PDCE - Earnings call transcript Q4 2020

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Operator

Good day, ladies and gentlemen, and welcome to the PDC Energy Fourth Quarter 2020 and Year-end Earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instruction will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kyle Sourk, Investor Relations.

sir. begin, may You

Kyle Sourk

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

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

Bart Brookman

and appropriate call only Kyle, you, employees. I you all It's everyone. a with the hello, today's to PDC thank sincere open Thank

execution Your position clearly commitment looking navigate most to our of to the PDC believe commitment, as business of our excellence strong and I forward. perseverance financial in be industry remains presentation. helped today's in this history and ever, plan reflected continued as operational have investors, success some company long for and our times will of uncertain And our discipline the the and

to themes listening key be Some for.

And flow projecting exceptional an X-year of SRC company returns, merger; the continue strength billion free over benefits the balance $X time X.X prices, $X.X First, the reap ratio, X% an in drive program. last, a continued and both to happy announce we share as and estimated the sheet to are ongoing strive our X depending flow efficiency the yields; with through yield. focus billion financial to capital program deliver operating. and Top-tier the value X% is third, to of to outlook, on which a investors our catalyst company, today, and as on a our we of PDC; anticipated cash between structure, significant I planned cash to flow strengthening cost of our continued for and free years free commodity and repurchase for gains cash XXXX sustainable assets be we leverage and as returning expected midyear top-tier dividend am industry second, start to the a margins

BOE early XX% approximately for on under highlights primarily a of in some quarter-by-quarter And cover a capital the cash per This our cost due of transaction. lifting to barrels Now reinforce this $X the we is Free $XXX XXXX with of commitments costs to G&A Production for and year the down a of closed XXXX. million merger the $X.XX per will year. details improvements, internal but me trending shareholders. let better record. for our company $XXX expectations. $XXX more remain team investment I post-merger of from flow paid than the XXXX our year BOE million budget, XX.X the the focused let of improvement XXXX. the is internal than SRC since million for equivalent, oil million, debt We

around flow $XX reduce at $X a and ratio under cash, or company free better to continued our billion. available should $XXX XX% XX% abundant and X.X under that and total to as growth calculated debt push generate our a You our capital discipline barrel. planned for of industry-leading activity, deliver expect spend $XXX And cash modest the million reinvestment anticipated is margins we to rate with levels million oil our near leverage and

address of A Last, ESG. our the history value want the commitment I announce to of the we shareholders. I direct reflection earlier, noted returning first As are our to in company. to to excited dividend

our every their the operating of to Directors Let starts through outstanding XXXX. thank of from commitment performance top, me in safety at Board begin by teams level PDC's ESG our extending company. for the you sincere to a

and Some flaring examples on investments, rate We of X.X%, corporate strong Delaware for gas a X.X%, technological under greenhouse series and reductions our progress. both company. improvements We methane wrapped our year the with up practices under through emission remain last rate focused operating and of a improvements.

give at giving to a in way. a perspective, commitments the commitment that, inventory. going on And our communities shows and our recent practices from this the PDC's meaningful strong, continue to strong best also to governance our We on I'm real our programs and you build to to With adding quality level update of to very and diversity. refreshment an over governance Board charitable Lance turn call

Lance Lauck

Mark. Thanks,

provide a that including drive locations. our we the X,XXX projects approximately X,XXX to inventory in in at Beginning our updated to Delaware and at XXX results. inventory, our like one 'XX moments, in is Wattenberg year to guidance X, This forma first for and year-end on outlook the total X-year practices increase pressure Throughout past Wattenberg first few in call and total improved line consider XXXX, we the inventory and the benefit our basins SRC I'd our of the consistently several review detailed well our Wattenberg approximately We pro DUCs years. out the were Before tremendous we projected course locations count XXX field. lower Slide wells year-end XXXX. both to certain compared updated XXX our in by position or than best spacing expansion because several represents in line able more areas spud XX% of from of locations our about pressures of organic that we across utilization year-over-year. Is compares to XXXX,

of at be in at lower step aimed will designs and management testing choke shown from the techniques bottom and variety further completion line the benefiting pressure evaluating increasing economics next of a slide. Our the

geographic economics, boundaries. the boundaries the major modified a the closely before the to not result themselves SRC to township more merger, I'd line while of range your like Finally, some have areas changed themselves, to the the call in attention names reviewing we've as of with

show slightly Prairie and resulted will this moment, has areas. to boundaries smaller slightly in summit planes Dave compared a area larger in a and our prior As the

for X provided can a that key Prolific TIL X next -- on is over all areas. takeaway our and the planned results right-hand as each our our in less the the that are areas run the our below unpermitted years. side X as at projections $XX of X I'll of planned the very approved $X.XX our A is organization permits Price inventory high-quality other current note strip. current the You well that demonstrate is yet here of next and WTI, DUCs, economic areas realizations. in in our to on returns activity we shown XX% than TILs per update actually inventory $XX our the as of see Kersey area, years these detailed well well the table. NGL the in is nature X This clearly barrel of gas continue located per

locations XX%. average rate approximately areas and incredibly you return per Kersey, see, for internal well our in can Plains Summit XX% As weighted between of and the are strong,

our s well. million per While of X.X averaged PV-XX north

area repeatable solid Prairie offers and our returns. Additionally, very

to acreage upcoming and trades and to our interest through our pressure designs up other highest X have active You'll area small as we the in has has but blocking than area. excited Prairie modified EURs position also value-added not we it our areas, to for notice mind, keep in could smaller which several the been improved in area oil our working increasing bring We're lead on economics lower projects, percentage. acquisitions. Please years focused completion our this this

