Contango Oil & Gas (MCF) 7 May 182018 Q1 Earnings call transcript

Good day, and welcome to the Contango Oil & Gas Company Results for First Quarter 2018. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Joseph Grady, Senior Vice President and CFO. Please go ahead, Sir.

you. Thank morning. Good to the like to earnings Contango's I quarter welcome XXXX. for first call would everybody

want On with of Then and Senior giving CEO; and the a our and VP Steve Keel, call a And Engineering; of you remind start Mengle, me just of Allan today brief Exploration. overview operations. Our off Atkins, that overview analysts follow Senior brief closely. we Tommy give that VP take -- to I'll Operations stock Allan of our current are a by our then President Keel Q&A. results. financial up take with will our of we'll follow Q&A our And from everybody in questions

Exchange everyone's everyone before to concerning discussion appropriate As are statements the assumptions I include want our time. circumstances. by These statements that this begin, forward-looking as believe may we and based that use Securities plans, But morning and most believe for operations. the we a Commission remind is press objectives be constructive to earnings release and strategic contain and Contango's we and related which future may defined of assumptions productive under on and comments expectations

per net just reported are income However, those financial quarter And of and of context. the performance amount first be for share of basic guarantees reported considered that diluted that we same XXXX. results future $XXX,XXX and quarter, statements estimates and not of in should comparable the $X.XX for or therefore starting results, to the with

of part other that release in you the that each for profit loss period the items probably in periods. in income the non net were and numbers quarter, the for the each most cash While there comparing offset are number each notice same

prior higher some revenue. approximately the million in a we approximately quarter, Revenue in on Adjusted compared prior release, year and and was for $X.X an exclusive million cash expand Some little share per of we compared the working improvement as along. $X.X share measure impact our explanatory as define I'll a year. current it EBITDAX, go $X.XX changes approximately generated in more are per operational the self of those flow flow of Cash per $X.XX was prior to $X.XX capital for to is slightly primarily higher share for the quarter attributable quarter was of to a natural prior for coming slight and million current oil compared in attributable our oil That production higher million $XX.X versus to a day XX% X.XBcfe XX% total to for to of quarter, quarter guidance of the quarter, percentage the cubic $XX.X and the from increase about prices in the and the of liquids. quarter gas compared year equivalents to the quarter. million for XX lower for the a prior approximately our year million quarter. at the XX.X Production end or was

the Our two which May quarter XX for at upcoming day, about quarter first is XX things. guidance XX% the due is estimated for company for during first the That compression of production our XX% in Island field field stage we weren't midpoint of million to to plant Eugene second total mid below the resulting two In a of of stalled estimated the an that quarter. contributed approximately shutting field weeks.

July. then pad production plant wells and Also expected is drop. about being quarter we the Sidewinder spud sequentially drilled the production single the via zipper second completed Gunner fact the up be contributing full So a and in quarter-to-quarter our frac shut are of from thirds that that two approach, will in makes in the quarter-to-quarter with lower

the two the comparable new the works anything bring total decline. production prior new the were help as we which of The operating for will ad $X.X If production So at quarter, production additional exclusive midpoint and guidance the second during and from to during forecast of comparable guidance second our adding timing normal should expenses taxes midpoint quarter, drilling preceding quarter offset third Texas wells we our not quarter on is be million of year is the our immediately wells quarter. quarter to field. in to which West valorem a despite seven

As end on property Ford at noted of of book a in gain million March. $X.X Karnes sale our release, million the $XX Eagle we recognize for the our

abandonment of $X.X well which quarter single We XXXX, non-cash of also in the recognized Vermilion XXX most lease impairments in million related field. and to first

At quarter, the the flows. end on required As has estimated had exceeds quarter. revolver, the of borrowing the by our $XX capitalized cost future of million at approximately which first outstanding the the a remaining we accounting cash base end $XXX and rules million

We working regularly with group the scheduled borrowing re-determination finished and our base have are currently a should on days. next bank in few that

that to process process. result finalize and any shortly expect We expect in that meaningful do not adverse

year to the necessary for internally financial cash the now and turns core update our plan a of non to able and extent assets, of find amount expect the CapEx We to for borrowings review credit an the under be our flow, concludes we remainder That operations. that through additional on sales it onshore temporary generated over Allan will program facility.

