OVV - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Ovintiv's 2019 Fourth Quarter and Year-end Results Conference Call.

As a reminder, today's call is being recorded [Operator Instructions].

For members of the media attending in a listen-only mode today, you may quote statements made by any of the Ovintiv's representatives.

However, members of the media who wish to quote others who are speaking on this call today, we advise that you contact those individuals directly to obtain their consent. this the may expressed that or be advised without rebroadcast consent be conference not call recorded Please of Ovintiv.

like from go now to would to conference the I call Steve Campbell Mr. Investor ahead, Please Relations. Campbell. turn over

Steve Campbell

to you Thank fourth year-end at on call being our quarter Today's slides our our webcast, you, website call. welcome, and conference are and and is operator, everyone, XXXX available ovintiv.com. for

news report contained results that SEDAR please today, and we in statements we U.S. note and annual and accordance EDGAR. the highlight advisory financial end filed started our GAAP forward-looking our advisory to our Before regarding in dollars. statements slides. found wish in other of of and take release prepare the with documents in at Further financial I our on get U.S. also report webcast details our are

to So resources are production information reserves, references U.S. state this the after we morning dollars, and and unless otherwise. stated dollars all mean royalties

will this specific prepared Following morning's all remarks, be questions. take your to available we

please to As us one This and follow-up. to questions question one allows those of to simply today. more get limit your always,

over now I'll CEO, Doug call our Suttles. turn to the

Doug Suttles

XXXX we thank into off our where on financial across XXXX. and key and XXXX, exceeded expect everyone, operational Steve, further all business morning, We and part momentum our efficiency expectations and This is year, gains of for carrying drove again, last to to We strong and business. good measures. efficiencies again us. joining finished a Thanks, great in very are you start in every capture

of Development Chief EVP David and and Chief Officer; Renee Marketing who's Executive Corey Head EVP McCracken, our Greg Givens, Vice of Head our McAllister, Officer; Zemljak, Midstream. Exploration; Mike by and I'm Financial joined today and Brendan President; Operating who's and Code, our President Relations; Corporate our EVP External Hill, our and of our

questions take after we our and issued to we the remarks. your we reference yesterday, Please note slides plan that will

We new consistent outlook discuss E&P, defines condensate with significant the today we our our and is Ovintiv to with generation will balance and you crude cash growth. believe that strategy XXXX with free

strength growing, cash strong third an of the that and sheet where consecutive capable while And free flow targeted generating sheet. accomplished year We investment-grade cash rated with marking significant asset free our this. at have financial balance is balance base we've

business. have a that This our we with that being the outcomes of disciplined strategic our extremely ensures We history achieve we target capital. for

Our assets are top tier.

portfolio. have inventory development and a scale across deep crude of condensate North quality projects and American We our

data the experience using have our and resource development a future us opportunity, is of industry of thoughtfully and We leaves managed with unique long this advantage. this proprietary set. a key This runway

all We culture across have of our of operational extends aspects excellence, ESG. including a business, which

us everywhere has unrelenting cutting-edge Our positioned use our innovation we on technology of an focus industry leader operate. and as

And very that part this in to ability volatile effectively price model lastly yielding through manage is business important have commodity our cycle. This our but sustainable today's of results shown environment, superior risk. is we

to call our Now Corey I'll financial to our operating the and over cover results. hand

Corey Code

year great another performance. was XXXX of Doug. Thanks,

growth growth generation, the and our marked are The highlights. consecutive the three level performance level condensate performance of our second Here and financial our some year of in XXXX. year excellent assets. were strong at our free Both in operating we the field at cash had crude core corporate and

$XXX cumulative onetime of substantial we've cash free [ph] the to organic our about million cash. This costs. flow two last free ability generated a Over years, generate excluding highlights

on and and for both expectations guidance. our short, exceeded hit In our capital original earnings again results cash midpoint of Our delivered the investments flow, our we promises.

