Contango Oil & Gas (MCF) 9 Mar 182017 Q4 Earnings call transcript

Good day, and welcome to the Contango Oil & Gas Company Results for Fourth Quarter 2017. Today’s conference is being recorded. At this time, I would like to turn the conference over to Allan Keel, CEO and President. Please go ahead, Sir.

Thank you and welcome, everyone, to our call today.

call Steve management Mengle the of that in Grady, Joe and me is team our consists Joining Tommy Atkins. provide and it want for doing? But to then and talk morning defined then like earnings objectives you we what everyone brief release back a I'd and plans, we're operationally overview SEC we'll this that we'll by discussion as come statements our turn strategic press may financial get and over some Joe may before remind about for comments to forward-looking to information related contain Contango's and include assumptions which the with a and started, I future concerning operations. and expectations under These the statements based be circumstances. assumptions are on we believe appropriate to

are guarantees of not statements those of be in and estimates and results that just performance considered context. should therefore future However,

the I we on be now, XX% We as completed did Delaware respect back. morning increase most that's We Currently this and really in Today we’ve one our release this and producing, flowing of wells about operations had that's formation. XX its with. got -- Zavala, XX% to -- million. We you had We past in back Georgetown the good in Delaware about the of reserves about We kind discovery drilled six had a increase familiar the few Texas but and Texas. moments. fair have we completion we're not a our that area an in which very active a think in drilled Looking one of amount yearend, that seem reducing basin. a excited the a County, of participated that We'll with for Dimmit you well we program that got we quarter, with One-Rig well we year be do an drilling started is operator are progress then acreage West -- week next in saw momentum SEC-PV yearend lot well, Southern at quarter. XX.X about of lot look shows increase County were of now. We’ve there. in hold the to gaining talk some about value Pecos have We Southern the $XX are We operations of this a made forward a in Basin, really to as a drilling area cost Bcfe. in of in we've our that. and to having But made again, progress operationally increase forward. as in moving in a

quarter. and that with summary to So, the you I give to financial brief over results let our for going turn it Joe, am you of a

Allan. Okay. Thanks

working from things. hedging of Contango attributable the define to net for a share $X.X all, a measure of diluted primarily of was approximately lower year and an in cash in results improvement First And DD&A quarter G&A a higher the net flow share that’s the generated loss of prior EBITDAX, That prior net per $X.X few to cost, operational improvement results impairment to noncore, impairment recorded quarter. there's reduction for to G&A compared leasehold million as cash and realized our million compared per cost. to undeveloped related attributable our year activity, Lower approximately $XX.X number better of aforementioned the we cash $XX.X or $X.XX to a and or primarily the $X.XX our was quarter. the capital in of liquids just prior Adjusted quarter. million the prior in in quarter. in oil release per and equivalent a of million million prior million quarter, year the loss and basic cost, caused a the investment offset the share to primarily non-upstream that attributable Revenue December. per the per exclusive Cash year $X.XX downtime changes company. the $X.XX share guidance production, Production approximately for of in from year the share day stock a small year was approximately flow $XX.X per some in the part per million lower for was $XX month under Bcfe by decrease by related a quarter to day $XX.X to million the to on freezes the midpoint a gain slight quarter for $XX.X higher compared impact sale for for prior or And compared of X.X prices. compared was of quarter for

is at estimated per the guidance million quarter or with roughly million the upcoming quarter. day to equivalents fourth $XX $XX Our for flat

the operating valorem production quarter, ad from we Additionally, end at guidance early for commence the $X.X from which expenses production quarter, of deficiency to in Bull of of one expect Ragin just XXXX expect quarter a new River and start Rattler that back $X third onshore and fourth taxes Total of anticipated for started to million approximately our flow properties. throughput the and the our back inclusive despite accrual is in two flow a the were low equal million April. number from

