PDCE - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and welcome to the PDC Energy Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Kyle Sourk, Investor Relations. begin. may you Sir,

Kyle Sourk

Reasoner; good press Bart today's Lance Brookman; Scott that afternoon remarks Officer, Financial and Operations, our President President Logan. accompanies and Dave Lauck; we posted and Officer, Yesterday Scott Operating Chief CEO, Executive issued Meyers; Senior morning. you Vice call of a On we have Chief and release Thank today. Vice presentation President, a

GAAP Relations and Bart available financial appendix found page Form of disclosures our Brookman. to turn The release reconciliations the on on XX-Q. With On the presentation. can over that, are I'll call measures, both be Investor the appropriate our We will that also filed today's the in for of and Slide press CEO www.pdce.com. non-US X website reference call presentation and our we forward-looking statements

Bart Brookman

hello call, flow hope exceptional believe, Thank Today, low-price and the Throughout quarterly is complemented you. in improved DJ as we to changes, cash highlight difficult environment positioned political of endure in by are sustainable plan generating free midstream world. to and significant this capable an made can our clearly an backdrop, results have everyone. Kyle, outlook, I a the in as a multi-year look we and enhanced and effectively regulatory PDC. communicate we That business in adapted and at I times will operating Colorado, company, future. Basin differentiates and the necessary an the but we we

evident SRC results. and in scale the of efficiencies finalize is improved financial of integration vision operating our we As Energy, our and

DCP G&A. our quarter the for well costs. dramatically both last, free Midstream structure cash line as pressures free yield things per LOE cash progress the of capital tremendous flow a the to improved within XXXX. note, and the we cash through the and go strengthen sheet. call merger and Absolutely and in today. free on improved we outlook. efficiencies of through flow, our balance Some both commitment to The year, as and cost margin Strong and the Improved levels company, system. production the This result And go

hit me highlights. some Let quarterly

day, And million, and flow growth stood costs company. quarter SRC company. in was of of G&A million. the ratio came with free one the financial the approximately This the cash lifting rigs the X.X last just XXXX. company exited the a primarily in running XX.X $XX Delaware the equivalent of due in to no merger. barrels cost at lifting the improvement quarter no for on spend from end oil leverage the combined per for of the structure Production over remained of quarter is costs the We per approximately and $X billion for capital liquidity BOE a standpoint, $X and From $X.XX at operating over in per quarter crews BOE. a completion same on million that or XXX,XXX rig $XXX for in XX% Wattenberg, For BOE quarter the

structure We detail company give the in more a will in the lot cost of a program capital on moment. the

Now, what element. information extraordinary I an more on consider

to merger range. spend million, last to this Capital perspective line the Production build strong SRC improved in Again approximately day. balance levels is barrels to guidance and midpoint with production XXXX That oil update. reduction XXXX for XX $XXX and be a operational should start me pressures. is the of equivalent anticipated million our Let an sheet. approximately of be our due the

anticipated and XX% months of flow XXXX. our of free to leverage million. improvement expected is to a sheet $XXX cash annualized nearing in we to primarily exceed with cash next calculates in expected with further flow million. under the capital an XXXX million strengthen to spend next to cash XX balance $XXX Expect yield flow anticipate XX%. free flow year-end $XXX production to over margin XXXX modest This on For the ratio approximately X.X flat XXXX year, Combined level growth free free cash

for into cost Scott Reasoner, this is retirement operating Going the forward to be thank at he impressive say I'd wish thank have like call feel we capital driving operations. continue turn results truly and shareholders. company field G&A I best of we is you. structure, LOE heads to to I'll a performance PDC down focus including over time to him turn these perspective. and before the Scott's as perspective, the few continue barrel to our we Scott, you result where I our in $X accomplished and call under to delivering from Last, call day from safely both COVID per our it cost over the the to I'll to some sets turn operational With NGO value these understand I operating deliver doing superior you of and both him. as all skill and the outlook. absolute to and the Reasoner. that, direct a PDC the illustrate Every call metrics anticipate they Scott leadership integrity ongoing encourage we take extend combined. teams, of really they PDC that, last his over They're will now his I to

Scott Reasoner

all up work put tremendous the quarter. both with so emotions a bottom, been It's all. put team team privilege, as top From to to office. Bart. and to real team the I of appreciate of part in want a in I our for great appreciation in with echo a to I the opportunity my you, be really the struggle more now this parts field PDC you Thank here appreciate Thank grow me.

doing The so extremely challenges. importantly I'm unique efficient more in we and safe of to extremely second quarter deliver the set proud results an an and extremely while offered circumstances way. able were of

the two Wattenberg The PDC lost second quarter of zero injuries. time Delaware in and makes years

turn safe will that of importance. and keys We're the rest our of we operations utmost of the As operations culture and assured [indiscernible]. our efficient proud date over over extremely knowing remain