reserve can proved be this to information take more in than production. of reserves, at deck barrels annual X later X.X with a reserve XXXX equivalent you well will exited our week. which as times ratio XX-K, in billion our of today's replacement filed And equated which a as We look

was most the a successful practices cut organizations the our from implement industry. best the brightest across year region. Anadarko other to The team. savings we significant and of areas one well doubled integration of X one combined We play of quick costs Certainly form and into closed original our G&A and in ago. demonstrated rapidly new target, and portfolio our competitive is nearly highlights just our proven ability Newfield over and both the acquisition, to

producers and is billion liquids the and oil X to have we a sustainable, generation. owners. over of of last combination free and growth years, of largest unique Our model our condensates, profitable crude and business high-value $X.X one the cash We're returned

a look little results. summary closer Let's at XXXX our

and reconciliations release helpful slide details are all deck. has of the in provided that the Our

quarter cash $X.XX was or fourth share. earnings our per or share. flow And $X.XX $XXX were million operating Our million per $XXX

about billion returned to buyback of we back During our $X.XX [ph] cash program. XX% company. the the way, of year, we’ve bought shareholders Said another through share

by our We also XX%. dividend increased

Full full our cash XXXX, activities or $XX.XX items, was $XXX free $X.XX share. per million, were while year excluding per For were operating earnings and million or $XXX million, flow, billion year share. earnings cash $XXX from $X.X was onetime operating

more SEC to has proved total to - year-end reserves and XX at reserve totaled approximately grown our billion increased index proved years. X.X increased BOE. than liquids, XX% XX% And life

per today. X crude XXX,XXX and day, this including was sector XXX,XXX production of largest ranks producers barrels in This the production condensate of and total barrels equivalent crude of us quarter per day. Fourth condensate oil as

barrels of of total XXX,XXX production per end at condensate our including at oil upper forma equivalent revised Pro barrels guidance of the production day, and day. per was XXX,XXX crude

asset volumes for condensate and year-over-year, adjusted X% crude sales. were Our up

revised also forma XXX,XXX production day, the was high our above guidance. barrels pro a end liquids of Our

the came on low end plan forma exceeded objectives of our BOE, or $X.X hitting cost of original $XX.XX below of while pro per billion in guidance. met XXXX, in at We our basis. Total a our all capital

the from sales in each XXXX. asset We BOEs X,XXX impact performance about of offset operating in upstream Arkoma, Strong excluding generated to us more asset and than allowed $XXX flow, together hedge, the totaled of cash portfolio day. China million more than which a free in

our reinforce confidence we Doug, the have hand call want I I Before in balance the back sheet. to to

is of our growing crude organically a X.X First high-value flow sustainable, price without of condensate at the years a for help. prices, while and over We cash leverage third and and ratio mid-cycle our we're to target next this times all, free straight volumes. of any commodity generating year, couple do expect business

July total adjusted At at were credit exceed facilities year-end, We've recently covenant, $X These XX%. debt a date not XXXX. that have renewed maturity only to facilities of X our we and financial with cap billion, to XX%. credit

next no do years. determinations quarterly There coverage set credit what there's are $X our no no not X.X billion have. facility borrowing-based facilities covenants, It's equally important for to note and leverage is The credit capacity the ratios.

have terms business. confidence paper other worthiness, also balance And our and we prices in of credit borrowing. to ratings, In trading low-cost credit have we of bond commercial our sheet and reflect indicators access investment-grade our

good strong capital committed flow. Our to our book target. ratio balance extremely activity discipline adjust confidence our to and in levels drive our sheet leverage, times leverage by remain We liquidity, X.X a cash is to hedge backed strong free

our not clear, be at to is balance risk. sheet Just

over now the to XXXX I'll discuss to back Doug outlook. call our turn

Doug Suttles

Corey. Thanks,

already, our free year today times growing third few crude generation, while expect and condensate flow of will cash we consecutive a our said we've that As XXXX be production.

growth, growing strong specific generating profitable to again that will capital targeted long-term and drive returns improved trajectory, programs our liquids lower capital Our efficiencies, costs, margins. be

high have deliver in consistently confidence to We our to results. innovate ability

You've as Ovintiv heard the this us refer to Edge.

will continue our liquids which margin. mix XXXX, Our in to increase increases

of XXXX. flow. production in XXX At our meaningful it Our total represents cash outlook basis produced points liquids this XXXX. our has since higher million of of calendar more estimated than million liquids barrels making This or translates up to the in addition XX% $XXX X of size, incremental is about

