CPE - Earnings call transcript Q1 2018

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Operator

Good morning and welcome to the Callon Petroleum First Quarter 2018 Earnings and Operating Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. A replay of this event will be available on the company's website for one year. to Investor conference Relations. like Brewer, to now of Director would turn over the Mark I Please ahead. go

Mark Brewer

Thank you, morning operator. Newberry, Financial for President joining Officer. Good Chief Chief morning, and conference and Jim With thank Operating call. Officer; me Ulm, Officer; this Executive are and Gatto, our Joe Gary you, Chief everyone,

During we to afternoon posted remarks, our be the referencing we'll prepared yesterday our earnings presentation results website.

download the presentation you encourage I everyone to So haven't if already.

Presentations page slides of the can & Investors www.callon.com. our You within on section located Events our find the at website

plans. due review I'd cautionary on Before to presentation. statements to we begin, Actual like of and call X and remind We'll help on included financial results could everybody disclosures across today's to some facilitate our forward-looking refer refer during to our important and make in We'll today's noted believe statements SEC that non-GAAP periods slide to with some estimates peers. the we slide to factors periodic which this filings. also our comparisons and today, differ measures materially

measures any a nearest the to we GAAP reference, measure. For reconciliation corresponding provide we non-GAAP

release, may on of reconciliations find appendix press the the which slides You and earnings the are in presentation available the in website. to these both

we call turn that, I'd the Following will like open our for prepared to Gatto. Joe call remarks, the Q&A. With over to

Joseph C. Gatto

this joining morning. Thanks, us Mark. for thanks, And everyone,

we'll be today's release earnings quarter during was out deck yesterday referencing first that earnings Our with along call. slide

activity a rig the dedicated the two We semi-level stage setting have quarter of through kind an in completion mid-February, addition XXXX. first the of fifth active with crews, of for

conditions January. year had a with the know, extreme start rough all Permian to we the in cold As

production. and this did wells on back team with operational expectations placed for importantly of bringing our operations an job and plans Our keeping well aligned excellent online

slide that better quarter, slightly like in small side in than expectations and more line increase X and planned on a for talk with interest that, sequential where to built in approximately sustained first a quarter and a of of in BOE BOE per generated On financial $XX the in Reagan per on excess high wells hit In also detail. With I'd the in in placed average on online. ahead we quarter ramp was did quarter five-rig a production almost fact, operational production Spur begun April and the all XX,XXX quarter to well Production for working deck. efficiencies was early in production of for LOE of placed of XX,XXX first completion per both stride, focus we last its our quarter the combined in front, posted had second the during flexibility year. Ranger decrease realized our mix day strong the wells of the the will approximately WildHorse of the produced than normal drilling were has million, with EBITDA areas XX%. second about which a was we program The volumes driven as backlog we Almost, quarter oil right the with a of Monarch in average gross by Production since we day. lower BOE last and with price realizations XX% placed with and quarter.

Wolfcamp wells for has on County above Basin, position of our offsetting the few first A also Howard our achievements and been our online over for months, down-spacing and across test a the well worth and section completed spacing. We eight results In highlighting. have had results four operational performed Midland

been the concept a producing both targeting a going In strong pressures. oil is which Midland we month other Delaware in formation it's larger pads, early in addition, expect time the areas our In A, and completion forward. drilling the be and we to in pad well high of of with are for Basin, mega-pad has two model nearing for cuts rates development County, and almost very Wolfcamp first our upper posting lower first

our combined a have second the Given the will with production area last seen addition the efficiency the Spur few capital of be quarters, increasingly recent Spur important from the rig the and over Delaware, an growth future. driver results, of we area in in

operating wells pipeline $XX.XX and an deliver a Moving internal arrangements, amongst we will to continued of our per margins continue thoughtful off-take margin this past an given infrastructure past generation the activity, to Callon, industry of cost over for measure of increases increasing on cash preserve BOE team we have to to advantage critical in sustained X, of differentiator for investments Consistent a leading we be all and our made cash Despite any contributed flow slide level that in this continue in two margins long-term. critical improvements, operating productivity, have to years. the facilities timely the with producer, this investments focus operating strongest quarter. expect the

