MNRL - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to the Brigham Minerals Fourth Quarter and year-end 2020 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jacob Sexton, Manager of Finance and Investor Relations. Please go ahead.

Jacob Sexton

Thank you, operator, and good morning, everyone. Minerals and Brigham Earnings year the Call. Conference to Fourth Full Quarter XXXX Welcome

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

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

we make Reconciliations call, to certain measures In also measures. this addition, in references non-GAAP financial release. to can during GAAP applicable our be found earnings

We to have recommend new presentation during call. it We the downloading download for XXXX titled Fourth in a the Presentation conference available Investor brighamminerals.com. investor our the refer website, we on presentation quarter 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 We this conference Jacob. and morning call. you, XXXX quarter fourth everyone year-end Thank our for us joining

our last take out winter our that the us Texans and from recovery The United to of are storms and go the First, fellow rest the States impacted all some who prayers time. will week. thoughts recovering

deal have here We great to in a out sort Texas.

grid. natural our country matter, world, rest infrastructure, this benefiting However, that very build will believe it’s the come strongly that's gas be that tremendous energy will event, reliable powering the more for important and will for natural very benefit out I a natural and role that mining resilient And energy to gas. decades demonstrating positively our our the reliability is and and dominant from educational of was resources. that Hopefully, the human experience. and of impacting fuels, gas the remarkable in oil scalability from Texas

oil a $XX The triggered oil the and Amazingly, barrel. briefly pricing to by our per OPEC saw in crisis liquids-rich we barrel. quarter. with XXXX fleet, saw year performance. healing. with the volatility decrease then the them $XX the entirety in basins a on in first crude The back last oil was of We it count saw oil well to from the a most to in XXXX. $XX negative, crews those the the we of fleet increase XXXs further as price of in rebound impact counts U.S. had basins. XXXX with so the Turning and of We third frac In rig filled pandemic been have around the company COVID-XX here the then above rig fourth mid and the far as markets. February quarter, in XXX quarter to today, to went rig unprecedented XX% volatility, started And Markets oil. during rig sit year around per rigs $XX followed by spent individual dramatic XX%

with the complete to low XXX really We as rigs, as fleets around starting than U.S. in around up and of of last a as dropping in frac approximately year ago. DUCs. fleet started happened operators from sit running better fared XXXX closer fleets February early we resurgence year. low now still Frac a XX fleets rigs The XXX then May today sit but point, short As to result, July, the no more XXX fleets in quicker frac their XX% in to capital-efficient

team, lived many cycles. As through these a management we've of

and driving operators are companies As currently cycles, up in efficiencies. service prior

productivity the will each see We than more rig and disruption. frac to from crew prior

and hedge loads. and no cut When heavy those with flushed could and this buy sold staff, entirely lived down dividends, compelled differentiated not spending, to in In entered energy debt the depressed not we significant tremendous want with Brigham to to. disruption or through flatfooted when Of assets. easy the compound companies capital volatility shut pricing did good, cash. take much trough position, crisis sliced course, companies the were others the bold pandemic It's in an our past, in the volatility value times XXXX industry hit, with buy Having to but when at harder for debt lows. are shareholders and to action to due

mineral lean permits portfolio for the at highly and a XX% costs and a very accretive location mix locations. our undeveloped of X% mineral in during attractive increased We went manner. overdrive, deals into disciplined year of deployed by Permian to Our permit looking over organization highly attractive with Basin almost capital DUCs, the our PDP,

In to We at payout ratio in return via stock sit we we capital in total, the via able share over our operating order return during XXX% we third dividend at roughly down levels repurchase able XXXX able September quarter the while capital in shareholders Further, also times also of were of the and, to share gradually undertook stepping with our process to dividend. quarter, maintained the price per our two were fourth result of results, repurchase. a our mineral retain and increase we where fund our our acquisitions. to our $X second now and peer-leading beginning flow and as our thoughtfully to payout cash were ratio to

opportunities, themselves energy To a with Service returns Drilling, the this for long have an retirement. where of the going prepare of recently comes the he further believe was are substantial and the efforts side Duplantier where by division capture operator at positioned Jon-Al Parker of and innovation those substantial Well appointment globe has Board market independent the the that service of that on opportunity. our renewables, at XX-year and redirecting career in across Rental returns governments business majors to combination we the working significant announced anticipated precipice yesterday, us to Directors. both the on side, super capital us be capture of space, to with a I history there to Jon-Al returning Looking the monetary those energy likely and, to replace capital capital the have ahead, the prior maintaining the shareholders, on President E&Ps of those discipline Tools & ConocoPhillips most to to

appointment wide-ranging We the announce premier and Welcome, are I'm the be valuable his our experience will leading becoming believe with over personally extremely you acquisition contributor years. in excited this the company Jon-Al. to a looking of and to working United coming States. to achieving goal forward mineral

and that, firmly the I Finally call likely over a turn Brigham to backdrop. opportunity view our summary, provides coming constructive operational and, Rob macro will in cover to With our be capture I the in the years with to to believe value results. highly

