MNRL - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the Brigham Minerals Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jacob Sexton Manager of Finance & Investor Relations. Please go ahead.

Jacob Sexton

good and operator you morning everyone. Thank the call. to Brigham Minerals conference earnings XXXX quarter third Welcome

today Bud and us Founder Financial Joining are and Rob Executive Officer. Chief Roosa, Chairman; Executive Officer; Blake Chief Brigham, Williams, Founder and

associated we discussion that remarks you statements of we you these including to release earnings the and our to tements forward-looking begin, our I risk. answers for Before like refer remind would the a and detailed

Reconciliations to to A In measures. addition certain we'll found be references this couple items. release. GAAP during non-GAAP applicable in call, make administrative earnings can measures financial our of

a to presentation our Investor website have during call. it the downloading Third on Presentation www.brighamminerals.com. "http://www.brighamminerals.com" Quarter in We recommend the conference We XXXX new investor HYPERLINK the download refer available we for presentation titled event

call over Executive a I IR our is webcast link and the to Bud website. call and to as Brigham, through reminder, Chairman. turn being is audio accessible Lastly, the on like would now today's Founder

Bud Brigham

appreciate you've We learned that is for lived companies cycles. cycles we amplified thrive. survive we've energy, Jacob. but conference positioned our in performance only the through have differentiate as if multiple also you, to Having to not earnings XXXX everyone And that you build call. Thank done to quarter that down third us are have to joining opportunity these in

on our sidelines. in a minerals manner our continue return Brigham top-performing in to and the and best we in the when competition that premium under to geologic shareholders; two acquire Minerals one sheet assets also operators. We've these advantageously disciplined can: Our position is team, positioned worked times to day from as with top-tier our much of such trying highly one, such areas balance capital

operators the creation. We're the lows, we aggressively positioning are value of themselves rising see accelerating prices it optimizing today. survive are by we're prior models in while to unsustainable cyclical were value and such of their our capital levels aggressively costs more E&P done towards shareholders. shareholder cycles model able similarly and to evolution business to We've now starting that doing also thereby from more As at thrive their while in when returning space consolidating, compound our to

our the we've flow cash capital are flow cash quarters free distributable long-standing the they free it Parsley return or balance the a to in distributable indicated talked to about we lease Minerals many reinvesting pointed then have I day, business returning and positive returning operating to Shale of of Since indicated storm. to are shareholders. seen merger a expense. quarter and as our scale up exposing to companies quite is we and August Concho, position. During Chevron-Noble of our excluding without similarly think to are returned shareholders much drilling our past CapEx XX% and shareholders this cash end and shareholders dividend XX% XXX% flow Devon our rigs call, our basins combine drilling these four to Energy are for in as faster consolidation, bit At Brigham E&P referring positives any along entity again synergies business the therefore has and and cash agree a increasing to Pioneer intended lease WPX, as completed on the and developing the for number all keep from roughly into XX% model capital and and today. ongoing with moved significant ConocoPhillips larger and of flow Brigham bonus. of X.X of plan benefit this an Further minerals. towards crews in of Minerals therefore connection to positioned weather well-fortified Most sheets of moving frac well will active we've

our plan no in to to also compensation executive pack long-term our pursuant governance lead stock terms has the tied with return. corporate absolute annual that of total equity cash directly grants and compensation vesting We bonus and

disciplined are top-tier energy. I shareholders. accelerated With accretive total an that, management be and to our alignment well-capitalized absolute least by aligned by energy metric. produce I'll to many including are with towards a our investors premium investors brethren Brigham aligned assets, towards our turn needs move compensation day. converting noticed compensation of acquisitions, and of are thousand between all in and the balance with investing mineral we pushing energy over capital, So, sheet, of I results. with end return company plan With more change investment efforts Minerals, the beginning shareholders. your of their day stock to the directly plans within Rob cover that clean affordable hard-working to in be energy to operational of shareholders, believe prudent reliable to get a and attitudes call believe At for these us every for work the hundreds management, will you global that economy managements partially abundant and Americans also at

Rob Roosa

highly to dividend, Thanks acquisition start share operating performance XX% $X.XX sequential our quarter Bud. a declare represents increase third our from I'm second us which quarter a strong allowed per extremely as of and opportunities. quarter. financial excited as continued strong the results compelling well third To

the to calls call steps and acquisitions anticipate to third move funding on of bonus gradually quarter on to wanted Importantly, include by continue XX% also we'll utilize six payout retained our program. ex-lease next to of initial revenue we're Basin particular quarter the during that highlight and bonus. cash over dividend of source towards payout was We that a long-term despite The funding distributable towards three is provide Delaware XX% to the third previously the ratio in of that past course not ratio to flow of taken cash the our does our generated increase dividend in lease conference game to able I having ratio million mineral messaged our ground quarter. for second of our in acquisition cash quarters. flow our XX% dividend goal partially our moving moving conference distributable to payout flow a our $X.X

significant owning always highlighted are minerals in the have optionality perpetual that in We nature.

operations, our perpetual the played third In applied if precious with operator on to of fact technology we chose the out ground funding to in it's That refer the it a lease drilling the time to times plays we column. perpetual third wells, game our million an during We and for part in development, the a over $X.X because rates geologic minerals incremental quarter incremental acquisition challenging as optionality program. they open. to superior source provide That quality and rock ability the to out provides option asset zone better of optionality quarter testament lease become of completion bonus again and retained to during lessee. acquired that long-term our a return liquidity real the again through

as A tremendous to almost ratio million retained. a which to of moving By make our of our our retaining to want capital quarter, the Loving do bonus, some to we to in you believe mineral exclusively to third Basin both viewed and capital, very almost we've Moving via distribution the entirely opportunity best creation the acquisitions Basin $XX.X cash about game we're further Permian mineral Delaware ground the almost rock approximately of XX% acquisition, to is third encompassing think the County, I and which of the always these entirely and the XX% of United we States. long-term when quarter fund a that deploying during for point lease able acquisitions sources shareholders. value closed

ground deal pending of verification and that see have clear capital thus have the or flow in we the their in to $XX strength currently are capital it and during continue allocation the constantly Looking Note a approximately in our capital quarter the deals on in game highest quarter our far mineral are either acquisition our options. structure. return effects options ahead, make title to million our process. represent middle closed evaluate that our I of allocation in variety of we fourth opportunities

we capital trough we is but deploying the value to mineral capital are right As during our our our will proving acquisition the value now the options, optimal evaluate substantial of creating continue environment shareholders. capital changes, are we clearly are deploying and allocation for that believe

a to of review Turning our operating results.