In terms touched to the here few the couple a more Slide see going provide in numbers, of that of bit you X. a Bart a on on I'm but detail quarter; high-level

LOE short decisions the we unsustainable to quarter in at that First and $X realize moving per adjustments BOE. for was delaying extremely we forward. but to impressive multiple important maintenance necessary are staffing just deem the term, It's made over that including

year project full Given that LOE we of $X.XX for BOE. your per approximately

at foot foot completion but in of the operating we completion of costs overall continued approximately a crews these of quarter approximately relatively expect given and no still the of well can come the a time the two hence back standpoint, lines with the in nature are pace turn operations, pleased From with period which facility per and that the $XXX it's year, You and Delaware. includes in $XXX to in our decisions. our crews, low-cost to production some Wattenberg June of level before DJ of second see half costs high entered per for we drilling, important that that the remember exiting curtailment

in bit of our our oil specifically XX% only curtailments quarter. Given gas curtailed in ratio toward production. XX% compared pricing a see some oil the production to the biased oil of you total we that May, We're and of can as our approximately

now in quarter, halfway that turn And As of the pad done our into it pulling the in June. stands un-curtailed. Delaware, which up nearly we're was essentially line includes Tinman the in

well pressures and and basis Wattenberg operating line X. the environment. we're seeing improvement Slide highlight both We outline benefit. the positive in to Moving a having This per is on the overall

PSI, months white of projected year. field our line and the there As our conditions future. we're approximately the from which half Bart capital the line volume into slide, is excited from a curtailments expect efficiency increasing the for the past important continued a the sight improving but foreseeable further averaged with back been headwind million run All The feet this Obviously, maintaining to graph X capacity speaking we and of the recent well the all day XXX later years past to a several an shows in on low improved in per II pressure major DCP of improvement in, extremely XX% line left relatively mentioned, expect have remain factored over cubic XXXX. on operators the of generally wide as improvement really incremental clearly has from bottom is benefit is we'd activity System, a data, plant to have times. see this pressures XXX the and space consistent Latham in

per spacing excited and to initiatives is total new team value testing value well back to maximize in designs both Our field well. completion well an effort and to get our

and oil uplift There factors prior chart on bar already that the can play compared productivity the per of that you to returns, and well capacity slide, are an as bottom see the we the the our we're back years. seeing constrained but line the As are basin. main in field takeaway of the area pressures right in numbers, such and provided flow maximize more is into performance technique opportunity once processing these given the to again can improved in

initiatives any XX Governor his his actively op-ad, both XXXX in developments significant he gas Slide Bart announced and reiterate Polis staying X go related that an in want but and weeks published oil Moving to in valid I recent to the Colorado, to oppose mentioned opening. XXXX. which to intention

guarantee way campaign. this an most necessary While and and run years, in Governor's is limiting the attempt to long signatures recent in clearly to in office has it the won't the in public the opposition go that outside a memory, support funding the doesn't anti-industry should support happened gather is X industry

equates expect XXX look years approved as combined rule-making Senate implemented X its to the the to timelines. DUCTs We process Additionally, working new continues forward closely have permits, which you commissioners Bill XXX see, can with we and over forward. over COGCC of future and and is to

past the position our positions permit fact, to combined takeaway permits to recent news weeks and in financials X we for Scott PDC With over the had are effectively The develop additional office come. turn slide. our and call the that from to an affordable and quarterly is the guidance. deliver Meyers and clean review count that, the years XX on energy updated to included approved DUCT the not that and safely the I'll here numbers within In with anticipated Governor's

Scott Meyers

Thanks, Scott.

through the As go numbers. we

With Just a production I forward-looking GAAP we for appendix encourage reference the second both as well from reminder a merger, price saw Commodity to in cash reconciliations. XX% net and associated all our quick our than you our adjusted expected. of presenting internal as non-GAAP that flow was we production said, obviously that metrics weakness by and decrease previously look BOE statements. are XX% less prices year. XX% the we realized increase This to primarily the quarter as and G&A year. for to quarter quarter with second free compared outweigh periods, our expectations flow and the were similarly XX% they in impacted per the both the SRC XX% our and activities down curtailments cash cash exceeded and last as sales between for quarter for compared of last impacted we operating

way force, G&A the related our to is last to $X make the all-in And quarter $X.XX Our one-time very or of of run per non-recurring We a second number an of which SRC from had these in includes million $X.XX decisions in excludes approximately salary rate which BOE expenses. of expense including BOE, reductions. in would difficult improvement a and XX% excluding the along million furloughs transition have of G&A resulted G&A employee. expenses similar $XX per reductions impressive year integration

long-term of important and G&A success these the levels is achieving PDC. health However, extremely to

costs, the sub we to the expect transaction approximately implies rate $X.XX which back a For half the of run year. per G&A excluding for full of deliver BOE year SRC $X

realizations XXXX years Finally, in all our million quarter year to million neutrality From $XXX of cash free initial to cash an basis exceeded and due deducts NYMEX has $XXX at in outlook range to flow $XXX absolute XXXX beating we pricing, G&A anticipate compared million second to production. compared continued our oil to million the June's expectations. in this million guidance NGL flow $XXX generated perspective, reductions our $XX as

this we for As generated to now in minute next continue million the and project back and quarters will we Bart of free including free continue the cash of three mentioned, in $XXX flow to flow cash a in and the the six of cover cover we've quarters neighborhood past half four year.

