SBOW - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the SilverBow Resources Third Quarter Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Magids. conference like speaker to now Jeff today, would hand over the your I you. Thank go Please ahead.

Jeff Magids

during Riet, to Adam, our occasionally third call. Thank will website Thank Van We today for our you this Kristi. are We very a XXXX you, investors our And it CEO; much encourage joining good Sean Woolverton, us Steve the me call. our on it. With morning, our COO; and new everyone. quarter posted call conference review and refer CFO. Gleeson corporate onto to presentation for

Please certain to note which earnings that their we financial reconciled may release. make the references are in press non-GAAP to closest measure GAAP measures,

are statements, are with risks include discussion These available risks more beyond and will uncertainties Our SilverBow’s are which which in SEC, subject on file our which on today the our documents website. described control. and forward-looking also to are fully the of uncertainties, many

to that, I’ll with And turn call over Sean. the

Sean Woolverton

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

along continued key plan, results, XXXX quarter third you I'm with our quarter, on efficiency our Yesterday, today. gas free catalysts which released along liquids demonstrates excited our our flow. as that portfolio budget, execution with preliminary positive a balanced with a our of focus oil business inventory between cash of growing stated expanding number a operational roadmap and we increasing to to production, Last we and share

revenue liquids strategy contribution XX% year revenue. execution volumes high has and ago. increased XX% grew on production oil of also XX/XX in gas. comprised of third considering of the date and above to liquids volumes between the overall were quarter, Oil Impressive, mix NGL of exceeded production quarter, our over X/X results comprised our XX% of only guidance. end For our second liquids and a a our guidance. strong growth XX% the our revenue and The

our below line per guidance. we unit again or For cost delivered operating expenses, in

drove of Our operating second growth to million, EBITDA adjusted X% liquids $X.XX expenses, G&A, quarter. on higher the and Mcfe. declined further per $XX including cash The cost in beat than

by of third taxes and Additionally, million flow see expense, our capital for free $X that interest expenditures, will generated cash less we approximately the EBITDA taking you quarter. cash adjusted

more we Throughout has we oil high opportunity prices, the attacking have inventory every very position year, large the in those our County. locations discussed or return cost. and disclosed how place, small Yesterday, expand scale. transaction are at doubled significant entry our in to new This are than oil whether attractive at we prospect a net XX,XXX Dimmit acre inventory in favorable

encouraging complete We have are the block, seeing and already drilled and results. in wells two

Steve delineation, in approach are phase measured plans provide on capital. plan maximize we our optimizing our We will to return a the on developments to color towards more his in future remarks. and early of take

Our strategy has entry and attractive inventory budget successful, to land this approach. annexed leasing of we prices at flexibility been identifying our retain return game continue in ground high very

top-tier a capital for continue SilverBow's From production metrics, as and bit-adjusted highlighted can cost and efficiency operating platform expansion. peer-leading position of view opportunities Our by external ratio simple: building we such structure recycle assess market ROIC, is there, best-in-class growth.

our against to listeners encourage latest presentation see SilverBow up review well how corporate I competition. to stacks our

free Moving one-rig cash a our on program, generation. continue budget, development to our with preliminary to is plan XXXX flow targets which

by over compared capital increase and XX% XX% We spending XXXX. approximately to reduce by production expect oil to when

return opportunistically balance Our focus inventory and our remains on high enhancing expanding sheet position, portfolio. liquidity our and

either modest price and increase commodity. $XX.XX gas at planning only conservative of returns the for $X.XX quickly means accelerate with Our for our could in oil program a

for to the and Webb further remain over acquisition years, small profitably portfolio from Eagle our deliver merger, our large, the we such synergies Any We consolidation. shareholders. next to one rig our full time must see acquisition with and albeit will inventory to additions Counties or plan several consolidation to look of ability play are Ford or recent existing and in accretive opportunities. our out and we Given cycle Dimmit compelling patient believe operate over as returns that

we XXXX, run capital rig one with million $XXX For a to to program $XXX million. plan of