the third to our per nice sequentially basins oil production Our X% to in and saw conversions production quarter volumes the very growth. third up roughly quarter DJ, of were contributed during day. that barrels Midland X,XXX We equivalent Williston

again which outside to allocation the Although, their favoring I Permian rock see quality. most the are operators is our as out do a with that Basin continue Permian assets strong capital these key indicator want conversions, to point currently

from and in Williston resumption shut-in curtailed the of benefited Additionally previously SCOOP or the we Basins, volumes.

quality value. Conversions X.X Crestone DUCs Continental again of led at reduced number coming in third Midland we extremely we the once diversified have second the It's quarter of or during converted stand Our in are the have control spreads proved were without benefit of inventory the important maintain companies cannot highest resurgence end available conversions. Apache while portfolio but DJ, to from to the XX% minerals all net DUCs Peak net we survive convert to its DUCs Parsley Despite of DUC our the frac don't in Williston and quarter. a different in the by These remember Basin. to situations, operational that and operators in production. converting and the all

assets. again be Our illustrating DUC at to clip, extremely continues inventory nature our an rapid high-quality the of converted

end Continental the operated X.X due DUCs flat third the Shell. would DUC been quarter roughly declined line indicated the inventory are Chevron, Basin PDC or be have were fracked Permian of Further, the which The DUCs Our in net start note the in to locations. DUC production. that in our I the extremely quarter quarter, second by Basins. of and the of are from of DUC and DUCs of the our the third at I was remained net XX% balance remaining mainly our majority end and treated inventory positioned X.X the In turned waiting in to conversions DUCs DJ thus of at that to ExxonMobil, one-third approximately at end Basin. Resources, Permian strong the Williston quarter net to

production. DUCs the and quarters. therefore they approximately or at the over The at here Basins waiting believe be of the again turned quarter fracked the situated two quarter inventory DUCs having of similarly been are will and next the production end with the of to line Midland of treated these to Delaware vast be end to impactful and third XX% We we thus and treated in majority are in

quarter. third permit XX% Our Approximately Basin permits strong the inventory DJ with at of Permian Basin. permits net are in end X.X% the also XX% the the in and our remains of inventory permits our in of are

continued COVID-XX the line day. believe and Our production turned quarter strong results, but being oil volumes unfortunately a barrels should team excess first of as cautious. DUCs for delivered in And the quarter pandemic in XXXX third crude demand. dampen of X,XXX to result We E&P quarter averaging operators oil are per being result has XXXX our fourth in equivalent

levels. XXXX, operators and additions to those maintenance for flat. we to ahead frac major towards capital lower frac If and XX those activity to mode those adjustments operators to anticipate upward happen, will being Looking to beneficiary those there production rigs increased a moving fleet have if and rig operators keep be when are fleets

summarize Given with many we the core conference now with over mentioned provide positioning environment financial I'll the of for energy hunt early we're a mineral possible XXXX us. half call now Blake, hopefully In are late uncertain guidance he our as very When we for and we update next of normalizes I've so call given surviving opportunities. an in for challenged to XXXX result associated second the the full quarter conference year, August fortunately XXXX as XXXX much Blake? are available in to backdrop data updated our you year year-end while actively to of acquisition accretive performance. the and to closing, February of attempting provide plan and can guidance thriving are our as call. turn the companies on second

Blake Williams

Thank Rob. you,

activity. beginning already our volumes Rob majority are alluded to cautiously returned operators the As restart of and to shut-in

DJ Product coming to daily to and quarter Our day, oil our sequentially was rate X,XXX to growth stronger-than-expected shut-in run gassier the up last XX% normalized of closer per oil equivalent recovering due for year. XX% due DUCs Basin in over areas of same to the to though volumes with cut Oil X% towards lower rate from and up cut roughly barrels the XX% trend SCOOP. than quarters as convert of the resumption the increased our production back to from XX% period mix XX% of expected Permian run the our PDP. should liquids

million royalty Lease from portfolio bonus of generated XX% a XX% exceeded and million sequentially in for revenue Our the up volumes improvement $XX.X the realized $X.X production of quarter, significantly pricing. better expectations.

mentioned, we game reinvest third in in of do through cash to elected significant business acquisitions our the retain partially not Rob the bonus this ground for as continue expect As quarter opportunities. we to accretive source reminder We year. the have to additional lease funding the

and EBITDA as and of to an the to properties The our to for are and September quarter $X.XX the was of the quarter. margins second pricing million. to type and ad possible assets. million However, for was million Severance G&A our includes showcases result volumes X% as realized from revenue commodity Net per was gathering $XX.XX of million. a $X.X surprises with was portfolio and continues back business. $XX.X were NGL. XXX% pricing. offering. valorem a million. BOE increase million in adjusted Realized XX% optimize up was were pricing closer for EBITDA compensation expense million BOE larger $X.X from approximately impairment of cash quarter excluding including transportation our per increase of On Adjusted By expenses secondary before the our levels. mineral expenses $XX.X $X.X uniquely only always loss was or per quarter barrel we and XX% high the EBITDA taxes $XX.X to minerals associated a and lease oils barrel $X.X EBITDA looking oil or the quarter generation million X.X% to and the gas flow create costs, Adjusted second in to in line first much positive with non-recurring per bonus increase realized oil $XX.XX G&A marketing share-based Mcf up per and $X.XX $XX.XX quarter. $XX came

brings these to G&A $X.X Excluding costs million.