XXXX, improved million capital. X% efficiency we Recall in capital. oil third-party driving in focus expect Montney. condensate is performance, capital we carry million reduction and a in deliver compared significant we XXXX, are When budgeting $XXX the had that $XX on in capital with and less XXXX, Our growth a to to

confidence flow gives Our strong our book in cash hedge us outlook.

over gas have we XXXX, of and natural condensate oil, For expected production our hedged. XX%

our today, a believe business in gives volatility to us scale and advantage manage tremendous created sector. this have the in our We distinct

consensus and and the one the estimates independent in lists, we are producers for production generation. liquids peers EBITDA XXX both our XXXX on We in largest top the near for EBITDA Here, of ranked S&P XXX. and show both and production liquids

condensate-focused It up our legacy business efficiently. and company. our XX% liquids more production. run makes incredibly crude of a our invest are don't than those but parts of gas We into We assets

create is have unconventional value gives This efficiency with in drive combination. deep believe our that class to reservoir an year development, a today experience us the demonstrated World Our winning coupled chain portfolio ingredients management. will and performance capital edge execution, We when that consistently improvement we continuous supply by scale, and cost key innovation over year. is time. after multi-basin in

nearly the hard meant we quickly Anadarko. at expected only well and acquisition. targets, we in one today, Priority XXXX XX% This clearly G&A are doubled in companies, one from This reduced G&A did work targeted synergies ensuring and the Newfield was that integrating reductions. the effectively achieve by achieved cost level we team. took beat cost we annualized every both and and Not well synergies rapidly these our our

funded XX% means, a of owners bought within established importance generated of to we and and We X%. our In record so. grew know an the of increase XX% outstanding cash, XXXX, in doing shares dividend our by have our production track condensate cash back and crude returning and lived our free

COO, ask operating highlights to now talk of in few Greg a XXXX. Givens, our I'll our about

Gregory Givens

by a free generated load in once the upstream production program. XXXX, million again flow XXXX. in cash and efficient team crude delivered highly with Permian operating leveled XX%, $XXX and In condensate X-rig grew operation This

beat drilling the lateral track quarter. pacesetter the times performance, in We their and of continued record team our own performance X exceptional

at improve. overall rig to spud continue XX less days, to sits cycle and release Average now times than our

than than are for Driving penetration more reasons. down cycle peers. XX% are Our critical our times rates several Midland faster

services increases the billed on shifts more the get from each so cost business days across it the time, First, finally, the It because we which lower our means earlier we also results apply many sooner, number of learnings are revenue rapidly. results cube our it And returns. of operations in by location. in can in

team savings. to our execution, generate management additional to supply addition In continues operational outstanding

our total we've two we drilling last XX% a reduction activity completion County. in third about and years, of the In a costs. Howard XXXX, Over had in seen

Howard expectations of X results Our production. and have the over strong by have recent XX% our more outperformed than first months been

and Although will to development Howard. focus Martin expect in of third of to counties, we be a XXXX program continue our in majority the Midland, our Upton roughly

running condensate XX% are in and again the rigs and X volumes more expect our oil or to grow in Permian We today, XXXX.

the quick in detail great all Let on our performance which Anadarko of update the Anadarko me give recent in covered Basin, was a on webcast.

it's on returns. million a great makes deck, that reduction Anadarko The operating generated cost reviewed Anadarko of our website, and in company. haven't free competitive largest XXXX. flow This upstream it free you cash If the cash contributor tells of story $XXX the in our in

To pacesetters done. Four $X.X million. cost, not summarize, original have out year, million of drilling - X in first took we $X the completion target. double costs our the and point STACK we're well And achieved the recent in play of

plays doubled other both industry. all have made and across We the and our returns in the portfolio competitive with STACK today,

year, the In production condensate growth last day. crude of saw with per XXX,XXX we BOE and fourth Anadarko, quarter XX% over

deal production the the from than closed over well. of well, rates X-day We’ve XX consistent oil condensate fourth maintained flat drilled February we drilling year, five previous pacesetter through rigs to the lateral faster our a During and dropping XX% a rigs and despite the and in recently at second were time the best-in-class cut quarter. in half the of levels

equally on in has leading performance improvements been cycle with frac continued to XX% well completion a times. Our impressive, reduction efficiency, our

drilling in made we the recent SCOOP. SCOOP, we've down cube a now are applied the XX%. in being days improvements The In the to STACK took