Our structure on low efficiencies. generating by leveraging cost capital focus is free our flow cash and

gas assembled, With unique the base the our capital return, balanced portfolio quickly oil have within we the single to reallocate basin our asset model. within or we optionality wells, highest all towards have

I'm strategic SilverBow optionality that beyond. into as and excited about and success the XXXX continued has it moves

of performance guidance, more our provide review will financial and insight takeaways. Gleeson's followed quarter's by Steve the operational into

Steve Adam

Thank you, Sean.

Third drive team's quarter in our excellence achieve aspect results continue business. our to to every of reinforce

challenging we work cost best has to efficiency deliver our portfolio. for cost the environment, as through we price prevalent wells this the achieve and been savings our to persevere commitment As across gains lowest

our completed five quarter, third The net County seven online and primary focus Oil drilled company and the wells. wells During net McMullen and areas. gas was brought the Webb

For XX% liquids. of pad, In latest and generation day online foot. a and This in profit single-well of which demonstrating wells of drill early BOE area, wells McMullen full of In brought produced a that Salle well quarter to completed XX uplift average mid-August net third company barrels completed brought in XX% La of over and XX the utilizing produced Oil per a XX our the online net XX we area, wells a BOE pounds complete XX% also a XXXX, company XX-day per XX% wells. XX to per year expect per the Condensate liquids. are our to XX-day day, in were X,XXX Both comprised X,XXX two-well comprised lateral average pad was to of of fluid ER. X,XXX

outperforming we mmcFE NGLs. we're Total areas. at wells by strong have high This quarter delivered the in in was largely guidance. end our Sean and Condensate previously mentioned, McMullen the in expectation guidance and of production day La As third liquids Salle Oil for came and XXX per beat production driven of oil growth above

deliver XXXX. cycle gains, have frack reduced efficiency XX% continues first we which operations from to consistent Our release rig times compared to stage by team to

to full-year million, and our and budget $XXX to capital production mmcF $XXX guidance Looking have XXX respectively. XXXX to ahead, tightened XXX mmcF million we

For timing guiding upon XXX XXX the first dependent its the in production first fourth six-well guidance This kind of the history. to for is super mmcF per largely of mmcF production pad, quarter, we are County day. of Webb our of SilverBow's

XX a this our gross our total day first an through targeted so in five Capital logistical this crews, deployment fourth setting focus of days we newer efforts we times. date XX,XXX-foot XXX to from utilizing strive production, sand will and pounds early efficiency per our completion focus the primary planning of reasons cycle targeting the completion we for XX goalposts. XX time variance This of just de-bundled Thus, an rates calls Field. December will just optimization few lease over production. project direct, convenience systems, expect super to six more all and improve production reduce range initial stages and is well cycle design to of million in be be opportunity fan dual record Because and our we and all-in to the year to our is have One end. the to expect this be of pad Baskin in quarter acreage XX initial consumable By offset are weeks laterals, mmcF frack from the for efficiency this logistics production production to acquire as effective pad of prolific of mmcF to per compelling production, pump to first first continue Overall, months. have impact overall on goal project completed from primary day.

referring it a at We Dimmit Volatile in entry is DVO to western, we the Oil. area low in the position delineation two able a acreage and this phase was wells and prospect. position lesser County, build We've also tested or shallow started through of Currently we were the more established cost for block. what delineation new this of point Dimmit XX,XXX-acre to were are