first quarter, XX% fact out reduce we report goal. plan cash that and to by to G&A I this laid and During exceeded in back we have a the initial goal pleased achieved am our

with $X.X rate. our quarter million at least to be fourth in We expect line run initial

of excluding stock, ratio business we up November our As model, record a payable result of cash shareholders quarter. XX. of share our per of bonus. of a is resilient dividend the common XX% Class second on dividend declared from to December A a $X.XX The flow X represents as lease dividend $X.XX This payout on XX% discretionary

sheet, times. Finally, very is moving which our balance during to these important

fall expected position leaving a million an industry-leading and cash have our the to our continue borrowing to net recommendation of of million of million with drawn reaffirmation increase $XXX our cash $X end a of be of indicated with liquidity $XXX Further a credit they base We is finalized Initially $X.X credit which million. November, of position. has on the revolving agents facility given an administrative We to as our exited result our liquidity. us event. redetermination, several in with quarter the of changes at a us terms at

by EBITDA back up. to less to as our to I in or adjusted the outlined amounts structure two times. Rob interest we However, flexibility we that turn cyclical our will ratio we now highly net the important mindful to capital current deploy along with than limit remains and wrap our borrowing to over and our rate it to ensuring and Capital things agreements. base remain lower maintain of elected industry we call acquisitions existing will X.X in debt

Rob Roosa

commitment one and appreciate joining you Operator, as the would Brigham a be our checks Brigham energy We I aka We investment ways the both Blake. space, the will Investors the and over boxes. exposure recovery. model sheets I'll back to our X.X. to that Minerals with reiterate like return demonstrated investors to balance call. from the XXXX shareholders business compelling Thanks call. most wrap companies good to and want third to those capital you quarter return To of it begin portion exposure the Minerals clean about up, to comments an represents of energy opportunity extremely of now turn believe conference question-and-answer to Minerals to own Brigham efficient call Shale

Operator

Thank you.

ahead. with We will Our Brian & from begin Singer go Instructions] question Company. Goldman comes Please the now question-and-answer session. [Operator first Sachs

Brian Singer

Good morning.

Rob Roosa

Good you morning, are How doing? Brian.

Brian Singer

the seeing. we're Great. I to regards Thank all you. on the with wanted follow-up comments that consolidation to

could more I You confidence dig And highlighted bit a level wondered you volumetric you positive. in implications of as that if the there. a that your view into little

the You combined arguably companies done quite a would couple activity fine be better of part been of had or basis? have a standalone will been we've that been strong would than on giving have on a basis. that companies consolidation at and have What's seeing sheets the standalone potentially confidence what balance that have that that from they levels consolidation the the you

Rob Roosa

Brian So, just are my in feel a it then of relates down of cushion, me recent buffer year, cycles better key just scale gives happened here large to people cushion. factor maintaining incremental such terms about can additional or when to that alluded this lot additional this OPEC+ disagreement scale, such it these fleets have experienced the and Pioneer like basins. improved Conoco mind and are COVID of here the They in the uplift that there we've as companies further provides that level in frac that just a as although, to is

have we'll of fleets the the that either troughs much lower with and and peaks the it, see highs becomes rigs, I terms lows. or respect as frac in so to And

XX% almost reduction consistent have less. won't that rigs you kind in see such was and here what rig much these XX-plus we frac will a more fleet And saw fleets is much troughs a the of be February that waves peaks of you'll reduction in the frac post amplitudes so a percent deployment and massive

to you're me rigs that field. our to so And now makes bringing of starting see in to And the back of operators right nice feel good. terms reaction really a some

of kind the running had you If basins you XXX we monitor, at look rigs in low point. about the

XX the Now reduced upper mid count in to in having with their and from the of that's we're rig XX kind XXXs rigs. Basin Delaware ExxonMobil to

So nice increase offsetting a really that in seen rigs. you've

as many response relates really us to operators. some in instances particular we're in so it seeing And nice by

we three has yesterday OXY which Just Basin, is that for now saw very much a Delaware us. running rigs the in positive

One up yesterday for drilling showed area silvertip of our us. the rates now is that in

You XXXX. that of positive. and now was I a again, to September rig that picking positives a a of DJ the the Cimarex rigs rigs in now deploying about two have talking rig where Dow a Devon deploying since running the is Basin, STACK up haven't Other to as OXY the much very saw they STACK JV. result

that I rigs maintain being scale. gives relates flexibility, as a it able incrementally much more frac to running lot to think and operators So field to it primarily more comfort, relates room, it as in just the fleets

enhancing And and it power reduce your to to as you relates negotiating service costs. so leverage providers, also gives it me -- ability to your with

which budgets D&C of you per XX-plus the more I $XXX do a foot appoint end cost that we've we're capital through at about with significant for the third operators the their go or materials in with huge the us talking the costs. here reduced with percent can reductions Many sub operators less. digested meaning day in different think costs, the seeing and positive as quarter on

of to think I what is quarter. by are day Minerals is drilled the important every each that and of at the number wells the so Brigham each us operator And end becomes

so operators structural frac nature of And many in being see our reductions we see and fleets. point uplift and an these rigs to ability enhances costs that in in to terms

about over important answer, scale. to scale, in just field And time. that, I think that relates So able consistently think to but much better one it's I an a the long-winded with feel you that deploy of improved comfort a Brian, sorry, lot it's rather being it rigs

Bud Brigham

might stable see don't Hey, the stable We already that example see through stronger sheet balance really are troughs matter majors Rob. tend the really that. that whereas and associated sheet activity. I with independents We just just to have that from troughs amplify they're scale. It's the and the the and with to more the add the down the already to shut that. benefit if scale balance synergies that more for a

Brian Singer

my balance And you. Thank regards the then is to sheet. with Great. follow-up

And or you at two that net as level. on of wonder take tolerance more to is You the do see your what deck a thought view help given kind process fund volatility degree you talked range; if I prices, debt-to-EBITDA price and we on turns hedging. X.X in that certain about commodity debt to to a, your acquisitions b, the price