Before I leave call the our economics. slide, I area Plains want to out

gas percentage, and Although with strong it represents consistent natural Summit. it highest the also our very that Kersey are area economics with and delivers competitive

we X. Moving in Energy. through with Slide the began XXXX merger SRC operational our to We realizing highlight synergies

and SRC to recall, combination you synergies. in well improvements best the in we the modeled merger potential an quantify structure recent never the associated are but pad from PDC well to SRC the times. our from with of synergies practices acquisition has the cost the led our the As These benefit the curve G&A significant improved drilling performance midstream type Throughout field. performance, year, seeing compared synergies we operational operating and environment completion operational include

route glove half of BOE directly team fit sign, has of reduced LOE contractor assets frequent contributing standpoint, for We've and the pumping per which optimization, back economics. to management the to an overtime Our PDC From all desirable needs, hand allowed in and has our freezes. able and more program, less line is streamlined facility implement the of our choke XXXX. LOE to SRC contributed also a level, approximately basin improving $X

As a LOE we XXXX. slides, of show structure Dave in couple very in competitive will cost a expect

improvements color day. a spud drill per of to continues Dave on Finally, our Again, more moment for in we in are XX% but number and seeing the drilling more this to improve than our stages will of and its completion team XX% approximately spud times average efficiencies. provide

Slide the an Delaware to We as inventory provided area. Moving on our by overview of Basin returns as year-end well begin XX.

past laterals competitive reasonable Delaware driving Over at longer focus value within and our This years, appropriate steps returns the up we've space pursue taken to high-grade several commodity is the inventory. and prices.

lateral years of year-end, the of This future zones. to A about identified with about in of Wolfcamp X an feet. focused average X,XXX future and activity we've equates turn-in-lines length approximately B to As XXX X primarily planned

that count. in of we also included Our locations position inventory includes SRL a number have our not

increase on our opportunities is through team a Our of inventory acreage acreage and to trades, cost-effective small venture ways acquisitions. focused joint number

further were as Additionally, certain well to DSUs, we assumptions, opposed could our expanding density is if modeled today hold it runway. our increase pricing believe to where in we

of block inventory, areas. DUCs table at As and relatively the North central the is split Slide you bottom a our between evenly on can XX, see and X including

Wattenberg nearly at these relative values $X oil average. sensitivity mix than there's on in locations, the IRRs and are see slightly while Because are these of projects and around a million can XX%, per locations, cut higher oil higher to slightly current you more prices. bit lower well greater averaged EURs our the that the a offer While PV-XX

this type oil, of curves compared is shown portfolio. s per you doubled to it in the Delaware $X staying million Basin at Likewise, to and nearly overall $XX overall well $X approximately what value to diversification NGLs, brings we have the XX% and contribution the to about slide. opportunity our gas, the in $XX with If on pleased the XX% with average. ran All PV-XX and we're all, on projects the asset IRRs same position very

economic to teams company the cash to deliver flow delivering drilling margins more for of on capital-efficient material safely our These their year efforts enable significant that incredible repeatable drilling inventory along Lillo our combination future after strong and the With of discuss year, I this uncertain portfolio result locations, and years. with has and in to call hard So responsibly. over capable free a our costs work, both all company unprecedented of XXXX summarize, detail. through to and sustained times of the returns plan the for turn are in many a thank built adaptability the and strong Dave focus teams, I'll It's Dave? want and XXXX. to that, accomplishments

David Lillo

Thanks, of a capital $XXX investment which Lance. XXXX the our projects XXXX, the expect seen our in million, which of Similar XX. highlighted the $XXX spend Page to first through range The is to of half really to strength with we is begin million on approximately budget, year. XX% we of year

free we below current the million, prices generating strip. significant cash Bart well of mentioned, assuming anticipate flow north $XXX As

incremental half modest XXX% and in capital current to commodity operating back environment are discipline the the the we our in While potential price the plan. committed costs lead of demonstrating current has year, to

We quarter quarter our annual to is deliver fourth in only -- in and an expected pleased an BOE for growth XXXX, day, growth XXXX. flat strong as barrels fourth continued to From per to to output day growth range compared X% XXX,XXX our XX,XXX are model XXXX. Total continue production and to standpoint, of treat to between XX,XXX compared relatively XXXX ourselves per production position not to nearly is over XXXX. XXX,XXX of average but oil success

add quarterly downtimes, I'll first Basin. projections consistent we've on of these in we the some experienced with right-hand our and Slide focus week, further the in evidence cash past Finally, being our primarily provide include of output. is quarter the production side XX. flow free weather-related This as top expectations Delaware priority

