Contango Oil & Gas (MCF) 9 Aug 182018 Q2 Earnings call transcript

Good day, and welcome to the Contango Oil & Gas Company's Quarter Two Results 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Joe Grady, Chief Financial Officer. Please go ahead, Sir.

Claudia. Thanks, Contango's the to quarter call earnings everybody second for XXXX. Welcome

to and Allan call Senior President Operations give Atkins, a today results. Exploration. to limit the of brief on as turn that President then our it of Keel, Senior up And Vice and Vice that our closely, are of brief our we'll our On I'll we'll Mengle, everyone's typical, it analyst operations. Allan myself, Q&A current our comment we is over of for Tommy Steve and is President follow financial and a overview stock most Engineering; time. to and Then productive open believe constructive CEO; use to

our Before contain we concerning expectations Exchange and statements assumptions earnings we for morning discussion circumstances. Contango's believe statements a the forward-looking Commission based comments future plans, on operations. begin, the may this related be which I under and want Securities appropriate that assumptions defined to strategic everyone release by as include and are objectives may to and Such remind

for quarter well to new year million the and a that's $XX.X decrease field However, quarter generated shut therefore $XX.X prices those losses to compared hedges a million lower approximately current realized million XXXX our one year revenue operational quarter in be measure decline. in that to prior our estimates statements we pretax on on for a a per and quarter, reported revenue $X.X million meaning and flow context. compared quarter loss our share the loss of prior quarter. in quarter. not gain offset and lower earnings, decline of decrease share results. due million for installation to a from net during in net commencing Cash realized natural Adjusted during diluted million $X.XX in compared a that the current but financial $X.XX regular current planned couldn't in in And compared to year cash share, million with basic in flow the $X.X commodity in per We production and expense and Pretax a to release $X.X expenses, should diluted our million earnings we outstanding million year Starting operating gain quarter. to Revenue operating two was approximately or field prior basic the production of overshadowed considered results or improvement the quarter, $XX.X quarter, prior the in only in EBITDAX, XXXX two, share Eugene production million a was $X.X loss for quarter to $X the and $X.XX that lower are was changes net the loss by gas maintenance. future compression loss attributable on the as performance or $X.XX the to Island of the quarter quarter. of million less per capital for the per of in current the the other guarantees income Unfortunately, price during was exclusive of quarter, $X.X year a derivatives just in attributable quarter. for $X.X $X.X and the to XX impact defined are compared improved compared working of for weeks prior

Bcfe million or natural prices and discussed offset was during the for however to crude producing compared prior decline higher company production The XX cubic total XX day XX.X from was quarter. Revenue oil $X.X prices. program Island our to contributed the in and of first a provided prior XX field some to to prices quarter. the Southern million While drilling that gas Production natural feet X.X increased oil from in not year the two per our non-core we crude during crude for oil compression for over anticipated production basin experienced quarter field our in and XX% year-over-year the a for Eugene to crude was It increase our Delaware an as million production. and decline properties. previously welcome to of due sale production for oil in year Eugene little in production regular XX% million a approximately shutting crude equivalent gas the due previously to $X.X liquids compared And lower This was increase lower the quarter. quarter gas production Island for weeks total of approximately for guidance. installation the

So, is the in quarter the plant meaningful. shutting was in second

as expenses estimated day the per begin from comparable Island $XX restoration $XX the prior Sidewinder to the is production year to XX. which taxes production were full Gunner a and quarter quarter Total provided operating and have for million guidance rigs upcoming our $X.X our was exclusive loan make Our guidance. million quarter we below of Eugene million wells previously for and of production the equivalent

Gain million this was the and derivatives exclusive operating mark-to-market the turn the XXXX quarter it with million on losses taxes the mentioned. $X.X quarter financial is consistent And million production review. I for second and in of year I'll was Allan And million. the the now, $X.X $X.X $XXX,XXX update. with to approximately an that a approximately was of for for $X.X realized between $X.X $X.X realized for while of quarter million for Loss $XXX,XXX mark-to-market as three-months gains. guidance has million and amount, expenses Our for the That third concludes long remaining on over operations prior unrealized non-cash derivatives charge.