Blake Williams

Blake. Yeah, sure. is This

I'll on I two So answer kind think hand-in-hand. of On hedging, order -- go there. those believe do we in reverse

the past. or investors in a currently talked of we're unhedged that exposure So the as direct today do to but about commodity, a prudent offer we've obviously, macro encouraged do keep done we policy that that, sheet. to as part we've that and And have obviously balance believe and by backdrop we our

in debt, think more at to layer more So we it look we'll to and start as start I more.

and sensitizing obviously run scenarios. that, downside curve then some and needs with structure to of, as and initial gas would we governor capital winter forward As that to on question it bit add LQA – kind back all in it your times, think a hedges a might X.X the to kind we've looking of time. on some far is of some you seen little as sense the basis, we – I capital maybe improvements we're going the example. our the curve, say more make about sensitivities But our X for on

to have screw over we that we and the up said story – lever So a to mineral only sort believe this in it. of way is the good past,

sure mind check. of as of always in kind for that's make us top that's we So

Brian Singer

Thank you.

Rob Roosa

it. appreciate you, Brian, Thank

Operator

Our question Whitfield Please Derrick ahead. from with go comes Stifel. next

Derrick Whitfield

update. and all a morning, good Hey, great

Rob Roosa

Thanks, Derrick, appreciate it.

Derrick Whitfield

for but of gas clearly all is technical of process are weighted you or Perhaps your your like gas trends. Rob, Bud oilier outside all environment, on In on focused your basins acquisition to motivated how to your plays macro amplify and evaluation production and focused the historically opportunities at strategy flow within if increasingly cash team constructive light pursuing or profile?

Rob Roosa

Yeah. Blake there's and yesterday updated of then think off, having Minerals assets portfolio Bud on. such out diversified Derrick, X, think summary I the the our I'll of offers I that Brigham or a start page can like. and do presentation put have upside in gas, basin-by-basin that so a you on what But layer a on look portfolio, really nice of you about investor and we our think basis evening when terms

there gas portfolio. already embedded within is significant think I exposure our

were look of to is Basin roughly XX% the that's So gas. with gas. STACK if at DJ the you XX% play our there And production

Side is our within portfolio. about also when have we Delaware Basin the exposure do Basin embedded there. think you western the do gas gassier, Like, and we So have

you think you into we to. east If gassier about area, as of have then Block County into there's get do then and you there that as exposure four in particular a move kind Ward

the see earlier comments to mentioned it Devon say the gas relates Cimarex of and activity incremental relates starting in activity their we're the to about of activity performance I'd hear night the as up play first uplift think my it some in you then exposure within do talked plays. have gas. to and start When JV ramping since seeing Brian Continental in of we're gassier gas as their running talking up. deploying about gas one So already now that – Dow increased as I last the we the to because that, about ramp to to capital to in STACK, XXXX, rig portfolio September operator and

And to the Hopefully a DJ spoilage. and the to able being consistently and terms and environment and so Delaware within here STACK, so go we is have times title to a one here having about just want seeing that. exposure We're also Blake at that are the the lot that, the you and still and so area, gassier hedging ago. volumes. inherent being point talked of we start Ford. of of if evaluating plays were about of I to that tell part through say, issues of of would in some not those in those verification, we're much good as still it kind Ford. not exposure draws buy that is do be think hopeful more and a and I we I the we've of the Basin, gas nice to Appalachia talked point in liquids connected gas to resource how did things run relates It's the portfolio. complicated work us Eagle still as SCOOP title there to Eagle that irregularly Basins, in shaped even continue to think the plays. what we some get can I would game, deals the you whether through the interest ground layering feel There monitor several Williston some or have season as is years mineral gas and future, whether that, in out all if there about, you units you near we the you're interest, And on or when the of buying Basin the that pushes unit, you're then on winter that about the many because

that, anything Bud, So we'll looking that's do at. like else something you be to add?

Bud Brigham

No, I you. Thank think covered well. you pretty it

Blake Williams

Yeah. Very good.

Rob Roosa

Blake. ahead, Go

Blake Williams

add. to Nothing

Derrick Whitfield

Okay.

certainly your of would flow your and referencing think out noted historical guys kind that page characterize source and ones you XX, deal competitors and year? you've look QX you landscape broadly, the More ability as relative into at to as then In And that. the on stand opportunities are I in in about ground table Sorry how and game next the Thought you both comments, QX prepared attractively in you highlighted process. process several your competitive been to acquisitions similar priced acquisition. measures. recent have opportunities

Rob Roosa

the and of So, yeah, levels question appreciate to a it's acquisitions. you pointing great increased

over just in been over and First underwriting to us lean foremost, the us reiterate to very enter sections basis. deals too past processes. having be seven very years to disciplined in the our well a to company for very different want section-by-section has out and I valuations your disciplined multi-section deals, because get have on you process. in always the are a quite will no comes key consistently does What diligent the skis into this so served each for worked If underwriting deal good far. in be of being that built separately, our up It be

is So that throughout. foremost, of I our deal we're shareholders And want would willingness mentioned say this I feel assured reservation processes those that with often busier Xth instances, to competition What in today ramp have. now terms in we undertaking really, say flow, I deal companies, refer other isn't start deal the teams in of amount really and but of the with July. to price after July kind up mineral first we're our are those tremendous disciplined would a seeing to anything to – that, part they our seller's overall ever August call than minerals. and to I that, that's of necessarily flow. in rest seem If

large kind amount the to change a of we rate price XX% more or able in seller. the those rate. or close that so to of had where probably of and reservation deals, or we've success on success so have just the of XX% volatility terms I part might to evaluated in that, said relates being reduction that would we're deals, sign and a in have historically, success But X% And a

to this metrics of offers a to terms to And – response $XX the on to a in there And out we've people run calling, think being able at to ever-increasing doing prior if to I flow brokers the of well in per you is deal amount in think kind in at point active about the so what see we're working be with have as of relates that, deal prosecute an they looking of the important operators terms cetera, to And the the just is than kind I if of were still cost, because we that, of, expeditiously per as much plan quarter that get of you us past. a such that's game XX% it out closures it their pretty that amounts operating reducing very equivalent our basis. when equivalent number cost rate, that million very your our point et past, deals $XX better we of at see here are that rate, of dollar think out kind good you getting seen. mailing, million look at that is such run the that

able we're what a doing of because the same We're terms the these doing portfolios net with more what even hurdle an much well in as So – of to of lower environment. our achieve is seeing prices kind locations equivalent to different with at less. additions here added

is deal to the being seller. structure to and just ever-increasing flow be our teams able able we're Our responsive such to handle that key that to