Moving fund. a things to liquidity are want highlight around our only I XX. There to and Slide of couple hedge

million. from periods million other approximately up First lag is of capital the it's This receivables of and July. changes over first slightly of to the matter revolver of Obviously somewhat flow activity. time you the sub-XXX as projected the slight in in that balance the working balance million, by quarter can balance magnified by in was and third quarter, the see cash of that in accounts at $XXX $XXX reduced we quarter $XX fact end second June free to for simply evident begin a our was decreasing million $XXX due of only the end the

in or hedges, consider see anticipated to form a Next bit likely point, our and our our take run upside of XX% protect the oil protection a to $XX the the $XX we second pretty will at At XXXX callers layer base down. you XXXX of allow that somewhat half a and barrel. us to protected XX% year from approach the opportunistic more will hedges approximately oil production costless of room we to gets that of production little likely future for our solid per the and be still this hedges of

a activity. on per fourth quarter quarter, Moving second production quarter approximately substantial to our around CapEx including increased increase and oil The second production a already the production third XX% guidance represents our We decrease total the of the quarter detail good flat BOE to rate quarter decreased third of compared and basis is XXX,XXX Slide guidance. and day a had averaging cash guidance, provided to XX. a and barrels. in been XX,XXX flow our free covered. Much We both expectations compared our and bit fourth this to quarterly

As we of four to off begin months three impacts feeling our completions. taking of

of tried the as million same then May $XXX A flow take outcome and be obviously possible couple that free once [indiscernible]. conservative our bit forward. expectations In for terms of will items transparency was to the are around. of as terms more in assumptions in anticipated But proved to moving as back pricing, cash we case out. again tied estimate our table to this that time we offer these The much to quick of we than a point presented

there the compared oil a back averages. First, year for softness bit of can you that see historical of realizations half in to is the

However, to we continue the see XXXX. this improvement and in to continuing expect

two-year of assumption and on Rolling approximately PDCE our shifting year. due above million the new of flow this the point Second, realized up $X structure flow forward. cash generating machine improvement below the see project you as XXX estimates a a dollars can of our a over the updated we This $XX becoming. XXXX our from modest into moving of generate capability Slide the to shows $XXX next evident, is line simply of TGP expense oil, from free couple to the sustainable buyer A line price contracts to free backs next has cash XX year. NGL, outlook anticipated just but overall net

provided, table improvement can numbers impressive much have. already these sensitivity price potential you how the Given see just

have we price a reduce expect again nearly years. ratio and a leverage and a of than project by free extremely of approximately two-year investment XXXX represents through next flow combined maintain cash free capital and free debt flow $XXX a Further, we and level a total times of of for XX%, cash an divided the two of flow quarters both in capital very For as margin margin million on deck. XX% we absolute cash flow competitive XXXX our flow less to ability as a fair billion. debt cash year investment, $X.X free more define cash six reminder, the at than free tremendous to This

program, the hedge improvements Scott, just in and Wattenberg these environment projections. Given about went we feel the operating very over good by on execute the our covered to we ability

XXXX highlighted Capital we release, million. to As to is $XXX relatively our in our million be unchanged. is press $XXX plan projected

barrels barrels represent same Xth per this Our when compared and into quarter turn expect to With which XXX,XXX continue call plan most next approximately to Xth XX% indicates, we of initial XX,XXX our I'll positioned both an year to executing of XXXX. the as increase production the XX,XXX XXXX, importantly, quarter to of to are the we production XXX,XXX this BOE well day over per to Lance. total and and day oil for are range year, that,

