Qep Resources (QEP) 27 Feb 202019 Q4 Earnings call transcript

Greetings, and welcome to the QEP Resources Fourth Quarter and Year-End 2019 Conference Call. [Operator Instructions].

It is now my pleasure to introduce your host, Mr. William Kent, Director of Investor Relations. Thank you.

begin. may You

Cutt, and Joe us Michelle, Year-end everyone. you Officer are Thank Results Bill Executive Thank Chief Vice Buese, the good President QEP joining Financial Tim today me for Call. Treasurer; and and Resources for Chief Conference Officer; and you, and With morning, President Redman, Fourth XXXX Energy. Quarter of

our obtain please financial copies slide supporting done not our to you've contains a go tables along so which results already, with our with presentation of materials. qepres.com, If earnings release to website, with

In the today's free to and non-GAAP which comparable the in most release conference and as call, including referred filings to certain SEC cash we GAAP filings. measure flow. earnings will is release our and measures, earnings use These adjusted measures SEC in EBITDA reconciled EBITDA, are

In everyone be our our from variety forward-looking remind disclaimer are of discussion forward-looking filings. that differ and earnings more statement statements. forward-looking SEC which facing our of statements addition, We materially making risks release everyone to could in a We refer our these business for many and our results we'll our robust numerous reasons, control. of actual beyond

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

a guidance over for the financial XXXX for update Will. our turning with by to today. an operational to and Thanks, fourth year before joining overview our Bill strategy call quarter thank morning, brief XXXX. Good I discuss and followed performance you performance, of call business the will begin to and the full

in and water XXXX foot were Line. $XXX all $XXX at operational XXXX reduced we categories. costs County higher are performance completion costs in We for XXXX, are budgeted foot in the in our peer-leading frac very to per a despite being year pleased Drilling with per full

with per to of [indiscernible] continues lateral wells team feet foot target an as XXXX IR single X,XXX X,XXX-foot we us completion increased deliver than And average days. the our for operations frac in XXXX, on a deck. XX total day to in complete lateral rate the shown depth XX,XXX have X, less the to drilling enabled to day Our a footage Slide crew. frac per of

have costs capacity guidance. equipment us to and allowed performance site deliver by us capital through it midpoint tying production natural becomes the to positioned new off capital existing efficiency. by and the during also plan operational above peer-leading into prefabricating down year wells Facility development as of tank-style XXXX below the strong advantage decline, XX% XXXX The methodology. come facility available spending our with XX% It deliver of our XX% has original development another

expense have Corporate completed to approximately to by required to an to additional XXXX. XXXX these XXXX we XX% and overhead XXXX, lower from costs from actions all was XX% reduced

and additional overhead remain forward. lowering committed do a going structure entered for the items We with associated competitive charges to anticipate nonemployee expense with noteworthy any have special XXXX not restructuring. We G&A

year-over-year in Lease expense per in in reduced was reductions $X Basin and BOE through maintenance the practices. improvements to XX% contract operating approximately labor Permian

power generation on-site lower Williston to such Basin. to of as the in continue projects costs We elimination execute the

our year equivalent guidance. the from primarily production remaining by end Permian. production of We the X XXXX, third in however, of in by to earlier, quarter anticipated with year did, new low mentioned driven Basin fourth exceeded the I the at As Vegas oil forecast year ended the oil decline quarter We the the flat Williston full wells fourth XX%. offsetting finish original

was indicated At honored rates curve the third possible, the time XXXX, the startup quarter during still decline call, type in last of that XX our we change accelerated mid-October, in in the from production finalized and we XX data through recall DSUs were guidance and you If that a original data. philosophy.

the below quarter, slightly production for and fourth wells, slightly progress decline accelerated the curves the production and below result, affecting we fell type of through the guidance as original began the certain fourth a rates As quarter.

of However, for as plots remained the ahead deck, line each you IR industry can decision XX correct wells XX on economic up and made of to DSU are aggressively, with and was production the that from the cumulative see well we DSU the the Slides forecast, our the in start peers. confident more

our rates, return in steepest have we given the the these are these the wells we forecast. of These of the budget has positive DSUs, built higher acceleration slightly rate learnings that the have substantial of been confident that despite experienced for of XXXX decline Now improved part decline production.

ahead to indicators other pleased fourth in the all say of operational I'm or that were quarter. guidance on

operating strong nearly $XXX million continued of approximately and expenses our generating and provided resulted of by cash activities focus second 'XX with in $XXX Our operational in half period. cash the delivering same QEP performance, million in operating overhead of the on flow flow coupled free

our to development a spend few results. and of as XXXX important plan. forecast that minutes and our business anticipated development to the describing I compared XXXX is its believe for what I it to program will alternatives we now plan strategic emerged -- move show I'll we XXXX. forecasted XXXX August in on the an now as for process XXXX we from reminder

free with each deck, and slightly $XX share reaffirm in flow of at have As $XX an the annual our XX% $XXX the we price million in more flow described for we spend lowered cash yield and XX improved price. range year, on our than WTI XXXX current cash production approximately to of a estimate million Chart of forecast capital IR of

picked on being with the County wells first expect of X amount Line of as frac frac new recently put we the intermediate Permian, an quarters production per day help X ahead continues to the to the footage of crew year. up X We to stay and in in drilling completed rigs drill the rigs year-round, rig improve. with In the

XXXX X and production grow oil Line complete production by County during expect to XX in We net -- wells --%.