an likely quarter were $X.X is of million slightly that end and low of XXXX the of stock for quarter current first to Guidance guidance will that $XXX,XXX excluding revolving for $X.X $X.X credit million that on accrued on expense compensation at is with compared the quarter about $X.X bonuses Cash our million million or the for workovers. the to million expenses in anticipated million to is $XXX,XXX insurance G&A to be prior $X reduction due higher yearend. functions to the and $X.X had quarter cost. first lower severance due facility approximately outstanding costs activity-based Our year includes quarter million XXXX support We associated of performance corporate than and office and $XX headquarters. because certain lower to in

be to XXXX that current low our but the currently wells. forecast for and and XX to non-core I gross a operations that extensive more with One-Rig update. currently [outspend] forecasted [ph], concludes review back CapEx is As level expect that program we year in be that cover the shortfall the million to we financial At Allan noted assets. of X for now turn $XX onshore sales for more to will slight now to than for the range roughly And release, in over it operations

our Thanks mentioned, specifics continues the of In development our Joe. the as release, we gave be part latter de-risking Delaware acquired the in there. our Joe XXXX. progress in Southern our to focus we of acquisition of that the Yes, operations release

As we I seven in that horizontal now counting wells just County. the mentioned Rattler earlier, production Pecos River started in production, have

are Wolfcamp Wolfcamp Rattler A producers six B The in while River first is the well. all first

overcome wells we've our made to As previously, mentioned did now significant that. challenges of we process early and experienced in we've had a all number

we've completion some in earlier, liquids drill. recent So our chemicals. encountered on wells obviously are with progress of to the very proppant that each reduces we've very we mentioned well related TD successful pleased cost as we've the reducing our and That in includes work. getting also made number which our that and into drilling been that most of few problems And days I

two program that We're we without and reduce sacrificing the in view recent with ways to We're and we'll the completion our production our we'll, performance. our very now. best more. that place costs One-Rig continue previous complete can last, the in-house and find keep field We as our our can most cost going our with drill and is team especially also drilling our have So, They our pleased in to X, wells. been number a to design Raging that we these it's production as wells. systems good lot Bull

really there. nice making we're progress So,

release, and you going various operations saw be been zones Wolfcamp Bone the in also Springs we which testing Wolfcamp be at to I offset we to As will testing in formation, B tested by our has A. mentioned some operators. addition are

that our asset than be As combined non-core sales flow to certain our with we believe also Joe program. fund will cash more sufficient said,

capital we noncore continued sales, prudent just in might see with do that successful of our those. activity again year. I the each in oil ways of are later The of any the asset results, drilling release, pursue improvement for prices in but other in I'd of add of However, an drilling discuss increase additional be the wells success we details accessing and to our would if happy have we to

to our concludes for remarks at really this that operator So questions. And it open any we’ll point. the up

Dingmann take first our we'll Neal from SunTrust. question Instruction] you. with Thank [Operator And

most Southeast let's Good Allan, my look do down morning, down in for position, Pecos. plan on East in this call of year. the your South operational was at you much that question the I first When -- the Port anticipate drilling kind just portion guys.

sort how So, to you activity hit of could your regionally I'm year, you talk just this if wondering speaking? about plan

Yes.

question. in drill that's well Bone test. in Paxton year. drill of well. have later down unit, there. that drill Yes, was do awaiting just the There's We're down the So, But general, there operator from plans of on Neal, the that corner schedule we I acreage, results thanks Southeastern kind a for the our that Springs to a that our and think would watching that General we an well

or just And anything it the more impact was of it there less on previous is some wells [indiscernible] little bit than it? Okay. a had, then, [indiscernible] there you'd different was

you. don’t why Steve let will I

is Mengle. Steve this Yes,

the and gas find to think cheaper, maximum casing on fluid out without rate Crusader up much producing us it's our offsets. what it our to solution lift and well, We're We wells do it's submersible as gas trying an the flowing pumps we move a using worked then first that so that's lift. and we far. annular So, actually more and to annular out to gas etcetera flow we better, having than as possible we We good is go pretty lift. can gives that off We're start rate. annular go

or you they warning, just in you availability that a and and On -- and on is because etcetera, shut then get up sometimes the flow the week well and don't and in what you can go tube prepared dependent however can when run they you any happens then when that for die. then days rig casing be got, you they dies, you've crusader XX give for die, that

up gas then the run the rather beginning up would day Crusader, the in flow that annular that casing go and that the we on the XX days one. tubing and that do So, decided well week from ahead lose than was front or lift first the we and Crusader

we And so, is that different did that the reason, I'm not on only something saying but that's well. that

