SBOW - Earnings call transcript Q2 2018

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Operator

Good morning. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to the SilverBow Resources Second Quarter 2018 Earnings Conference. [Operator Instructions]. Thank you. begin may you Brown, your conference. Matt

Matthew Brown

Bella, much for you, and good very you Thank everyone. joining morning, Thank us.

Gleeson CFO. Joining me presentation refer Steve and to CEO; Sean onto Woolverton, Riet, on the we call Adam, today our website, our will updated posted an We are and our Van corporate GAAP our occasionally it Please non-GAAP may closest we to certain in note financial to call, which measure make I reconciled investors encourage press so this earnings that during to it. are measures, release. review the references their COO;

today SEC, over Our fully risks more subject which are to our on which call and uncertainties, with include are discussion risks of the described are in will also I'll Sean. are available our forward-looking statements, many turn And These the uncertainties website. to documents which beyond on that, control. our with and file

Sean Woolverton

Thank this you, everyone, our joining Matt, thank and morning. for call you,

we saying guidance a cubic the reflects in our quarter, of per by in half XXX what second million giving cost, that feet the with aspects. start came first at we essentially indicated us all me production, below day, our and on expenses. Let and operating first in in optimize on flat On call. guidance, line in which our to our quarter down efforts we portfolio equivalent year delivered we came On drive

this delivered average. we X a feet half XXX year net first is increasing per details. go one was On in half will the X home over the million producing the XX% scale of I wells, about of first have cubic half. in the wells. July significant of setting the that the the the whereas fact more things the really for second of alone, side, into we a us And ramp increase August brought we the that entered drives of online year, think production the month equivalent net point CapEx in half first day, and our But up Steve

half number seeing are a we to successes driving second our the As program pivot in growth, that this ramp. capital we're of

were we're pay Fasken, program quarter have proppant strong from the taking drilled of are of wells Bcf Upper above an a we midstream results the pounds foot. average XX a X capacity, Ford their million over on wells Eagle day first advantage there, completed we field as produced X,XXX are basis, XXX seeing where tracking gross type of curve. in in First, with lateral from our seeing per These available performance and stacked positive

on quarter, more to have get we area great stimulation is acquired Fasken and Given We've also those on acreage these doubt the to report more No Ford an the this in next ways design wells results, we in first begun we of We'll a property. larger asset, to XXXX. find on call. continue of the more out even quarter's wells completed core the wells in of second X,XXX utilizing Eagle some X pounds. Upper drilling even the

acreage, wells Oak LaSalle testing July. Second, from spans block, acres in two our Oro our our progress significant Ford Live resource brought block in our large in continued In Eagle Grande that County. XX,XXX and consists we on Mas and Southern in make approximately on to our now we base Southern Uno block AWP delineating to

producer in and XH the this online day Grande, XX cumulative of the is for At XX At oil. on million production XX type new Ford, a they're well Eagle a of of still of in in of the equivalent, is producing On X barrels their strong that those curves. the XXX early million a has X While barrels and for Bcf. of of Oro basin. consisting average, it's the NMC gas X day each area a well level, XH wells, been over our gas, has life a above result year first top NGLs

wells further or of to range have of tested X, a and are performing we type to These this designs. wells XX% X and area. in around such, stim test As curves, their X at and learn XX% continue stimulation designs

second At X drilling We we our not slick under drilled by this are by for our come designs currently the their their times only improved first side, in X.X well. Uno water AFEs will also and the and drilling learnings, days applying wells be from wells, the wells X and and testing are time. in area did reducing first they third on these drill we Mas,

we now, and late results We growth. online wells these see We for these are second August. catalysts be in half as will bringing them completing all

our of Ford, We are bringing day activity first a quarter. XX% more on Fasken the increased Eagle third on, coming which quarter in feet midpoint, are XX cubic at Southern over Artesia, activity guiding XXX for million further targeting million With over the third production our XXX we extensions adds liquids in delineation and -- wells our up in half. the net

of the second half point no pivot year the doubt The for company. a will be

have forecasting. We track ramp are to the we on deliver production been that

optimize quarters. cost for with we Steve. the see coming reductions, were bottom well that, We hand top structure the Taking EBITDA our it company to the And account to the generating our cost over with performance. line continue I'll over we line bring strong growth down into and growth

Steven Adam

Thank you, Sean.