BOE and even levels position. oil in by early more rates compound the of originally areas is day well Eastern deeper rates encouraged DVO. are expect And area been The we are richest than of now basin. the in as per pressures net surprised this IP We rates expected. potential have estimate seeing to we organic liquids. reservoir barrels we of of gas with the comprised XX% the decline than by from each across step of Today, over of Furthermore, out results XX favorably our driven higher shallow million XXX well we by some XXX place

believe applying structure significant We efficient, location. this inventory to of return higher cost will a low area that capital strongly unlock our

approach. development complete and XXXX we and Sean in additional major thoughtful DVO mentioned, drill through wells As a plan to

diversified knowledge We strategically our remain inventory western continues of and with requires added position be new to locations Ford. acquiring and acquisitions through us across underlying XXX Additionally, operating resold sustainable more inventory commodity smaller depth one-week that both valuations positions grow experienced Eagle more asset portfolio attractive our an have beginning at the wells optimistic team along base The to Ford at geology. we the the personnel enhance significantly within portfolio, gives enhanced returns. a a development acreage activity Since the new positions. This inventory our drilling program. successful in Eagle our with a our asset balanced size than of mix has to and our vantage expand especially on of identifying XXXX, that

to I'll Gleeson. that, hand it With over

Gleeson Van Riet

this as our Steve. I'll third Thanks, structure. quarter financial morning, capital as well In my highlight our results, hedging and programs comments

million, XX% revenue. XX% $XX representing with with natural gas and of revenue quarter Third production of

XXX% realized and the NYMEX XXX% hub, WTI WTI, of During NYMEX NGOs. of for NYMEX quarter, of was XX% Henry pricing

decreased a from lower second retreated back the to positive prices the quarter and differential, gas prices ethane levels While from on and deal propane premium prices. of September, retained July

price quarter. ethane pricing propane, based WTI forecast softness recent guiding for continue recovery realization We we're term, near the price some NGO fourth NGO in of XX% on in for an and to the of but

contracts our the the is for the covering XX% of million. Based approximately production Our on hedge guidance, total our XXXX. of quarter for was production remainder estimated $XX.X hedging gain on midpoint

gas average approximately production of $X.XX price Our weighted with is a hedge, MMBTU. XX% per

per of production barrel our Our price approximately of oil weighted oil production $XX.XX per average average barrel approximate weighted $XX.XX a and hedge a price XX% NGL. with of hedged of is NGL XX% is with

per barrels production we weighted a end. have inclusive average price oil quarter into day to per a per of hedged head are of price that gas MMVPU and $XX.XX weighted barrel. subsequent XXXX day hedged production Note the $X.XX of average figures MCFs entered XXXX, the XX is at For of at X,XXX per

a and XXXX, hedges negative weighted average In the gas $X.XX. differentials. average use to our addition, oil of a hedges on basis In XXX with also differential basis per gas XXX weighted basis remainder MMCF of on oil exposure have to of barrels manage and differential positive we at per day, $X.XX swaps we day

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

As doubt that premiums no new With pricing we towards we online, both anticipate capacity as the competitive Eagle premium provides the Gulf for comes going oil a that Gulf and advantage slightly forward. lower location realized there's Coast basis said, pipeline Ford's gas.

were production operating MCFE, range. both per Turning out per LOE our $X.X per gas of G&A $X.X is million below taxes guiding midpoint production $X.XX taxes costs with guidance. The stands oil we're we million. revenue, G&A guidance our total the while believe Cash $X.XX for expenses MCFE, $X.X we coming and in to Adding TMP of $X.XX production of of million quarter together, the the for and quarter, fourth $X.X line guidance processing were Transportation X.X% which of the amongst quarter was cost, were cash MCFE below million. achieved peers. for least expenses

to including expenses remain G&A $X.XX quarter MCFE. sense We target operating cash of our a to per offering $X.XX in track XXXX year MCFE all-in per achieve cash Our compared $X ago. the totaled on

a unit of despite levels per second MCFE, operations cost mix liquids prices, of Our higher from to our benefit At adjusted EBITDA ability continues continue position of provided million. adjusted resulted SilverBow. strong quarter increased and EBITDA and production our hedge as to total, to decline efficient $X.XX lower in is attribute our liquids structure stability. $XX.X from in production some commodity a drive In per $X.XX, a defining

