SBOW - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Laura, and I will be your conference operator today. At this time, I would like to welcome everyone to the SilverBow Resources First Quarter 2019 Earnings Conference Call. [Operator Instructions]. Thank you. to call like to now would turn over the Mr. I Magids. Jeff go Sir, please ahead.

Jeff Magids

and Thank conference morning, for you, good Thank Laura, everyone. for first joining our you quarter XXXX call. us much very

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

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

Sean Woolverton

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

the are for another to report strong quarter pleased We company.

financial operational Our consistent fronts. demonstrate ability and our on execute to results multiple

we and our presentation, are We've on all made described key quarter, we last our this corporate and portfolio XXXX discussed aspects generation, delivered free our objectives balance in for corporate flow sheet guidance. strength. on our cash of efficiency, As and call expansion great our progress

of today, how performing. proud organization I'm stands very As it our is

Let few me highlights. with share a you just

per implies XX% the as holding XXX we range upon XXX are our which midpoint. it full cash a MMcfe production off, relates of flow, based First year to growth free to day,

remain year increase and recently wells well. guidance, quarter online growth as deliver double-digit full With to production track the the in on second EBITDA new brought we

EBITDA Mcfe, came key increase. On compared EBITDA higher million $X.XX differentiator for in gas-producing adjusted basis, our than per the compared when a increase to per of $XX.X a the we XXXX. a At adjusted us, continues a year of our to peers. is ago. first represents quarter XX% quarter, unit first For our to XX% This

budget we our $XXX Finally, holding of million. year $XXX to range full million are capital

We our year. program decrease year in and the result completing second of of a a as second see to the half expect moving quarterly wells in drilled uncompleted of our spend last from to X-rig quarter but inventory

percentage corporate to move to the our structure we On expenses making the in the production lease XX% a in favorably compared processing year a compared guidance We on and unit on side, continue on evidenced one our as ago. lower totaled $X.XX decline basin. of cost G&A, basis to transportation per and as us efficiency in, by operating a per taxes cash most competitive costs of Mcfe expenses, a revenue. operating All including producers

of XXX% in initiatives utilization the pumped. Our and stages included of optimization regional sand, mud more programs quarter getting

added to drill also acreage bolt-on We longer laterals.

drive more lateral These X we our drilled our the great efforts to are efficiency McMullen having in SilverBow's into representing all examples Finally, to laterals longest area both exceeding lengths wells XX,XXX with date. Oil feet, of operations. wells

to expansion. Turning portfolio

and see the within footprint transactions of commodity active are and flow geographic sizes, continue to We various deal basin. currently mix evaluating

valuations. to activity best timing the the continue acreage an believe are acquire by we of us effort, cycle attractive to mindset. a opportunities next full level acquisition, be encouraged our for assets From predict will pick quality cannot we return we current there favorable leasing While and with at

opportunistic are predicated small transactions recent on nature. in Our activity that is

NGL both flow. XX% growth overall the oil liquids toward we day move strong production we focused with low-cost on of and production Ford drilling on compared a cash We to balanced acreage As remain Eagle first more core in mix, reported per quarter our a sustain percentage increasing XXXX, X,XXX as portfolio. increasing testament barrels per day, production X,XXX to liquids to our of to of the overall of relentless is first our team's quarter net pursuit barrels our liquids a which from rate

Our in third provide increase EBITDA take will price our us which production goal with flexibility the have comprised our swings. adjusted liquids overall quarter, of XX% is of to advantage commodity and to

Finally, strong on from support we our standpoint, commodity returns remain continue protect multi-year Eagle to development hedges a plan, Ford. about our sheet as pricing dictate. to balance prices the layering we in from benefit basis To disciplined

$XXX million. We also reaffirmed our borrowing recently at base

will will over as I Our navigate focal continue metrics a And for point the with cash balance XXXX flow. we to be Steve. look call to generate free sheet and us hand and that, debt to

Steven Adam

Sean. you, Thank

on Moving to our operational results.

of MMcfe program. guidance, decrease in compared production due day The in growth production representing ago. to the nearly quarter midpoint from XXX above our completion previously XX% quarter year was fourth delays a the XXXX starting the came to per guided the First of

than results of quarter, These range. and For as of first in our we the portfolio overall the increase higher oil NGL guidance our we production, strong further potential, coming the our reported X% and XXXX. with percentage liquids a of oil production during midpoint oil to which both look validate course

wells we drilled first X in wells, the online. in completed with while a completing we one the wells net XX drilled net the XXXX. County In bringing X being of Webb net gas quarter, X-well Over wells the quarter, and area, pad