Importantly, produced near-term. per with the this are provides path aligning BOE in capital spending generation internal a clear we growth cash to the

and our for quarter. example per our now versus $XX capital to an BOE. operating progression BOE capital discuss the this in As an of move margin per of I'll operational the first spending quarter, the slide $XX is X

be increases labor limited we inflation has for way to that their but market. total in inflation on while our work came been the that service far better under $XXX million CapEx estimates, areas cost in see D&C cost may quarter, XX% a any discussed operational factored efficiencies XXXX, we to for for we first improvement anticipated the XXXX than spending tight in and in work can at continue thus that capital through quarter mitigate You just March, unexpected

of with this terms of rig our items, year. drilling term renewal ticket four are coming on big In contracts one rigs up for longer only

deliver placed team in has we're In integrated quarter. our addition, agreement groups. earlier, production graph into dedicated above to and in But entered frac recently for hand long-term I new the a able highlighted wells see efficiently we you two right the frac program. And with rigs into expectations spread can the that our on

or wells result with XX% to to the update. to production after pad be larger profile our increasing expect in operations turned-in-line fairly for the at over Ultimately D&C Looking a remaining more operations quarter year that, of optimize over schedules to pace like our approximately linear for of the With this balance balanced I'd throughout for reach updating the development. growth the should XXXX, year. call remainder the of Gary quarters Newberry the turn we

Gary A. Newberry

on Joe. you, start Basin. slide Thank X will activity the Midland I in with

quarter, Ranger and of were during placed from Monarch. were we wells stated, online Joe basin, around rigs the moving the the majority first As the but

Monarch precedent the Fairway As Very efforts have into area accomplishment water. quarter, for expect frac will online as a wells wells resulted second needs as A the is Spur. and we high we Monarch further at Wolfcamp water in from what recycling water move well strong for quite XX% an our we This and from as additional use prepare of to recycled coming sourcing of expectations illustrates frac successful sets at produced from recycled area. our we our our six mega-pad well

of quarter we first with late five mega-pad drilling the section As are these on our of making drilling Monarch. with sixth progress completed the currently We've at We Joe seen the completion are have wells our to results very and A third Howard schedule second talk in on excellent had first currently the lateral some more for and quarter. encouraging well. production the of earlier, issues the six which have sand from opportunity County, down-spacing far. seen We've utilizing slide. in intra-basin I begin We've also Wolfcamp will test about next performance thus no the mentioned

We beginning through pressure QX, local sand access XXXX. will partner continue Schlumberger our integrate we completion have strategy to will local to pumping into supplies our as

well offsets X, program as development larger Moving first same of the pads important days as WildHorse in transition to test during Fairway our to data with an Wolfcamp This year. slide performed to well extremely compared that are direct we asset. area pad is has production point down-spacing this in XXX our of A concepts the two

I next months now Delaware on couple we activity of these We will down-spacing make before to Howard. slide any for in testing the the continue about decisions Basin in will watch wells X. added A in Wolfcamp highlight the

activity are along and to with starting in times. some see well well We results our excellent have promised cycle improvements as ramped

per equivalent The Spur, additional the beginning Both plugs. can have production see continuing later wells wells you As first includes following an to XX infrastructure recent but lower wells extremely our up. cuts, Spur barrels to average at this of achieved have in pressure well oil oil Wolfcamp It first production. which two day quarter, X,XXX from reaping drill first the drill-out frac reservoir benefits upper Wolfcamp significantly A rates oil early is to wells in the high outpace with of and area expect exhibited of a clean production pad through We're is two-well comparable our wells and bottom work. while been left-hand Spur. the of at have as and rig graph, online performing the XX% addition of encouraged our has the very at activity days our these average is A

is first X, achieved footage more since improvement more to much as Spur, our and time slide get drilling achieve have better cycle pressures efficient under the We've feel we XX% we cost shown As well our than operated throughout will more day few reductions, there on year. at belt. our offset become drilling our a wells in in in which per

area. As well the very in on the Spur shown compete we on against right, the graph peers

wells safely team Our well times our have ability milestones an more infrastructure wells. XX%. spend average how responsible slide our asset improved. to We a operated economical On and new the develop production even about ramp footage to enable the talking to fair the drilling reduce of to wells. for to look relates on continues amount most is most manner. efficiencies the XX, peer at infrastructure drilled first which effectively of per our by in The our cycle significant us six ways was while we ahead through and time day and average update economic recent provided operational asset, highly on Spur And it