Ford Fasken, our projects the base all production quarter. assets. results successful optimization Grande Upper Oro at Moving for and on wells to across driven strong continued was Production X by Eagle of operational performance wells

for of operating to processes we cost, for our costs, and are our optimize unit As procedures and evaluate all procurement and functions. continuing

which retaining increasing overall and fracture oil as alternative allow while have For service example, costs are us some to cost inflation to due Admittedly, white, we improving evaluating we decrease should prices. testing sand an to stimulation and Northern conductivities. regional seen

LOE and with compared our to year associated to the pressure continue operating we increased with operating related efficiencies we quarter Verifiably, ago. a power impact was on for activity. this line and improved already per seeing to $X.XX Mcfe expenses. offset However, upward $X.XX are purchasing bottom lease prices our vendor

our expect XXXX unit of to due basis in operating We back combined on in with continued improvement lease further half our second to expected discipline, cost XXXX production see the -- from a expenses the growth rig.

stimulation total mentioned Upper in in Eagle from in Turning were to most as net pad second that The back Oro X Ford as wells quarter, a wells Grande larger relative of at the to Fasken the X-well and net quarter. completed wells as X the wells we of earlier, first a completed Fasken, well AWP. X recent designs the completed employed

type proppant curves. first of were per The most quarter after are are foot, proppant pounds early wells loadings with had results completed loadings months, wells and X,XXX encouraging. recent X The X,XXX pounds of foot, average and per outperforming

the Ford. Lower to shifting Eagle Now

consistent performance wells to line with see XX continue curves. We with in Bcf type producing

testing X,XXX our continue The We feet and for results X X,XXX of stimulations we in them NMC We to at results the completed look curve. to length, at forward early completed lateral water normalized these pounds flowing water third our sharing X are currently with performing foot, respectively. upsized in our look When these July are X,XXX the They slick wells slick lengths largest wells company feet, the were first Grande quarter back. Oro fracs per and These have history. designs company's are at hybrid completed were which asset. type optimizing completed lateral of call. at on We and fracs. frac Fasken, these and

of We wells completed also and hybrid per being at July. these the both history. foot and frac designs They respectively, our to These to in XX previous brought of increasing sales in cluster completed were wells completed wells. the densities with with XX lengths had with X,XXX pounds of lateral assets the feet latter relative Bracken stage and lateral company feet, and X,XXX second-longest X,XXX AWP

mentioned earlier, wells Sean performing type As are curve. well above these

continue volumes, rock. designs team on The up And water and sand portfolio. exciting designs to an gearing our SilverBow optimize effectively slick We treat is spacings quarter. test to and across tighter fluid wellbore focus near third stage further that stimulation for larger

We With the to wells during Gleeson. expect it to over wells XX X the third to quarter. turn in sale I'll net to bring second that, quarter, compared

Gerald Gleeson

Thanks, Steve.

As quarter. approximately per million equivalent XXX which gas feet the averaged quarter from for day, mentioned, of first cubic decrease the represents production a slight

rig. quarter third the cubic feet wells our into for completed production to XXX as XXXX, from out we're delivering increase to second XXX to of day we start Looking guiding equivalent million million per

representing was revenue natural million, production and $XX.X quarter gas of revenues. of XX% XX% with Second our

and NGLs. was realized for for During pricing of of WTI of XXX% the XXX% XX% natural NYMEX gas, quarter, oil, WTI for NYMEX NYMEX our

NGL are the realizations realizations have prices oil for rallied, While quarter. NGL XX% XX% lagged, now we guiding have to third so recently for

approximately loss hedging quarter for Our contracts the settled was million. on $X.X

be for the to our with hedged active now has balance based midpoint XXXX hedging and on the production of approximately We guidance. of of our program our continue XX%

we've addition, also exposures manage oil to gas natural to basis help used In our swaps basis differentials. and

hedges a gas balance of average million cubic day we per of XX% basis guidance. midpoint have XXXX, the weighted represents $X.XX, gas negative of XXX the For our of of at feet differential which approximately

hedging have For per slightly million day. our cubic we basis to increased XXXX, XXX feet

operating cost. compared down of was QX Mcfe $X.XX Lease Turning expense to to XXXX. per XX%

X AWP this of LOE clean closed quarter year. which our reminder, for Olmos a our is of As accounting first March this after divestiture,

of expense to $X.XX For Mcfe. the we're third LOE per $X.XX expecting quarter,

favorably We LOE $XX.X $X.XX quarter focus In and compares the $X.XX due a interest quarter our on Mcfe, the per resulted a for expect were slight our T&P cost year. expense continued peers. $X.X credit million facility. adjusted back improvement in strong Adding in on levels per and total, the half a together, to up production the in continued unit increased increase basis our EBITDA processing the cost OpEx we first of step compared in have we to was production borrowings believe LOE in Mcfe. we total as of which our quarter, Cash of and per second million quarter. to Transportation