Rob Roosa

with The those Minerals well to also team and portfolio some many a winter team value Brigham sense production and including of our entire again people Bud. operating on remains finished recover and Brigham from acquisitions and capital team, We fourth the they're of to operator thoughts of volumes showcased diversified The to as we mineral would get to Thanks, statistics, storms. once our our all our XXXX last were share week's many impacted know, quarter with asset struggling as our to our to strong acquisition game dividend. trying normal. allocation. laser-focused and program Minerals ground directly in including like from Austin, prayers back

think numerous operating into our face a recap our to the the regulatory performance, that of in minimize everyone it's been changes do getting potential to portfolio lands. purposely worthwhile I exposure to Before has federal constructed of remind

potentially basis Dakota. New North Oklahoma, In particular, we and could potentially Our lands changes our of portfolio the located state DJ that federal are be X.X% Mexico the federal has therefore, Texas units, and side royalty on New federal of across company's regulatory less operators in activity acre than shifting the and the therefore to Mexico, subject drilling X% to units which our have The problematic, in majority assets make believe regulatory exposure changes. beneficiary are net vast think to only Permian. of federal a to and and and assets of about

to Turning operating results. our

sequentially the were production our which equivalent quarter Basin fourth volumes. volumes with of Our during quarter. grew Permian particular, quarter barrels third In volumes sequentially production per day, is our X,XXX oil X% flat roughly

oil OPEC+, impacted significantly full and fleets. COVID the rig face also frac For negatively negatively the impacted and year of in and pricing which

volumes my most mind, In we increase to full able were resiliency outlined, day. roughly our our our as of has tremendous to faces the seen. production XX% industry X,XXX per indicator Bud by year another to that As oil challenging times our equivalent some of assets and barrels teams

or we end quarter, net the fourth of our the converted third DUC at DUC quarter. the inventory than greater available net one During of XX%

compares XX% XXXX targeted of quarter extremely year April to the drop converted the that to During I back DUCs work, When XX% is full XX% and for no the period conversion in frac gross for despite implied activity since of of year. occurred fleet in spreads the the of year. did preferentially XXXX during low year-end net the That XX% to historic of entire XXXX, DUCs believe frac gross converted we our inventory. our levels historically operators XXXX of June our our entirety the come of of they strong, our and ratio almost net XX% our especially XXXX, the assets.

Chevron, are the ExxonMobil, DUC approximately net Basin. DUCs, quarter majority X.X anticipated the X/X the Further, which the fourth net at positioned PDC, Continental inventory be our in Resources converted Oxy. Our of to are end DUCs by of was Permian and of

running XX this of the our of roughly month, earlier XXX liquids-rich the operating top basins. frac operators of DUCs approximately As in five were crews

quarter, also spud And encouraged XX DUCs XX a X% XX% continue net conversion sequentially. we rapid to to of to As see wells, the our our the inventory were locations quarter. result, our DUC from in third to we pre-developed increase only producing roughly see as during declined the up well

including seven In DJ saw six the Chevron rigs rig our the add Chevron three Basin, at during we programs. uptick quarter the fleet. Basin, fourth we restart the during adding to and in fourth quarter, Basin. both some adding through significant overall six drilling we In a Midland Basin operators, rigs saw rigs and key Delaware adding Pioneer activity Oxy of Midland the saw Williston Importantly, and our the from and Oxy has rigs operators with STACK rigs of drilling in drilling In Dakota Similarly, Basin, Continental, Hess, rig two to Colorado. quarter in two first restarted we've of running program The in and currently continued Basin add number PDC improve a the year currently including rig DJ Oklahoma. seen to count, their are are Whiting. restarting Devon North their count program running this Ovintiv their rigs,

want at in as XX more the flat XXXX we drilling next Our quarter. a to our a well XX XX% In versus the permits the net the Permian year, of remained what some in unit. help Wells XX in to X/X the is than REV Delaware Brigham are completed the that permit their to drilled well BX are production permits strong previously as in Noble quarter and benefited as development fourth gross with of half Chevron are fourth acquired our the and or Basin five-well of rolled been five-well permits XXXX In of end the this both end and pad with Basins. the to activity in XX net has in of doubled first our our XX% rig the Ranch XXXX, the the six of the drilled on X.X very In that XX half Increased the in excited I quarter year number DJ to of wells, County. inventory third the gross Basin, is and Basin, the the were Minerals drilling first inventory and to of portfolio the permitted Chevron our has into second rig net drive at These will again of third. did Basin. DJ North, into pad wells of location throughout a from quarter. referred at end the drilling and about Delaware Noble relatively pad, second last Chevron Minerals Approximately this also West activity fourth in Brigham highlight for particular, area restarted Wells net the months. quarter. has Chevron's roughly of permits permitted drilling DJ assets in net new the was the the drilling

And of this activity to activity well quarter only we the of points through first already XXXX, directionally quarter basis, a drilling falling from fourth of the the XXXX. our activity have assets. drilling levels on All of on the a exceeded, net organic halfway

an dividend drove our sequential quarter to XX%. comes Our to despite fourth the XX% That payout ratio from the increase X% operational increase results in in quarter solid from decreasing per dividend third $X.XX our share.

previously cash a of dividends. three have to macro the As six environment XX% ratio to continue to flow dividend the the we plan toward as future XX% taking messaged, next over course, quarters, payout of gradually move long-term we to into of distributable Board contemplates account

As also fourth inclusive of cash a of bonus X% flow, quarter reminder, mineral our and our lease acquisition third we of our retained XX% funded programs. retained, that quarter

based on there. mentioned, going over share for Bud to per stop As operations, shareholders XXXX. in to $X XXXX our we're return We dividends didn't

capital. returned Obviously, shown recent also by in million to $X per an stock in level of at buying have that back last September prudent volumes share. capital of We year be our use $X extremely our trading

us mineral Those to be but we toggle capital to options options market are to the extremely very that and evaluating dynamics it's constantly plentiful to caused clear opportunities will fact, want In acquisition continue right are have change. acquisition now, returns between acquisitions. that hesitate pursue not I only allocation compelling should