that on recycling as frac it process. in for by reducing I impacted economic reaps water to benefit Basin is reducing operations. of pairing the that of and answer sourced The the while incentive locally cost, said have with feel environmental logistics many significantly is part a business As Delaware occasions, major right is be water we of the the management benefit planning going

to we across interconnect the disposal two pits installed X also on nearly significant in shown shown disposal Midstream our even water Also the Basin recycle connected off-lease salt barrel tying progress on importantly is slide, the we volumes salt lines. separate towards the the water As are Goodnight non-recycled and million batteries constructing and We've carry lines more transfer position. curve new to disposal. water gathering central tank of to for have frac entire ahead by pipeline Central Platform facility made

We expect and tie-in September pipeline as With complete added gains over most of call commissioning CFO. turn our the efficiency portions significant Spur Goodnight of will to with infrastructure the Ulm, I the project the in system. that, the Jim we

James P. Ulm

Thank you, Gary.

on position see our to points. $XXX million. liquidity enhanced continue the XX, to a basis $XXX in out $XXX facility pricing the can the of slide This You reduction we to of we on further base to increase level date the increase May with of an of saw XXXX with push grid recently a and million the reduces elected facility, million of borrowing. XX commitment Along with bringing cost the borrowing maturity an up maintain

With financial at in spending with end just margins the was a us our quarter first to $XXX recent supporting the of plan strong the see position associated position changes, capital program. our under net million. as continue liquidity we This annual very leaves the robust

the check closing in Our of a state on reaching gap metrics flow remain to cash debt continue neutrality. and we're

hedges covered $X. slide XXXX XX, of we among than to XX% production at of peers, stronger oil Moving to have approximately our the some less continue consensus Mid-Cush with

just with of oil and have to our We with have under to of day weeks covered $XX. XX,XXX a X,XXX under to collars Those a in timeframe. per collars add ceiling in barrels position has been the XXXX that to just hedging recent floor continued increased $XX,

being in hedging, we hedging in movements differential incremental recently two Along each Midland-Cushing place. with pricing in our XXXX for enhances are with the have Midland the hedges hold via putting continue our addressing per only both recent out agreed next sales providing of of in basin parties firm longer to agreements, several over of to through oil liquidity XXXX, coupled FT up Given the across to volumes, various further quarters differential term patient lack to Basins. pipelines, and where takeaway long-haul Delaware barrels XX,XXX as both with day the we ability December the This production capacity. ramp volumes firm on move we

look We we'll also the physical With long-haul I that, for review call longer continue may like that at deals opportunities over potential term would on back pipelines to to attractive. Joe. hand to the be and

Joseph C. Gatto

it Thanks, And the concludes remarks. to Jim. turn like you to back questions. for That open our line operator, prepared I'd to

Operator

We will the now begin session. question-and-answer

Operator

question The from Bank Please is ahead. first Sen of go Asit of America.

Asit Sen

question an some us infrastructure Good been as you update greatest in your your see year, Guys, you chokepoints? XXXX? what lay I down morning. do thought you've have headroom fairly your out. you divesting talked and Thanks. process? infrastructure think on could do as then And infrastructure In words provide is about this have other you My the guys what on you production early XXXX over build guidance

Gary A. Newberry

we to out water that we've of manner. be to to Asit, in lot. oil got three and infrastructure move and all the in efficient it think able move, gas, from about efficient be an Yeah, recognize We a well both components this here, product order

hard we've you've to systems systems, shallow every gone future certain or hazards where service up disposal we're this significant So actually mentioned. the to providers don't our avoid efficient we're that take our with that's can to with we are be valuable area, in infrastructure in we third-party water deep water moves We've water cause and on invested water the And aligned make way while goals, we've partnered as going that to to why worked drilling with Ellenburger own the oil to disposal best resource. either have actually offsite infrastructure gas. that in accessing problems, ramp

that and throughout that greatest that's our you our today, we on done much because there. So our is focus description so of and assets our asset, my being a lot of know newest brought of asset, as as we've all them detailed Spur seeing we're where opportunity

work that's as do that. to ready positioned that we're an across for that move wells our and being to as still drilled to sure operating is fracture and I I of those assets every success you there, Now, to stimulated. on just that the are planning all well have day we that, key soon think And make team just think fluid

of the those that thing it's developed as far for in these their third-party to potentially as As and we've we've at the for longer disposition invested of of some with some we relationships assets term competitive market ourselves, providers, ours. think pricing assets right only divest benefit the

we development we've pinch So in. the that plans put to ramp points long invested and areas don't as in our

to we'll get thing thing So We've be future. on do. we think and continue it to it's always right focus the right thought as we to to do the and we as that ramping continue in think the to about better