across We plan our active organization. and and we expect to in as other the cost XXXX have learnings an the see apply basins reductions from continued SCOOP, STACK the

and XXXX. free driven operating step Montney the compared was capital foot. the The no scope by over Our previous flow the by and in in completion Montney's XX% increased with program. per We $XXX a year. in spacing rapid growth XXXX to The generated liquids million in condensate Montney cash lateral production change upstream optimized deliverability increased additional oil when XX%

in the the less liquids the on liquids-rich the which than than of well days Montney focused resulting compared greater are fairway, returns our more the strengthened first resulted in the The XXXX. was - XX% XXXX to program program from producing in average condensate XXX X-year portion improvements industry-leading Our play Montney further cycle were Overall, the times. portion payouts. by to

to Our capacity remain condensate fairway begin way XXXX the in processing prepare the early on objective in much coming continue XXXX. Pipestone same will and focus our in additional we the for as to

portfolio assets base the They vital a properties, returns portfolio. today. of comprised Our some oil-producing in our generated are in play role of strongest our which high-value

more For flow. liquids, assets, Duvernay, the cash generation. produced operating Ford, barrels million combined for than generated cash free We of and flow XXXX, manage these a of Uinta XX,XXX and per upstream assets Eagle day these $XXX Bakken,

program drilling highly typically Our to more capture are are operational and results front-end efficiencies. repeatable loaded

operating reductions a in with transfer the be in be our to operator Eagle cost the the of continue after scale, This realized the with learnings these culture Bakken As multi-basin company. and adopted innovation, multiple a across ability Ford, rapidly we've seen to of significant plays. can continuous where years both

to out. Doug close I over will to call turn back now the

Doug Suttles

Thanks, Greg.

our proud see crude We're selling a shareholders of focus and our returned results, leverage we've continued I $X.X scale. think and our last through more to years. you reducing our significant with capital as on nonstrategic strong the allocation with and portfolio condensate, and over ahead creating significantly the We X strong can enhanced multi-basin of our a promises from excellence, than track commitments board operational we've assets, record. and disciplined across billion business delivered

risk have cycle. manage We proven the ability through a to

almost is growth. flexibility, lower, strategy plan growth. road cash unlimited believe corporate We is Our will ahead, we are and we over strong free flow level cash capital by create value and both have free will performance. prices sustainable compelling prioritize and this the generating If flow on delivering our

flip the side, growth. accelerate if higher, will prices not On are we

We delevering. expansion will see and flow additional free cash accelerated

great and are Our results base our asset our the product of quality teams.

investment and we'd our questions. be your to for Operator? in your Thanks than more company happy take

Operator

first [Operator Arun Instructions] question with from comes JPMorgan. Your Jayaram

open. is line Your

Arun Jayaram

that And more on I strip given help look current - the Doug. returns discuss XX, like X And relative could detail are basis could like if Slide on what Anadarko, prices, the Montney? us perhaps the investment the morning, breakout area. a maybe in good in in and a paybacks Permian areas? give looking bit of the terms payback percentage us big CapEx characterize, Yeah, on wondering what you was little maybe you in by at

Doug Suttles

Yes. the No, thanks for question.

think now been loaded the transaction, you rebased a think to is can Anadarko that X program, what Greg we we've I and since rigs highlighted level see the that that rigs, when essentially XX now, closed program more I to have now. and running we've X Newfield continuous kind of

seeing to portfolio. is So I you're capital the approach think a very across distributing what balanced

it's And another product very - oil. way. very Places very ability Montney have produce and there they get for a different course, and like we've across in of a all royalties, of the is indicated asset that is, low low which the question cost crude price how's we which of and and the capital sells commonly as predict. performance get well, very, Wealth to consistently base They similar. is,

higher Where and costs we into higher. mix, are of the a move places the are the oil have percentage but the higher, as royalties product in we Permian, like

in financial payouts So something very window. at portfolio that look what in they're on we we they're at X-year-or-less a basis, a around return look see, the is returns at performance. basis pricing, XX% it generating - whether all And Arun, payout on all or mid-cycle across the similar we

Arun Jayaram

you post-hedge that could a discuss, was breakeven. press and if And is on mentioned of than Great. follow-up sense $XX. is, less it's if the wondering the I'm oil kind of could my give number a pre-hedge wondering a you in Doug, us price basis. release, you what it, call I

Doug Suttles

and those can this now. don't head I a time, I admit, cash. can have look tell right if though, my all world, you, I numbers grow that out in free continue business in you must in $XX generate to

business fund could maintain dividend not the cash flat, believe keep flow well it's hedge we sustainable. just So in XXs. define the this how about neutrality book to and on We breakeven, XXXX. you into depending continue a that's And

Arun Jayaram

a Thanks Great. lot.