organic $X add free million achieved I leasing will noted earlier, approximately million cash our for we generated the this flow of spending As that we $X while quarter. programs. on Sean

like quarter our Subsequent we million to position credit and Finally, under turning borrowing quarter, We'd headroom. compliance million. $XXX and covenants balance outstanding end are of to to in million. $XXX At at financial at our facility revolving our sheet, thank $XXX the all was with have re-determined our approximately of base we their third end, in the was the our or support. had our full quarter, banking end continued liquidity the syndicate significant

will I turn wrap prepared to Sean that, with up over to our remarks. And it

Sean Woolverton

Thanks, third quarter cash positive the our generated Gleeson. We and track costs. oil than our To summarize, illustrated doubled execution. oil reduced inventory, of the increased unit flow, company's record production per more further

provides us assembling our low to balance base to commodity portfolio mix our borrowing Our continue program. the pursue cost liquidity development and

coincide Our fourth on gas pad seasonal the company's highs complex quarter largest which most are and with operations prices. SilverBow's should delivering focused and in history,

Heading can is prices encouraged control. Commodity we into within controlling more what XXXX, than are we We're control. our ever. clearly not

our capital within production to control. consistently of but executed objective. by adding on balancing means progress, highest complacent. no performance, inventory, our on that our have and projects we We're our proud wealth front, mix, And return reducing a creative are optimizing our allocating further However, stated costs

given Our XX% self-funding SilverBow's leading production, pure best-in-class XX% sets this operating margins. recycle more in reduction program peers, ratio was cash preliminary operations ago. cash targeting and a production and returns free the adjusted development us three generating Today, amongst year XXXX just out where up positive year we growth for is years in plan from growth a over organization stand transformational Rosie capital than change flow. spending oil in across our

strategy size base as and to We continue We asset in growth unique of and packages choice the organic forward remain next accelerate optimization of disciplined quarter. scale to shareholders optionality SilverBow's our the leadership. potential are and and afforded advantage updating partners which evaluate self-funded, we our our to and leverage look we and to

the turn I'll Q&A. that, back for to with the And call operator

Operator

Dun [Operator of Instructions] Johnson And question Rice. is your first McIntosh from

Dun McIntosh

A you're Impressive free generation. little cash than expected. quarter, particularly earlier the bit on

it What some the think flow some Just on or point? on more the quarter side wealth or inflation of you fourth would more I there target. the combination was drivers both? appreciated? getting Was color to cash were free originally be that efficiency cost outperformance of

Sean Woolverton

I is the towards Dan. side the It on mix to improved and comments the specifically a our streams, Continuing of Morning, Hey, both favorable liquid more on question. production. performance appreciate of combination increase oil. the revenue production

leading I think our so there. the were definitely for quarter margins operating pure nearly XX%,

well the costs. product helped as mix as so And lower us

And so helps growing the $X.XX costs of free us and at to continue our cash of actually flow included We it, $X Gleeson I flow with million think our million on in cash the we're living drive inventory again, down at coming we're at. same so land take advantage we're in pleased where our MCFE mentioned structure. $X low-cost spin, really time within very but

Dun McIntosh

expect maybe to others were all? you all you able the the position. of that that maybe Okay, And are it there for was the Steve, then congrats what achieve to? attracted putting was it acreage? that not about What little then a great. on county available was demit some Why it for And further, things together leasing Thanks. and what maybe organic that