XXXX think about XXXX We about and XXXX XXXX when So think infrastructure. beyond capacity. asked you and we

throughout timeframe. well for covered least the have at we that we're that plans So

Asit Sen

helpful, very Gary. That's

is, and where what going – average your in pad to the pad is your you optimal XXXX? up So follow think compared current given do XXXX is size my And be footprint? to size

Gary A. Newberry

continue mega-pad focused six that with two Monarch, good question. in and it's think time are was Midland we're a three all throughout Again efficient change in we've pad and in very related a And to in It you we'll do that the in Basin, and like at done we're And about that's operations each. manner. Monarch. value. have all well cycle capital with That's was didn't our those and to why similar doing what value by the who that wells because that see XXXX ways, this on drilled doing XXXX simultaneous size we rigs, cycle time we'll

but how we're getting start, we that see think on So good the is, depending to to go, that want we six wells mega-pad size, works. may is if what in that's future probably we the how we to expand

that big whenever to is wells. and has, single of to short – Our water, were oil a we've on part positioned we've plenty back do efficient That's both always biggest period getting moving program fluid that's get Again, on going move our the got the the a has of all because point industry that fluids. they focused flow be those forward. been the time. infrastructure in we were of reason they gas efficient challenges knew capacity forward built going We with going to of of take very much so one how mega-pads, single manage development point across we from assets focused to those infrastructure of

for So been year of some doing we're multiple the is most pads And on we're well that this geology Basin, most we've real would XXXX. forward development per we're two Basin, us the opportunity we say rig any pad as Delaware about in in the as program performance Delaware to Midland to still Basin, jump well transparent pads define now, or three the very it's Understanding position then I in Spur important rigs into and in value-added we sites. single variation before going asset throughout across across the assets. the

Asit Sen

color. the Thanks. Appreciate

Operator

The go ahead. Neal SunTrust. next of from question Dingmann Please is

Neal D. Dingmann

the make on all first talk about maybe earlier Gary, on I you. spread kind mean, I obviously what is – so morning, the XX, the one. with about Is talk morning, du add the just minus bit obviously that side about that? this $XX Midland little this oil you more so of talk the $X my you that another the could Good when understand you on your see to water talk around sure infrastructure just pipeline could maybe doing question you're a it's side is I other things I said oil you guys. connection. and understand down morning jour enables oil these optionality where topic Medallion that the in slide and you and that of ahead,

Gary A. Newberry

like do, barrels bit Yeah. talk it's about them we think arrangement that relationship view a a grew going Howard be Howard Spur it I And and of hey County early we got said, Reagan love gatherer we phenomenal down a time. in They very when in we us efficiently. things to – lot in your even be again then won things Spur, County, to can done the the gatherers. those to we with I and Again, a good progression for for Neal. primary they in got about Basin. we a of barrels though natural then got that, And a lots it little as a we've our we'd Delaware had different job very with we different long-term in Howard had primary have gatherer we to we way forward. because The specific was Medallion opportunities was great ramp they've County on have, out

arrangement Midland. Delaware those from City we can we like we pipelines. into Crane, and into from to all move that them that is move move the We can about way long-haul what barrels Delaware multiple them them from Now Colorado can Delaware move we into can

and on capacity long-haul that that all needs, firm pipelines the term as deals, to us we of up well coming the So out like optionality end longer that on have all sales those user period needs, for future parties also time as basin. a optionality on of actually contracts of our the gives needs

market has it ensure it flow. to always market, and our take strategy to get So been

we all way that's contracts structure and going kind forward. of So our of

Neal D. Dingmann

for just think want laid follow-up there. cadence. have well you I this I year. And sure one the to the make Great quite out last optionality then on guys

you year? X.X how still the wells, think see and remainder Mark potentially talk it and that what something I first a have and the flat guys about the think for quarter previously? with were bit the was that and I like of Is you said be that. in sort the Could completed You you Joe of going to you line about activity thinking was, cadence all just

Gary A. Newberry

Yeah.