Operator

from comes Gabe Cowen. question next Your with Daoud

open. line Your is

Gabriel Daoud

you. Good morning, everyone. and Doug Thank

just just so throughout we a wondering appreciate expect as bit seen we've a should a past. capital all I details could years give of I - the production of if little - if and Just bit you us far. and trajectory sense maybe in I'm was wondering lumpiness XXXX.

Doug Suttles

look Great portfolio single multi-basin we're and Gabe. on doing once Greg question, growth, competes at and it industry. in capital on players. condensate the focus briefly, efficiency, that And we even benchmarks, Yes, by very crude touched efficiency where best with which, way, kind by our you in of if this again, and basin a amongst the as it's capital the our

make smaller X months about front-end to have it's those levels this get assets; X to we've the words, more than in rigs to talked the to we rig load efficient program. our we sure other for in XX. of But past, efficiencies run In for X tend

second So that first in it similar recent more is a the the half year bit to we'll of half, will which than mean the have capital pretty years.

Gabriel Daoud

Got a you've guess, how thoughts general can laid follow-up, against I that look little about bit you framework today? the at capital view it. out? Doug. Thanks, just allocation you then, a inorganic as then opportunities how the on portfolio talk And you And

Doug Suttles

we've we touch got a we I Gabe, it on - think tried very have a portfolio. know, the You to strong call,

approach. has are basin As obviously, time largely think, been long people to can importance as scale. industry single few you the us, recognize that followed of in very We particularly you that know, see a there the sector, the we've left committed multi-basin the for players

got we've runway. long very a But

it. of depth year-over-year with I we happened the think highlighted what reserves and

over over and as times our our to using target highlighted, I actually we think Corey ourselves years we free X.X the next cash couple net debt-to-EBITDA. of incredibly generate, have, focus to executing of move So the is efficiently what about

Gabriel Daoud

Thanks, it. Doug. Got

Operator

next comes Greg Markets. Your Pardy question from Capital RBC with

Greg Pardy

there the Thanks, that's now update wet good you've morning. in just something been of Anadarko, Is the implementation sand on? any on working

Gregory Givens

competitive We've Yes, really talked our portfolio the cost only We're thanks question, the continuing and your highlights our make been rest which across the that day industry. driving but basin, results some progress. to we of of Greg. continuing work down to to not about that operations it optimizing the rest of for in portfolio, continuing in Anadarko our are all see at good of in with,

Greg Pardy

kind sounded of Yes, like that's it a okay. but like non-answer,

Doug Suttles

wet cool do because you sand. idea, know, spend location, our Greg, of Anadarko supplier, highlighted day kind I idea sand areas I'd the cost a a of delivered and in mix Otherwise, to, - of the the not sand that, add, sand now as to of we out we again. up it even a pound. yes, low as bring the recognize think just a that money. is lot with actually than really And then reduces what's interesting, at it as we supply drying time, water make they it's money over has And Well, the $X.XX course, we're seeing less chain we sustainable. And because and it

And actually was the as and idea. organization this I an between And supply think patented we that we've folks. shared operations chain idea with our you, was hatched our

places pay royalty are thing And want continue in now is the if beyond things Permian doing drive to the and it at Anadarko. do done we've yes, in to So capital we one to people nice efficiency. the looking it's the of other been us get it. But using they it, to

Greg Pardy

Okay, in the wells of a start should about at perfect. basis Anadarko? the number terms million. four $X.X that D&C thinking you in the we now Is million mentioned $X.X more? have Do go-forward And on pacesetter you

Doug Suttles

to $X.X the And going through more But move either, But not million. that that, from for target to be to million below buy else. I to that, in going for Greg, another now as literally and because well, well the team. say the year, see to but ready similar I we're average it's beer to that of our - that continue be should the course exciting everywhere the in I to $X.X taken set get I'm point. we've there's quite going I months, his best you're that's believe actually go potential not think it's there well average not we very also you help Greg to XX pacesetter think to costs go a

Greg Pardy

last me market whether broad this you've in know I around mode. be to that, And that on talk Could don't one you appraisal just but appraisal move some - activities Uinta. I terrific. then that portfolio? is maybe comment for Okay, out about reasonable whether of expect what some are it A&D, would at the maybe like we comments just the been you the could typically And know to the point could [ph] thaw whether beginning is and maybe around to year?