Bud Brigham

I might cycle. less so the our in cycles why a this we've like company mean, there's mean, is this is cycle, I capital there's of spot so is the real and just many these we in add positioned have capital have. quick. because sweet this It dose industry. we of seen the I particularly of

competitive So experiencing. in prior cycles it's that much we're less

the out we be So unsustainable acquire level. will as prices cost pointed while lowest at rising interest as when the from you

in they make going that as So are a prior our as this accretive most acquisitions company. been have cycles, will the to be

Derrick Whitfield

again. Thanks, Rob. and helpful and great update Very Bud guys

Bud Brigham

Derrick. Thanks. Appreciate,

Rob Roosa

Thanks.

Operator

Energy. ahead. from go Simmons with Hammond next comes question Please Our Pearce

Pearce Hammond

of taking morning, congrats questions, ground thanks the the and Good on success for my and game.

capital, to a On like the as far as do of And see? at the what ceiling and years just you minerals general, ground for game you'd just defines in much to in curious besides target essentially, Is acquisitions? inventory there you on how have. appetite what do amount acquisitions your certain want that

Rob Roosa

being trade the Pearce, important immediately relative we immediately, able an XX-month to overall at. things I to project. is yield of are us just the that that for I our think one to of Also period kind transactions point would is IRR being key a accretive of say

that about can together of deals of create we is think that beauty amalgamate within those it metrics. think quarter any that number have a overall deals I we So the we as our and one deals synthetically meet

heavy sure always deal. heavy a PDP perhaps or a we're with we're together making able we're to targeting and deal undeveloped an so And more yield NAV accretive, deal accretive that DUC mixing do more by

we're each create quarter, And signed overall how portfolio metrics such that those monitoring want all to it of criteria. various constantly we and every that's so seeing deal and an these up, meets the throughout deals monitoring been synthetically

processes to So the more runway. that's that the do efficiently have for and able effectively. XX having think really part terrific these undeveloped pretty the We've public. In I past, months side over on the we that been gone would past we're us given refined longer the is probably

yield Now today, we're to hurdles. meet trying near-term obviously, flow the cash

each the we're such And levels kind of that those can't then processes just down part But way paid. ways, that of and comes our I deal together. able to we're is enough it's we integrated quarter because it good of We deals at every deal mix dollar feel day same iterate what great good that deal location per making that feel seeing in net approach We such flow, we've disciplined to so what but our increased for as end very -- all we're sure just these cost. we those bought. deal about the teams exactly the know when the about the we the

every of to in number looking deals together. things numerous each -- that those trying at and number and terms a quarter it's bring we're So of

Pearce Hammond

not And environment you're the my dramatically helpful. if basin. Permian. some That's Or amongst are helpful capital other and and is recycling get in about on from the diversification can Rob. focusing, like and minerals away Brigham, a in follow-up we're minerals? rid producers even or the market basins the efforts and is be Thanks, centered gets your allocated basin clearly, capital But Permian? of Permian certainly basins selling acquisitions a much now really around focus on problem wanted which some the attributes in more Does a it right various then the there's of just maybe there for the make of the in of to a sense

Rob Roosa

monitoring and achieve I perhaps can to think we always redirect a the in higher-performing way and being of that trying portfolio areas. terms to that results good divestiture we're potential to identify able capital then is there

key those sometimes I to of always sort redirect it of towards thought an live and for better areas the we're looked assets And that next at, better. day rebounded to and the perhaps one are metrics say to there's maybe that at year, favor of that's another the out assets, of we mid-year later would opportunity and hold the and the looking year, So been future like it's those processes area into area bit divest and little feelings then capital rebound. next activities a an perhaps fight and

shareholders different transcript. trying always our mentioned allocation make something optimal It's that's number that monitoring, always constantly that for we looking to just we're that our a sure those capital So of spectrums. much we're in the something across decisions we're like making decisions at

we and to presents probably the we to couple that would that try see that or runway ahead undertake the that redirect So make beneficial extent to think divest and quarters -- opportunity to effort an we've It's three to fleets different doing frac anything. yes, of where bit little say capital to I continue happen. a a I can that rigs and area, before itself a It's got more just wait of respond. we're seeing probably us

place. think in mentioned, And part so liquidity the is have I great Blake significant as we

percent return shareholders and distributable to our We flow expeditiously. distribute capital bonus been have disciplined. ex still to able cash able to And of lease XX-plus we're still

And good iron better patient be so it's just things the while and about be all strike I ready hot. to feel those oftentimes, is

Pearce Hammond

Great. Thanks, Rob.

Rob Roosa

it. Appreciate you. Thank

Operator

Our John next Please with from comes question ahead. go James. Freeman Raymond

John Freeman

Good morning, guys.

Rob Roosa

Thanks Good joining. for morning, John.