Joseph C. Gatto

Yeah. This Joe. is

(XX:XX:XX) prepared talked development I have of As larger have some moved the about. around things accommodate to about remarks, talked we in the we'd some concepts pad

So a how slide, out has had I but evenly the there just in think little quarter. directionally been spread ramp throughout was think more big second that's this I on schedule big we year the a at That's changes, point, of modified. there, bit this sort the no previous

Gary A. Newberry

had DUC that first a bit recall to we again a little in quarter, the bit slowed actually Neal, a we Yeah. intentionally down inventory. build because of

so the result initial couple the all frac to it get second we of start-up pains, efficiently. little of They're we the tried of we kind we happy give smooth through at first to from ramp both that activity kind our least as the I'm with I'm activities quarter, though with very bit of the even Schlumberger. very going started that, Drilling outperform a to I'm only learn, that day, in activities on And growing level rig a new we're – as forward. from We've And happy makes sense up a – which the to at to slow better end we going did this Company. did me timing. happy from point down, start-up pretty of DUCs of we bit. but got little out. That optionality of have, to now to only But of things the crew a results Cactus got of

Operator

go from Haas of ahead. Please The next is question Imperial Capital. Irene

Irene Haas

Yeah. Hi.

of two terms are going this insulated my How is, details anything agreement, buying flow bases transportation, you that that not committing out? through to earlier yourself. you users sort some really which without buyers sort please. much on the of mentioned You is from And end Just firm the be question disclosing you are because XXXX smart, have color or of secured you your security? for in contracts to have what you're of

Mark Brewer

Hi, Irene. is This Mark.

system off. of but tap number pipelines buyers, are volumes into ramp capacity both on they the various that these Medallion we two Medallion hold there continue remain unnamed large arrangement to and which points the for of be system actually now, around two that is and FT So volumes they'll taking as global will on

there's will line through the we XXXX. at have Mid-Cush of to fact a would Now, we're continue we with – to NYMEX system pretty generally now That's is things now, other and options the right that still deals implications. there Obviously, we want pricing our there. if to that be we a which right some protected to look do going see in handle more little have come structures market aware in think hedges just at positions little a could those to move the we're we're be we think come that But of but a to do the beyond bit things into bit, And before start markers as rush in we and a but different things we loved moving, put going that, of looking additional of it's the books patient, we couple for noise place XXXX with are creative in in on why well of the hedging lot kind there. number forward. not have we're

James P. Ulm

I differential months It market, in and opportunity continue a because than will and that took to right that the traded we're makers, this for position. further had What very XXXX. in that's We're is a start lay different the for of have look today. and position mentioned interesting a XX we but position remainder would us Irene, the add, is Jim. watch thinly we is market, XX% WTI that XXXX. note meant think to to to that with I build very market hedged favorable be for frequently just to we Mark to is closely key doing talking

Irene Haas

this. for Great. Thanks clarifying

Operator

question from of Gabe comes next Daoud Please ahead. go The JPMorgan.

Gabriel J. Daoud

morning, Good guys. Hey.

Joseph C. Gatto

Hey.

Gabriel J. Daoud

just test a when County Howard about year, six around thoughts see test? you make you the Can a talk and so Wolfcamp guys anymore more maybe I and little the definitive historically about to like of maybe bit think just the but call, months you Basin

Gary A. Newberry

strong. The Gabe. looks very Yeah, data

we're as mega-pad it. pleased are at with and we're development happy So with especially so months. the those more wells, a we into the we'll wells We're it strong the pad like get in is But program few there for look so development like. But data involved development it seems wells looks just it work. looks WildHorse, it an important what data forward to the with the with going additional point. two It that was

little make go bit certain time wells So that have you decline on steeper little don't you forward, takes it a looks far to so always as very but a bit those good. more it

Gabriel J. Daoud

sand Understood. Gary. on anything in-basin terms there any the sand logistical And and of all then at any far so issues it that in just how looks Thanks, was then color and or like procuring in quarter?