Lance Lauck

and in but the Research to XX E&P Scott. entirely company companies, also prices. Thanks, call, list large. blue grade. how section similarly-sized This sourced our And Suisse then this and peers of including run from final which at today's and sector PDCs is not that, Slide are your on all we projections, note investment many to impressive to of XX E&P show at to want compare includes I'd E&P data PDC only the large for cap to like chip for strip Credit projections

differences projections to So own our some Suisse presented data for you'll notice today. in the Credit PDC compared

cash XX, starting two-year this free E&P generating flow a cash in disconnect bottom by flow mid-single of shows tremendous This and The Wattenberg in Slide midstream Suisse. averages rank same cash improvements estimates the a that on efficiency between estimated PDC our Suisse Now both digits. the PDCs expectation and is capital with Credit PDC chart regulatory the of above highlights for at among and free our cash given our market, the performance of the XX% generation best Credit in further current as standpoint. the equity very historically projected from both XX graph free free which extreme a our times four free especially with XX margin. groups the general cumulative projected and is approximate Slide company two-year flow yield XX% cash Starting to yield, of of even flow flow for median

as investments. cumulative capital flow is reminder, divided cash Cumulus free by a defined cash free As flow margin

was and that credits generate PDC combined, for per for Company of flow spent is strip capital at the estimated free of to projects cash pricing. So XXXX $X.XX XXXX $X

of see, more can estimate is Group the medium. PDCs XX% E&P you As than double

Now Slide strong Credit PDC. very picture the estimates moving a once to XX; paying Suisse for third-party again, from

median free year-end From have peer As projects half based company's industry are leading only we we're ratio projected input times is and we're the flow below Credit a leverage the able that assumptions. at couple sound expected was strip rather to projected top extremely In at NYMEX their cash ratio our the group X.X our to sheet, times. on Suisse graph X.X pricing. of of profile a one leverage balance XXXX six standpoint, that an

The other sheets. company's Concho this Blue include Chip projected and ConocoPhillips. EOG, like to strong On balance have similarly Pioneer, E&P graph companies

lowest highlighted estimated significant the world. at improved extremely Finally, XXXX the PDCs the we up turns of cash backdrop sustainable strip low-price that and also environment of multiple E&P in believe free multi-year and an as year-end multiple. valuation us and Throughout multiple flow in approximately times what regulatory for this XX% makes DJ generating a adds EBITDAX a trading company this the chart enhanced all differentiates shows X.X to each plan and midstream capable business and next group we've story. EV of approximately Colorado compelling the last for of This operating and call, and XX below PDC X.X median pricing.

to flow portfolio, teams efficiency. executing that the our structure cost free call extremely a of transparent modest the focus positive successfully close we cash and to commodity consistently capital our our heard on and and and improving of ability is due focused to prices story to continuous we strategy, strength relatively on of material today, an our namely both concise a generate the sustainable you've financially overview want Finally, provide are the quality

development we dissipating, us and to and and generation. in asset headwinds are financial with we From We've an our through allowing continued responsible certainty. focus return flow our liquidity to seeing on maintaining the our the face past high of we're of future operational Wattenberg continue improving the cash some reduction demonstrate safe debt sheet project and foundational not standpoint in more projected clarity Colorado, the but that and discipline, historically, our regulatory midstream further strong to only balance company. Additionally, prioritize free

Lastly, the and E&P over I'll a we be believe metrics. to turn of Q&A. industry to positioned we value the creation With call are that, for well is leader, the operator many key

Operator

line [Operator Instructions] first question Duncan Rice. Johnson the McIntosh Your from of comes from

Austin Aucoin

Bart. Austin morning. This good for Hi, is on Dun.

to Congrats say. a First on off, quarter. just great want

Bart Brookman

Thank you.

Austin Aucoin

with you And first return all's declining could your XQ question provide the and color growth. I'll little and before you to CapEx is be a then, to my XXXX. trajectory looks trough XQ more on and all XQ a volumes the

will any great. provide can crew color raving you activity completion around be that If

reduction. I numbers term that longer hard it's early balance versus recognize activity about Lastly, the XXXX, all on are growth debt of for you too how in thinking

Scott Meyers

Yes, I there. bunch can take questions -- there of is a in

to more take $XXX that to having you're we the and we $XXX probably next Scott, the would around I'll million to compared about, well. to throughout minus summer something CapEx for I So have steady with the as Xth plus down. year Again, gone $XXX range this some next months obviously or quarters, around talked had year, activity say quarter see what year with CapEx has our -- some the for that next million million going as spending with in in two throw $XX quarter, CapEx third of

cadence again rate have the through with the year. and crew continuing Wattenberg year, have coming of drilling we way completion rig, do operating activity the running in our a third starting now Delaware as late far running the next completion back As crew beginning is and goes, rig right all and we at rig quarter next

I overall spending to how direction fairly to good guidance year. gives anticipate next we CapEx our Scott. else that. Anything think add you and that want So, of

Austin Aucoin

other only XXXX. question You covered I was Scott, the it. think

Scott Meyers

I this continue we throughout CapEx motion standpoint. We I our that the XXXX creating up way have is spread too we're a the hint evenly to going in year is and year. XXXX more gross set and to the from tried little think positive our that very next Well, what think, for look