XXXX We Wattenberg on Moving details our provide XX. to Slide program. more

the our on see boundaries the Lance right-hand redefined can You of slide. to side area alluded that

in the our to current to non full-time a an team its more in the a to we also uptick due that best-in-class. a invest XXXX $XXX a drilling For operating From of standpoint, expect intermittent with million ops compared and a basin. bit rig. to million, on completion year, pricing, our use spudder to All completion and demonstrate expectations rig note, baked continues $XXX activity crew driving in we've drilling

to XX lateral continue efficiencies, We per pumping reach spud also unlock completion extended spud days while stages day. X averaging now to for more than

environmental a tremendous is incredible aimed this in $X.XX than the aero field and is for of up $XXX the retrofits to north includes per our performance as competitive X,XXX entire our without of lost XXXX. our $X continue X.X safety decrease installation. more stages in approximately surpassed we project through well a adds performance All days per Last, a improving recent XX importantly, days this low Wattenberg nomadic of per time Our lifting team as accomplishment costs foot, XXXX organization. approximately facility lateral and day. and BOE to just most XX% But incident. to and million This team costs from

to reclamation of We XXX plugging also in million wells. plan and $XX invest approximately nearly

we the and the reference, well the And operated count of for more wells. For past reclamation X,XXX completed each been basin over few than we've past decreasing our years. have the X P&A in years, of

our we Wattenberg. Moving regarding drilling in outlined future approach to Slide XX, permits

plan as longer-term This we I XXXX, important in and this We Earlier we offers continue few to flexibility the application the an Chairman, and reemphasize he to cap, COGCC want plan, hand. the permits Rinella. to in tremendous COGCC While relative of yesterday named our a working initiative signal have through this us work on out This what basin. DUCs Lance an the with PDC. as XXX deem the his to with or and we stated in currently is cap incredibly he our minutes is closely time prospective mapping development stay filed that a week, our XXX in touched excited have process a area for work comprehensive formal and process confirmation through PDC application with hearing which intent ago.

and Our and team XXX cap shelf to X with expect wells years approved. the once XX include a approximately is we'd currently designing between future life

While management working approvals, permit county, our best ZIP Weld continued code, extremely lead we and relationship with of the confident our can't predict timing flow. practices, are state we XXX% that the will to

which in, year. more a Each more of XX to a valid oil pad, our We or half approved turn-in-lines approved also early OGDP, multiple gas GDP, and expected permit of X in first these are pad followed into for wells development and plan our permits, apply DUCs, for approval, XXXX plan, years. consist single permits All quarter, including when applications by upon second than the secure of XXXX. than X,XXX wells, will the

to Next, the moving Basin. Delaware over

see. in which all $XXX expect oilier XX for rig turn the drilling, We $XXX completion our in We're foot, IV than to facility and expect to per invest these compared operate costs year, we will full-time the approximately to less million part-time $XXX oil between XXXX. weighted which Block drilling and second million of to our the projecting are and contribute to crew, we timing growth completion a in wells, XX to come of line savings half a and X% between of turn-in-lines all-in

of In anticipating somewhere we're per BOE of the terms $X neighborhood for in the LOE, year.

want hot for intensity, E&Ps. which our I a topic all flaring to Lastly, is touch on obviously

reporting this still demonstrate of Nearly in routine the Bart none our purposes is intensity X.X% it for essentially, this sooner while volumes. was contribute hopeful and reductions volumes plan all year-over-year of upset to Delaware were our will improvement X.X%, this flaring production HXS. half conditions. As mentioned, flaring on was XXXX remaining to to In are the HXS by safety related meaningful flare to we new in definition, is to The player in equipment considered our in technically area. install goal related our wells cycle XXXX,

as in closely and Delaware working continue midstream well We our year-over-year this ample to successful as and to will committed this providers another are capacity looking our we're strides timely forward projects to And solid lead area year. We in, value. Lance to with generate connects. demonstrated, third-party All hope returns well. ensure

operating handling to down returning between curtailments over, production, banner turn XXXX With Scott year. all to safe will assets call all the want tremendous I in to over SRC the turn I people was for manner, a and and I in their XXXX thank Before driving integrating work that, and the teams a costs call Meyers.

Scott Meyers

Dave. Thanks,

record in quarters cash BOE we've consistent but to BOE. Before in on -- X track flow giving cash world. our over more of our annual per execution look generated On world. putting volatile cash in each a stress of cash $XX debt our can flow Generating per from shareholder to the on budget X-year X LOE detail of and We've XX, quarters. and generate G&A point feel see free in together free of it's a in free top a an XX flow. you next and reduction important price to commodity cash past free the ability outlook, of a flow We've targets in each goals I years. quarterly in meaningful the X-year reached highlighted the and dividend with incredibly important Page only XXXX, positive past couple outlook lasting, return our basis primary years to past is bottom, our of flow, quarterly free clearly projects our one inflection X not having Further, the X years, back

XX% per In and SRC terms includes BOE that costs XXXX. of in since improved numbers $XX than of transition transaction our more by million we've And G&A, XXXX.