Moving to mineral ground acquisitions. our game

fourth $XX.X capital the to acquisitions, million the closed of Permian we that During Basin. deploying XX% approximately quarter, of

the While point up. of did we I of that the pass limited, out while them Permian focus, simply see some we opportunities attractive rates remains that cannot our attractive extremely return at should such Permian outside

expect of but basins bulk to We dollars remain in highly up to at to open scooping spend deals continue in our Permian, attractive out-of-favor prices. the the

well our and potential in $XX into in in strength are million acquisitions of middle deal or XX% continue Permian during net comprised the the is approximately X.X XX% Permian quarter quarter at our have either to and inventory, which deals quarter title first a end flow verification process. the closed roughly approximately pending quarter net the the permits of to and first PDP, we ahead, game of basis, permits Looking first DUCs XXXX. quarter end ground anticipate permits, DUCs and inventory we DUCs adding and see to equivalent are our are fourth of our and our On and

Our mineral been things progress made And we the exciting we extremely in has with with generate return deploy $XX and a to near-term million We acquisition even XXXX, production XXXX. believe XXXX, in in acquisition that clear million sight mineral acquisition cash store rapid focus on $XXX of XXXX. plan to specific in would capital on great during we flow activity while capital. team front line have to busy for more of

our to every a that and to team start, We to deals flow are XXXX great will off I cash and want production both and that for finding reiterate meaningfully XXXX. our day is acquisition contribute

X,XXX we This of includes million weather for been for first barrels days weather, the $XXX to at initial not out XXXX the to oil X,XXX full We during we that winter the downtime of million our running day closer estimate operators excited production would mineral also and severe range the per the of midpoint. mentioned. been impact point oil equivalent severe envisioned. per XXXX volumes approximately result guidance oil by per our provide $XX the a midpoint impact than originally year five this XXX impacted had that year quarter guidance will production equivalent year volumes X,XXX I have that year X,XXX our to previously during that of barrels guidance barrels day lower to this likely will in of equivalent of production We I full volumes full assumes approximately full are estimate capital. per day severe production barrels oil day. of of equivalent the the currently want that acquisition to production weather

ratio continue believe to portion As also and I meaningfully capital. moving cash to the toward acquisition to our flow retained long-term mentioned, we intend payout XX% funding contribute our mineral of of XX% a will

with of our As a call. update second XXXX the conference reminder, will associated we early of August in XXXX for guidance second quarter half

I next the reiterating a will firmly resurgence comments believe decade. the we think energy experience industry that it's worth over Bud's

an business While at Brigham our creating to is is team reap and performance prices. ways high-margin get substantial many the at management positive continue more to poised in importantly, Brigham represents here that there value, Perhaps commodity exposure, benefit. Minerals believe we drive we the unhedged commodity are will beyond to experienced changes

financial we've the Parker our our he so for and having with ConocoPhillips, work Drilling the As and excited Bud Duplantier opportunity at experience turn depth indicated, our enhanced overall I'm to both summarize at team over Jon-Al Brig in call I'll Blake? with to Jon-Al minerals performance. Jon-Al our you wide-ranging very can about performance. now adding Blake, Board. to driving by us and terrific joins

Blake Williams

you, Thank Rob.

for day, at flat XX% production liquids oil of barrels quarter flat as oil per cut was sequentially. the with at daily Our was equivalent X,XXX XX%. mix well Product roughly

to We curve to gas to cut drive oil We XX% activity continue expect remain Delaware in higher, XX% anticipate lower assuming XXXX. the that a SCOOP. improved and oil operator in and areas DJ from will growth the an the our in stronger volumes will to Midland range normalized bring investment in environment and as

XX% due $XX.X up Our quarter, for per royalty came the of revenue quarter portfolio million BOE. to XX% pricing. pricing in $XX.XX in Realized at generated sequentially for improvement mostly a realized the

XX% based on per sequentially pricing trend barrel current and realized of to Importantly, was to pricing. oil strip continue clearly up $XX.XX, set higher

This largely and NGL. tax, $XX historical did same, within costs, of lease fourth quarter, $XX $X.X quarter. revenue with reclassifications of million the of $X.XX taxes levels. Realized though carried G&A from loss line have bonus also prices portion our the expense for full and before million. momentum per X% third G&A $XX.XX bonus Net forward roughly and the of from pricing. normal costs of course the higher. out the line adjusted quarter. and transportation are year quarter to the million continued $X we team lease XXXX million our came valorem marketing net were royalty the included highlight was revenue lower curves a gas for of to impacts oil are in about oil total large Severance the of are net intense adjusted historical in Mcf expenses up share-based we our revenues the and of oil. gathering, XX% income the compensation not commodity driven million, The in million was significantly efforts that and the ad pricing $X.X cash SEC a quarter, roughly and million to for the or in and Given $X.X $X.XX BOE, for at Adding was the $XX was expectations showcases amounted we impairment, trending from excluding that business. by EBITDA were of these $XX.X during or revenue derived for out given On below year back this impairments, excited per such and mineral per a quarter barrel was PUDs EBITDA third royalty by I'd generate given million. reserves with types Adjusted roughly stream like squeeze range.