today. happy here We're Joe. everyone have us to Thanks with

had and voice, that drilling Basin. last program on especially the he's on we're in As Delaware XX bit Joe's a about side. really progress the you operations making months our with success excited quite We've I'd the over our say could tail

contracts drilling currently two this excuse this making June. the expect for arrive process So on Wolfcamp and rig We're the year put being now which -- rig new in progress to to last zipper in already currently more of pad our we production put with it's early We'll that really starting on to changing XH a on prepared year. We've the wells three use five B that Ace frac with week. there me three well. Fighting drilling commence production

even spud reducing B in and A and wells, which zone we released those our of tested our our ago days, a we've should activity improvement been this that acreage. greater new in helpful reduction rig advanced days. over to show was month across little first Wolfcamp new While we've results two more continued bit has the and be

we up proven like our area. A we've the in both now B Wolfcamp the feel and Wolfcamp So

to next And start some Springs Bone little would step so bit we're that the a be drilling hopefully year. do wells to later which this going

well the our June, In purposes, reference was XH, and zipper south Ram two for we of the day. day in of Wolfcamp XH Gunner the early will a Wolfcamp A frac wells the begin Just XH Sidewinder River the day the located first Rattler XH, best IP XX to XH, wells. well. were same These are and B A just Rude pad a B wells Gunner well drilled Wolfcamp from of

wells a and both the expect that release, the for and the rig on Our of for to today Springs production two formations. year you extended have put continue Wolfcamp going period we an time. have Bones a Again been remainder best in A, our saw B will as of combination test to

development to ways strong. forecast or late another XXXX Gunner the to is here drill Sidewinder increase amount or remains area of for in prudent completion should in XXXX also to We'll County Our five and capital the continue look after prices six wells. got Pecos the of drilling potentially wells

focus us partner exist around We area. our control position our as of also to with for now. property close may between to made area. group we Karnes started XX,XXX acquisitions or We out look to either look those our we'll And think But acres there. a we and to in some continue with producing for so continue acquisitions opportunities expand progress acreage in we some our

concludes that it operator. remarks. our that prepared the questions we'll open for up to with So And you

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

nice well push I the well did just proppant extend know laterals different Good morning, the that a little to you described more all side on that anything there, bit the guys. side. trying and is you as A completion on it late

big difference it the our well. Well, was first B was

little down the deeper, So like that drilling and Wolfcamp that we've very now force. encouraging up rise so A been a bit another so tries it's was was fact on until

recipe drilling much now and completion all thing. pretty the wise same of terms it's in But the

Yes.

Good try at the can look like sort luck when guys of quite about you about remainder you just that year, hear, frac when all crews then bit talk some to actually you you frac a tackle seems the had where you guys and you'll good of you And you of about in to if kind of them now okay. bringing how talk the talk need groups on can these have in could that?

there you've certainly guys doing zipper frac on that well. fluctuating and one. Well. five so is can't with find Sidewinder that We're market anybody the We're calling it. sometimes you got Gunner sometimes that a That doing out then the

market the the tighter, that tight think has in as or past as tight what So don't anticipate is generally we it it as get but as today. is will been it's

good getting on pretty frac some had luck we've crews. So

then think Okay just and lastly weeks? you just just two offshore on about was downtime said that the two I weeks

Yes.

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

up you Hey, are? talk the service things. question of costs Neal's I following just edge current guess the on about everyone. good what morning, Can side about leading well

-- just I what Yes. would well finished that on state we the you say would

Right $XX million. at around $XX.X million,

Add and A wells, very or B slightly with pleased have that. we -- below what we so

right those guys there wait sort news. spreads on are front through discounts for is spreads can anything head completions you that's and for any better defer the to or of we Midland gas just guess along takeaway see to now? desire And And continue these if what Okay, then I you talk oil seeing good line? well double-digit and

that is average the a Hub It's out but about Well for few of sure differential. WTI are where a on April is probably oils little right Texas April Oil for our $X.XX settle higher a last tad consistent to was out seen, a we remains in first days it at bit. mid spread are off just still Hub. subject X% differential a with kind gas Henry Well, that's corporate the Henry push from under to it'll average Brad, be like in it us, %. for obviously of little West standpoint. gas company-wide and on quarter today. just WTI; for still we at blown where for

Okay but or lines in yet? along the those getting no out of constraints anything physical oil terms

No.

see co just And or a you B? then reasons topic. on and zipper you that Are A need guess sort great. guys do develop to Okay, of efficiency frac the pursuing for I

bit just primarily about could well. per savings save - save you well million -- $X.X quite you All a a anywhere

So it's meaningful.