figures G&A our per all-in noncash of XX% Now million run improve quarter, cash rate just expect rate our reached run of that $XX to additional XXXX. XXXX our an and to of we've compared over

more to compared an XX% of BOE XXXX LOE of Finally, per XXXX. improvement represents than $X.XX our

entire continues projects combination terms free Our and high-return it's G&A, of impress, cash everything of above today, rest stand the you've that team allow to seen in a to generation. drilling us LOE, flow

X.X of sheet. buyback XXXX, we date, down the billion Next, much $X.X we January and the reinstating leverage February the ratio XXXX, of $XXX million $XXX reach before our half absolute are share our paid balance a more consistent program. to transparent debt debt. additional reduced exited Throughout million back goal of and about In and with of to an debt and Throughout by we year our than times.

As you reinstated billion last program. our will have reason. for achieved night, and one saw our this buyback primary press I in we $X.X target the release bring up

couple reduction. next We've some and the cash Over as XXXX. our operating outlook consistently to our strong well flow commitment discipline allocation capital debt We exceed for program, these of meet you're in incredibly our numbers. to and see in slides, discipline feel incredibly confident going to or free commitment program in hedging ability financial demonstrated as multiyear our through

As truly Slide we in on can result, have seen which numbers a $XX some be staggering XX. a world,

We capital the X $XXX First, discipline. next each and between $XXX plan years. of million million to invest in

flow is $XX, $XX to a billion our of this to range unlikely reality given all prices oil and instead in a done current $X.X at program be program world billion sit. free billion. a it's job You'll a X $X.X and extremely has X of of a our Dave run consecutive capital end in in MGO each especially X-year 'XX $X.X years, XXX XXXX gas, has $X.X great floor to range and of results our our billion year cash to again notice similar outlining the cumulative low for equated These XXXX. where outlook very plan

the cap of do value. $XXX nearly can projection. couple million a about current I'll half to of about or approximately cumulative balance, one-third free debt of at cash add at enterprise our ways period. our look our Here's that strip you the entire to but market you over math, prices flow current let of different It's equal another X-year

we're all not cash? do we Now going done what reducing are debt. to with First, the

ratio. years. -- at debt a by has us this debt Xx net reduce outlook, to below next In expect over X million leverage reasonable least We $XXX price comfortably any the

for stock current goal to more buybacks include payments. the our is cash flow anticipated between the shareholders $XXX million return additional based does free million This free on flex than through of cash strip. the buckets and dividend quarterly Next, additional $XXX to flow not to

to these outlook match. is on oil We this confident our operating and this execute are ability scale, extremely of to deliver numbers. or plan tough mix to basin, in Regardless size,

slide terms outlines of commitments cash allocation. In our final for free flow our XXXX, our

to focus As reduce as strengthens $XXX to leverage back converts plan aggressive small debt year our a Lower revolver reduction to you and our well we as be our we buy settle have debt pace, cash least absolute march ratio. debt dividend. positioned, million. balance return correction, this total can to see, on is later We the shares primary plan program. Should in we shareholder still at but there by our competitive a only not towards our sustain onetime another in are an only still

make our highlighted of people the possible. of operational we every a this shareholder is and debt As Board and between program ingredient a be begin financials program, operations, all it transparency, do, PDC. such new excited plan. mid-XXXX to further commence $XXX the Last, opportunistic X%. this dividend but our as and for at our day. But Today, best only capital our to our together of reduction can approved you this making cash Bart working for all not execution. this our X% of free to at all returns. it to mentioned, of you long-term era excellence P&A Thank PDC in target PDC track the with assets, flow that the approximately look cover needs, million, key all flex differentiating record our amazing yield Tying We're are a

next Q&A. turn to it excited I'll the years. With you We We the so hope too. for for operator over are several are that,

Operator

Jayaram question Instructions] with We of the coming line first have Arun our JPMorgan Chase. from [Operator

Your line is open.

Arun Jayaram

potential you, perhaps On in side all bottom -- math, Scott, $XX. the of return 'XX. flow, My lot this Yes. numbers XX, generation of at what on many in the free Bart to What and Analyst terms the of cash question, really and highlighted you discretionary of do detail. free 'XX to we for if left you cash Slide detail we're at the a terms something versus team, some of it, first like of the with opportunities great appreciate pronged under approach X the Day, could our $X.X between the cash in going flow cash get debt do additional call billion these strip $XX. free flow paydown, model closer to to look

Scott Meyers

Yes. price That's what a of until get once plan great say debt you commodity free payment could billion, debt be now, largest would bit in cash question. being And years. or -- our X a so years achieve our I we will potentially right X-year the to environment, of this $X our current we might little that in be see below it a we these more instead plan, than plan, X able balance wedge the flow.

but $X a at billion. of we I were balance we'll think company billion to a slower that get I of having pace it down still under $X in still debt, We the debt want just to get think continue is program after where good. a debt, play to mix because

return our So the be debt start I obviously, to we shareholder. increasing reducing capital speed when would say would of the opportunity to downs, the we pay

