AXAS - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen and welcome to the Q2 2019 Abraxas Petroleum Corporation 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. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference Mr. Financial Chief the Harris, Officer. Steve Mr. begin. Harris, you may

Steve Harris

Abraxas Thank XXXX Quarter CEO Abraxas the Watson, you, and welcome of today. me Josh Petroleum join's Earnings and Second President to Conference Bob Call.

and Accounting we addition, our Operations, answer after may have question Chief Bob's Engineering In Officer overview. to available our VPs and of you have any Land

would everyone As the results those contained call from conclusion a any be will statements. replay after during a that today the and these this remind are that materially reminder, in are of available the forward-looking of like statements made I not actual call. webcast and vary statements that historical is being to considered immediately call could taped fact statements

vary the encourage contained filings in Factors that our are risk review and could described in Securities we releases. would Exchange press cause with Commission everyone and to these filings factors the to our in our and results actual

to to With like that, Bob. I'd turn call the over

Bob Watson

production afternoon. our headwinds advance of Steve. one. are X% let production in represented in know you, due still variations. gas not Due of you our quarter of less processing second issues and I than third-party to XX% policy BOE unpredictable shut-ins generated wanted all change good caused gas NGLs but quarter, Good considering. of XX% a we a Thank about liquids yet great to a Considering Natural revenue. combined flaring our the to and gas and the

to up somewhat back. relevance can changing a in ever NGLs still do really decide, of some the regain guidance BOs NGLs want for comparison. to in and and to That's it we and Mcf always BOEs BOs BOs that when the convert question, meaningless of forward change matters. If barrels of and productions BOEs the to in reporting gas reader leaving primary BOEs why if they of to are consideration ask future, we and even instead I production report reporting So our all our

frac the four are We're Operationally, things and running approximate average wells two successfully fairly interest the have XX%. XXX been over Lillibridge was do Lillibridge time of working the new XX The with months. these stages fracked wells hopefully protect avoid over's. the over's made wells Bakken and future production to In for coming on some work online in last smoothly. decision and of shut-in were older summer to work enhance winter older the some

the meaningless continues in especially we online Bakken day per an during is to Maybe scheduled is some ONEOK an relief the on BOEs issue the in second where XXX net quarter. come flared new be to quarter. relatively Flaring average fourth infrastructure as the horizon

schedule Raven lateral more the number of three drilling the just X-well one ahead with Rig on pad, third East starting is Federal remaining. Jore slightly

We casing our Jore the have successfully XX-H. of on Federal run first on Forks the Three test and drilled second bench

units. second that bench success in will existing un-booked operated spacing additional is bench The success Continental the currently on by spacing us give second operated And offsetting Resources. and it's has inventory on our good shown

XX% the to The to timing, and such average currently but we pad, on scheduled is in in Jore non-consent rig gas since budget pad East us issues Jore and partner Federal oil a six move going now own flexibility tremendous gives the wells. which well on consider to Federal Extension working Northwest takeaway. rig as opportunity own drilling have prices Due we the approximate unit a to we Federal Jore the interest

of been and under were encouraging. ASC. flowing we pressures quite the Basin, In completed flowback oil Both recently these where Pad Woodberry started the working two-well interest. Initial Delaware have we drilled XXX% have wells on own and rates

below rest casing the the of also well us enhancement is lateral will starting this opportunity the the the release successfully currently the finished, When XX,XXX rig is the B feet Wolfcamp on XXX% second in the production Greasewood work which year. are pad for on drilling owned giving we second first setting We in after lateral. to

three on to our XXXX flexibility wells going We in just Delaware to XXX% be significant currently our status drilled commitment maintain our us have forward. in leases giving program HBP existing

outstanding For flow you to so I our capital of the sure this this statement year, but for there, a accountants up I'm in I'm that smokescreen from facts. actual case understand It the over the out you we about like a principles cash what don't. but relevancy looks had will say, significant accounting threw expenditures

expenditures statement and million a X the June XX for include second million decrease $X.X payable. in for the XXXX Capital and the expenditures cash both $XX.X million in $XX.X ended accounts capital months from flow of quarter

Net liquidity expenditure and payable capital and working and far increase to so be $XX.X capital the second accounts thus during to for million words a accounted our expenditures In XXXX capital capital budget. applicable of that this was announced million million we as used quarter $X.X decrease $XX.X to had year expenditure. other

drilling to We in pad. schedule. -- loaded wells average was and on East budget the the up XX% we are schedule And have right with X due Federal all due efficient along to completion working recent said Jore the drilling the actual picking additional most front-end despite on currently our CapEx, interest our most economically

higher-than-expected out second the on frac LOEs for due pads. Lillibridge were as during summertime quarter well costs the as In workovers to subsequent addition and the protect the clean

to be but is attempted don't know I XX-Q, our of most to in All you read of this wouldn't. didn't I soon-to-be-released assume Qs and I explained if have

the a and of options have enhancing simple and to we with clean two ultimate value. good relatively shareholder a consider of goal number solid assets sheet balance With

attuned shareholder rest management our are enhancements. to and assured that can Board very You value