March a $X.XX payable per shareholders of record As dividend as Rob on This XX March we of already XX. to is class share of stated, common A stock. of dividend declared

balance sheet. Moving to our

the with liquidity deploy of with and our million. million quarter prudently credit $XX debt $XX to total continue drawn We facility million, opportunities. of $X.X on net of into highly cash $XXX million acquisition capital exited us revolving leaving We for accretive

redetermination $XXX pricing in our occur have We million and May. a undrawn positive into tailwind that as will have potential

of evaluating bound portfolio. to to capital constantly net options our of upper other times. debt among sources asset or our sales, and structure comfort change to an reiterate no other We two continue potential are level less as than on our thoughts adjusted to X.X There liquidity is funds, including EBITDA enhance also ratio we at on

aligned company approach and payout we more Lastly, seen begin not adopt cycles our have have bonuses back compensation a with do two with the absolute compensation I shareholder equity shareholders. as to returns. well we aligned newly public we believe our embraced plan grants plan commodity when space energy through pioneers years the our call ago. that other shareholder consistent benefits and cash properly the in the annual have with long-term will We executive to design, wrap turn investors a over and and only We been to now have management the for stands tie things Rob companies to up. of performed

Rob Roosa

the Blake. prices create commodity We're in results for and soon. extremely turn likely Thanks, call. joining Brigham is the exciting very XXXX pursuit investment full efforts begin of to and to oil value markets we will call. and Operator, felt I'll you energy our to the of that to over us question-and-answer those plan the to in in excited we an have never-ending quarter now XXXX continue With the industry. to fourth business We appreciate conference XXXX the portion as push our best recovered. about our actions to you year level the be Further, took our call XXs, next value the back be back

Operator

ahead. of will begin We first Instructions] Suisse. question go Chris Baker [Operator from the Please session. The Credit comes now question-and-answer

Chris Baker

organic guys. It organic versus like on Permian the it, wells the underlying on profile, the were morning, the, context just just basin, My last looks the profile which exit-to-exit year? the just Good call was X.X about PDP first in you X% maybe an X% is growth question guys to Can growth acquired maybe up last single in basis, Hey. volumes saw talk down digits. that, year. low of net you

Rob Roosa

joining. Yes, Chris, thanks for

low relative decline to single Permian of the remainder growth the to points the clearly down I others. of portfolio for outperformance of think to digits our relative kind growth that or our

drive Loving that County what our in to and the best that's about XTO, tried When points pointed operators, what buying about in you something some really so we the ability we've the to. think EOG consider we've growth. and what area, and And consistently do to continue surrounding Shell, we you're core of in the to asset to talking of others under really terms

portfolio, And the of so and really, that. continued see organic growth to we've we're quite the pleased with

Some fourth comments on activity quarter XX%. made to we in I of increasing the related our rigs portfolio quarter the saw the that fourth the

Here, just first first the to through half the first fourth additions DUCs net of in the of quarter, exceed seen the quarter, already the already entirety quarter. we've the

to So resurgence really, pointing the what the organic we're basin. that rigs to started really first has And mentioned, quarter in Bud drive fact really, as and that and a both continued to happen the through to is I what should return in the fourth a quarter the our wells place, activity go in an second production. you to to of it nine to months all portfolio, operator all because be additive those consider especially realistically, XXXX spud of infrastructure put as the processes, completion really, through the XX once the they takes half for well, happen

some you the Devon in I'm you quarter think operators especially the some about when fourth adding immediately and operating into where our about particular, not the first my So seen as they've drilling commentary, spacing particularly activity hit some to of been date. In quarter, STACK, that encouraged we've ramps and the units. think of they of by rigs

PDC. about think You

for in in in rapidly component think Delaware single our They're the Midland the increasing of XX particular You to Basin. rigs undeveloped Oxy. the about largest wedge,

this and of XXXX. year all particular, look very into in activity we so constructive this for to will us later be, And growth as

seeing from, particular, what there, industry encouraged perspective the and we're Chris. we're overall out in So

Chris Baker

you that's the follow-up of maybe as development And assume on in great. to around be the that's a current thoughts no would see to that terms commentary -- Any or would areas it additional there's the guys portfolio. could flow? just focus? visibility where we Yes, And less optimize that where cash fair be potential

Rob Roosa

a portfolio. of in the that's quarter continuing The question, third that's particular, the want Chris. alluded in portfolio the And conference great to Yes, topic to is rationalization call. a to enhance

when to so about we you think environment was constructive it, that process. undertook we And the sure when make wanted

where we there lot obviously, period rationalizing feels about our out it getting crude in think range. priced more when excess and constructive $XX of call, of you had in so November early was conference sit, to when a $XX, Today, in And $XX oil the portfolio. the terms that we

And in to liquidity low what us throughout take the were the of making I sure instead and reactions when in to when provide particular, having have at did XXXX in and team work end the rebounded. prices period, hand prevented the so of we plenty the terms opportunity from think of capitalize with market

And what extremely that Pricing as market undertake that activity, right all want should in so evaluations is mineral type seeing we of rebound any put market. there we're others to that position to now. etc., might conducive the be which do to out

in the I terms more entire with it and units buying activity. think first fourth could Permian so heavy the And of here because do asset the our across the quarter undeveloped we from of in tremendous sections be spectrum are having quarter success, in particular,

us as will that do And opportunity the Oklahoma, to likely there's DJ you well so and Williston the in Basin. as rationalize see

we the seeing we're forward flexibility capitalizing portfolio. to as positive. there provide the what to potentially on continue the think is and that I improving market us team portfolio Permian enhance really, to relates to it see looking So out is opportunity conditions, there rationalize a overall big And the

So we're more really looking sales forward to undeveloped sections. of those the and activity opportunity into high redirect some XXXX to

Operator

and Next Please Brian of ahead. question Singer Company. Sachs go Goldman comes from