Arun Jayaram

new Kersey maybe the there and wider increase reduced And delta And between or the regarding was increase that we've from pressures -- one talk to maybe you bone for if can there? meat understand Summit, you relative the maybe Lance. that guess is wide We the more getting plans, narrowing a been line And cetera. the completion inventory. about et design of hey, wondering the thought number is one a questions maybe if delta is investors the I little economics at locations. the between economics of behind you, was just to helpful that what generally I could provide bit versus

Lance Lauck

No, question. Yes. great

per per depending So the XX what part I'd section is to on in. ranges the around wells sweet field XX spacing in say from general, equivalent. in of Wattenberg our really you're XX section, wells spot our

and SRC that's outperformance back but it'sa you specific of Arun, that wells XXX if trough within well areas is when of pad on approximately XX few the field. our see equivalent look spacing by So look the the you areas tighter that XX originally that really, that there, of pad from tested at wells itself, were And increase these were year-over-year, test. total, a

finding that's there we're so other certain taking learned SRC tested, field. test, the with we are we're we what what and is it and areas And far, we've of are so has of additional field continuing are and why that successfully that to areas applying the

go, So the so performance. seeing is what to still basis in density much. There's increase but really we're areas of from key we some more the those increased inventory where we the see very far, like

look to are the you the compare in some the and course kind sort it of of areas. the of of question rest the differences ask around If you sort then of

that I which And is then an drilling million a the that's lateral. done XX% the cig in the more feel $X.X a it team X-mile have down rate got in wonderful total, very you where and think of can anything XX% netback completion strengthening prices of We've gas the have return are why we comfortable in gas where and closed saying the of our our approximately lot Plains is oil we area, a costs coming with that thing to a this take seeing his prices. for NGL prices along that deliver from in than we're as that area. tremendous only That's getting Dave differentials really job area and lot.

the really time. us tests to over with have over time, economics is continue more us line for and ability these much continue improve the a this so do to lower of now these that enable more And fact upon pressure we and midstream to based foundationally,

Bart Brookman

That Great. this Barb. is

to Lance. of a Just couple adds

the Slide X EUR at and look at drivers. big we and area, point, to it's look if of couldn't on the that's Yes, in that you in be you But table, the pleased If Plains one gassier. more opportunity Lance's here. the

per when the You're portion the in the into this he goes are tremendous, space. basin. reserves the deepest, of back and The started gassier in mid-XXs hottest well

And But per to overall, mix and the so a we've well it's always known it's reserve drive of that, the really just quality commodities. returns. the

Operator

We with have Umang Goldman of line Sachs. our the coming question next from Choudhary

open. is line Your

Umang Choudhary

Wanted to how flow achieve appreciate shareholders. billion, allocate flow allocation dividend. have priority to do you might the Once free the to cash on cash $X you debt any incremental on priority. of thoughts follow-up objective And variable the plan I you free

Bart Brookman

is I #X march, get to again, be both would going priority it's shareholder $X that they're to returns, right the The to be Okay. mark. meaningful. say until going that debt as now, we billion we But

it's code because as going we're David largest working price. the that buyback share now, that appropriately we is going to tranche. risk, inventory And want if apple see not to understand and hand-in-hand is sure when say is in We down we that And just we that have focus I be at the once and our would that we're a other billion look the permits, approach Colorado up think to the believe differentiation. the look we talked that of then hit it the see Zip right now, the still stock important although -- reflected would valued you to you confidence multi-faced that so Right a open I and with But to that forms returning $X don't we we becomes you potentially of do, state. about still line, debt of the less make shareholders. is

look the base the So on program. this the variable. line we're we that, being it's cards we dividend buyback The execute we now, after a really were able a can right finish years. right forward now, about starting looking consider next But to summer. and in the not maybe down share foreseeable couple of one excited And to for

Umang Choudhary

Great. process And I good How if And next OGDP and you milestones guess expect Colorado. as the on highlight the plan? that's to for in any comprehensive mega segue you can you do the permit to key process out? my play a apply question the

Bart Brookman

Thanks for question. the

single collaborate. is application years. the involving multiple approach, are And the an OGDP, commission, which oil have caps, both the they're plans. in in a the gas kind area X of philosophy we've It can to development our larger a X-mile they and local these taking X group all by and We've or larger we're the early facility smaller consist on, too. a involving plan, for good local acreage the way OGDP scale, comprehensive and pad wells, a scale, is laterals. and So identified which pronged an area pushing X then the development approval with to for which adapted for state preferred larger block well there, locations, be larger a state continuous of and And planning and the we and to apply government, need you smaller geographical

Commission CAP, Hopefully, to We the we wells then your it's a XX,XXX and have question. we Gas And our and step first And wells. incorporate with us. this sections. we earlier that have larger in our just week. XXX which incorporate Oil what applying to with XX And over is really one area call that going Large for excited going application the of about answers first to getting stay process us is they're here. work a static CAP made

Operator

from the next our Johnson of coming with question have Rice. McIntosh Duncan line We

Your line is open.