John Freeman

us obviously So down cause that quarter of take want in of taking quite ratio about XX% being payout you sort but level. of sort to that what a think kind for now, X% first obviously, are accelerate you to of you at target? get I quarter of I just step to all that to the the a remind that or rate past right of the run or some each metrics to to kind know now maybe -- And to of environment, looking that you've the sort depending reduction payout either XX% kind to of that direction. while are in the that just this long-term just can a just that payout long-term kind telegraphed either to -- of assuming could And the get that longer, on you long-term level get keep from of everybody year potentially in

Blake Williams

Yes, sure. Thanks, John.

are. discussing always to do flow macro cash needs consider and what that our down. business to as trends going retain the how for we're the much stepping we So when as keep We're well capital

looking be at So looking past it we'll like at continue to to We'll prices. be grow. the obviously dividend amounts, we'd

to can compound mentioned we we've call, cash that think And up this of in I that business we said, our back our trough think invest we well already really the in so as Bud buying on cash. have a the about for flow deals talked desire with now And right the do cycle in value past. by

So always just time making that into of we'll to variables we're account. all step down payout down but ratio, the taking over sure that kind

Rob Roosa

that Yes. was that the start game were able reinvest earlier XX% ground the part times of with we point And to of did just, us I our think, flow, again, John, the we comments the at for multiple help And, and important just acquisitions. as to utilize reiterate, cash me. to during

that's think a us. for value. us huge I allows differentiator compound to It

equity Warburg, and and we're portfolio, early guys history our was to all flow reinvested value, assets. company you Pine business the Yorktown, as we’ve to buy with a great the generated our about Brook back of of the really continue compound and think private part in able that the If our relationship cash

kind that science the than in, of do is of I and Blake of earlier also ICS et we is because art comments as that that, looking go this more the during ratio be a that's period, indicated, macro, do to of want be that So a cognizant an kind XX% to payout three why cetera. traditionally going environment we're over to to think I XX% we'd the six-quarter mentioned though, to of way.

And how understand is shareholders. to distribution the so, we important

very deals. take we being with diligent, again, into very be disciplined, So, We'll make as distributions. our thoughtful think do account all future factors, we we these and processes sure as much careful different about in

Bud Brigham

distributions. environment, we're because to XX%, to we for and and normalized going of prices I I'm unsustainability again, us given prices add just XX% of mean, activity grow might briefly. a payout, expect low stepping be doing meet demand aggressively with to activity that be in continue trough this view oil to see, to step-up a prices In us time unsustainable low over unsustainable transitioning out we're a the optimistic I is -- very which our enable and that, and time to my coming will perfect down. worldwide a towards

John Freeman

this I was appreciate in concentrated bonus follow-up great. lease you that heavily question. area? one Was all my just the any quarter, that the That's received then And one color.

Rob Roosa

want I we're evaluating because point potentially or one don't to again to directionally operators. any to minerals -- area, leasing constantly John,

want in place leases, we et So in favorable extracting competitively, think, to lease cost any I one terms commitments, bonus, cue don't I want terms of putting cetera, clauses, to point meaning our the the most sure to we're area, most make because, drilling releases.

want to would whose bid. what in put say areas. do it's don't a operators one very directionally lease out competitively I there, are know to point so, area, any when exactly We And that we but

And be minerals. and so who interested those most might in --

in very running areas. competitive those we're So processes

going hesitated future. I to the to into there's opportunities because be think defer, I So incremental

as really very achieve way some this again. get of our as to to of want leasing assets. minerals as kind can don't patient much regarding very too here, potentially same much, question in it I the earlier optionality see we but I relates disciplined being So processes that by the our divesting

extract really course, as too But I lease much and rest don't possible to value each want we're So away every that, for everything we much. again. give competitive minerals -- assured time to of doing the as possible

John Freeman

Well the quarter. Nice all guys. That info, makes sense. appreciate I done.

Rob Roosa

today. John. Thanks, you joining Appreciate

Bud Brigham

Thank you, Yes. John.

Operator

question Our next Please from Mariani go Leo with comes ahead. KeyBanc.

Leo Mariani

by to along notably I Obviously, mostly production for significant industry, the your XQ. some but in guys. just also been shut-ins there's Hi, here quarter. XQ, wanted follow-up the in

saw, to able and you guys get quarter shut-ins quarter? kind second third that see if you of you production trying any a Just back to the were were sense, between to all sequential out growth organic

Blake Williams

we Yes, were.

X, for across that that back we portfolio. way force we characterize have did I the back So, is They think, full be fourth throughout the the -- certainly, the online I DUC all think but weren't conversions back in July about. We they already these shut-ins that quarter. that came should Nice that some burdens quarter. they spoke Rob

sure. our beyond for coming back see did volumes the organic push just helps some we higher, shut-in that adds So production

Rob Roosa

by particular, point the I'd had Continental. In Basin, Yes. to, some Leo, additions nice within Williston

them, or this shut-in either curtailed on online had above beyond Durant Sefolosha So pads. back some by wells and nice online bringing brought their them volumes, is and

had the company of of but nice there, some on really activity, kind Brigham some position bit County online nice old exploration a little the proximate the that So just that, really there pretty brought in us. for to area, Williams wells east

activity organic us for there. nice So

Leo Mariani

production as up as expect the reasonable in to inventory, it at starting And I sequential as in landscape? guess again to Obviously, look year of helpful. you premium forward early is and then pick well, a next out little kind should the we That's just activity bit. pointed quarter into guys see fourth guys you again Okay. Brigham's to carry with growth that back pretty that

Rob Roosa

turns even No, in come online wells things us is production. for those of I when think timing being key just, when ultimately or the we're the control one and then we to fracked an if as can't online operator wells positioned of essence, non-operated, they're production,

a we could you think, talk this I talked period, next well -- over therefore quarter wells not the second of cautious. of how kind an the the because period we've so, of And brought to or to maybe about and the about impactful. volumes operator more towards the of six-month end could online instead months of defer kind be three we've approach got And have six-month online brought as a

seeing brought the online reference You're that to speaking of our quarter. in you here fourth year, about a lot this without wells operators

to we'll So have just it. monitor

treated. feel same I DUCs end where XX% much think with us our good quarter quarter, at of dialoguing we so of our is what or in had how second XX% here of about the we're treated. as makes entering really with fourth you the DUCs what the had We're the we

So I by if PDC in good DUCs Chevron, others. of about feel fact the look DUCs, lot are ExxonMobil, feel you feel good about Basin. encompassed We located the fact that of think good we the the that that. Shell, it's Continental, largely a and Permian our at We

So turning getting fracking are those the wells online back wells, people active, to that field, getting in production.

to just So I cautious, want come we think be because don't we control when wells online.

leads point can activity of than So to six-month us more that a fluctuate. of guidance naturally to quarter-to-quarter because period near-term kind a period,

Leo Mariani

Okay. guys. Thanks helpful. That’s

Rob Roosa

Thank joining. you you. Appreciate

Operator

question ahead. Our Markets. next from RBC comes go TJ Capital Please, Schultz with

TJ Schultz

morning. Good Okay.