Austin Aucoin

there could we hurdles, and being question all all early. clear you flow, would color. what a all that Cash is dividend at you And need pretty that as is to which outlook we follow-up point too particular, move In implementing a into from I be steady. be would a some while, here not it guess said, the the flow free for cash look before stage? I is only consider robust reaching be to you mid-XXXX, and Thank

Scott Meyers

debt, Yes, I mean our want the focused debt right clear, consider be why message total mentioned we debt material reduction. $X.X company at we capital we'd below at return now. we currently balance and you for to or shareholders, to other now, our look long-term absolutely before health, are right ways And that share billion when on suspended we know buyback current get to love to we've that's our is

sheet sure. target the leverage it really a now, is say continuing our we XXXX, we to getting When and at now, we'll said could I now. think our under on. right to our again, turn with great having that ways through number balance under number share to a X.X at comfortable we billion get we debt X.X our go graph focus strong still looking level goal. have, So, debt is leverage back make ratio need would among right as program one sheet ratio I not total balance one back paying on but I I our start But outstanding other that's that down repurchase really want

Austin Aucoin

on quarter. great you, Congrats again. Thank a

Scott Meyers

Austin. you, Thank

Operator

from next Welles the question line of Fitzpatrick from SunTrust. Your comes

Welles Fitzpatrick

morning. good Hey,

I plan concepts to the been me a pleasure, anyways. know most explaining over to let work getting above has real and you're, teaching know it's me at so First in the beyond it you I these with to say, patients the given you're off, a do little you, even with to years. of years. what I of Scott, do don't know you something basic scale and to over that because and hope retirement, but going

Scott Reasoner

I appreciate that.

Welles Fitzpatrick

correctly, stays of check obviously have in a you efficiency not I count not, XXXX, of it kind XXXX. talk happens guys debt if in relatively make causing you to close want sure wonderful remember that's but to efficiency. to to rundown it's XXX Can the what it's number, You capital just to that that

Scott Meyers

really something that's Scott. end at of XXX the this we're and counts, about And end combined year well, looking at this of Delaware XXX DUC Wattenberg XXXX and Yes, and the is that tells scheduled around the up described then we with rig you so rig for the is one and know to a do and drawn late picking again. XXXX second wells down running drilling XX have start or Scott at

really, it's bit down, from a a is drill year for but faster a So pull not really also really too we breakeven of it's it function quite can't a me to really of little year much if because we'll doesn't that outrun that, could like bit more get can't really probably see there we our as time. completion level crews we really this, below by and and it that be XXX over

Welles Fitzpatrick

Okay.

be CapEx. time a front-half of So had little is first the and weighted our XXXX going to coming for XXXX, maybe not in that rigs if bit, all

Bart Brookman

XX% it a loaded, really in to for again of the big front-half it up but the be crew and that idea year year, pick crews we we'll primarily that No, Yes. then of and crew picked the we because third have Welles Delaware, will it will the also about have because be front-half and up the year, completion it on frac of XX% released get loaded then following that the in will the Wattenberg.

Welles Fitzpatrick

issue could can just Inc potential spill another it's been already, on if one sense, then I but midstream you I and much impact doubtful has know closure. too mean I talk talk there very perhaps of ton perfect. a to do soon, any you to Okay, follow a And guys from

Lance Lauck

Lance. this Welles, Yes, is

is period only so that not by that way is, the its judge Bakken directly to make route that that best volumes week. There and vacated ongoing Wattenberg, process there different this the for locations, the much capacity best and types month, could you when to arrangements, we movement come the impacted finding is Wattenberg analysis doubtful the our more went down could barrels the closure I oil-marketing in always there's just different the field know that barrels know an some additional different incremental time Our of is and a for continue, in from be on so in of really this price but and every and general, there closure we do some see basis.

Welles Fitzpatrick

much. so you Thank

Operator

Your from William Thompson question next from Barclays. comes

Bart Brookman

Hi, William.

Operator

is Please if line you're your Thomson, muted. open. see check to Mr.

William Thompson

about that. Sorry

me hear You now?

Scott Reasoner

Yes.

William Thompson

XXX what out Bart, for the heads cooler posted allowing to XXXX.You Bill to right. maybe by remind under to called is implemented while SBXXX. keep, initiatives obviously continue us prevail All left the Governor through essentially trying off ironed ballot be be Senate to to

out, the expects XXX maybe talk those plus can of years PDC permits you process year-end You now permitting allude the you docs about permits. changed has equating inventory, about about and how to and recent XX plus three pointed have about by

get So, there. color curious some to

Bart Brookman

Yes, just a based new comments. on a got that actually positive pretty of of the commissioners. let we commission We've new make feel me couple about background the

but positive with so the any his oppose now is got very like we feel Robins all governor industry we've also all and to this ballot we have to good relationship, commission. the Jeff not released, got very, industry op-ed a who just position, focused for operators. the PDC his felt governor is overall, very chairing We about reports the a stance who and initiatives, of good He the

to As kind put him out far remaining there. of am rule makings Scott, let that cover are to going rule the the making, over I as that some and of