Just and etcetera flow the whole just choke sites all relationship between changes.

out kind is has the well shallower are the of we of like seems them. it I on just than declined, that getting evened little say that. So, there won't a rest

don't know, next, and the on monitor did I the helps that Bull that was upfront to So rates we'll that. wells. thing our maybe that be we tubing looks lower where blowing same a second X best consistent well with The ran we that Raging

So, we're understanding to just -- given we're we're way the performing that these things so. flow how

on last credit just the of have for you're question Thanks you year, liquidity, details. far a Okay. outspend what's Joe, tied you the or this as but don't for on getting on little facility. Allan, one an as bit left much

So with thoughts just maybe what's the that end noncore a thoughts your at year talk liquidity? are you as you bit you little the or program, approach sales could about the looking One-Rig about if of

started and looking it mentioned, able shortfall we're we up cover some the already along. we slight feel I whatever as as are obviously sales. a is we those Neal outspend. We've on process at adding good But end reserves about go plus, with being to we non-core asset Well,

maybe go improvement not will and see an well. degradation the as in we along we any hopefully, as borrowing So here base

Very so much Thanks, good. guys.

Neal. Thanks

RBC our take we'll And with Heffern from Capital. Brad next question

Hey, good morning, everyone.

Brian. Hey

running and is just the talk flowback, the what can savings that? before cost gasless On you about tubing from

can give can is with keeping seen, don't reason they're -- handle wanted but you avoid line, sand different plays whereas the with wells production production they the -- I numbers, the that to sure everything sand pump operators submersible exact not different handle lift. we not gas on we've struggle I'm we and

six of with have costly and intervention. And pump, be we we the probably average a of and may that to submersible the it seen problems say -- workovers, pumps maybe out closer on a have can I'd cause number you get but just that's year can so months seen a

other supply we than So compressor the for annular that and one know got that and got rental cost a we're lift all able it. gas] to the basically you gas as and to much have that it we've far do [get facility, central so other compressor when that's you've wells gas, at with central pretty

operating the are So, than cost the considerably lower ESPs.

idea. are well you are service can this the a for And do gives leading just Are right at what you you edge they that. XXXX? now in That then of about thinking -- Thanks lot in me guys point? talk you about and for have them Okay. a good costs how locked costs

Yeah calls our progress started so, significantly. we of are it terms cost. of we pretty service have When terms in seen a But little continuing improvement bit here drilling days. in a the year up make ago, over ramped our we

that. I the biggest think been just and associated the the factor with has completion the cost

to improvement things been the and to recipe the we're see of also of that our completion able continue those costs of help using, amount One that using. is, we've the areas. just that of in that fluid profit We'll amount we're reduce adjust

kind additional Texas we're market there going be from something continue say, added million cost very north experience benefit that seeing follow to that's going of out of out have to market in some I $XX an opening, and the we we more to have capacity of proper per the would these something with We're mines to evolving especially that here. But closely. West seen less with at or to So, improvement XX.X so. something well

as Got are Okay. look you about guys bit hole are then same are the imagine wells Play, the can pretty cheap I the little at you on economics completions, they time declines talk well? And the what like think but there Georgetown Obviously, substantial there. open a it.

Yeah.

statistical in The It think to somewhat that neighborhood. complete you're from drill was outstanding. and $X at I per a those that out well flow in, on the is the we something well there, a back probably wells has and the production that looking million So, of well been that participated play. other

to being are the connected is key carbonate drilling fracture reservoir the to We out system. there

bit what some in is there be the participated statistics I are that our of it of high. terms be. to also but in So, involved, science of going a we results But involves very you tell going very, little wells rate would your on to return well

more times. the Permian a talked Can that? about are, you then what of asset about talk And Okay. one anything think just than assets not or the couple you is sales non-core do other you've that about how

ahead go I think Well it's - Joe.