So the point. secondary I at think the this September expired has lockup from

And comment meaningful I then, your the offering you for best acquisitions you last just of have stock the intent economics positions? Thanks. allocation we any should that capital can given acquisitions how levers may on remaining But allocation. So, on consider about that comments capital you your secondary, the original have forward still view on hear on owners versus also repurchase as the moving potential think on repurchases?

Rob Roosa

Sure. TJ. you I appreciate Yes. joining

to as But couple block repurchases in. point acquisition and -- September the provide buy stock that to or like there as good and deal Blake then think it a did we view join did we get I just offering felt provided opportunity we'll a the that in of So let of the thoughts relates at unique kind metrics.

I my the to situation. we comments that continue indicated we're to think, monitor going in

and as evaluate XX acquisitions So, we move opportunities. continually thoughtful months be potential we very versus will next over the other

we're So continually assured rest monitoring that.

they're this lesser terrific percentage as a had of with that, had earlier think that to much obviously private we've the I relationship a now. we've is company overall sponsors alluded relates to it equity

I XX% think it's ownership. XX%,

lesser liquidity. they think really company. much good Therefore we of up feel I so are much there's more that much more the There's And percentage float there.

that. comment in less I into take. the or company I directionally intentions much would going of impactful But their them as a terms to so, less take they point can't Obviously, And independent as to forward. any don't being therefore you do relates very percentage the actions being much they're of it to future and

Blake Williams

the And that both sponsors I think mean Yes. secondary fee they back I they we had fleet rights and their this had. did offering last

mean think relative I think is we to I on too buyback reiterate to just cheap underlying the So, stock assets. Rob's our front point certainly, the

I public we're ground to think about game. the So, able through that very we're to capture private that arm excited the

capital attractive So, to on that our seeing as opportunities some elected we we're front. that way push really

TJ Schultz

Okay. Got it. Thanks.

going make you the Just part of will acquisitions forward that to help quickly as bonus payout? bonus. Or path how decision Thanks. to the on including lease just Is fund retain lease versus forward? revenue the

Rob Roosa

Yes. Thanks, TJ.

much think of earlier relates of I an comments it as a than to the more of it's art kind science. kind

And terms including of the lot forward the be so, great to have of think for going we're the of a us And overall I cognizance we just environment. payout optionality part going in ratio adjusting lease is excluding bonus. overall

So number productive we can a to monitor toggles going of take the be distribution forward. and that there's

particularm, that deals the as ability third and to some And XX% in the acquisitions, think our essence quarter lease allowed we acquisitions acquisitions. place here game mentioned, accretive us some really just to highly the did seeing put help those this I nice retain in opportunities really that as to quarter in And quarter. bonus we're third related to Blake in of so, ground in the it

and dialogue with of again a dividend and along our So relates planning. that the goes Board of to quarter, there's each Directors every lot as it

being as And to those modifying had so bonus. -- ratio that lease it again all payout the rest are assured including excluding discussions relates

how each a of we So, as it look we at there's that I levers quarter and independently. being every different I'm and not relates very optionality have but it know to number definitive,

a going So the the we've we about as that a forward. provided lot think lot is part great I flexibility of optionality dividend of is think

TJ Schultz

guys. Thanks Okay.

Operator

May comes next from question Please Our One Capital Securities. Kyle go with ahead.

Kyle May

potentially wanted Ford entering guys. comments basin. on and Eagle see more talk there about you morning if about thinking your interest could I to the Good about the and your you're follow-up how

Rob Roosa

Yes.

discussions particular you lower these Ford together. Eagle a that operators to are in beginning co-develop units is and the Eagle And some these some operators our have of follow tremendous related undeveloped do there the to that the In scale to have can upper operators still earlier think continue particular, now drilling. I play. are of some pretty Ford

And so, I into doubles, of kind the entry Eagle in be game looking the think into Ford here the singles beginning basis our will a on and probably cetera future. with for et the triples ground

do disciplined so, at our as indicated, I've But in we just And underwriting doing. being that's we're something transactions. very when look

what encouraged seeing monitoring up So working I'm there. deals. But as and to Eagle Ford we are we're highly

Eagle basin crews If rig anywhere, there rapid Ford rate than a a that more kind seen you in and in we the you've of it's of probably look at going the fleet a particular, increase doubling almost the Ford. forward so monitor in Eagle

response ramp positive of to from capital deploy a rapidly terms ability their seeing operators are area. you the to in So and up

at so that. we about to the up to Eagle the We and and and Ford. want definitely buy encouraged looking our assets, ground game get So, there running view favorably Eagle are Ford

Kyle May

also the versus Got it. increasing on And just more quarter what's market-driven talk a quarter. feel or the you Or a you it dollar trying is per third of if have of the fourth amount in XX a composition the color That's Just to presentation, slide there. helpful. any get very location this Can driving type? change? little bit more about shows well

Rob Roosa

Yes.

key So include. data Kyle, points page we to at try the if think one I XX, look you of

if third And million So slide, you see that's you're $X.X the the right quarter third part the at in of acquisitions. looking quarter. upper that

next that's X% DUCs that and relates to to so, it permits. And

to experienced it the the net That permits quarter the the $X.X look or million. thus at we've during dollar during relates If acquisitions, was of quarter. composition to quarter cost next per XX% you and fourth location DUCs the far

almost as be see, to wells can that you four relates will in times drilled. you either that will it soon have turned more line visibility be permits So

we the every model transactions visibility permits and essence, situations drive higher each up In how as and think and it's proposition work And to DUCs pricing. risky so, section, pricing. so when much relates increase obviously less it improved you less about riskier and does a

then period, the the dollar quarter then be because to far to the us indicating for been including per that composition for or also synthetic for net either permits that's brought what company deals reason quarter we to obviously of which so our how understand is that is of that very over the thus think kind together and the a the are I everyone location, when going of blend ability to And next are of analysts research but you XX it contributory deals important closed gives to those to and investors all all. XX-month DUCs

Kyle May

appreciate color. Thanks. additional I very That’s helpful. the Got it. Rob,

Rob Roosa

Yeah. joining. Thanks, Appreciate you Rob.