XX-day a all savings previous April. drilled pad, design wells the a we delivered wells of area, XXX brought X being which being and more are lateral. X We in of in lateral Ford with year of record feet, SilverBow sub-XX-day the X,XXX-foot in came averaging over first is wells in These LaSalle completed March. in and early utilized the Across BOE with further thus These strategically well X-string XX,XXX having performance IPs wells X techniques. results area, infill generation line in combined, for X-well drill the wells proppant X to significant portfolio, designs the all-in a early a with fourth last area, those days area. this we XX,XXX in a representing million drilled X,XXX have times, we Each In initial quarter. been head an X These drilled X over the results development life in length the liquids-rich casing the per exceeded In brought area, per early brought and our additional first averaged feet. second We deploying capital, being new per and of Condensate well's Oil X BOE of online lateral X-well early have costs completion our is X,XXX Based utilize quarter gas employ in where operations far intensity wells hybrid McMullen the In wells to X these support majority we both quarter. pad completed barrels day. expectations. wells Eagle legacy for wells, fit-for-purpose in with with completion online drilled late expected acreage. completed We our of production each, of quarter. lateral. it the rates continue XX fluid-per-foot wells enthusiasm day a the pounds have While team on online of on shown we customized online Southern $X.X

fluid them of continue according or reservoir We and of class system designs, the to completion parent infill. modifying assess to well, performance our

day, times or brought as cycle pumping able We March, into jobs were represents the Furthermore, reduce to just also increase XXX to frac X quarter. continue stages days in per a X to and in spreads prior over demonstrated we which XX compared operations under which by drive accelerate stages production. our efficiencies similar XX% early thereby on

on second rigs over $XXX As McMullen capital budget first such, budget, to of Specific see La to in Salle the to first reiterating of we rig quarter to production This million quarter recently stepped range rig quarter We $XXX ran year. are results. most for the expect million. drilling will we the an for the liquids-rich areas our of in of X counties. have XXXX the X increase and super-spec remainder and down focus our

XX in of expect our liquids-rich half a to a technology second the pad drilling. year the forward net the to to the drill the XX proven the recap, activity and to first XX of look of in with the of quarter To complete We to nature completions wells marked We and majority occurring net wells to XX given return our portfolio. quarter. window first shift

along expect production see significant overall turn with results. We liquids-weighted With it increase that, I'll more in to a to Gleeson. over

Gerald Gleeson

comments and capital morning, Thanks, as costs, I Steve. this financial will In well program quarter hedging my our our as results structure. first operating highlight

$XX.X revenue. quarter production XX% million natural with of and of XX% was revenue representing gas First

XX% XXX% Hub realized our quarter, XXX% NYMEX Henry the NYMEX During pricing of of of NYMEX and WTI for NGLs. WTI, was

increased. have prices quarter natural prices second first of have WTI gasoline, NGL exception levels, the With retreated while from quarter

quarter. our guiding for now we're XX% realization be second result, price a the WTI to As NGL of

for Our million. the quarter hedging approximately production gain on $X was contract covering

We active the with total estimated XXXX of our at continue hedged production attractive to for XX% be year midpoint on hedging Based prices. our full guidance, program. is our

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

hedges gas of to per MMcfe flat day XXXX, XXX basis executed we've For NYMEX. priced

gas have on of negative hedges XXX we a $X.XX. per with day basis XXXX, For weighted differential MMcfe average

end to stands of coming the per per first multiple came and were expenses below $X.XX Cash $X.XX for processing the of of compared our our T&P we compared guidance. G&A driven Mcfe, for and costs Transportation XX% of categories. guidance production in of which costs. our quarter XXXX, initiatives. gas by $X.X achieved we expenses to production quarter X.X% taxes Mcfe, out continued for favorably amongst cost-reduction taxes operating lower million $X.XX to Lease low total quarter LOE, revenue, and peers. down gas-producing the Mcfe, oil of Adding per in first million production across $X.X Turning while were and together, the were believe primarily

we're million. For cash quarter, guiding to G&A million the of $X.X second $X.X for

our per As We including expense in our per first quarter $X.XX to on operations to production improve. track operating In reach our $X continues the Sean $XX.X quarter of XXXX. cash Mcfe efficient in of $X.XX expenses, operating adjusted the totaled per Mcfe, in EBITDA $X.XX At XXXX mentioned, EBITDA liquids of remain million. all-in strong to total, G&A unit adjusted Mcfe. compared resulted and target per cash

the on For expense facility. $X.X borrowings our of quarter, is was million, credit cash increased reflective which interest