Scott Reasoner

and will on completed we didn't everything is future. near the going in but the be able the and that integrity, in want, that start we're has with to very guess was this Obviously, I but etcetera get that, with again compliance been we're most which here what on comfortably we're along went focused to still pass comfortable we comply. so of all negotiations our Yes, first wellbore

two a going but phases, is and in but is to actual As there's with that of citing for well to next we're guess believe being really that its really of Bart And one hopeful them in and rule phases as to see yet completed be done in each that couple that's the was ceded process commission that and change professional we're admission the it's said to months well going we those, October. expected case that. I and the it's and around two lot next will in through real they're able be work challenge the a

We'll think goes that's on, on and feel but speak everything Reg rest have a coming that that's are that to made has and we appreciate as difficult that our combining the too up it updated pleasure. a towards the with that's pleasure in they a be so rules we Health as commission with that. board have are is to company we're this on but September, very expecting. stay point as is we be schedule, only thing go stays although the great through if will call will these process. what a industry with So fully we novel, the get how Department COVID efforts of getting I We've our schedule, as a for relationship other entire company The again it'll of of the Chevron large X continue with enjoyed relationship be a real also to are because I engaged all CDPAG this on of others a think and we very and in ozone that with

William Thompson

That's flowing stock helpful It's the for an PDC that any, discount in such trading comp of chipping multiple, we the is XX, part would, the then overhang point the what execution what valuation Slide our color but Credit chart clearly out and the clearly your their you mean pie. what's past uncertainty, just value at my justifies in Suisse on at I of sheet per the probably barrel federal would exposure. a I with have it's but do or you kind curious on way, deep and obviously improving Outlook regulatory get XXXX discount and DAPL and no but feedback, view with question, said there. another to are while your peers guess your away trade open XX,XXX rate thoughts and if Colorado think that's leverage, to I dealing about

Bart Brookman

to we've the just next capital of some think improving out. that's rolled to, year making. flow. communicate I it, through we balance had and and both this regulatory what substantial of that getting cost authority. to and our our X for of thoughtful County the way got just we is efficiency continue continuing Reasoner our -- free political year more in even time Yes. some with still it's the give have paradigm after to think environment programs execution, what the at returns in some more of Scott strip communities where to got you we've do, got quarter. really with in well permits an Well, XXX basins, structure And structured XXX% to think Weld a I per quarter these with County, we We showing we've Weld we've local capital that our head and position to you results this have Showing and to new communicate as the thorough get I believe reviews cash rules to

think momentum. gain continue to I we'll

this. So, Lance, you want to to add

Lance Lauck

good. Very Yes.

Bart thoughts there. Just Yes, continue of on some historically, William.

the color, right and I field company of the sheet is been for environment stock and their capacity and mean That's model we flow to there that for also, a with with the the touched Latham foreseeable year the now on have really system we think focused time think ample on start-up day I think on just sufficient focus a business regulatory an II capacity a reducing project, we has debt. for a the way blessing financially midstream on capacity by the this been top bit Wattenberg on. the its of the of and differentiate I the BCF it's the capacity all overhang us driven exit X.X the definitely out itself, to about with going to going us I system some you're of on that well forward DCP's growth tier free night, cash getting balance future. as think where a limitations just of I real think things spare

our reducing our are volume flow, strategy, to is cash the So as will we improve. mark, after debt quarter trading believe gap. metrics quarter, delivering begin perspective, From that bridging on we free continue to execute

William Thompson

for right, taking the All question. thank you

Operator

from Downey Your Brian comes Citigroup. next from question

Brian Downey

Good the morning, taking questions. for thanks

a we've reinvestment and rates from cycle earnings growth production mid this E&P lot So, peers on season. heard

be So, laid materially term different XXXX. I'm longer for from that curious if out would how about what you're framework, you've thinking and that

your So, of cash next year spending free for XXX suggest the guidance midpoint. flow figures on of $XXX at million

implies next similar cash free Should but we ratio mentioned reinvested that there? anticipate of of or thoughts being any you longer your a term flow So, is slightly XX% sort year. cash flow under margin,

Lance Lauck

issues just in ability to up going same like. on and plan see to the and not thing, really to with our the we've of but price and happen it depending a guidance be we the the still you with have outlook I Wattenberg look set balance company on XXXX behind the is doing we what we're When have going to the so Using same at given want we flow the growth on think us, site I again, Yes. able that something think midstream on similar, foreseeable I continue could lot modest commodity XXXX. and something What all XXXX we it execute say, depends having of is, for to in to looks to execute continuing plans to just flat think drilling permits happen XXXX. we going prices It's generation future. free put commodity to cash that's continue XXXX the the

think in don't continue aberration by expect I results I And similar any an the future. is to XXXX means. So, would