Operator

Suisse. Please Chris Baker from ahead. comes question with last go Credit Our

Chris Baker

of and Most flat completions follow-up in. needing year? year-over-year me just next made the but comments asked, out curious the you terms we have been of you that production squeezing see crews held for in to Thanks increase. see earlier Should Yeah. to some Just my in shaking Permian? questions rigs on around of see wanted maybe where

Rob Roosa

Yeah.

Sorry, Chris. Sorry question? a little anyway. It Could the for that. you kind about of me repeat broke bit up there

Chris Baker

Yeah.

terms if on completions share remain Permian most curious I see headphones. that to year-over-year. wanted -- gross my just follow-up color could in to was you around And flat. it's an year have increase out of been think earlier was I of terms next asked, rigs of saying in my and I questions comments you just Yes I needing the in for that directional the any in where just shake production crews might was had to but

Rob Roosa

a I in that to fourth flat. to to pretty flat of the it's are and written dialogue alluding rigs given increase frac relative keep do people crews quarter I -- think going flat rapid keep operators take think about volumes a that lot to have

what struggling is with are does how our the cost I in rigs many of that frac but of take lease changing favor. a rapidly people or equation because lot so think the part rapidly is

you I In forward the potential do seen with gets to our given or again having weeks Loving what more less. back So our just again -- the up we're in ramp all operators And to and increased think sort County. three encouraged at particular, to it for on rigs be -- as activity running rigs In going to we've rapidly XXXX here in look kind so. of the highlight now. the last right OXY six they're I'd particular, asset

area Silvertip rigs. the yesterday starting add Just the back even you're to Delaware within the private see rig Basin added operators to the

You're add seeing and Jetta rigs. OnCore

and And so people add rigs to you're starting see to then SCOOP/STACK. --

that the we've always that encouraged that us your key acreage a that of level frac acreage the tremendous acreage those So fleets it's of is inherently footprint is I'm probability means within there gross good of increasing position a that to have and an hitting for higher to footprint and rigs within basin you're gross have basins footprint. talked going because gross because activity about a as enough if widespread

spuds move you're operators that rigs in activity. that forward, ramp about improvement we our the see deployed going and net throughout gross and as these to going XXXX some as up So you to think moving be encouraged acreage in in I'm nice are the when XXXX that

to are do cost what the it's cost to and just that frac fleet call think That of levels I being and might temporary. moving being their for many to activity of operators of too how pointing XXXX rig pieces be early there these so because are much think are for XX% just improvement of XX%, related I structural lot improvements structural. people a said,

So industry it very general. for positive looks the in

of being And spread XXXX. gross frac that see nice good us. and so to response result some I'm our a rigs encouraged to that you're footprint going And to fleets beneficial as then in acreage

Bud Brigham

what terms to apparent the the just frac Rob meet demand in of in provide -- modeling briefly. can have order a When drop-off the that's decline view activity in some big really And you front order be I I the Rob as very look and completion add us rate modeling it see that it steps for in -- to with XXXX in XXXX the more of rigs we at of up here in and Yeah, scenario and supply picture point. don't don't said activity and very, earlier substantial you happened my in in the going it. bullish at -- the in so

Just are and that be of going the are the in going rigs minerals these premier acreage activity, best areas to. that to first to to uplift best located going in the are a take the given meaningful move our

up So well it us in sets very for XXXX.

Blake Williams

thing Yeah. And add seeing starting the environment. that is lower upspacing in and I is the would operators of think price seeing we're a talk I one only the about to lot we're upspacing trend

I we've So years that's think that upside how and of that our that underwriting locations to to own never to. actually even portfolio continue -- analyzed given analyze we're to be over and have how the the we going have relative down we acquisitions lain number

as sort have operators assumed. well So than better up of converge, with end but results we

upside us XXXX. going into I that's just think for

Rob Roosa

of directionally OXY, that into these and particular to more recoverable co-development reserves whole in future. to about going get you more the much there from zone Upper produced development much think et operators cetera pointing And you're DSUs efficient Wolfcamp

look So about is encouraged particularly their has you if their talked WPX were to at development recently areas. how I'm like Gaspar And here of tremendous. Clay

so the them really forward. take he's going lead reins And Devon going to there really at

going total day the to better drilling the wells that past. we've much operators see XX-plus think A, I in of these single line brought all those seeing relative wells co-developed as the one-offs end basis, that Bone the at think the you're the once seen so by kind to And different a DSU -- for some online. of DSU plans EURs on their you and tremendous by there in you're as are see zones particular about And results the through Third development the

Chris Baker

Thanks Good. I appreciate update. the guys.

Rob Roosa

Thanks Chris. Appreciate joining. you

Operator

closing question-and-answer This to back for any I would session. turn Roosa Rob concludes conference the to remarks. like our over

Rob Roosa

appreciate morning. us the call Again third joining on Yeah. this we quarter conference you

of phone our post when that's quarter year. guys Looking the forward fourth results late -- to anticipate be we you to getting after and with going that February on next back

the us. in for take care thanks joining and So time. again interim Appreciate your

Operator

conference for our concludes This joining. today. Thank you much very

You now may disconnect.

MNRL Sub (MNRL) 8 Nov 202020 Q3 Earnings call transcript