And with that questions. I'll open for

Operator

first Our Baird. Allman Instructions] [Operator Joe question comes with from

Joe Allman

update question Bob that. still Basin Thank an Williston Or process that on us kind you. Good sale everybody. just of give is, in ongoing? concluded? of is first terms My asset afternoon is the that And

Bob Watson

ridiculous the number of retained a Yes. of Partners still at We're people. It's still -- discussing it cash made with not flow, going multiple We've we're that asset still plain still that so ongoing. some our ongoing. is very issue give away bankers to Petrie

Joe Allman

And could you it's asset shale bit helpful. process? Ford a but little -- sale Eagle the That's also us update Okay. older,

Bob Watson

That's sales doing that from an indicated taken agent and still too. we've over of have people ongoing ourselves our a are of We've and it kind uncovered number interest.

So discussions ongoing. those are

Joe Allman

or then processes asset Okay. on And That's this marketing helpful. other same there on any are that topic going point? at sales

Bob Watson

it of of we've money. assets package a And over together that also we accumulated interest they're worth Dakota Montana putting North We for override years We're area, royalty the have. the nation. non-Bakken in the credit and operated get but some no package our throughout a which Yeah.

also with to we'll fairly considerably. obviously, So up be is cash the And, going those to raise portfolio the to clean soon. market objective but

Joe Allman

didn't Okay. the last see then I press didn't helpful. release. presentation I anything Is a That's out me. there for any And guidance? there. in year new in change full see the

Bob Watson

No.

have that's number, it I've haven't the We yet. is which said changed of BOE that kind a before Obviously shut with gas in number. the affecting we all meaningless

approval board just point we'll our and pending that as barrels changing to guidance oil to our at BOEs. be So meeting guide board opposed of at nearby

Joe Allman

me understand Bob. that help And Okay.

going you can how So are forward? through run guide to you just going

Bob Watson

barrels going per We're if approves oil just production of we're to guide just board to day. -- the

XX% We to think since But wants to a our than called to meet somewhat meaningless oil at what this and gas meaningless point. for continue generating comparison. that I've revenue, credit Mcf of NGLs give kind will that also more we report is ridiculous us it's NGLs of anybody and are do for

Joe Allman

it. Got

okay. -- So

it report a to in going just you're So way. similar

You're just going guide to barrels of oil. to

NGLs? natural just not You're going and guide to gas for

Bob Watson

Correct.

Joe Allman

it. Got

Okay. Very helpful.

very you much. thank Okay,

Bob Watson

Thank you, Joe.

Operator

Thank Parks & question And with next our from the comes you. Noel Palmer. Coker

You question. may proceed with your

Noel Parks

Hey afternoon. good

Bob Watson

Hello.

Noel Parks

Hey.

of couple a Just things.

much Lillibridge. went did into over those? You -- how were summer talking CapEx About the about work you at

Bob Watson

there it's projects. couple and booked had of never after wells being We cleaned were had Well, a as fracked. LOE been out that various

the all clean them successful outs in of putting total them. are them of going so I'm and -- had we've on $XXX,XXX in But in production. on to say back So process

Noel Parks

for let's -- to great. of your up up a locations At up or was much see the talked -- I rig owning just talk in at the slowing out own bench about you times rigs lease more in XX running between? Bakken I later to -- is also that? you the Okay, mean, on that the -- thinking you're I sale you're instance, any some I getting on possibility you Do And and Delaware finish second moving about the in once steady. wound there, you down though, looking said about And in up guess inventory. inventory still you've year. the fairly as rig you something down it you use any of there there's course, have the you have there. -- pretty this you've Would up in about Bakken do for Delaware rig timing if -- moving guess you third-parties activity

Bob Watson

the an you to certainly guess to the What in developer that and proven would has not equipment as it's Bakken. rig we've lowest-cost discussed. It the one I lowest-cost moving the down we has discussed itself very us Delaware. future in of some is Well, maybe time if have a that's efficient allowed say become not that option one

efficient development a And or It's that the Delaware drilling in walking to be we able maybe wells. program would an thing Delaware. very, be efficient rig to that extremely in in say use be very the hope to would pad to same able cube rig multi-well

Noel Parks

Okay, that some in of there anything I as are heard wouldn't the new to great. private offset And we realize your just otherwise or from operators far as companies the Delaware? hear neck observed about. you've I'm wondering single-ounce what probably that woods