XXX to for We're for presentation reiterating guiding our of quarter year XXX guidance. XXX XXX day. to MMcfe guidance Please full guidance. second of production day corporate MMcfe our per per and latest to refer our to Turning

the would We And syndicate million like for at our at at base recently to their million. Turning $XXX of completed outstanding semi-annual where $XXX liquidity the end facility We our revolving position redetermination, to reaffirmed continued our credit banking sheet. was I support. balance our million. $XXX quarter, approximately and our had thank our borrowing was

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

Sean Woolverton

Thanks, Gleeson.

summarize, strong a the to start first company. year So quarter for the for was the

our and opportunities financial continues consistently to execute, our performance strengthen position. ability to our demonstrate competitive Our capitalize that and operational on control costs

reaffirmed a and building room recently asset provides us Our ample expanding and to with running liquidity portfolio base. borrowing balanced continue commodity base our

I structure such, any second our towards that concentrating of and commodity was production portfolio beyond, look about strategy a areas oil portfolio a a commodity quarter that a room one in on our We well quarter first close prices. the quarter challenging portfolio has without returns. market. on are moving As believe product SilverBow, we with growth liquids-weighted is long industry a winning as more positioned doubt first rising the term for think oil saying a the stellar most this to low-cost and by in price well by build to in the will beat environment. and in perform committed in will diversification, we're swings with premium we a We markets. wide that a building for At is type and

the to back we look I'll call. to executing strategy. into operator point, quarter, At portion for this we this our of Q&A turn second the As on the move call continue the

Operator

comes first Mills Rice. our Ron question from Johnson And Instructions]. [Operator of

Ronald Mills

A year quick clearly you're as question, grow. relates quite It's looking targeted to some been it time. a or a -- for to project

kind what of there market if mentioned in even Are and you your fits focused they're stated oily get of whether fairly bit the efforts opportunities terms and what acquisition a focused they seeing to of the play? of due better that with Can You how Just of deals like sense or also types out property more part in corporate-type robust not it's trying the goals as color more liquids, now. little to a a you're -- to provide deals? you are. the right

Gerald Gleeson

the Thanks Gleeson. for it's question. Ron,

at hand you we to are right think it take a basin that, there's And on Eagle But of I you a as kind more the end last which remarked afterwards. with always Ford as a kind seen are. on. of wide me opportunities us very crack started buyers still is to Let for maybe and Sean is activity one, for of of liquids We consolidation. When the M&A we've the of kind acquire of focused of where swings the see know. of in kind lot of year, pause up match kind prices, sellers in sort you which there's expectations kind think

it. given pause, bit we're a behind time now So that seeing of

Pioneer a this earlier that deal. saw you think week, I announced

more thing kick kind but very us, only when of on the of activity think very about we're basin, M&A we're kind kind also for on basin, not to So within focused our we're we things low of cost focused being Nice there. see up. that on starting focused all

So like out competitors our there. BD team. very one dialogues with we every a We've of robust got get

I by at. that transaction look don't that don't So we there's a goes think

lot going ability you significant time. part We've bias for to think the pointed -- because prices spending I now got that this right we've to got a towards from us on operations liquids commodity of out, of and our to great been the we've team inventory, than our as gas with with rig. execute scale where that's that. low-cost The So are window we've where we X more nice is, got more up thing are got just platform, amount

really sets acquisitions it's for I shareholder if on can corporate really value drive enhanced of of returns. think where assets opportunities, this up asset kind the really -- in sets kind us well we or

control at of and wide We do timing we a come deal only deals what So at we is sizes. The corporate thing look and can't variety deals. deals look both asset sale. for the

as I and as Ford I So when But of control. with the Eagle looking that happens, bit the pick in think that. get at we of going little we say kind as But could it. it's it's bets, out quality we're we far win. window, a the in our guess, we're of timing If oily to long win time, eventually deals as should

to you want add So that. Sean, if more to

Sean Woolverton

Yes.

is well. to touched those well Gleeson transact. opportunity do a consolidate put think, transactions. And Ford, our in I We our that to the to Eagle continue will there on we're to within strategy think balance sheet and positioned position accordingly manage at to we ourselves look

Ronald Mills

house are have at? of Okay. of transaction, type do is any are they kind then comfortable what any And Great. kind looking things I limitations? you deals, terms comfort -- size Some size sizable, in level, particular but there you X will are the in transactions your imagine, or of more