Gary A. Newberry

our couple haven't to a us, that through happy logistical it really direct as as with advantage in so for all we've lower intra-basin our significant we're The we getting sourcing the agreement at to for we all on us issues two sourcing on of it Hi-Crush seeing. No again far, had Schlumberger. for day jumped But intra-basin we our access what longer with with kicks end maybe with delay because cost had or into us real is QX, but worked a and of through a direct we're Not pads, the a pad, Schlumberger. us day wasn't with access the sand. well challenge sand agreement Yeah, our agreement out term within done to the XXXX it mines.

those fully that many helpful it or would it'd bit hadn't of planned local we we in because QX for to of we take mines. expected be volumes entire the time simply, – efficiency I industry. large QX little weren't think at a But for ramp up

in shape. we're good So

Gabriel J. Daoud

Great. Thanks, everyone.

Operator

go next Please of The from is ahead. question Brad RBC. Heffern

Brad Heffern

everyone. morning, good Hey,

there the in this in missed C I the if Sorry, Wolfcamp comments, well Ranger? prepared any is update but on

Gary A. Newberry

at well. Yeah. that. that still very sub-pumping a No time, with just Brad, performance last this in thanks week. we're point asking happy We of at update the for got

ramping we're go. that So as we up

And time before so, more definitive results still we wells. report on those

would've with time We so like month well Parsley and with just that that a a you completed again, results bit one you And want it's clear the last to But see drilled well it we've gotten. participated operator. told water than good is, had, results only that by is another well a making the associated to in Anxious have on I or and more other that expectation. in Taylor color the give was not results another to the those on was the And next little call that I acting be clear. that I'll think compare well. that already be the I hoped. I

really future in So this we're a ready time. infill little any bit define to of potential point tidbits not there. at But

Brad Heffern

Appreciate back earlier, trajectory heavy infrastructure XXXX lot Okay. you a a questions it's taper ratable we making and you some start are spending going then of of to Is the in a the that. circling now lot. you're doing pretty see talk guys to And beyond? investments or Can infrastructure about of it to been the lift have that been off? from

Gary A. Newberry

Brad, Yeah. question a again. that's good

of as infrastructure We going very year. already are seen And be these pipeline significant jump get blessed in it's in efficiency phenomenal minor get only be over at the in it and new high very these we do is, already of being beyond quickly will third we in the in four there and assets, improved expectation new operating all quarter systems Paying jump adjustments how Spur several confidence forward. at we and dividends dividends all Our resource this will and areas. and And as the paying perform. going you've invest assets in to in Monarch, years. assets, last assets place those having us we're WildHorse for greatly as having the

off will years. So that spend in infrastructure future significantly drop

on be to expect I wells. drilling it focused and just So primarily completing would

Operator

The Rice. go Mills ahead. question Ron Please is of from next Johnson

Ronald E. Mills

you're to is A if there, eight you Gary. to significant to think from if you the upside if mega-pad your follow-up the going XX how wells mainly spacing, acreage on test, you from well most implications, obviously are protecting in the spacing Hey, spacing? go inventory up back go right might consider the when moving and can development X XX do you wells meantime but to

Gary A. Newberry

We Ron. but three development see bringing and – are know. in on few pad quick, pads going make now as to going Howard let's to just pretty we're We're on. we a need No, more it, well you this months to decision two

going make all One doesn't we're There's at work. steps right. it. couple to so a And case look it here, of

then go to it, overinvesting, jump pad opportunity a we a we're wells certain don't the want it, do underinvest, just year to six another make going into manner and want ultimately, we're Now, we're of those believe to in in it in go want need that and we to but certain we to to going then even don't you've development to because going in it, not decline that months lose to got we to and works. make we're that And to watch don't overinvest.

the each learning curve, as comfortable basin a is curve zone. for the just landing with across this So, right a industry we maturity individual very and gets the spacing

very I the the justifies these and say, comfortable a have, we that's Howard of a types results I'm cautious the in expectations we XX with – the things. It saying that's and I Lower going cautious results XX I'm given and A moving We're what just direction. always right why in Spraberry our this is to the spacing clearly answer. looks section were have that per wells wells about are Wolfcamp to we're in got well, So Spraberry, only and always I've always have right. calibrate and Lower the like we but with just go opportunity mega-pad bit in do reason about am –

Ronald E. Mills

Great. quite of industry back year? the any you Can on incremental especially flows about this growth as year then oil color provide talked on gas we and and think just gas takeaway arrangements you've a assurance, next assurance of half And about flow bit.