Doug Suttles

actually, back And Greg. ties kind question. yes, of Gabe's this to Well,

appraising we've in wells this an Uinta X-well will these perform how got program which is year, So the mode. and development testing in

strong - well it's on been of wells very you actually a over cube play, individual upwards we're Because there of an a some barrels the actually, drilled, So basis, X,XXX oil day. follow today. doing there's if

now. a disciplined and is, oil elsewhere; question ultimately The program. we've you The It's actually, production. we're focused sustain sits play good like is you this places isn't it's returns Because generate where This develop the very even portfolio. in to environment it performance STACK But results the about that that about a grow believe, role. a the determine we news trying will this like like competitive in Permian. will very is done appraisal, in And as actually can cube?

have then But wells XQ, the like. see by those if did sustained look probably online their results, it, about the we we'll then what performance think time San late to in to what those you Juan, as we similar get

is time out. So that still some decision

Greg Pardy

very terrific. Okay, much. Thanks

Operator

Silverstein Research. question Wolfe Your next with comes from Josh

open. Your line is

Joshua Silverstein

in have going you X% now, to of X% just guys. morning, the plenty few they things the the I on, of notes on and producers seen a sheet. getting and debt X% balance range, the in rates X% A guys of range. Good to refinancing right investment-grade had particularly couple questions a are Thanks. you've lot amongst

there some refinancings So lower I to expense the is doing to just that what way? hurdle wanted interest see to your

Corey Code

here. Josh, Corey

mean, obviously, rates. refi I are paying premium. to a happening some and are market, of trading close I Obviously, we're attention prices - to, the at the producers getting in the good So alluded as what's the bond

liquidity for what us, option lots with really a committed I of for and free us. like, to it's we generating So cash, good But that looks to haven't think, watch.

we demonstrating relative better free cash bonds cost having trade there can credit, what the that. of good premium, at to we side keep to is and see our As growth we and But some rates because of those today. upfront a have doing

So that's the kind of trade today.

just that our XXXX. next guess, until maturity isn't I point mid-November I'd out, too,

to decide So we've time some got that.

Joshua Silverstein

then, to spend. think And just standpoint, hold fourth I $X quarter the you maybe guess, from side, a strategic the and in it mentioned liquids debt Thanks. Great. volumes billion would the on still a that, around past be previously I flat,

your peers leverage - get go times don't priority priorities sheet the one why maintenance accelerate that you growth key there so the is balance key Why to the the today, today, where that level below just to to And down go ratio? are so of what's to rate X.X not deleveraging? just just

Doug Suttles

modest growth, flow if generation. incremental free this cash trajectory Josh, I the kind growth know, actually the cash look best you there we at you is the do actually is get to with kind math, of this do from the to of Yes, why and highlighted

you as our think grade a and in You said, we have cash investment there, approach not we confidence but debt, the of get an fastest And actually Corey there. that than to balanced combination to we $X free which faster best in commercial grows generates way given way only there credit is proposed. a cash, business we have flows, the a is paper we rock get billion actually the facility, way get program, have and solid, this going have a it's XXXX

Joshua Silverstein

it. Got guys. Thanks

Operator

question next from with Goldman Brian Your Singer Sachs. comes

is line open. Your

Brian Singer

Thank Good you. morning.

more given Can about on should of talk the the some CapEx a [ph] you expect being to the we bit particularly front-end the trajectory, earlier. of a also would CapEx discussed in a bit pads of you loaded quarterly come some bit, timing little on? trajectory production think when and volatility You cube the oil, how about