today. Thanks, Joe, on joining everybody and thanks for call the

developing Texas our basin. West on asset in to Delaware Southern continues Our be the focus

in placed July, We continue in quarter area. producing and one well April wells area to this XX. in more the number two our total in to derisk of that bringing production We

type Bull producers also was well, below built total, IP curve. our Raging over curve curve. XH our XH As in in type and we our continuing was have now well the Wolfcamp Gunner release seven type to B. XH Wolfcamp similar to and In The Sidewinder the the A two

both in cost well. of to Gunner came per things, side under the On the million the complete drill to cost XH XH Raging $XX and Bull just the

possibly chip enhance So, that at our to and below. the completion and costs we execute drilling are We rail cost the think we now continue to returns. can that continue away therefore somewhat level

rig this and is now. We days that the bit our flowback section quarter, five days, than East we is rigs with changed anticipate it crew A happy even well have now rig with completion acreage with little well, as - this expected contractor in initial position. we're that our in [ph] our XH with operations finished the it's was General drilling was rig, the number South the last well kind at we Wolfcamp spud, in The mid-August rig to we our at think first five new mentioned a Paxton recently in the I in TD been we target XH That of that recently well faster XX not since in to-date of is it's best terms begin the of days, with to finalize well September. timing. look have and drilled

steps we'll next by with area. finish As north activity program River best helps netback and and oil in continues acreage to part as able drill that including of that Rattler we pricing and saw to and outlook this our to that factors our take results, we area. going to moving we're Paxton that's look another our this further been we the based the strategy move The is decline kind of in Midland-Cushing place company back for evaluate several the around at the the our at in saw continues forward derisk to release, and Northern our is well. to that of for in position overall differential decide for the be - down have our you the us spud, after XH we're this means We'll what that what number General to costs get have

for I back it to turn will that, over operator period. with question the So,

ahead. [Operator take We'll Instructions]. Dingmann go from first our Please SunTrust. question from Neal

open. is now Your line

Good in morning, wells with forward of question, going Allan process. the sort gentlemen. to your plan and complete finish up

the as of on don't You And the as those and problems in some of side. as on completions kind as have had past of One, have sort what's sort completions talking basis know to been the seem you having have you of as like a sort having you go about then services spreads. batch plan frac if any been just the do you going wells of done on two, you of forward. or keeping plan you issues obtaining far kind the far forward

regard or lower haven't with completions any the execution problems. problems anticipate - any really of just Well, we we had the have all. those at to Not any

a we'll feel whatever drilling, executional we have can pretty just four achieve. of that. do inner just that now drilling the the good the some [indiscernible] time operationally that question and that say would to we've We us. so work pad going four wanted cost spot, those you how So of in been That determine, have of for aspect that our between the to more good kind and that's a that kind of lag that. and of availability to your question, we well we if of about From about think vary to having drilling thing I first completing service that is completion for are lag us more I for well And are production. leases we that of, certainly then prop - we water, to guess or I pad things between would sometimes then of be on our wells so kind some really the we do had beneficial standpoint, the good coming driver most best biggest could like then market, to would so. probably us have, very or Neal the

Bs, on, then just here. your maybe been just follow-up one Wolfcamp these about with I between in few the there again the thoughts of about Two doing a Bs. As And little have And about Delaware have just bit spacing and and a talk going Okay. if questions could been most days. your of I up your second Allan then bound? you One, secondly couple thoughts wells, know a as think starting

a little doing are we bit that. whole cafe, and I we've different of still that tested it's there. early couple think in But evaluating us still Yeah, benches a the for

of found In as is opposite spacing. what of operators from terms spacing we've XX seen

in but as be don't that how to us many So, for an interval. where know we any will that, that so, got addition of inside stand that's that our right as we have as could X that X ultimately It today we've would anticipate there. focus now not much on zones would work we get benches efforts will

Very for the good. Thanks details.

Neal. Thanks,

Johnson Ron go next from We our question Mills will take from Rice. Please ahead.

open. Your line is

third bit in one morning, What us you to think little an with update said world to any Bs? are that in wells terms the Question Raging curve I there line type wells? and of and issue expectations your were guess your of couple I results your the in you production is an from is Good the now curve on now difference Gunner How just between if particularly of you trying re-rate changed? As type that the and more Allan. give I'm curve Bull. type the Can have on appreciable the your some was older and just below. a IP and your XX?

I'll type let some Steve regarding kind of questions of those respond Ron. curve, to the

XX essentially far a type type range from barrel all. of much the our liquids. XXX curve, seen of really similar have, the all type the kind we and curve of first I As the I, than haven't in has from as an perspective plus don't early change gas of at day the curve, months IP

operator The with XX after that's happen to now what just comfortable data going We've to adjacent real to of type really, we XX their feel at to our the out we exactly that in is looked ends. quite first us so, and that's where of And question considers type offset months. is, nearest a the that curve. our kind much further our change get North not and sure we're a I'm and time, curve and flattens so in little going see bit curve months,

We type we're first a so, for I we'll months curve just, got at. supported really the a we So, last kind over and think is the of XX or hasn't all moved of the purposes where we've course lot. the year data get practice and half more

XXX barrels that Boe? taken was just oil that from day, Steve is the or a

Oil.

about XXX Okay. the the like And the correct? XXX, you Gunner think when that's Boe,

Yes.