Brian Singer

of acreage And could the the there operators. for that than see the bit push the you costs well some and the some supply But of wondered some question And a little in My more focused? those. view the questions to we've optimistic had beyond? of is productivity for do both a of the seen in XXXX how down, about and core in the concerns areas little first like cost plays, how less I think which on comments come being across and you given seems bit It with dig and capital of -- areas core deeper. the which equal, you in lower if the in efficiencies need your Certainly, do outlook an you with on on these developed else you're all pull underlying regards be productivity. some you or of discipline on made to

Bud Brigham

is of this a but more lived most This But we've been generally, one every as on Rob it. cycles, yes, probably and start I'll you cycles, number and Bud. companies in extreme, these this, service we've every add and service we're in from coming efficiencies, operator one and every improvements this the was and substantial side cycle. certainly the will -- then -- the of of of through know, of that, these seeing one perspective and very are side see well. And as again, of and really innovation you and pressured, when out the when the course, cycles, operators it's to these to

Just example fracs. the is one

think rig you I this wells. to that the question also the wells, but as going the just cycle. whether add already the more -- the count product is rig Rob, want prior to pandemic benefit the completing frac that? from so it going than productive go maybe was you to that side can't on in So of fracking the drilling and and it's be no we pandemic at because count to relative and frac so each We're to And that we're each forward. seeing and rig to look prior to

Rob Roosa

second operators, No. either we many that to in Brian, terms that going fashions. can we're and third during, operators that really extremely that of see enhanced efficiencies and in Bud or these as pointed had. it's in in exactly I I to And efficiencies, come times the really drive mentioned, quarter think and call this tough right forms you're

a cost when you've thus foot, per in of to times, far positive in we've so XX%. be cycle from think just of improved fourth quarter, And there's at lot commentary to and seen what highlighting the drill operators you almost them, terms saying times about they're cycle of look you read some CDEV,

XX each So rig per rig year. per drilling now wells

decrease North pointing Bakken Mexico pointing improved about a both pretty much quarter. XX% saw down Similarly And record their the foot. New XX% pointing costs they fourth Oklahoma. XX%. third in to cost pointing think in sub-$XXX the Avintiv's in to saw well the Resources is then significantly well Ford costs falling the in better reductions Continental cost. here Marathon from Permian, and costs Oklahoma. and costs, what in being areas. to in to that You quarter, Dakota better in to XX% Eagle well point Devon Matador's XX% well

much all costs. these operators improved to are So pointing efficiencies and

down. you The volumes but so flat efficiencies, maintain well or as same, flat And QX XXXX think from to are to per in this such wherein capital volumes are the trying goes operators that dollars XXXX. flat, about cost the QX are environment

but likely directly a for what CapEx, the to so is XXXX, us, not I of drilled improved any during flows because as efficiency an activity in gains, through. those we dollars see more wells XXXX levels. We're, being estimate, equivalent beneficiary direct we're would And of a incurring which will amount of reminder, of

I efficiency reports think And you the put so I'm on are have particularly of so constrained, different pretty core work to they're encouraged all given with. dollars as gains. there's then be Brian, the that going focus still read And to and to the I significant limited budgets core. guys going operator some that out there's

And best so up to the put very they results. still need well

So in limit to core activity make probably the and going focus that's the them on fringes. still

in I And acquire most our of directing basin. tremendous of making a disproportionately terms done job of we in parts so of them the core, still I the core of some the economic see has the think activity sure in which team

see environment, encouraged wells we're activity more in And more the to the drilled, so going particularly what we're core. given seeing,

Bud Brigham

is might well. -- in and one Hey, seeing production performance the as from add thing. compounded The efficiencies Rob. productivity really these wells -- performance, we're Permian some I particularly encouraging by well and in just improvement

Brian Singer

think, you're Thank also for my follow-up than you ultimately that. paying Great. considering in to, then that with if more in out-of-favor regard operator value areas? view a you have it unique made on have I is is commit less PDP? Or it made proposition. will you comment you regard And the a feel define acquisitions little you talk to of about that basins you're that. a could these based a capital bit how you that the that acquisition more Is strategy Great. wondered that and I with

Rob Roosa

Yes.

well the have as outside we've the Permian Oklahoma as basins the in assets So acquired in DJ, that some North been other largely of some Dakota.

have And challenged of other providing of some valuation so more basins the activity. more on say only terms in more environments, of the what been in some conducive in gas I that focused regulatory there we're are would that PDP environments oil to and

etc. credit give will We permits, to

do. trying just And to extension a what logical so of kind that's we're of

are the the about although significantly deploying that first thus the of I our feel Permian. good that of capital, is it the is than Permian the about such far, higher the quarter, fourth asset such XX% is opportunity In our returns we quarter, the in asset. think entirety was

can such opportunities evaluate team the do is capitalize those. up come and we on And our still so about, that and set

And more credit are to will there in indicate so DUCs. areas. more favorably that those way. is to selectively basins would largely PDP constrained in and gas, valuations are particular, oil heavy you'll we some And in occur us oriented the regulatory add and toward it environments, those see that But I that give to But risking permits.

Operator

The next ahead. of Barclays. Wai Jeanine from question go comes Please

Jeanine Wai

Good morning.

question first on just discipline on of kind efficiencies. Our and dovetailing question Brian's is really

in remain gains your I just E&P, So I about you've And leave based if capital know We you as continued, we're little what does but it later guided really And XXXX to the the Can is, room day. X,XXX determines that efficiency range? QX. bit a is talk to current prices of activity downtime mentioned. year increase X,XXX it more operators it's theme a estimate in for includes mean on plans? the BOE constructive? for Or huge weather-related just asking a oil per specifically, what you just know discipline, as

operators hold less more line so still on CapEx do with but discipline, really And can the dollars.