Doug Suttles

I the XQ Yes, is through activities And then as decline fourth question growth had you the of Anadarko, you're to because, It's strong good places in don't we a see in down we expect like even year. What the us a volumes. though turned think, a in see XX balance from XQ, in came of the to lot you'll there. because Brian. XQ, production small wells going saw, Even these line. just quarter. I had grow

the So a the XQ really of here the expect XQ in should production program, modest first start-up number. in volumes. show growth a then small in the effects decline and But you the beginning as quarter up in

Brian Singer

the or scope? productivity the with cost further changes efficiency in that see your you and any XXXX about And you what the there you curve? do life you side, cost outlook of Permian is and see in And scope is in well, then is, how the thanks. well as on we some expect see Basin. we the regards expect would in the productivity cost of same And efficiencies to do or follow-up Great, talk the type through what cost which reductions for what Can the should from my Permian?

Doug Suttles

Yes.

have results gains sight than we from predicted. go today, I 'XX gains, continue further But even look, we driven we greater that 'XX. of Greg capital as but cost stronger working And mentioned and as Greg highlighted, efficiency off stronger and stronger as constantly capital we've had Most kind from we efficiency cost, in will to to had places think of County, actually to get you when like we're on is that. show Howard we line of that improvements. show well continued

We're this I discussed spud by long and seeing still the mean, companies, not the industry we short basin, if reduction. And it, the in that actually with have the way. way, we've big drives a a drilling you look at in cost fastest it. TD times

the we I people And think by have day. this pay cycle for much of the in shorter we is thing times. industry, one missed what of that for the value pay

So actually the first completed, it you you the production, total the leave less till turn the get on takes and lower from show time project days time on to location cost. you up

still learnings greater means You driving it's is driven you and by the faster, can way, really going programs deflation driven we and continuing. lot constantly them it. optimize that forward. by also a off. greater And tune Service which get what's not your But is really cost execution see

Brian Singer

you. Thank Great.

Operator

comes from Neal with Dingmann next Your question SunTrust.

Neal Dingmann

Doug, all. is specifically. first operations, my question on morning, financial priorities, Good

You healthy flow. all to free cash continue generate

how So on change incremental shareholder any stock - other place? in or Permian either either just repayment, just general return versus of to or debt prioritize really wondering, any thoughts growth,

Doug Suttles

Yes. at on And is our want we're clear get leverage do this think target we times. to to of mid-cycle today, I that pretty prices X.X

the cash focusing market for we'll right We've that having to free while flex to and cash single-digit zone. is where to the we're talking a that's point. there actually been by we that growth. So get is condensate about today, and somewhere to get see the free have in sheet. But that modest actually crude conditions. obviously growth use number the the mid- upper respond almost around to to We range priority But and today, is balance ability of complete a

Neal Dingmann

just And makes sense. one. then That one last

level depth plan you. comfortable Permian sort specifically, the now of could speak to on the more today - with depths Secondly, based your about Thank and inventory, thoughts your you operations? of your the

Doug Suttles

strong of that's Last And No, had we year. question. things. year, couple a a great a very Yes.

acreage and of but I portfolio, across in and we premium A the swaps the develop we drilled what and think wouldn't doing we by swaps criteria our it wouldn't lot XX% taking across it trades, across probably with just meet was trades because of replaced, that it's the company. by company. the Permian,

we I think replaced drilled. the XX% we of wells

So a the we spending inventory without dollar, we of drilled. replaced single XX%

up-spacing to look why of in any Permian, the consistently this And how way make when at challenged - we sense. we've challenged is this manage development develop is the idea we right doesn't

we approach, for we've problem we secured do, fundamentally it down But inventory you're call you're Now not less a that it inventory obviously haven't road. is, a people cube, than have tightly. you've and your it following means done going too that, Because been what developed does forward. acres approaching, others on call we've proven other if it if the co-development, more we consistently creating and

for a we've we'll grow feel the rates acreage the similar what Permian today. have quite long comfortable I to to continue time, that, So with seen we

Neal Dingmann

Thanks so for details. much,

Operator

with Your Campbell Brothers. Tuohy next question from comes Jeffrey

is line open. Your

Jeffrey Campbell

to liquids wanted on Congratulations are growth XX. on kind bit, guidance I a natural the little Slide just portfolio and this mix? the XX, being was you've quarter. Doug, within Maybe shows of this decline but prioritized ask I there this. touched the are just Slide create On wondering, gas. modest in specific that XXXX production areas to a any