$XX the expenditures. to on million spent We CapEx in Turning quarter. capital approximately

sale Sean capital the our wells month net the production year during X of of entire full As mentioned, to guidance net for alone wells We July have X prior we and reiterated to second XXXX. the brought compared quarter. in expenditures

guidance provided XXXX presentation, quarter our for expectations. in it latest our to please we've corporate refer third Additionally, so

$XXX million. was of June Our approximately as XX liquidity

cash our fully capital with we the over expect and the comments. wrap with prepared had fund all program quarter, it to end and facility. with credit We on our borrowings headroom. our I'll compliance in from operations up And were covenants our turn full to that, second to Sean financial At of generated XXXX significant

Sean Woolverton

Gleeson. Thanks,

really our Fasken summarize, of potential stacked cost to the our highlights quarter asset. So pay second the and structure

significant are We of 'XX back with positioned momentum into our the significantly. half operations completion heading as accelerate

by production by rate grow wells to low is goal maximizing and our with returns beyond, operating our and attractive growing leveraging margins XXXX about think our we As of cost.

efficiencies We continue cost driving with operating operational on to structure. competitive and focus a

a and team, a of that high liquidity developed rates and to continuously attractive a profitable set. with robust the years. a for locations over working balance of point, back this opportunity have And deliver it sheet growth substantial strong Q&A number operating that portion we We inventory at clean turn with has operator ventured coming to the well-positioned of are the Along drilling return, we're call. I'll strong this the for grade

Operator

[Operator Instructions].

question first Northland from from Jeff Capital of Grampp comes line Management. Your the

Jeffrey Grampp

can slick the it comments of you water conclusion that, a prepared guys to asset was curious, base as I headed can kind you of And the kind like where and is to make guys the across Definitely higher that fair times a well? kind I operational are of the your of helpful. cost you That the was on proppant? proppant. what cycle change appreciate then maybe how across in slick seems are to sounds that tests and sense be doing fair higher of are see, if wanted a water, it give all give-and-takes amount assets, with us remarks. -- potentially

Steven Adam

waters slick This to see The a terms the of our that we trend and both is yes. is question. answer We as Steve. moving assets. Jeff. for Thank as more you delineate continue develop and Yes, more in

And of seeing water of also, times, trade-offs more impact a we're pump off those trade-off for propositions all reeling more relates we're bigger and bit bit terms of In more it we as it relates backs, stage. there optimization different jobs cost, cases, terms pulling it time are is, longer working to these now. as And wells. little little as longer flow time the In as relates per go a in to costs time cycle through across and some in the only cycle for to a as there's cases, off assets. the other cycle

Jeffrey Grampp

of we least, data kind heck then you'll another across X about really Okay, in more follow-up, your for some at probably I my assets, helpful. months, quarter, various of garner may 'XX areas a any But Or than And got various outlook understand of look great. into of early as capital given and kind still That's of we think that more we delineation your a these indications the largely know year-over-year about lot for of areas? of kind project areas do that today. we certain year should for 'XX? as

Sean Woolverton

are of encouraging. is think would to that to we're getting results starting the seeing just think areas this This still I I the year. XXXX we're all point, Yes, budget say Sean. Jeff. time we're about the that across the At

capital And a this is you reallocating really probably to use So allocation we good that or the year. the that next repositioning we allocation yet. quite have tell still in modeling thought haven't we'd about year

Operator

of question from the Your Mills next comes SunTrust. line from Ron

Duncan McIntosh

Dun at Johnson for on is This Rice. MacIntosh Ron

Just of sounds had started you've a over well. like kind seeing a there what to you're on expand the kind you've curve water about uplift shift couple seen Fasken. relative to in Upper the do design. with completion slick relative that? of Or as Eagle some completions to that It Ford questions Wondering bit little type uplift of at

Steven Adam

develop in the number an we curve have that type and Ford property the with there. we're a seeing we're to upside are good that through that see On to the know, that upsides area seeing It's we're as -- presented. those relationship, at But curves wells from Upper Eagle type curves looking place. we of still you And we that Fasken, to quality other seeing match also are and we've early, a to as properties similar. type a continue