Gary A. Newberry

beyond diversified I what cut transport in a network think, Ron, add We've a first anything there to Midland we and that? got said that we've you the we typically the XX% point in folks XX%, is strong done sure, to have range. high oil Waha a want We've very I'm kind of in not Delaware. downstream Mark, and firm have remind

Mark Brewer

No.

those there gas cuts And we tap I line comfortable coming split compared and new into we then we at second looking be that'd on be in so to wells with longer system obviously, early above aligning and consider that, an and markets, minimal at that, about gas adds, time to from oil some ramp is there Waha option NGLs. our of FT and see think at north-south gathering have our Spur think footprint the and if if area end-user. they term I touch of would beyond pretty least want ourselves provider volumes bound determining going are and a to we will do have amount always I XX% XX% about a between our peers, that on to outlets you the there, these of and obviously producing, guess a where we're

Operator

comes Grampp go next Markets. The Capital from of Please question Northland Jeff ahead.

Jeff Grampp

Hey, guys.

quicker Spur the maybe Spur laterals then the ones a recent here lateral plan Can what those kind you is generally of the on most this Just couple the guess and the of us program two on I (XX:XX:XX) what's remind were wells. year. there, average just

Gary A. Newberry

Jeff, you to the bit. question little most wells, lateral correct? your was confirm I from recent length just that is broke up a want two Spur

Jeff Grampp

right. that's Yes,

Gary A. Newberry

footers, the over Those it'll vary And forward, then foot on of going just lot we have depending wells X,XXX spots XX,XXX a length. upon lateral XX,XXX will planned footers. completed were

phase an shorter and the well HBP have some we're in of this will asset. since We we down section where are bit little constrained laterals put to a need still on

Operator

next Please Kelly is of Mike Global Seaport go ahead. from The question

Michael Dugan Kelly

guys. Good Hey, morning.

yourself lock it's sort these cost deal? transport of of much a the be how you'd with in term of on protecting this capacity hear of and and proactive inked for how expect get assessing kind of love out, Thanks. prices, of think kind FT good contracts fees this would how not to I one these you're You've that what about thinking I some would ballpark really pipes helpful. to so ballpark much you, Mid-Cush kind I just don't want on from the number basis sense opportunity the going XXXX. to have actually slated up though see longer been much how any kind to you're real would of and flow then, And surprised I'm are, or so

Gary A. Newberry

would I break of kind this of into pieces. Well, couple a

we'll is, really to and that on watch fact means that I've higher is We've traded be First, this about XXXX know in thinly focusing targets methodical working we're to layering and the improve. repeatedly, realized but we're XXXX. to very going WTI were in very continue into We've what been carefully. the that – market. there price we is will the market I until a put said position, out ultimate This positions. talked and patient very continue it do I we conditions

think want one talked and a a prudent to hedging we've we at it's about commitments. the I term the portfolio that and longer step what a look complementing also have I that the think to on things view, with do of take physical approach is we side of back

We are reviewing some opportunities there.

it's makes for do specifics. a best a kind the early will term. balanced of But we sense longer be will whatever I bit think us the economic and over this to again, give approach

Michael Dugan Kelly

that right. differently And share? there kind Spur, All latest the good. Switching is gears, could you wells results, encouraged that real you to Gary, look just, of did anything early That's see here at back than fair. Thanks. just

Gary A. Newberry

frac always some the our to trying very, at did on pump still less minor with in we're in different very we but the spacing the with well tweaks think But sand recipe. general wells. a get the Delaware works We're to We little we these recipe bit only the we've things. than tweaking fracked general making still to of of them wells end right day, it. earlier We fracked stages, that no,

Operator

of is The Stifel. Please Whitfield next Derrick from question go ahead.