the right. we sale obviously to source what is price Just Texas consider everything's core at offshore. say right Brad, going for are West which the of And than flows earlier -- cash

you those, every be the than the will other during So know is everything what has sell the what potential. each and for. versus keeping it can one and we But course value to evaluating year term of the

in than we more So, budget. but what total that standpoint from from initial the compensate a expect the for again exercise will we have that outspend

Allan. Thanks right. All

take Stephane Aka we'll next Global. Seaport And our question from with

Hey guys, morning. good

morning. Good

trajectory you speak of put the trend on the for quick there? shift the appreciating production. should you overtime mix couple And kind guidance that if I was wondering a could Just the ones for of QX how just year out, also, to the me, but rest

have But challenge. timeframe our that frac we that, XX as to I between these we’re high-volume the get I producing reduce somewhere think the on spot we to the that we the the is time days it is well would jobs it like we somewhere to guideline, certainly a that our we’re drill We'd well on-stream. outline it Well, well bring as a that view a well takes line, from but of is XX time Gulf. to gas using do

relatively And oil. with to volume low trying so, we're replace that

think if of have production you comments kind further Joe, basis. any will that So, on for I we’d a regarding provide know on in of guidance any mixers don’t but quarterly And try I going production, view our rates. from extent guidance, we terms spud do production to increase. all only to that time the can reduce to enhance our to to we flow-back,

Okay.

clarify. just maybe kind to And helpful. then That's of Okay.

million that of $XX the the we and So, other of as inclusive well year. for spend kind number seeing CapEx is

have $XX leasehold Pecos mild in of in we the covers some do there. County the cost our million area, So, is, all basically activity

We and are haven't partners there. those of play, working have or forward try there. to the the wells there evaluating our really activity with any budgeted relatively and working the determine inexpensive. But in the to in drilling we’re operator kind that play got participation for Georgetown don't large path a we've again, interest we And the -

Joe to cash not make So, for know trying impactful. to any liquidity from go going right that all but any to to a flow, at And capital develop of we earlier, his will non-core incremental that standpoint that up the asset more out with that sales the as is deficit stay given you there. inside required fact mentioned we're extent be than

Got it.

maybe Okay. on could the you then weather lastly That's And me, volumes? QX for impacts helpful. quantify

I probably foot was guess that. Probably, believe I in terms quantity what probably is million equivalent That's… minus or of was so plus around that, XXX cubic it

Okay.

guys. it. it. Okay, for That's got me it Appreciate

Thank you.

our take Rice. question Mills with Ron from next we'll And Johnson

thinking Are profit going how reduce is that Hey to to if a kind moving we guys, little compression is the we're changing concentration? on and with could was I this forward? then back Mackintosh] of the ahead you go still a flowback you of testing go you're tubing what [Don wondering also style bit here or this phase And in throughout about Ron. 'XX? run

are our per Well fluid we obviously in and in doing kind our and XX XX averages consistent of what play. we to monitoring our still that's cut people barrels foot with we're back to was when XXXX it, profit of back cut we cut still -- XXXX from that the back the

our we're it two. results that concerns Rattler But seeing of And hurting The out we overall out again that be best didn't these we too reasons. far our Bull flow. Crusader for or it -- but well. we've that, well. as we’re the believe terms of rate - the of was again I can a River And you And little us been sure as back can that in dramatically. line so flow we our total with mean a day the not just Raging I that different tell are Rattler back to things. it's gets to River the monitoring probably bit, good as But change we wells obviously in fluid So, on for is because is it, flowing better not again

So kind overall less up that’s If looking seen but reconsider, we that fluid we're we of making haven't we’ll what at. then end yet. total

Thanks. Thank you. Got everything. almost it. Appreciate

you. Thank

It closing are no I questions remarks. to or there for Keel, time. the would Mr. any further turn at to additional conference like back this appears you

We appreciate forward today. quarter. future with call everybody results participating the for updating look activity to the you in And of next the the our

So, thanks us again today. for joining

you for Thank And that your concludes participation. today’s conference.

Now may disconnect. now