Sean Woolverton

Sean. Yes. is Ron, this

not ourselves size. we're it's us, to limiting for -- think specific I any

company is will investor a organization, interest. more greater goal scalable attract create a scalable more that to Our

all of depending fund So gear deals. size the And acquisition. we'll have at we or really we're modify to the that upon would deal, how looking

so the ways managing And wide looking we that. are market, active as to BD also balance sheet the at active of we're in a range in fund and

deals. or up the doing in of advance And to set so funding parallel mechanisms even we're in trying

you goal to to really market specific more we're is going on but not and the I'm in all So deal that create scalability hone any size, size, long-term tell this here. for in our

Ronald Mills

last the one. And then Great.

about La McMullen your wells even liquids-rich on over two? we you you the inventory shifting looks and it's La more from lately. areas, it activity expect on McMullen the to you'd When oil weigh of Salle to Just some inventory? shifted kind little think here county, the activity a McMullen planned bit focus Salle those deeper since think in you like Or area, would should between how

Steven Adam

a X X might perhaps shift an end. very and at at focused want on now, to you, we Gleeson been some Thank able know, of to at start and I'll has drilling is of we've years Ron. confident McMullen. about a small Steve, Sean our porous, kind chime and pace. around been oil in you and area of And oil. to opportunities to replenish capture And heavy been via X-rig and on inventory the Right our in more inventory of We're as also ability see Artesia This our viable the we've actively in seeing to acquisitions.

not further areas, and capture, go only back is also stack in Eagle by the in those by pay Ford Ford. there from in and And not upside even large, some the up to Chalk. Both we knows Lower X well liquid forth, believe, as in existing the development as Upper as also then the who the assets but opportunities. assessing Austin Eagle We top

and we our focus base number like add at opportunities been a ability primarily the And the but our both doing we've work to improving relates over So our through doing added additionally, team operations we production. has to as to portfolio, means, team existing it been in looking that like and our -- opportunities. of refrac that also

Operator

Our Neal Dingmann comes SunTrust. from next question from

Jordan Levy

Levy Jordan actually Neal. It's for

line out. guys rig about don't quick are Just adding dependent? that potentially, speak a a obviously XXXX mode maybe have during and flow more how focusing you just cash free growth thinking a Knowing formal versus guidance Could you tempered to kind back you down question. on of the second commodity

Sean Woolverton

guess, and really you that the returns in I don't I Eagle question. strategy Why a we tell is take Ford. base Sean. -- focused what is I we're have would This this that,

a sheet. years, balance really goal company last capital-efficient And expand job obviously to we the diligently think is our low-cost, a establishing I really organization. while the of done as we've over manage Our great scale, couple our

from the take adding organization we'll dictate really and future rig returns, where we potentially really acquisitions. second shifting those towards returns bit the as capital how our or a of allocation pace we activity. And allocate between that think So we let here, accretive drill determine capital the in about

the allocation how a of flexibility in have capital acquisition. we between bid lot dictate So our the we and

of next to So that's XX XX the kind how we view months.

Jordan Levy

earlier. kind then was Ron going on quick what And follow-up a asking just Great. of

two you current and thinking now, rig right for development the and Salle, potential Just optimal areas that. kind potential as online? with your of positions be the Is expanding the of McMullen between La what I and it about and on guess, kind X the to Salle view La inventory. the The change upside pace McMullen kind of of program that

Sean Woolverton

Yes. Jordan, is a What basin, technical team knows the single appreciate the like ability second Eagle question. have have very knows the efficient regulatory we in to knows operations, about a really that the surface environment. platform, be cost rock, the a Ford

as prices so are about And the returns favorable, think the and commodity driven liquids on by McMullen we in Artesia higher there near-term, side.

about returns ability think what the is to prices we and are liquids the capital the to gas us As what inventory shift upon into depending dictate. what our provides or

on have drilling Artesia-McMullen are So reallocate higher I if that returns well. would start we prices tell a there. probably you dictating right gas area the position focused gas ability now, move we'll inventory as extensively to range, prices great that and But our because up, $X-plus stay we're the back in that and in

Operator

No, Instructions]. And no [Operator are sir. there questions.

Jeff Magids

over I'm turn going Great. to back it to Okay. Sean.

Sean Woolverton

Yes.

I you, nice and to the call look in a you, when up. have company. interest out the don't again, quarter I speaking held call continued appreciate our August, and we second in forward day. to wrap thank why everyone's So We

Operator

conference call. This concludes today's

You may disconnect. now

Jeff Magids	Senior Manager, Finance & IR
Sean Woolverton	CEO & Director
Steven Adam	EVP & COO
Gerald Gleeson	EVP & CFO
Ronald Mills	Johnson Rice & Company
Jordan Levy	SunTrust Robinson Humphrey

SilverBow Resources (SBOW) 10 May 192019 Q1 Earnings call transcript