Doug Suttles

it model just business, well, No, the business Yes. condensate growth. and an the it's literally is What - plan is when gas crude we we're targeting is interesting, outcome. efficient and

what grow And putting production, actually the the capital down but to that ability when the talked regimes. is flat today. about really efficiency like or differences of the the is it's fact in is across about So different capital - liquids result recognizing it's the just of where we've the that it, certain - you see things royalties essentially we're is

why, of in the wells or Montney high-quality reasons less even low-cost royalty these mean, produce liquids have though, a other lower but per one and areas, condensate incredibly I very obviously, operating well are have and they basically low costs. actually per less much rate the we well it's than

that So point. that's how they get to

same the By the and by. outcome crude driven way, NGLs, plan are efficiently NGLs grow thing. to it's the an they're target condensate. what that's don't of So We

Jeffrey Campbell

was On lateral the compare I Okay. STACK pacesetter you. lengthwise? wells just average Slide days? these how Thank do the And the what's length wondering, in XX,

Doug Suttles

That's about feet. these been on essentially the XX,XXX-foot a that's it's But quoting. all cost we're what XX,XXX-foot numbers, a we lateral. we When talk averaging on X,XXX, X,XXX target. lateral there, it's out we've And what that's

Jeffrey Campbell

Okay. one And I sneak if one. could last

wondering the has if else effort Going transportation appraisal I'm to just something understanding historically muster. was Uinta, had tackle passes back to the our that's that the if issues. area some

Doug Suttles

question. it's really insightful Jeff, Yes, a

refiners, out to this sits, price actually you If a it slate that will is But comes the you valuable of North you of crude go because of the they probably that because don't where it. America tell that. reflects get product talk in most

the product? Renee doing of actually that and get also asset, as of how about think about, her appraising do are So value work we we true that team lot a

And what thinking prepared of But by price to that. about it crude we're working barrel there. a out could that hard, about talk received point, at on the about there this we're not thinking than we're that, we think because add the more $XX

the than also considerably subsurface we get to think better crude. appraisal, about price to but clearly, something has we when want for that work, today's So

Jeffrey Campbell

when more we'll about it. to Well ready to hearing discuss that Thank you. Okay. forward look you're

Operator

with question comes Richard Securities. last Tullis from Your One Capital

Your line is open.

Richard Tullis

everyone. morning, Good Thanks.

that's Just reserves in really your much two areas. your so acreage; questions locations recent position I quick your core the to inventory healthy based remaining But points review, Eagle for Eagle Doug, a year-end than returns smaller realize Ford Ford? analysis on what's our

Doug Suttles

great the went in that we what you'd our remaining to And analysis time. you by producing may and today and over analysis, would looked no producing Ford drill. question. what we of be thought and Eagle - back mid-XXXX, a half entered that's locations today, do Yes, went remember, left asset Recently, back it's that we we of would and have at

what twice producing we it forecast be. it's would today, So

in And best comes at wells there still say we the are there Ford. it's the course, and to XXX of time, XXX of about drill, a that - from Eagle lot to wells said the of And we about part drill. were

chipping but very other on is and some away a of lot recently. few industry, can called the what's challenges We has You results technical a we're we've now today, been strong our had people we've that at that, as acreage see seen the Graben. early, in focused some clearly

at decline available asset we the continues and as for receive have America. you product products very that asset it's across scale all also, prices good got think know, similar and or because flow when small mix, margins It's cash it you very in high North great lot So to can forward. that going got free of look a what's generate relative to

Richard Tullis

XXXX Thank day housekeeping, the plus you. a XXX,XXX item, guide to oil last XXX,XXX in what's That's And of component the condensate? oil helpful. the

Doug Suttles

It's roughly XX%.

Richard Tullis

Thank me. all Alright, you. for Okay. that’s

Operator

At session, to Mr. over call Campbell. the completed and this question-and-answer have the back turn now we time, we'll

Steve Campbell

our operator, sincerely thank We Have you on everyone, to this Thanks, your soon. and the very in you, company a and dialing road morning. in seeing investment good look for forward appreciate day.

Operator

This concludes today's conference call.

You may disconnect. now

Ovintiv (OVV) 21 Feb 202019 Q4 Earnings call transcript