Sean Woolverton

a a February mechanical XX% terms year, those of pounds been of job there. online excited That Upper to about above tightened foot. X.X And were We bit we're up the that. a in production, back little hybrids that type brought to add done always What they're Eagle Upper with Ford, now spacing, close little on Slick that months we per very we've wells bit those I'd Looks Yes. earlier well's the in the in X X,XXX water, encouraging. performing for more couple weeks. of slick water Ford about diversion have curve. the wells on did stage wells. Eagle

this to sand in, of going brought concepts we're round So next fracs. -- what we to did up the and switch on wells water scaled those then is slick

So think and seen earlier there. from have from with the we're results in the I upside we've we year excited

Duncan McIntosh

at anything been looking like any room on And over done Ford? just what terms then great. Fasken. that's Fasken? you of Ford, the that differently in Okay, the Lower Wondering And running of also Eagle Eagle in and kind completion at test Lower or you've have there doing,

Steven Adam

as The inventory. drilled know, a up that you Lower Eagle we Ford lot at of Fasken,

spots have and things crowding be we where lines and spots, that. going that. to some and these tested We've and we're less where we have ahead select interference However, gone know like select of against up we there's lease

quarter. it's And so can and we able to tested that in in very designs recently you have and the the maybe of larger of we'll third have some slick best But in likely to the announce our wells we've we with currently area. share one just be water that one place, be that I favorable

Operator

Instructions]. [Operator

Neal comes question the from Dingmann from of Your SunTrust. next line

Neal Dingmann

portfolio. where out first question, of XX, looking your kind you at you're laid if Sean, my Slide

upside of you For is there to on you're try you there, or I'm that? wanting on how see? do -- a much -- conservative drilling locations get and your how just sense thoughts Steve, you being think

Sean Woolverton

Yes.

there been of slide see think acreage out the you and to really, in then already. where Western about of Webb where year. upside breakdown able acreage we this in have can -- On core Eagle Western year And from we've we've we've a area, some asset, terms Artesia lay added is kind the acreage our inventory, there Fasken, been add we County -- our that captured Ford it the and

we is in bit of on look has So -- A little Ford adding over on to room acreage. areas and both of been continue all to of Southern Eagle a bolt lot inventory running area. those there -- the gas

And I most single conservative thickest, XXX now, the between on That's XXX all rock of been a and zone. think is basin. some Ford in the being with inventory modeled we've the -- Eagle spacing, of in inventory, our of our there. that we've those part right wells richest really,

we'll So in some that there. some in spacing as have demonstrate stacked to thinking lateral year, the tests about well probably, maybe of overall as our the to position start area next, upside test

Neal Dingmann

or sort sort And external lastly then as currency, shares about your growth factors? you financial Got of I'm guys today, think of as Sean. it. sit for you how or When just Gleeson, wondering, just about those both you you think given do position, internal your

Gerald Gleeson

Neal, it's Gleeson.

Sorry.

So the financing or Is think the that lease how acquisition, whether question? about question we is it's them?

Neal Dingmann

right. do inventory All that Exactly that the -- Or packs already today based last of need question, kind together, of to my have. size Gleeson. on you that given

Gerald Gleeson

Yes.

a question, think we So Yes, good is we're I to I the coming with kind to almost lot in good in. but have of $XXX frac We dedicated of our a spread all existing activity we've going -- a think efficiencies assets. and enough got that. into a getting second running have Leverage, the lot place of of million quarter shape. a there's room rig, in the which ending couple back, think be of math think, is liquidity,

do That or we right do lease cycle very some price can scale, about So a the we the acreage got the opportunities, right if returns-focused the and at right buy full as get lot can also when on synergies said, returns economies with we're think -- of acreage. there's benefit acreage, to the to And it get we've of right basin. we within of kind existing that. we bigger whether

are, a I a we pretty have things. that So from where think we BDF looks active lot

we were last good we've analyzing think saw. things year, a you at leased pretty as as I lot

there's as think actually that cost our lower more So I of to increase us attractive business. scale will our returns opportunities help scale even deliver kind at we under get for

Operator

time. no this are There Please at questions Instructions]. [Operator further continue.

Sean Woolverton

there's If we'll us to call. conclude and again thank morning, I questions, our no further everyone joining this for want

Operator

Thank call. concludes participating. This you for today's conference

You may now disconnect.

SilverBow Resources (SBOW) 8 Aug 182018 Q2 Earnings call transcript