Bob Watson

confidentiality remember may a offset number you of As operators. signed agreement we have with

their confidentiality our are get divulge knowledge thought gaining from into what we -- what But the to able process. information them under not to we're outsiders. we're incorporate do we the So, and we're to that agreements, able information

I answer I wish can't So, really that. I can't. I but could,

Noel Parks

maybe you're hearing bit engineering a No Or kind it's whether progress benches of whether or just seeing looking clarity different the spacing or you made about made? the it's maybe problem. being on Wolfcamp more being characterize little just more better? side progress where Could on

Bob Watson

all wells of incorporated our between learned I of is and the vertically, on which horizontally current Certainly, corporate presentation in net we've feet feet count. spacing we've thinking what in gives XXX location XXX from new think between current a which them wells us above. our

the little was our that driver Certainly, year? test more we to a on has down-spacing year or information than production on for the been close gain now own which prime a from a

Steve Harris

Yes.

Bob Watson

Yes.

frac on we're your more more knowledge pretty between the we're minimize if into and day better we're the is But the only and make to we be comfortable optimum every knowledge feet neighbors that decisions. wells So, those or when you're certainly avoid gaining thinking now that the more not doing and that -- fracking one have can XXX not the issues XXX jobs. feet to seems it parent-child the we

some We've business. made of side came considerable very and under the in progress Woodberry far Obviously, frac we're outperforming. the budget wells are so fracs. of on They our proud

So, learn design. own operators we continue learn work from what our incorporate to in from and offset what frac we our we

just in improve has to continue should Bakken. very that going So, the forward as dramatically it

you attributed protocols you in corporate be and the look and you'll joining at has what to it difference it's the decline that frac our presentation, so of are progression same has other, the see protocol. all our see production production If rocks can because frac DSUs curves. to the to And each done

in Bakken advantage eight everybody than learned the play that of we start in about the just Delaware. Delaware have what still we and and the a head learning what but considerably basically the has people there the It's much are of or industry. to newer a So, in have whole up we nine-year

Noel Parks

Thanks. me. for all That's Great.

Bob Watson

Thanks Noel.

Operator

comes And Johnson Dun question our from McIntosh you. Thank next Rice. with

with may Your your question. proceed

Dun McIntosh

Hi, Bob.

Bob Watson

Hi, Dun.

Dun McIntosh

had or sounds it -- the East, some you the With the optionality. Jore you've got like after Raven

of I maybe go to the next What drilling Northwest pursue or on Northeast. that would think Jore it's pad into deciding some it's are not? Jore or drivers

Bob Watson

made and flow would you year at we're guess, budget. say oil be in position cash capital that not. current free statement that to We've the I prices this a we want

flaring quarter. want takeaway, the gas fourth we're we that's to would and a So tired going line as on new ONEOK gas infrastructure see of the of impact oil pretty the that And bunch prices impact supposedly of well. during

CapEx from be If would driver they prices If least at reduces that that gas now positive. be guess recover flaring right eliminates that but would I the positive, a greatly our greatly be oil a or where overall would are then budget.

Dun McIntosh

the Okay. year production since look the this down, Great. corporate of so at end the any XXXX? what you all's assuming of kind what's and And then the at -- -- decline to Thanks. just into lays rig drilling without then rate after heading

Bob Watson

year is And and and that XX% down that's influenced know and it so in five this year or and Q the It's I that's I'm to state Yeah. by it's wells. thereafter XX% second not or XX% K PDP know first month's a we year -- in wells in trying drilling our XX%, X% goes I Q. is to decline I not think. drilling XX%

Dun McIntosh

right. That's it Great. All for me.

Operator

And our Stifel. Scialla with question from you. Michael Thank next comes

proceed may question. You with your

Michael Scialla

Hi. Good guys. afternoon

Bob Watson

Michael. Hi,

Michael Scialla

you I side? at LOE. workovers you see the as want the going On is had some there? that of a quarter. the good Should mentioned you your your rate where inflation a look LOE we the Or to on for quarter first guide run get LOE do second for on sense

Bob Watson

we in And wells what definitely any we're mass to spread No. I our costs don't more over. have we at better operations fixed say see And inflation. as certainly generate We we would do. getting

look $X see would excluding to anticipate maybe million million of don't day-to-day non-recurring. about expect costs. operating $X.X we year as for the month, those consequently we know a rest what as and So the we I protect don't We our frac internally any book at for shut-ins expenses

a during cost all think work Bakken, don't I do, second we're the normal up that we to the thing inflation pretty going be workovers would in the to to it quarter. so was fight our, in there though wrap considered in cost doing what barrels prudent just summer winter. up have time, think the I even us maintenance few the the

to flow rather inclined barrels cash look than at more anyway. We're

So anything return our flow prime enhance driver. do cash is can to enhance we and

going So, and high all a little are existing forward. extenuating this I yes, those LOEs quarter's because of see circumstances don't them

