope the you in actual month of that the be and you prepared and all and going of treatment. as our of data Paul mentioned, the two, enables we all spacing that to optics the to the his well as design remarks, microseismic, kind has optimize flowbacks of gathered geoscience data then the kind I or the and our the the view stimulation kind what BSP The Codell, was analyzing is leads we of the provide of results course of interim a meters or optimum Niobrara to stimulations, quarter will real-time collected your spacing data optimization we

Derrick Whitfield

That's great, over then results. pilot placed in high-fluid Does my intensely the follow-up, Or to are upward area that type be improved shifting better? it's an program on the wells Wattenberg your curve? Northeast expected of performance to And XX-well the bias

Paul Geiger

that. to parts Two

part that more this applies the you've over west, higher BOE higher-fluid this this western and of so that in production percent you've tested in so rock and in previous central wells As the included you specifically would that area typical on acreage, generated XX completion, intensity capacity we've it wherever call. to and apply curve we've type go overall seen to seen plus inventory our that

pleased in continue to levels. heard production very see that we and think the with in use and that continue prepared standard forward remarks, that as the going our we're you I supporting benefits as our So, to

Derrick Whitfield

your for Thanks helpful. Very comments.

Operator

you. Thank

from question comes Our with Fitzpatrick SunTrust. next Welles

Your line is open.

Welles Fitzpatrick

mean It from rather bit good understandably decline. for over days. math right, might the the sections on headed? pretty Hey, to seems which my updated did on tell maybe morning. to flyer, if pressures solid thoughts where have like kind Can a on been preliminary I I pretty XXX, sounds any be the a EURs a bit us little over XX XXX first there? those the And you of XXX shallow maybe little wells

Paul Geiger

This Welles. Sure, is Paul.

as the that pressure we've section of to as higher-fluid XX seen, of the completions, completion about. well intensity the think and in As we've stimulation been we start so able to XX west, the generations volume move dramatically west and increase think we've then with and XX -- we XX, part those rock the off improvement and on I are that we talked moved of implementation the that then we

and how And standpoint have where controlled of we from kind your pressures have lower decline in give west that on is you and so, some leading tried see the you exactly the month do performance that and as that you in three We've productivity going real-time had XX, that to observing of move seen where see of significantly where indication you're we don't that productivity that seen very a that well. manifestation you forward? it The we increased environment, is response row. see see IP in program don't would two had you productivity a got we've flowback a that it

more company. so then are more flowback Northeast that and seeing you ramps, experienced Recall the for flowback of those a longer attributing controlled improved we volume two And to plateaued , completion and couple to see earlier wells four wells to on as higher ramp are our wells. very rate had sustained intensity a those a last got some about commentary we overall west, of in and first you've of we've higher that Wattenberg the rock across and wells from rates And to the maintain longer improved in moving that controlled controlled flowback. pressures connect month higher traditional able from quarters for are and there Hereford deliverability the as we're their ramp Hereford shorter the the stimulation in stimulated to

Welles Fitzpatrick

taking they XX to section thinking great. those we controlled about And of point it flowback a do should the think will I that presentation? maybe wells, later? be That's months, then into you mean bit a and And Okay. making your be couple little it

Paul Geiger

the section I Did hear XX or say that. you wells XX? didn't

Welles Fitzpatrick

XX.

Paul Geiger

standpoint. that very time. Those very, on period have been From of Sure. short

As inclusive higher given a flowback, pressures result difficult of a us make the indication to EUR pointed controlled it's and XX of capacity give the What rate overall. in the productivity -- first sustained segments as XX higher earlier, days. well production we increased at or out

here Scot couple to what and in into and we've next tank. XX we so well the I talking of about that the look section these in forward we XX mentioned, months as seeing higher translate oil think as exactly seen over And are productivities

that in look I XX, think mentioned that prove glimmers east section see even talking the that. in to we of that further will forward sustained production you with the early oil so about and you but tank

Welles Fitzpatrick

you Perfect. is could Okay. one leverage desire just any a down in then just your Or more get been updated getting it team there you've the the in? level per Is across time? And guys mean Can your that basin I not asset if base? broader -- I unit. As on leader to and thoughts LOE M&A? give operations sense. G&A Makes

Scot Woodall

executing the in the probably term now. right that the results opportunities in on the is the Clearly, I you say, the focus in of where the we're focus near we going look know, we've where data would on Company on as is then that. sits and now well, area right the past Company always That's Hereford, for project future forward. collected the that and the