Duncan McIntosh

permitting David, on a just digging Maybe little in for more the front.

in assume which inventory you plan to from kind do gives next there out putting in now? make let's sense these That and focus think obviously together these and kind can curious is the on acquiring you lock early that mean, for successful, the most step beyond way But CAPs in how So through there today. long CAPs out What's I of you or take good on the solely up X of that you'll there GDPS. a are go longest XXXX, that? kind term just you to these years lock about so. most most the to are pretty inventory. if the -- It you of seems successful be things that

David Lillo

said It that X plans. CAPs The weekly way. gas profile we're our at an And through analysis being impact be XX of one kind X kind just on X almost really we're XX and you X together. -- simplifies that's the best the we CAP analysis, those where we've have that like impact to X identified, to simplifies So towards. continue the we're CAP permits, really look OGDPs at I and like more the development CAPs analysis so and to behind preliminary, oil the and just environmental put starting process because alternative location just of in It static XX before, process. pushing commission plans team's sorry. one the OGDP after is going them those work seems looking to are with XX that to initial had I'm and

that's kind our future So philosophy. of

Duncan McIntosh

for And your Bart, maybe then, Lance.

seeing the to just general you're there On front, been market. quarter, in rejection in that It if relative forward? you're in give have just decision any the to the And some could going to recovery, market. strength that drive kind looks on fourth seeing from going NGL what switching could some of you color commentary what's that like

Lance Lauck

Duncan, Yes, this is Lance.

than we strength for where that that We products for what's rejection higher actually of NGL to demand, look seeing we're is our will our sort price us all. do and are Delaware the supply what the case determine there. seeing versus have and we we all definite in the Every due the use assessment on NGLs netback in $XX at seeing, best We're and Duncan, just areas recovery of currently. an storage month, to much

because our budget that within together, we're that's sit for budgeting factor all we of And recovery. to CX And currently, into of numbers our what now, modeled we've versus put we're throughout will as participate budgeted on that the contracts netback same And process. is percent us the monthly percent for in we by best for process a basis we election. analysis make that Wattenberg determination And they prices. proceeds proceeds, DCP field. That done a then where that so the in that rejection more of of mode right and once at sort least have year. you a those because in the And going be here,

Operator

next from with coming We question have Citigroup. of Brian the line Downey our

open. Your line is

Brian Downey

it's on is might new planned, do the everyone. with if hand? point know case area the -- But is hypothesizing approval the wells all final Could at compliance there? On when timing update this XXX on for us process up in the you those we I goes plan. see you following on as permit think base questions

Bart Brookman

really a question. That's good

the As applying we don't There's continue other earlier we first to as We a the that, get work on to commission steps several out part gas We're in. permits DUCs with sooner, bias don't the we time. mentioned, really this oil really said, started how feel. of XXX and over have local week. around there good I process on a have permits oil that going good approved all and feel us. have be I gas Like hoping and better. to commission But to turning and the the the we is the XXX for governments to

So too at timing we're really worried the this not point. about

Scott Meyers

the into kicked we effort last Yes. the plan And as we really incredible actually the pleased. And of get were commission encouraged that submitted them. that here they were all had to Brian, off, to this expectations outline with by teams that really ahead said, first our Dave data step week, our probably was

sooner anticipated. other step to land So probably because difficult, there's a we the be lot It's very predict and ever than to all that expedited done. work steps of was technical first

the decent So any step indicator, first it's moving but is pace. if a along at

Brian Downey

Scott for you, Bart, or then, Lance. And

item development within your business as You initiatives last capital listed the flex bucket.

around normal investor call few or if you're to you more land if what that's a clarify represent received we course sized Could I'll questions bolt-ons material contemplating within work that? that. So intended

Bart Brookman

it's course land Yes, great just question. the work. normal a Yes, of sort type that's of

make focused several for the And trades. win-win block Delaware, milers. And longer both laterals. make mostly X X milers like we've efficient to We're always sort That's and talked there. we're that's we in on such a about of got very trying So a way. parties up to

So wells we're the the to company's joint we their parties I open of along lines acreage think one on another person, types other some structures capital of talking there might venture, we there. And another some a we're bring to drill with where where more sort then that's acreage. of

of look currently very, acquisition what we're of has when very, up most think -- we types we at. long be it that's overall summed much portfolio a very with and you but of how what at with might breadth what have we very have, have we the small that's And runway really inventory strong focus a have. look of the company that We So at, I really all economics. we there looking may the

Scott Meyers

restate, flow execution priorities to the Meyers cash of And Scott the are plan the our that outlined that and Brian, we covered. free uses just

to clear be just that. I want So on

Operator

question line from Truist with the Securities. Dingmann next coming Your of Neal

open. Your is line

Neal Dingmann

better out, just see activity on talk Could a for you trying half I this but second to kind maybe XXXX. the cadence on I'm just kind plan translate that on get into level little will of bit year? how of a the handle laid and

Bart Brookman

Yes.

free you're flow kind numbers? talking more of you're talking about when cash cadence, production, So

Neal Dingmann

That's correct.

Bart Brookman

Yes.