Brian Downey

is echo, complete the Great. year. Basin Delaware And year. Well had the largely you're to for realize sense of where in mentioned wanted on you the to trying congratulations a get that retirement, foot. go could the Delaware. I'm costs I Scott, XXX then, a I next capital program

if work reflection done you're next durable also Wattenberg to if could and curious that's already the any in I'm the I sure retire. see potential high or further we side. you you make maybe before deflation if want of So, deflation could on setting the touch on you've a year just bar

to year. So, we next can hold David it

Scott Reasoner

as end. with so that but Not a yes still of see I amount tremendous again times on we're retirement. an he'll the the the this though, Thank appreciate at well believe, both of term. really to to over rig ahead we believe comments. I the long already you those answering my for is question it, and that months that drill getting confirm but all spud improvement next, we appreciate the and I particularly XX too, or the done over efficient areas we're going to associated some be of they've sure say next think look which in efficiency and we Wattenberg,

So that continues.

rig that. We we time crew with in now, a the and get continue laid expanding; the with smaller really phenomenal efficient. are the coupled short job. We really, so, the down about to completion side completion more the drilling big were that that Also, wells right done the following had crews feel time Wattenberg that PDC periods right team behind on about we of Liberty team good

only like can more always So that that. the minimum. costs. efficient crew a help daily you're running When that were we a on There is daily cost at

side, them, not wells fully wells drilled haven't the some into company in and in of Delaware, we we talking drilled I'm Delaware of efficiencies any these the of last we've best the but story, of On about A portion the as these similar a couple all them. when the future. numbers, of baked

is probably going that a smaller frac get over reducing number already was but be to will we to that's believe doing whole. it able repetitive, phenomenal. there efficient casing led time still more hole these to pace a of a of opportunity faster the bit, days the really we're hand love I'd with times that The friend, and So I become and Dave the out the will and but very over and do smaller on pretty good such think little that, because do the you but that's won't is part interesting I

much going things got too was, and one improving hang best we going the end, increments out it where be to of it's in forward would it again future. way as think don't somewhat the I towards thing was but small those said I to Dave I point say like that from this the

Brian Downey

the Great. comments. I appreciate

Operator

Your of line comes Gallo Stifel. from the question from next Michael

Michael Gallo

and on [indiscernible] actually Good for question. you quarter Congrats depending his Scott on retirement. taking is This for morning. Thank Mike. my the

levels? different XXXX, You XXXX, mentioned that would documentary throughout change declining at price

Bart Brookman

at will be we that you laid the don't in initiated plan still we we that for caution have we out budgeted months. haven't coming though, really just with would of look point, the of and life next this really that I couple kind is At would something would, year typical, there up the the we we

But to we're subject we up now, another is this change. don't of in think a the the up just document obviously to see Delaware. picking right at now. right crew good really We point. Some Wattenberg, use we're we well see, pretty In really

in sure comments would just be I'm hold and is think point. way the The to flow consideration, such we'll Bart's cash it, all Lance's given expect I very focused keep and our this comments be around we spend on with eye that something we making one sure would so but our keen we relative a that but on crew something Wattenberg. I would at see the we're

Michael Gallo

That's And follow I you. up. say helpful. Thank

pressures future your line development? process of declining line mentioned decision-making year DCP the pressures affect to system this You current

Bart Brookman

start pass I'll a of in Lance guess I comments. couple and probably

we we're that that's effectively. like think the us I plans. the really cash it don't so really that think steady would been guess looking flow that get cash we're forward this point and be is the at flow. produce, to to opportunity capable or over, Meyers we're feel we're That I do take and two on next years the it's something focus to gives we're year it capital what that something trying over probably at look will state most of free and looking can Scott is again, we that described, focus thing an free so tremendous primary change the to and really that produce that I back we've thing our of, to are

Lance Lauck

can the that we've our us as it One more thing in over ample just system. project that Knowing performance we stable that budget with for makes we I'd clarifying capacity line forward. add going pressures that in with got well much the to pressures see that is time. in It with on system clear count

Michael Gallo

again congrats that's quarter. the Thank Perfect, me. it you for on and

Bart Brookman

much. Thank very you

Scott Meyers

Thank you.

Operator

comes from from Your Noel Instructions] question [Operator Palmer. & Parks Coker next

Noel Parks

Good morning.