Welles Fitzpatrick

so thanks. Thanks much time. Understood, for the

Operator

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

open. Your line is

Jason Wangler

taking up the Scot, Hereford into on you the move all. talk the as it of ask kind there? morning, guess, where there thinking was more side, second guidance, should is and going it could quarter the, be LOE just around wanted I in to we just you maybe good then just about about what on Hey, something and or

Paul Geiger

is This Jason,. Paul. Sure.

in below that drove associated in there that up in a type non-recurring. non-recurring four were we're things down few and overall some up, number four that QX. first half weather our have QX other significant have drive that We call I we had with QX, what We

us, recurring three I significant think overall into half, we as those things in then the you out into blending numbers -- two those driving rate for see and down, move second us focus the going on things got production. ramp continued the

we those And second so combining the number see that as -- we're down to things that low about. we've three half, all in driving type talked three

Jason Wangler

the think NGL been does across weak but makes talked NGL a it's it mentioned, thinking should just your how the know and guys of I portion the I kind stream, it's is even about and help which that improvements, Okay, you worse? side, Bill about that in guys of prices, pretty of basin the anything maybe think does Or from being infrastructure be much Or kind it not you we obviously there? not there? constrained, huge about what everywhere, you

Bill Crawford

Jason. of affected basin Conway, pricing. go is producers those also to to us gives the Bill. pipes being the out Obviously and some Yes, multiple to which able of multiple to deliver This access do

most your we As year on Mont all the the To important that's and improve. economics. driving expect into to the oil the the end toward volumes can point, delivering is infrastructure Belvieu, because expands more the of get NGLs that this

Jason Wangler

I turn Great. back. Thank you. will it

Operator

Thank you.

Grigel comes Our with next from Macquarie. Paul question

Your is open. line

Paul Grigel

western into kind to you're what to wells some you Northeast the Hi, room kind inventory And on talk or what Could maybe running the there? if attack Wattenberg or wanted the area of would about you continue that beyond? have one XXXX newer of and seeing flank. question on you of then

Paul Geiger

talked the DSUs compete, at higher-fluid over as is continue higher happy intensity put some several Paul. rock. then there able we Paul. wells productive way This productivity to We've so to we Sure, the we've We've SRLs we over early results stimulation together been -- and there. see there. improvements in got put the that stimulations the and together our very are high those and one to the look that time, of very the acreage, We're EURs, like over excellent about

more actively look positions do of drillable we that. opportunities so beyond. We to together any over and continue to have additional acreage for look half DSUs 'XX, And in XXXX planned together in don't will second there put put but the to in we

of blocked far our As there. as last got isn't big on materials, not of to the the there, the this acreage but we've over LOE the see kind if is that drill portion you outline overall, over out of the certainly the

Paul Grigel

of the And than and more is may Okay. maybe supplement on rather to environment acreage What as then northeast side be current Hereford a swaps just on the maybe on that. M&A, on the but blocks. producers motivated bigger dovetailing a give to everyone's on together there? two not or other Could if thought working working you that full just get moving the kind

Scot Woodall

we Sure, not Clearly, being today, try go as large of Couple nice to there Northeast the undeveloped in and things absolutely. we've amounts Wattenberg. that but up, in anywhere through placed is block got position big block value of on DJ there.

far swaps block to things to up. As those as continue

I other's get to out here. their good that think execution and get done to of drillable make into DSUs additional acreage trade each help and we've doing operators in luck to had

continue with we the operators able to see other So do that success in basin. and to being

Paul Grigel

much. very you Thank

Operator

showing Larry remarks. Thank you. to turn And now the to at any this back would closing I Busnardo call questions any time, for I'm further Mr. like not over

Larry Busnardo

remind presentation. the of will again. Time and XX:XX know of posted EnerCom website would Monday you. start Denver to at forward seeing be you CEO, presentation I next AM be our Gas many Thanks, Oil look we you be next that our thank attending updated Great, to week. & Mountain to will the the the I and of prior will copy here Scot Conference like presenting to a you Woodall at in

Operator

a program today's thank disconnect. wonderful gentlemen, and in Ladies for day. may does you and participating all This have you Everyone conference. conclude today's

HighPoint Resources (HPR) 8 Aug 192019 Q2 Earnings call transcript