Rob Roosa

Yes. Again, for joining. and thanks thanks the for question,

for the been operators, the when historically, converted, based So our and some of crews, permit also PDP frac looking those of it's then acquisition inventory DUCs how our and at on activity wedge. etc., that in component includes you volumes, our some we guidance, largely of end year, about at course, has it also think have buildup our asset

current -- efficiencies activity operational And on current levels, those really or are current all so those statistics. driven operating components

efficiency the will the upside incremental to occurred that is year us the point benefit at to us there you allow that will during enhancements or see in extent all Jeanine, further. do future to guidance and some So acquisitions, potentially update

on think outperform that we And there's out, the to room the can extent if these there current enhancements enhancements hopefully guidance. that so efficiency play out, side, the M&A such I play

as the flows. flow I'm efficiency that continues drive So to to enhancements, we'll continue production our hopeful these that industry particularly through cash to see and

Jeanine Wai

retention. cash Okay. you. helpful. Great. My second Thank on flow That's just question is your

retention to be this the acquisitions. XX% really quarters. the next cash in You'll indicated you flow And your remarks, over is several XX% to increasing for prepared

does helpful. see And further your are to by any of you starting developing, little the just prices an increased if increased to uncertainty? primarily opportunity it appetite retention thing, to given reflect basin, we is So more wanted you. just likely any for that a bit less check this are this would higher for I bid/ask your Or kind set just allocate regulatory to be you expanding but narrow far due current need and sounds oil and how year? color acquisitions given really Thank last changing guess that? things meaning So portfolio

Rob Roosa

the definitely question. No, Yes. appreciate

to so cash assets all the guys historically continue with early we've our back acquisitions retained XXXX, generated the to is beginning that of XXXX we have really our see since partnership buy with by flow acquire retention And with. as and of private in cash equity our flow

So growth cash acquisitions, we've, throughout development of retain seen continue organic to drive tremendous the opportunity asset. organic to through our history, flow

similarly, retaining that some our want by assets we So here on to capitalize with opportunity cash flow.

take that. acquire to opportunity of out opportunity XX% -- with tremendous a Continue there. there's there that our to think flow, retain is XX% just just to that to tremendous cash because we XX% So

And about quarter, here permits. buy of you to XX% instance, so first for far them, do good thus and a when PDP, assets we're what on to DUCs activity with the mix think we're able in able

we able so times XXX% to terms activity of ratio buy is to That about able do quarter. Permian. And in we're were that what activity fourth X.X the in

you I do as that tremendous pent-up. upside. There's think kind the just environments spread, there's to that, as mentioned, of think has the linger. narrowed continue spread we So bid/ask this

activity. year activity I of sell, the desire a lot of terms their of wasn't there last in sellers when think, and to there large was period -- whole on a

have potential in out And buyers been reduced have our also so have buyers buyers their or private there potential acquisition playing that's public think levels, equity-backed reduced levels. also market their acquisition just mineral that reduced numbers, and is I into what's favorably the other peers hands in both the private on also those

buyers And so potential out there also that the number are of reduced.

way. sellers in tremendous think of the I There's quality of seeing opportunity So set moving opportunity. tremendous are our the We're terms just assets.

definitely we want So ability and to expand capture upon. retain that's something to the

And what. so continue that's you retention to to really the driver acquire why increase behind us, cash

Blake Williams

make only self-sustaining more bit too, also payout, thing it funding with management is the dividend that little when energy XX% us I to yield those while have I add, think a helping the acquisitions. allows industry-leading an portfolio would and our

Operator

Simmons Pearce comes Please Hammond Energy. question next go of from The ahead.

Pearce Hammond

with taking well the acquisitions as And question. minerals And scale into thanks see ground larger seems for public a by. in more like scale about larger game strategy like potentially ground expectations as tremendous game. my success came talked Yes. When hands. think we'd Good And when you had deals became lot a you've you I harder as well. morning. that private public investors' have It a been you public to come moving were XXXX,

get tremendous it with color high-level and what we hard more some a prices? Is from year deals line? over went love to volatility with of those Just on the goal done? curious COVID getting just So get fortuitous just Are what that. oil those the becoming your the to through high makes conditions deals level, to past

Rob Roosa

Yes, pearce. the Appreciate question.

patient. in be to We're process. want our definitely we disciplined underwriting think I very So

deal So we that that execute in a upon which naturally cross creates has bar, kind larger want such high of it. to to a

to accretive deal, to really be deal, the it's that performs. and how of activity that performance market to, production the important that benchmark people think and cash as create deals pointing environment of and these patience an you flow. the company M&A that When so And be to terms lot discipline in it's going able want a on We be we immediately to point overall about to to the accretive. a that Pioneer-Parsley XXXX want the of as are large

any of we're to that it. going fact so we undertake do that is -- deal going there's scrutiny cognizant to of of the larger And lot very a be

because And want the the future. do want we deal best to we so the another best probability succeed to chance, into

that these need the so that's see of production, be NAV. process. cash we terms patient Being deals and to We're disciplined And through what very is our really, flow, perspective from accretive in

for instances, of There's individuals the do that relative -- think reluctance I and of realization sellers, there's asset. that where in asset. And selling asset knowing in they they you -- us some about terms probably of and some private to terms so what paid competing instances in when pay for that pay what think there's we that against would what those

as of of private these think typical to terms versus life in pretty continues you for positive life, when firms acquired I that think that a our these some equity us etc., to itself wind patience they've in assets. back plays fund naturally fund the out and terms of limited runway have down

you as we've tremendous on ground the success mentioned, game. had So Pearce,

So deals. the of looking fully team everyday is engaged terms in at those

be of still game can undertaking acquisitions, disciplined while that the we large patient we very our shareholders. very for think very such being best in ground we do deals deal and So successful the underwriting