Michael Scialla

of If the you leaning leaning it in your put I don't on were completing are give maybe Extension the production and mouth Jore six that to wells maybe the of there case, versus the next? toward Federal us And in like year of the that spring. Okay. the words what's -- could you wells sounds make those if you complete sense want in to terms a CapEx in swing trajectory decision this

Bob Watson

wells a Yes. that on the we to those chance today's environment. in on production or and not. made there's we'll And next complete I a next good go prices. yet whether in have see unless spike bringing really that say crude then, the haven't would nice year drill flush Can't pad pretty continue oil we good decision we

closer budget So flow. are those in current that getting the and help oil and have -- exactly would it price impact bigger at certainly in environment. on current do our us We a NGL zero budget because wells free cash in certainly down and environment gas we're won't the gets the to that current

that $XX I million drill. on So, for right think our assumes to we're that and we line continue

to down. be, probably million decide range going that? in be that So, that something then it's know number not if back I $XX -- like we don't would we don't what exactly if to but we And drill, the

Steve Harris

through of yes basically. XXXX, Yes. We're so million carrying settlements

Bob Watson

Okay.

are that. Our guys agreement with ops in

Michael Scialla

Okay.

you guess so if completions, you were the roll over So, if say production would production in this either production not affect first the I you heading But to see for additional the the XXXX? early till Or additional whether -- wells, you completions the any but for year? quarter drill going delay year push to do you budget, way. year, in of this of growth expect the potential into next that

Bob Watson

No.

wells. Greasewood lease do They're got we to in commitment go forward going go fracked the wells are those And I wells, September. XXX% have on to flat scheduled to complete Those worst. and a keep we we've will in so Because that. that it's on be at with mind, frac. think to two be

So and that means on probably flush continuing November production in coming December. on of Xst

in So into the that actually of the year. quarter gives us a kick next nice little going fourth first

year-over-year XXXX quarter. third six in be be coming gives quarter the interest down boost wells a Next fracking -- high probably nice quarter, a in you're really over at year the very would be for first second We'd growth working looking the online, XXXX. which bit. would us But

Michael Scialla

Got guide anything perfect then Okay. oil to experiencing your this curious to weak it. on on has sense. just NGL prices or on recently. here makes been I It NGL -- intent particular just price. I Abraxas? Was mean understand yours just forecast I'm low everybody quarter. And looked extraordinarily like there were

Bob Watson

is barrel? $X.XX our Yes. I doesn't Delaware currently. Bakken basins a is had pricing. just we're negative or NGL is. that per the in of We It's and the unit gallon negative in guess on the just life way two but worst matter, it's NGL in -- $X.XX there that's It the --

Michael Scialla

Thanks, Bob. Understood.

Bob Watson

Thank you, Mike.

Operator

Thank you. comes next Baird. Joe Our question from [Operator with Instructions] Allman

your You proceed may with question.

Joe Allman

Hey, the again. Bob, thanks meeting? a address by that the Yeah, Or Board issues is meeting? the regular up for that that And is Board to what's activists? schedule of kind brought

Bob Watson

Well it's enhance we Board we we're -- we that see opportunities a -- meeting. discuss value. always always And shareholder regular to always scheduled

that's be certainly this the from on there'll so coming for and it. agenda results hopefully And meeting some

Joe Allman

And when Bob? meeting is that

Bob Watson

Tuesday. and Monday

Joe Allman

if of And any specifically made Okay. another overall? comments activists, to And activists to you. and just you then today Got that even that Any the the terms comments? just address the put Board don't additional in public. want letter out

Bob Watson

No.

very all I the to made comments going think enhancing is I've attuned shareholder make values. we're our that to Board

what we're out sense. So opportunities there look makes to the and going at see all

Joe Allman

Thanks much. it. Got very Okay.

Bob Watson

you. Thank

Operator

turn further Steve Thank would call this time. you. questions any showing to Harris to now I I'm like the at remarks. not And over any further for

Steve Harris

earnings we call. in participation today's your appreciate Josh, Thanks, and conference

posted be in As and the be approximately transcript a on XX available replay at start, will webcast I hours. will a mentioned website our

have So day. a thanks and good everybody

Operator

conference. one may disconnect. program have you day. ladies for does This and gentlemen. a participating all conclude Thank you, Every today's wonderful in today's and Thank you

Abraxas Petroleum (AXAS) 8 Aug 192019 Q2 Earnings call transcript