Scott Reasoner

morning. Good

Noel Parks

situation that numbers Yes. but at just into bad see some we'll I done it of of normalized commodity on or and from missed do things. sort for of back to just they sort conservative you with but looking what of XXXX how forward, looking cautious end they more by midstream you model my then, I seems into improving quite I of overall not of if look right the think quarter before assume wondering, differentials cautious with couple prices you said and be the look are was more last quarter, remember and, I improvement of were level. looking a you earlier or you the helped, pretty I along be as I'm on and we're the as have worst just you sort strengthening. but inclined still future. it We're might differentials to will the had

Bart Brookman

Yes. great No, question. that's

$X barrel to to big keep item I talk then line that we're go per contracts deduct fit clearly had role barrel the over there the has factors the look So mind $X quality I'm of of year speak improved referencing The Slide and at XX that that as are you that DJ that is here second transportation and of this, the quarter. substantially the the half second quarter, the improvement a because in $X firm projecting mean, over barrel. deductible the our into to we second in and the quality, role and DJ

see why in that $X midpoint half real have as for barrel let the more of then shared reason versus reduction we weighted you a average in more on here per all. docked; the go that's just XXXX as got improvement under purposes accounting Scott D about Meyers of and our barrel, that's And that me there second the touch So just, quick. we year. we if treated TGBP in then prepared And revenue and his the of remarks,

of both realizes $X for of kind barrel a each you the and to barrel. $X those about $X let's look midpoint at about and to the per about categories a long-term and go say the up price do back fore-sight, XXXX, just XXXX you If deduct total add

there's that. will $X contracts a So, about the of two higher-priced inherited reasons One contracts key that. barrel we per forward going we higher forward. merger time. work few part for through is, all That's a Deduct are And higher that

of the in and thing second second very Wattenberg quarter best expired. The oil year, is our contract contract this differential that

XXXX in the say were XXXX. in $X those So in a $X per barrel at as a versus more supply two barrel role things

Noel Parks

that thinking a And particular vendor talking expired, it actually that you. a that reference future Got I for with about contract as and is the point. favorable about just

would how it? Just the you was describe named -- what or contract just

Bart Brookman

so Well, of on that contract specifics the into was contract. and to can't go favorable team but there that marketing very contract a was the that PDC, our contract that was to able big we complement contract ship secure that to

So over to with. that an exploration that's came

like a to various we on our monthly outtakes pipes basis so, lots different to And monthly basin continue company. the of of if and for the maximize for netback for will, on look, said earlier all in we both oil you

Noel Parks

years, ask couple five Great. to maybe the How term just bare was a this. years you Is well, for? way of And contract a actually or? long it

Bart Brookman

said on and multi-year favorable able arrangement was contract was the contractual us I very were get to company. that it available to we a was It that as to the

Noel Parks

a on know if is, about back other the big the into front Great, anxious drilling I service just days, I to mean to it's but curious thanks. try basin. customers And a wanted factor, with don't I levels then being on confined I These vendors activity of really topic kind in just rumblings few your here lure the my started completions. to our touch maybe

of wondering vendors, much get to year-end and if, there's calendar side the the an you instead trying plans lot focus of year-end. the XXXX just XXXX I'm a being inbound for as of for if guess, wire I'm set under the On from I calls on. get

Bart Brookman

the that's and for you're ready cost. is come to, fall back it constantly tremendous laid companies we service Yes, obviously getting speak, we all somebody that we a as And out before to this the it the cost most process, late something substantial teams it we where a we equipment in making have thing. give type was in of of but And trying, we we budget correct. would there providers --but already point But finished year. think year, there. from that I earlier most the amount going don't think it's as pretty that contact are earlier such that down a at for to move something was is wanted all because assuming we're expect It's is of even to with are pretty, the that first look of consideration you I already tight the great of

So, really it move will don't but expect to be pushing obviously, a lot.

of is the back the something coupling is that's most end combined. all part completion there and quickly a was we as possible question at lose for crews sure the think that And can us do and can away operation get as a is efficient drilling the the the the equipment which Dave, will pace as that obviously focus back concerns on all get I be that to best we safety the describing more that. with give we important from side, making with tremendous can our you, year that the crews perspective is and us focus team getting the of the we perspective you I is towards from and were at, to best that looking

focus to job that the operating good budgeting for will that. and So they're sure, the of doing preparing be for teams be the for a process

Noel Parks

forward. lot. Thanks a what That's I Great. was looking

Operator

further turn no Brookman this now call time, questions any showing closing I'm And I at the will Bart to remarks. for back

Bart Brookman

call and continuing forward to, forward. Yes. everyone deliver for results for as today Thank and to ongoing going your We thank your thanks you, you positive in. listening Sylvia company a we support the and appreciate time, hosting look to

time. the for you thank again, So

Operator

you now does this your conference. We for participation, thank gentlemen, disconnect. may conclude you and Ladies today's

PDC Energy (PDCE) 8 Aug 202020 Q2 Earnings call transcript