Okay.

it's probably for you in when at can year, for capital XX% So spend of year. the of figure about the you look first the half

flat be quarter capital. relatively The should from a third fourth

highest crew that's is quarter. for Delaware be because the we'll our the capital to completion quarter basically when running second The definitely going have whole

turn running have to the and you production, early to the parts going relatively it nice of quarter When quarters we're through continue production way starting start going be what's and kind when look second your as growth low we that's some lines really fourth of shot completion and the in Clearly, in and when in third at first look And kind at gives in of a So we're now. second quarter. quarter watermark, that that's I flattish the capital. quarter modeling are Delaware have crew on, the happening will the to those arm.

Neal Dingmann

just then And follow-up. one

talking talk some are, to have others, have about You one more than that a few certainly get priories sort dividends, the maybe guess, you're turned to more kind once I continue you repurchase of others share of guess, common I all. in you shareholder still down, guys mentioned about, with of that's much or leverage

Is some level, have sense? wondering I of just sort still makes in if kind others I'm that, gone I'm And probably that the curious sort why you can't is where from think is where that just certain that's versus but just level levels, of stock that why still now? -- priority tell there return that, repurchase. the the So -- your is of list you a a in just of obviously, list. And these given guess it wondering I'm share still that that's is away

Bart Brookman

Yes.

process. I call, right. the questions usually on as half undervalued. our still the can shares at at Colorado the think We permitting I you you're look call look mean are

we I at our more the shares trading that have lever. so an we be reasonable opportunity think we We And think think undervalued. are are a while not multiples that would here that still

us of we So path. to get down over once look we that other And to then debt, time, go approaches. look to for might continue $X billion at

Neal Dingmann

becomes as -- continue would ask, soon. hedge dropping certainly be And could case. level has program nice hedging? same you Scott, continue even to to is the it if to all very about very I that the wondering, keep going just would a I'm Leverage just the

Scott Meyers

Yes.

absolutely. yes, I think,

the Ultimately, mix us as us to or in collars as more percentage We hedges give continue run balance as a to maybe many you some layer well as strengthens, the hedges. could see have room. not sheet in

look So probably done. is 'XX 'XX when at our our program, program basically you

when looking we at 'XX collars 'XX, start In close we're just Our getting in the base layers would we're on ready that and to that. program, some of future. start probably getting look program, more the

consistently, wedges that's over time the best practice So us little still for I worked is small years. think the over

Operator

the our from have We with Michael of Scialla next line question coming Stifel.

open. line is Your

Michael Scialla

Ganella color things any building X,XXX where more CAP these know want while. back indicated a you've to on? than got those to you to very those projects. we're areas, biggest you've challenges as can you on projects XX the on projects that them for give quite maybe didn't I'm or the with units know spring see David, Are approved? there say, them. I what excited you COGCC the other on sure wondering talking I'm that feet to within might any the work about those been you I just push said within just commission you getting has

David Lillo

bag be a to I going mixed think of it's challenges.

We haven't went through the whole yet. process

learning. So we're still

management couple the forms, alternative using to think our new analysis, still you government local of I commission entire and area, impact time. gas be is cumulative analysis really oil best can't together learning I place. them. so at very do these the weekly well clean sure know that operator we've coming have our are up We and comment the in and worked proper so making far. practices. do We challenge going and meet what the working for is There's first very we almost the go them. to What put with a biggest I with an on the that at forms location precise on make we back meeting, don't which applications want is to sure have same

and So they out are governments. working what want. still logo we're the very to locations, been there the on similar that with process through We've really for local working these

I biggest period you but a going have clarification give short These point, been it's rules very this at risks hurdle I well this the whether at very in think what place time. of a is, So or for can't only precise time. on

Bart Brookman

kind "Hey, being process Mike, commission we are Dave the diligently week-to-week defined. that's of a And And is and biggest the mind, answer, the with really here's the team state, think about feel with working in risk. I going Dave's literally We've next got through are And steps. my But it. working we good constructively. the saying, and and

the the as is high, had the confidence are operating that experienced we next as the very practices and in that have because and our things the we Our operational the all past. steps, is as in that's have endgame next requirements the here's components commission far of level part in with CAP, almost Here the steps."

a So the reg, learning biggest new middle as number making, the big acreage new thing of we're large I and a think a a learning. we're and the off in rule state's of of wells is biting block

here. So little hopefully, clarity provided we a

Michael Scialla

that make spacing, -- areas was statement? low-pressure too is more simplification wanted the I that in up as areas? that some of definitely XX your to as a the on wells per is you going Or dense Lance, follow-up section. that to on to mentioned Yes, helps. I wondering, just much

Lance Lauck

field. you Codell. will wells areas think different Well, targeted A, in of of we say that type if areas are the to outperforming and different C in the are spacing that general, were the just impactful actually that Niobrara results of in they the on the the in B, at the at very testing because I as looking is look that general, are successful inventory, of -- X, I Slide for success

that well got we're together what test equivalent. as section there per putting is you've So real XX a a stack

for are X of So different developed. test this parts And to benches, all in of if do of the made better field where there's different sense those areas in it Niobrara particular the will. us you area,