I like recalibrate. am Okay, trying to said I just

the second wells, product pick-up of nice mix quarter Delaware but or online? add get on. in Joe you the product expect as some should we Second, on brought What Gulf wells terms also in as Allan mix of Mexico you going you the more forward. back some in

Well, installation. Ron forward. the shut I Because second bit of a say you Mexico what see compression higher little the in weeks, Gulf for was a the couple quarter going to for we of would had than

So, around I think we that. were or something like XX%

a bit say that that probably quarter. would little the less than So, for I third

for one last me. Okay. And then

that and kind you year or here? of the you next wells online going sort Is maybe activity you're something that and take of pause couple off to there, to these rest pricing, do take evaluate of in a is once think something, you to in what just hit couple You about results expect talk can bringing a you've of is break. finished and them showing Allan a resume the XXXX

I'm certain a we take will pause. that not Well,

We are evaluating that now.

of factors a have combination decision. We that would that impact

Our other much these we've high coin, off pricing. the due PV I level side bat, to the up, been the that of got differentials on pretty take your that all away right production have

going will we or that a area forward, this have right kind and as of wells several whether big plan pretty evaluating our So, inventory but is now what of factors go drilled be we're our right to primary not now.

So, the a big decision company. it'd very be for

know it current or particularly your the discussions $XX Is borrowing you but available ratio? some to of this $XX seems limited have in as it million like on with I million terms liquidity, base of relates your bank

pace at but position impact number or so year. possibilities quarter that that pace the more opportunities advantage our drilling a accelerated of into the Well, especially and what also going specifically into take in even to Ron, footprint evaluating position we the to plan are the of us out do potentially to increase to we program business actually ultimately carry would fourth us following our will current

Thank great. much. Okay, very you

We'll Please from take Kelly Global. ahead Mike from is our final question go Seaport line your open.

the things you assurance should and what first just the talk and we just in side guys flow turnabout gas cetera feel to that now? oil kind here pipeline's Maybe Thanks. morning. et the Good about forward how just almost guys. Hey, of book on see right full going the you're seeing physical

that Sorry, Mike very that Could clearly. come again? didn't through ask you

Yeah Can right now? all me, you hear apologize.

much Yes, better.

Yes.

that. about Sorry

assurance the what the Thanks. boots with flow front you're perspective So, about a the the on on the how both oil I Permian overall quite market and the ground we're view question of commodities? and of full actually being kind comfort see on almost physical bit just gas just front really just seeing a - and give your right us pipelines kind now level hearing from was the those on

sorry. I'm Okay.

So, yeah, very, any selling having tight show issues our reports we're obviously all projection is that now any the the the later and right third well, getting very and on market on into trucks maybe We've quarter talked got We're or not pipeline. fourth there a putting to We've shows [ph] a quarter purchaser. be become our trucks problem. even there. problem and could that not

got pretty of right but There future us mean, no and that we're are covered say now a of won't for have a so is We in far, we couple here that, comfortable okay. we that that foreseeable trucking, but they hiccup guarantee feel they've the months.

a the in a potentially pipeline, putting of point part pipeline Northern to can oil justify the getting where also acreage. our to on we connection We're

and guys So, there our as there is working are well. capacity on

selling our And so, And with working it's today. now. guys the are that we're same right analysis that pipeline to

So, of selling on with through and we've of two current And we're level that AESCO, relationship acreage for we've both there a plenty them capacity far as those got go is our as And of our got through production. lines those. already.

Appreciate back whether All And you pull to evaluate that. right, potentially. great. as then

you to here are have stay number coming partner in differentials sounds would to - JV just at that need to environment you market some need would be, how sort if potential this. they - like point you would that where where you pullback, or don't in the Thanks. how in you more Will have of Is that - play right is - future will right. and curious variables you case base lean how that in Just if to you now mind. help of

a we have good partner here very As you know already.

bringing if to an that. I play. opportunity the we is of to capital, think plenty needed of a capital, But economics in additional look of have be the for terms we So, there at

We have at to look that position mixture preserve that. we lease our

liquidity plus our forward. all be those the that for what will drivers so things direction And combined go of kind we

different mentioned we earlier, number potentially strategy And also, increase looking I to As take footprint. think a appropriate. we're to possibilities opportunities advantage at is will well whatever position pursue us that of of our

Fair enough, you. Thank guys.

you. Thank

you. Thank

It questions at further this appears that are time. no there

like call Allan closing I'd turn back additional the or to for to remarks. so, And Mr. any Keel

forward today. like thank everybody our get much. just you next so updated to we in look quarter. participate the to Thank call We after everybody And

this your Ladies you call. and participation. Thank all concludes gentlemen, today's for

may You now disconnect.