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

morning. Hey, good guys,

a Just the quick me one asset sales. on for

You recently. just that Can talk anything been whether you're on on currently the front you working guys subject? successful have about

bring they our sell it makes million that environment assets, for sort us. number. today's whether $XX go we and idea determining it year, sold purpose. do at of to the $X core non-core looking future value to at $XX meet all Well that only Stephane. price said but we're trying sense of prudent we're got in We, targeting asset million. I were it But onshore to of the goal. we non with And them When the a started the We've to for fashion looking like an first in and we're organized another every million to that versus

last one And for Understood, maybe Joe. for you thanks then that. just for me one

kind Just of the could share re-determination anything on expectations kind of there? you

our it of should conversations way. we don't this would that meaningful during had anticipate right we've next in a impact the change as way few but change we again, have the the now adversely on finalized based a along process, meaningful or days Well, liquidity a in

We'll Ron take from Rice. with next Johnson Mills our

Joe to quarter just on down follow the production-- the second Hey, up morning. good Hey, sequentially.

about get the those shut timing Eugene ins think to related it half half in new the look in said what in When half production can may of of was on the the on that of color second with Any any think and I track production Island. we two in of or in back wells second the shut-ins coming terms be year? about profile thoughts you profile July. like

Island. Eugene the midpoint on that before. comes of two-thirds the we from expect once Gulf compressions from do Mexico, two to the that the about of were guidance shut-in roughly it's looking uplift the drop at We Ron, of on, of wells get compared to coming some we have the Well, where

So there we some expect in production. going be increase would forward,

because materially where As this you current like end give we quarter know, the guidance we can don't impact up. beyond things

that increase certainly guidance today, are the but expect can't to where we where but give to So because really we of any if be from as might impact.

opposed pretty wells when a would least get it time run level couple time to of guess kind and Is seem get one seems from back on fair? that that of that quarter of back of you're bringing ability kind you to Mexico Gulf two first now that at that I at one thirds at as impact in the to likely. the a

with agree that, would I yes.

your Can going and -- and using on contractors. on your you and a out completions? color also rig more give rig Okay you bit said to swapped you who little who why just you're you're

I'm sorry could you repeat that?

you thought Who to Yes little contractors, that. you process asking what curious was completions? the for rig talked your out who about going I a for to you're use color and as doing just also behind changing

completions, used C&J. next C&J we've universal, used used a fixes We've number Our two. different we've companies. the and used of we've COGS,

had a the mention we've were wrong over and of far at we've as names few like As is not for that a kind year I'm concerned, but year, rig a rig we had here, sorry, some now, we just the just to going the issues time. felt little using, I'm about

Something and was good that a upgrade decision. don't like be came breaks made we ahead the and we to it opportunity felt to rig just like three that and whatever went was it an rig going or we current

help Is benefit in capable is project? cost? potentially a potentially of that drilling wanted faster? of drilling can to And well a of bigger -- is more upgrade you it really terms is --we think the efficiencies the Or be something it it upgrade rig, and with

got course we increase is of we be it's is you No. The rig. time or the or so moves. to or off three At and rig we drill we're a got -- more can of of the substantial is off hopefully think able day, end was way our top well. moves the that it class. drop pumps. top need. we rig It's a We everything --the the cut the a think efficient. rig we can day felt two our It's day over that We rig bringing ought a But to of overall had

three or start to two for, year. finish of perhaps that's course it over the so And up adds wells from the

month So gives period. XX us maybe another a well in

be wouldn't that just things we we we I'm not had people improvement lots an felt first-class going And but do went we grabbed of it it, done put or to it. we rig. down again, came And, going thought So like we there. it out there, we grabbed the -- little of again But into was that available, have it was to lots it. that combinations a

that the inflation rig is out the upcoming your fracs both and new market -- are are -- And is priced? to how your the where you was? of starting was in completions see on cost the being and Where prior terms rigs one there

a rig up we in just a that mentioned easily rig daily. a make we a on just I This but on it than had, can lot again per is on felt bit more time because day more the little than that the that like we improvement the there's for day on that the

got roll You've equipment et cetera.

a one you cost. of just that day cut more cut can you rig a rig, so than just And day,

the On think moment out the favor. there in I fracers supply at completion of the side, our is

there And seen so market it's a hope fluctuates but we've costs quite today. the we're of We cost happy a bit continues with drop that are as where and in late. but

near your us of footprint? area as your acres deals, A what net one in acres about X,XXX Then for to terms market talked can are of probably you; D potential just like curious you kind County one in via and there plus expand your Great. raw that you it's looks existing give sense to the last a Allan Baker's and around producing supply whether

Yes.

guys acres a may area the from the just have the guys where inventory I point big that such get in is will around you I us operators private that guys. lease positions came execute. all some that have up large and And the they and just-- swooped these recall a think there's think this of not that they lot ever have we can

going of not then expire. opportunity. But be drill all to have it to And than clearly that their any just they value if to before letting some to decide where get sooner out provisions of later. rather have it do that there's there's if And they leases

to I coming think will the relatively leases active get areas be going --they're that soon they're where going because to to have these up.

possibility. the those think I factors are So primary driving that

That session. time, concludes question this the back or At answer for -and- conference Keel today's Allan any Mr. will I additional remarks. turn to closing

And to the future. look an forward giving you like just I in call update today. joining everyone for the for Thanks your near thank interest. to

This you for your concludes today's participation. call. Thank

disconnect. now may You