Michael Scialla

ask a like not to all with still wanted you about year. Or in improvements, the asset do putting can where operational Bart, capturing sale? mind, up that with prices, competitive in for completion that in you capital if can any region? in guess, -- Delaware But that about, my neighbors just interest seems your I efficiencies one, a crew be the last Dave, efficiencies And on I talked just the subscale of I'm wondering that still mentioned kind there, given you're in are oil you things maintaining have you there

Bart Brookman

be competitive. I Mike, we And can Yes. think

laid numbers out. Some of the that Dave

to execution on years got now, got creative Delaware -- investors through look really we thing some good adding. to and our ideas We've X plan. got we've X X look years encourage with a some comments, and and that on And We're but assets at trades the Lance's We've adding value think right of strategies to all at we're focused ventures obviously, there. would and inventory. to is the the X I joint I to So things.

with So And basins. focus now. right the execution in along that's both

Operator

our coming question have next from Parks of the We line Brothers. Noel Tuohy Instructions] [Operator with

Your open. line is

Noel Parks

using on some you the management? or under practices best heading time that the top Slide of X. choke on sort for Back that talk The last work about the choke of was modified curious, you bullet, you gone practices you're revisit when

Bart Brookman

learn coming that on with line over the based our some had management our different be we've each based been pretty learnings has other. here. We're from years can. lowered on from we're some for much think the provider choke choke practices choke and midstream But line of aggressive. facility taking the years, pressure, fortunate on we and this SRC's Recently, Latham is facility management trying management II our pressure our very consistent design. We've, I We're ours, that to of using

our get you choke management. on anything Lance, So

Lance Lauck

Yes.

do the that brings something that. work said on continue the we lot now. ways to up of and we're the the open think main wells. improves to continue it I choke well, the test forward, to them and that I plant watch, more now to service, facility, very think thing management But got different opportunity David. around sooner the That's which to stuff. things affords styles a And with et DCP's in goes production But to late there's to into the and is ability And us of able designed of to economics we'll have happy be that's cetera. to

Scott Meyers

Yes.

comment Just this one on more question.

practice that I both schemes, design, management, with, things completion think teams of pleased it's the And new trying choke things. the whether design, operating basins the one perforation is and name with of we're you really it. proppant

We and focus our efficiencies and a to program. completion per innovation on drilling of trying lateral improve foot our reserves improving have

curve that produce the factors last to that. the to into now them. can we you whole ability Slide question, expect right a years. that environment benefit pressure of there's to had things the we wells go just bunch the So this X. see and similar And And hope the to that structure to on have a cost that cap line we like in we've would one always X, But generate is X produce best way our our to big probably we

Bart Brookman

reduce line of was XX Yes. larger you turn -- wells the in which the And on, well comment one pressure on multiple pads. these one some and particular, I you more pads this when think and

in have you management be around system the are issues puts that management handle our the can't compression we're clarity it. centralized that more to on more that. If you hydraulic midstream of our your little Sometimes aggressive provider, that areas so able on little a choke choke more can a because with emission optimize

Noel Parks

side. a this And the related sort on around in continuing just case, experiment to and of completion question with, about thinking

directions profit basins and for head earnings about I've of on loading do times to people As is low, to juice of -- they I ease their both up across many season. returns And if listen curious companies, or trying to biased think stand lower was where you, better bit. scale the in fracs actually have certainly, I frac think can everyone motivated well completion? and a basins see your plans during I as or maybe different on the And about going with just intensity sort was to prices larger talk more intensity. with I different that trying were were when toward towards back you you time a can't been when see when soft so different could especially or heard

Bart Brookman

about was per noise wasn't so which pressure, looking and through of many Wattenberg, in the data different on years, In several we've foot pounds sand. in there fluctuations we've and much line had so on working. which tried was And recent working

where using replaces technology we're starting profits Finally these we We're of proppant new to XXX steady and stabilized, loadings lower testing some proppant micro our tests. state line pressure, the to we're to do loadings, that a higher have mesh. it's

getting the years, on safety our connects our fracs on quick good wellheads. using very at we've been our Over

point there's you to We type And to we that data of do wellhead. where past. new done our to the wells. when our proppant line the a have have are they've things, ideas of a noise so time. just of sensors loadings finally wireline some bunch try we testing teams in trying in that NPT not have been we're pressure, come number good to it. and these We've of optimized of excited We've around consistent lot and to But the We've zipper sensing reduced those have things.

Noel Parks

from, you test that from environment actually months might again? stable sorry, now, Bart, conceivable to just X from it's new year have again, a you -- found more now, a efficiencies

Bart Brookman

time, to over efficient, stages And so XX knocking some because testing why critical getting doing these nonproductive day that which able we're is per really to operation that get we're the here. is of on is

Operator

time. turn over to There questions back will Bart Brookman. at the CEO, are no further I now this call

Bart Brookman

think listening and what a probably And you, most gentlemen, is a we the Yes. in really but Thank and we than questions PDC. you important time for thank Little terrific longer normal, outlook everyone just the story. terrific appreciate today. for

you. thank again, So

Operator

This concludes today’s conference call.

disconnect. now may You

PDC Energy (PDCE) 25 Feb 212020 Q4 Earnings call transcript