Derrick Whitfield

Spur. for appraisal comment on One quick you all. your Hey, on for XXXX? initiatives broader good you Could question morning

Gary A. Newberry

not in only challenges It of Mike hazards. drilling any of pads we helps the understand, across cycle us understand us the development. continue type the It concern differences we into also cycle fronts. helps any well again helps of to of significant as performance make any like type or the any us well get changes couple on talking still of really all to about, wells single just as know this type challenges, we just in on bring times a hazards, to position whatsoever we'll just just we have. expand it's all certain time – of stuff across It asset before any but the to across We're was drilling drilling isn't well future. good understand program base we same, because the position type is Yeah. from other exactly asset geology that But these any

you see all that we those throughout as are, we'll as just expand it's XXXX. map that So where batteries on central tank go

Joseph C. Gatto

some the well this And I in other that think sure a zones you as if but not year. Derrick, were also on in I'm later (XX:XX:XX) the getting this as we shale were have question, Bone Wolfcamp tests C, planned second

as the development we that as have as B well as the A, Lower wells well those and of back into in Upper term the the resource getting two as of on will longer think here. all in zones, XXXX, about So we

about wells. encouraging some extent Gary seen and zones to zones, new on are testing known doing terms data well offsetting some that was we in as addition in of aerial talking we've what So, the work

Derrick Whitfield

color the exactly looking you. Thank that's for. Perfect, I was

Operator

from question Pickering, Please Sameer The Holt. Panjwani of next ahead is Tudor, go

Sameer Panjwani

guys. Hey Good morning.

Joseph C. Gatto

Sameer. Hi,

Gary A. Newberry

Good morning.

Sameer Panjwani

On cut the acquisition curves new you favorably Delaware oil very compares the type to results, the XX% underwrote.

at I oil. XX% the curve Lower time think A assumes the

cut So point higher? overall drove is the wells there just specific expectations higher oil for can area that you does anything to bias on these or the this your

Gary A. Newberry

need cut. Again, to with these have again we that these wells But see see – wells encouraged we're more as time Sameer We'll it what we just the very mature. to time. especially on with we on more we just continuing oil need

So encouraging happy results, to have them.

Sameer Panjwani

them to design a kind appropriately wanted I WildHorse test a spacing offset And the you that spacing to I question of kind used used compare about Okay. guess there a Delaware these completion the that design confirm well. standard that earlier Wells, think just on answer the of was similar

Gary A. Newberry

No, It's it comparable. comparison. was apples-to-apples an very

Operator

The is of Citigroup. Wai Jeanie next question from go Please ahead.

Jeanine Wai

everyone. Hi good morning,

Gary A. Newberry

Jeanine. morning, Good

Jeanine Wai

Hi.

if Delaware the missed go the the more side crew rate well. in can or provided completion anything? year details Delaware, so whatever side specifically of Midland know and think quantify day apologies XQ XQ of per things yourself, per metric into or on in pounds foot drilling that And on if on judge but great very this, the second, I I I whether you now you you In efficiency could the terms day use some are last mentioned Schlumberger or XXXX, (XX:XX:XX) of doing internally you where in and detail to change you've versus is or stages the you say that's both don't

Gary A. Newberry

multi-well completions. fracs looking we cycle level pleased the day. and time want with at on especially efficiency. through constantly doing We on drilling how as overall very are today can efficiency we on to as development better of zipper these get We're pad we're improve Jeanine. get And every from Yeah, crews focused each they

time faster we for to course measuring new wells. where got cycle the have do The each with production But they existing it, with with all per and day Midland It's quite the the on or frac that around quicker to location Basin, that that wells, mile comes when the profit crews, the last per And we down in pumped logistical track move improve wireline strong comparing some team now, between times we getting oil a it multi-well that. it's where day delivery of to right themselves. so whole continue growing pains to crews, lateral really all we're relationship comparing and continuing the record getting forward. got but matters challenges on themselves down focused are they're stages we're the do we And not is. really it's pads, crew, the crew themselves we've people why that's other, doing this like of relationship cycle we'll feet of crews,

the So wells, bar efficiency. take Schlumberger same pretty got we're where to committed they level started. the happy crew second the our are. understands of crew and set first a of It high to They've the expectations what of couple them with but couple getting with will pads, they're

Jeanine Wai

much. helpful. that's Thank very Great, Okay. you

Operator

to Gatto other at to our back question-and-answer over This questions conference would concludes no session. I are turn for like time. Joe There the this remarks. closing

Joseph C. Gatto

everyone again talking Thanks. Thank thanks, look and for us joining forward to for you you, this morning. questions soon. thoughtful We'll and

Operator

A The website. replay available conference the you attending for presentation. event for be year has this Thank one concluded. company's will on now of today's

You may now disconnect.

Callon Petroleum (CPE) 3 May 182018 Q1 Earnings call transcript