Bud Brigham

is seller And the commodity makes to difficult impediment. we the to for look in your volatility it buyer for and Pearce, the as example, seller, at more clearly, period, unsustainable, When buyer you or the had an you it price alluded transact. you question, an either the

environment cycle, a that that out an the impediment, And a having but beneficial. on think less macro more should coming -- environment side of at been I has being volatile be a more other constructive so at

Operator

Derrick Please from Stifel. of comes question Whitfield next go ahead. The

Derrick Whitfield

first Picking up on Jeanine's question.

expect Could exit Given thought midpoint by shape rate the the than material your the where you'd would us previously to your XXXX you're production you for impacts weather share QX, a of consensus. the exit similarly with of suggest trajectory projecting and XXXX higher guidance year?

Rob Roosa

Yes, Derrick, the question. appreciate

the point, in full And probably response. then really, impact I the production, given at then trajectory year And point, volumes guidance. be the incorporated uplift. QX of seeing in of terms we QX and overall think strong weather some our the that the QX think low into QX of we've will really that

the positive we that positive production as weather mentioned, So volumes in quarter. impact improvements think And QX, you'll And first thereafter, the will response, see then I to QX. shortly as QX, probably impact line QX turned get up in picked you'll for summertime, to that in that it around and activity wells those organic line see just the QX, production. takes given time

and see So of really QX response we entirety you QX in particular, about nice in a as the think XXXX.

Derrick Whitfield

the follow-up, for frame of to your And us plan. perhaps help game of in ground cost of you elevated type Great. my yielded relative has yourself you're capital Could then your capital returns light as strong or Bud, expecting? acquisition your returns strategy historically

Bud Brigham

Typically, that basis. high level are that XXs unlevered capital, on an we've we low got cost our release teens, of targeting returns Yes. times rates return so press X typically were our asset in of

Operator

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

Leo P. Mariani

we I G&A. down to is based guide guys. on significantly your wanted to those a a on very guess just of numbers job Hey, did XXXX. for up good question trend 'XX. I in SG&A starting getting ask now The

Just any color you have there?

Rob Roosa

Say guide? it again, the on

Leo P. Mariani

G&A you like your asking was to in it guys I looks about XXXX? So G&A versus rise expecting XXXX guidance, are

Blake Williams

initiatives to were relevated Yes. Certainly, environment. undertook that somewhat XXXX the in G&A of savings the some we

So us of pushing it providers. lot our service back a was on

out those with out are higher able speak, some there to of still of those price and more think are year this bit business forward. environment But able but those we're I little keep cost still trending of some to forward. Now to were kind given so of normalized save system, keep the the going going little we of -- a environment, higher that the bit a some

about $XX.X $XX million, expense the So of of million we've guidance SG&A million for numbers in to year. midpoint got so $XX.X our

Leo P. Mariani

buybacks. Helpful. base want I Okay. stock touch I on to guess And

smart think about the acquisitions? are to lot that late mentioned your obviously the environment guys how in You say, a And stocks a ground you versus, last fact now do game very that you're this do year. able buyback better buybacks

Rob Roosa

option No, acquisitions. stock buybacks Yes. potential or

So whenever us. to capital our options we available the portfolio undertake looking of opportunities, entire we're allocation decisions, at

job of each highest And and so of does the evaluating that sure those deploy team a capital each dollar of return every the tremendous asset. we and finance making is rate

so monitoring constantly And that's undertaking. we that and something are

monitor sorry, as my -- events to was the all toggle or opportunities. comments in in we and it And one we different fact unfold, of evaluate earlier of between transcript my the is the continue in that so believe I can beauty comments the

the one stock you so monitor I and we But And buyback double. continue that to evaluate. think that things Leo, seen, post the we'll in essence, September obviously, you've as of undertook, indicated,

that desire a obviously, undertake buyback. so And to the lessens

Blake Williams

Yes.

I go of years. acquisitions, achieve to Derrick's on for back about XXs low kind question yields would think our being high-teens, to rates I of of acquisitions those We're able XX% multiple return. excess in

So we comparing and share. be to buyback that the to through are continue those compelling, as per back game a most what the that always options ground see value we'll adds

Leo P. Mariani

about same of -- at of guys has want days? Are Okay. deal half to And was quarter. it's guys the in think side. be level million of to sort trying look, of about flow That's roughly where more you that conservative capital, deals you way still you looking the pandemic, you now pandemic? everybody Brigham you anything guess, I to sort helpful. kind these XX%. of And looks of a I tell kind of to ground $XX the due M&A the to just less M&A, that doing game of were Or Prior maybe sort maybe guide, have don't changed that sector just of sort just at talking availability on pre

Rob Roosa

Yes.