Steve Adam

there what knowledge, us This further Okay, in-depth what the what come Dun. work had thank we exploit and all some the done as there different as That's this hydrocarbon with content, been kind and some see then based wanted and attracted throughout extend to regional underdeveloped property on could the we We beta succinctly. you, had do can of well areas to basin where do to play. across had some opportunities. our And area. the of we opportunities

core well what not done it metaphysical peripheral massive our of to is science on then That been And the to also on we entry to kind we wells. low-cost these work continue X a some can then of Science to a acres, forward area of in exist. applied the late path And that to the take and allowed to of line some being different both knowledge up design number deep how which so some can of as how we and those results tested us first as us completion and improve to have the achieve acreage we knowledge. a our a position where better see with did then come targeting. to analysis we elected with gives take had And therefore, but we combine to as opportunities a that, couple development scenarios what we continue a already work on generation to only wells. prosecute results

now. little are to ground where we as acreage from want a the of the then looked that's relates at wells. as So bit the of how in play we we've on delineating it beginning, we to continue And X first forward kind to seen look a coming the already opportunities, it at to how

Dun McIntosh

congrats strong great. and on another Okay, quarter. Thanks,

Operator

your Neal Dingmann SunTrust question And from next is of

Neal Dingmann

the Sticking with [indiscernible] for second. a

a just little of quarters. comments that well the give [Ph] that Tremaine type can as in the what's or as can just coming overall that as capital existing talk you to you in chatter give If infrastructure bit you play allocate on in more area you'll the

Steve Adam

put in to terms towards the and less one you there's new infrastructure, little you it's western that There's we skinny. out those have development continue the as And come see the infrastructure we'll areas. unfold. more of bit So relatively a just Neal, together flanks east. of the as go as to It's collectively to

maybe a the capital all, delineation From plan, X-plus of year. of drill plan next then we and to wells to latter part First the the development.

first science already the we of we're well wells $X We for there have and the a X took sub the out costs strong line after costs. aside million

exploit continue be should we on the opportunity million a to we then can be we at reach should delineation. more able there. our in feel when And able the and once can to be process, manufacturing sub but to see we we that it an trigger $X comfortable a on want scale mass pull the that importantly, below So within execution our get numbers are to that and very million $X we ability strong well the do have

Neal Dingmann

such Can one [indiscernible] you follow-up. total asked last your Salle just good. and just Very I you inventory? Then La the how - talk plays while In earlier view hadn't a McMullen. in as

sort the view these room? running totals Just how are of the you wondering days Thank you. what and

Sean Woolverton

Yes.

in sitting of inventory, XX% is location XX%, when of we're gas. we liquids associated now on gas of So with about more into acreage that position. it our identified XXX the component we a Probably acreage liquids Right our think bucket counts other sit. locations and dry associated north with

to In terms this. of in we've several blocks there. on with have laterals. still And opportunity to able We get and in little We've bridge area. Salle years inventory there pick up allow either in the been us where La very of draw been been executing pleased longer McMullen that sits a we've bolt

the to had foot In fact, looking coming in laterals. X,XXX-foot that historically and X,XXX XX,XXX number quarters, a those at of laterals drilling we're flake about we

those to economics opportunities laterals take to our position the of So on bolt commerciality presence we're in area. us finding in getting and then already the are the to longer opportunity our and areas has nearby that of improve blocks that given advantage

you at keep we opportunities where that can opportunities have we front continue So years XX in we of viewpoint of think to us. we our and find overview look loaded. stand from inventory to And

to our it inventory look like expand we further. So and

Operator

[Operator responses at are time There Instructions] this no additional

Sean Woolverton

everyone updating further year. morning you Thanks fourth year-end quarter us joining on in this Thanks for next

Operator

call. Ladies for concludes conference you today's and participating. gentlemen, this Thank

may disconnect. now You

Jeff Magids	Senior Manager-Finance and Investor Relations
Sean Woolverton	Chief Executive Officer
Steve Adam	Chief Operating Officer
Gleeson Van Riet	Chief Financial Officer
Dun McIntosh	Johnson Rice & Company LLC
Neal Dingmann	SunTrust Robinson Humphrey, Inc.

SilverBow Resources (SBOW) 7 Nov 192019 Q3 Earnings call transcript