I a of of net kind provide the think are when about statistics we dollar lot So a basis. location per it and on

pretty in how raining terms dollar per net the And we're in of able substantial so seen of a to location basis acquire.

close to able a think were dollar location pandemic, per doing on pre buy So now when that net basis. about equivalent pretty to basis on per million $XX relative the I that to quarter we we're what targeting, you're

the us more become for efficient. that acquisitions So

dollars, to but almost And location spend the basis. allowed so less per us same rate yet dollar on that's at acquire a net

focusing acquire we're composition the on overall PDP, today, So location. activity in and net is per DUC able of of Leo levels to what recap, nice -- near-term that have kind really again, XX% permit and some of activity, to dollar

and then to basis. a if it's we've levels think today's location seen And less acquisitions, So of able net per that historic terms acquisitions back, I buy. upside also, to look relative on you compare dollar we're activity in

game ground of that So there's in a acquisitions seeing in relative lot we're the benefits past. today's to

Operator

question go next Kyle ahead. May of Capital from Please comes Securities. One The

Kyle May

Hey. thanks Good me squeezing And everyone. morning, for in.

some commentary at quarter-over-quarter. presentation, the also the portfolio about the PDP Going eight percentage shows looking then your of along slide with increased rationalizing locations which and of of

targeting actively Or you're that's acquisitions? if higher wondering PDP Just reflective just front you? if of of more set a the opportunity ground mix in game your percentage the is in

Rob Roosa

both. of combination a it's think I So

just PDP necessarily itself. focused on by it's say not and would I so alone And

And what activity the so is really, overall in of we're and on mix permits focused terms PDP, levels. DUCs of

thinking an So it we're about really of in terms more wedge. activity

such So accretive to in production going and But are that in kind over XX XX% that the the then we deals shareholders, near are term undertaking are to XX, of acquisitions contributory activity cash to range. flow. next buying of highly by be that our terms months, both production XX, what's

backfilling unsustainable The are unpermitted naturally wedge have the DUCs permits, those the be is definition, and NAV as and undeveloped another to allow locations, off accretive. And help keep turned in of wells that other meaning by -- us that XX% drilled to those which an treadmill. line, us of then you locations

what a quarterly create of basis, to we're of in synthetically the deals. of portfolio bundle that's together -- really, So beauty able on doing a terms

quarter. is So the DUC permit all heavy heavy, more if that deal blended or one is throughout more PDP gets one deal or together

when we're of And quarter, XX of deals performance the to is the of and acquisition we all our evaluating quarter. team those kind so monitoring XX evaluating deals when team benchmarks the a start relative entirety doing and to

Bud Brigham

get an Yes, what passive a manager I think as asset. active of with us you

So We're add to going to that's for we're to obviously share. a do going profile, deal looking a deal. value a certain not just do per

Kyle May

latest and the last Got it. potentially the mentioned that update M&A into for portfolio as us follow-up, you thinking Thanks that. give Eagle quarter, an Ford. expanding Can your activity in direction? expanding basin on my about you And the in

Rob Roosa

in Again, us our disciplined Yes. being it's patient, underwriting very process.

there's deals than going to that. Ford to deploy so And extent Eagle an deal, the more attractive we're Permian naturally

an organization. at So every here almost as these we day look deals internally

so evaluating And each other. we're to deals relative

And extent we sure favorable allocation there's going the to we're shareholders. those deals, do areas. Permian to make of the deals best we're naturally more so to weigh going for capital And the to

Eagle returns, we're an up through in the for So allocation monitoring working in Ford of the we're dollars, accretion NAV deal. it actively Permian Eagle put deals, but still terms that seeing much better would I available then Ford shareholders of

Bud Brigham

We've Eagle the Yes. Ford been in deals.

for that's across finish one the found we haven't appropriate got value line because haven't Just us. one

Kyle May

Rob helpful. and That's guys. Blake, appreciate Understood. Thanks, it.

Operator

with The be Freeman ahead. John Raymond today go will last questioner Please James.

John Freeman

in. sticking Thanks Good me for morning, guys.

Rob Roosa

John. Thanks joining. for morning, Good

John Freeman

Absolutely.

sort of where out-of-favor on Rob, the these Just quick taking makeup basins. recently some a of were you're sort of advantage these of follow-up, you discussing what acquisitions of

bit more mix. heavier PDP little a getting You're

said on PDP of me far, fourth like for quarter, comparison the an first you've you been on far PDP Just the in plus that quarter? post, compare but can what first in so done -- the realize apples-to-apples XX% quarter bought what to give dds the the breakout just so you I has you've

Rob Roosa

Yes.

would the quarter X% you to I thus the say. PDP in in it fourth to that's if X% component about quarter, X% X%, compare to the So far, XX% first

DUC such, in And heavily say, quarter. more than as so I would a are weighted on very But much it's fourth down component the PDP and permit basis. the

a net So basis, well permits. we're you running think XX% DUCs of if of that, composition on the about terms and in almost

think the permits almost DUCs X.X the So quarter. I fourth of and composition relative about when to times that, that's

of as year terms the accretive we contributory forward. year benefit next permits So fact go this substantial those to production the contribution and that that being is early pretty and going you're that, throughout the to in really to of or flow John, us and for the driver have cash DUCs

add excited, as net think And of to net you locations inventory year. permit and Permian locations so DUCs in our XX% those at will the that we about end the really the that Permian, the in I'm of about the overall and to X.X being had that's and especially about relative permits our X.X inventory bucket, DUCs net because permits and DUC

of the of to the DUCs in and fourth at XX% inventory end just almost our we the alone adding in our about one we're permits inventory the on So quarter. Permian quarter to hand that relative had

excited thus assets extremely the about far we're and in I'm putting So the of quarter. that under the finding contract quality first

John Freeman

great. detail. best the That's I to all. appreciate for me. That's all you And all the Yup. That's it super of helpful.

Rob Roosa

Yup. for joining. Great, lot. a you Thanks Appreciate John.

Operator

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

Rob Roosa

look Again, first appreciate quarter to our again and related fourth here everybody forward speaking our us to May with in joining on XXXX quarter and you results. year-end call conference

Appreciate time. your again, everyone. thanks So

Operator

presentation, Thank you you attending today’s may concluded. The conference disconnect. has for now now

MNRL Sub (MNRL) 28 Feb 212020 Q4 Earnings call transcript