County in mid-January. our we first bringing started on Line in DSU

on XX,XXX per oil production a the peak of day. than shows day plot producing of nicely Line and oil deck provided barrels Slide building XXX of expected XX DSU County that per in barrels rate IR more towards greater XX,XXX have the is currently We of than

We along are wells C anticipated oil. amounts us type on that and as shallower with our the Wolfcamp test producing disclose to the results positive early These give type to XXXX continue A/B are confidence B the first to significant are in of dewater expectations. Spraberry the Spraberry horizon, exceeding bench delivering plan. our prior pleased tank curve The curve, in zones

to complete X was lateral well third and begin of wells program the activity February disco drilling during We continue an XX,XXX XX We average week August. XX refrac between with March Williston, during the August. In initiated anticipate plan through to on length a and to and the of feet February. drill pad

non-operated in We in also biggest WI adjacent pad on with Antelope. high-quality plan South pad XX% to X the to approximately in wells $XX million invest our

seasonality but half the and that to somewhat Operational translate to the first of to or be seasonality higher into flow the to expected this second of annual it generation year understand year. extremely the we less first that during cash program free second a nonlinear as significantly deliver important trajectory than understand that We of significant peak cash flow is is this development XXXX, will $XX second during half third Similar volumes half in in both fields capital will in the the at likely consumes significant the transition the cash the unique, mean year expected before are is will to half of positive capital the free quarter. outspend and oil. spend year,

the the last mentioned joint substantial sale During including transaction. we -- venture that I the of were full business, or a maximize of or our the of options evaluating a call, variety to partial value joint water

has actively an once and engaged are with We we'll buyers potential process update concluded. the provide

in improvement XXXX, sheet sheet balance for significant summary, the committed QEP completed returning We to balance overhead cash categories our free to and a In delevering flow, corporate reset during delivering shareholders. and XXXX -- all operating our delivered capital entered structure. generating continuous

improved completion successful as sustainable of deliver of and asset a costs a in result in the this of corporate facility oil-dominant confident are to and high-quality, our base, We reduction decrease significant deliverability ability overhead. drilling commitment and performance on our

turn to with over to more Bill of our discuss performance XXXX With along our financial that, call guidance. detail the I'll

and you, Tim, good Thank morning, everyone.

the and for up quarter Over fourth guidance XXXX next results year-end our few on call minutes, provide outline will some details and initial opening the our I Q&A. before

EBITDA, the $XX For in million of million compared was the quarter unrealized of of third our a net associated fourth the net reported million net end $XXX.X net increase compared quarter our fourth period net loss of the derivatives portfolio. 'XX, quarter, 'XX. and reflecting with million at the to of the decrease was adjustment fourth asset of derivatives to $XX in the relatively income million at Driving the $XXX of $XXX loss loss we adjusted modest remained generated million At at higher, mark-to-market associated deferred reduction flat third oil Basin. LOE production with X.X we flat transportation the slightly remained Equivalent from even the negative of the adjusted volume total G&A historical plan. NGL $XXX.X Williston equivalent the a in XX,XXX barrels of of end quarter. portfolio liability third the the compensation a million quarter, to $XX million barrel after expense quarter. $XX In the of generated was Combined and a commodity million,

fourth Basin quarter associated adjusted Williston by XXXX approximately historical million with $X the period Finally, operations. impacted negatively charges, was EBITDA primarily of

held average XX-K production details the to million which guidance. into And 'XX XX.X basis additional as per of we XX, during swaps, The XX% enter swap is contracts, We Please of of for at of oil barrel. midpoint quarter. fourth December and see our $XX excluding basis contracts. the approximately for contracts continue oil XXXX, the price of totaling forecasted the covers barrels commodity on derivative contracts for fixed

flow. the generated million, consider by operating is million nearly and in flow $XXX we During full a of delivered We activities year for provided you fourth $XXX.X we million flow million $XX.X cash cash remarkable by missed of neutral the net by outspend cash free $X.X XXXX. being accomplishment which that cash just quarter, when

As adjusted excluding and debt we plus amortization accrued a noncash capital discounts issuance EBITDA and expenditures reminder, expense, expense as excluding cash costs of flow free define acquisitions. compensation less interest share-based

approximately million borrowings was the $X.X With shareholders' and our our gross approximately of had regard total no of was were and billion notes. $X.X total assets quarter, on hand. equity of revolving which $X sheet. cash facility $XXX We approximately billion. billion, balance approximately had under debt At was to senior outstanding Total all our the end credit

quarter, notes remaining due March in of we fourth million XXXX. the were $XX redeemed outstanding that senior the During of

fund those outstanding notes $XX cash approximately senior XXXX, we on We balance $XXX approximately leaving repaid would issuance. of and of the million hand due reported to we transactions, million used debt at repurchased also on have indebtedness, We that million year-end. this if sheet cash not had of $XXX

plan now our touch our debt future address will I maturities. on to briefly

XXXX we the on the year-end, if expect hand facility. First, to regarding under notes, cash notes repay our credit at needed, with availability using

a generation our flow and our assumptions. result cash $XXX will in AMT 'XX based refund current forecast installment our be during forecasted at be million greater budget our $XX.X next the 'XX, of hand on quarter to free than XXXX expected credit we As cash of on year-end of the approximately million, fourth

extent over of the noncore we the towards the use net any proceeds assets next of all addition, of XX we will repayment to our successfully debt. In months divested the

that options evaluate to sufficient identify we believe notes. notes and necessary in those 'XX, and that capital best the continue of retaining October for May the access debt have we of address to time we markets our senior to option 'XX the While mature to

guidance. to on Moving

is million modest Our XXXX guidance to compared to a the at XX.XX million oil increase XXXX. volume barrels, midpoint XX.XX

XXXX. expect by to to Williston X% decreased Permian while expected We production approximately X%, is by to production oil increase oil compared

Our natural X% to volumes is XX gas for Bcf, 'XX midpoint decrease compared XX guidance to at the a for XXXX.

for volumes XXXX. increase the NGL X.X to at is X a barrels, for guidance XXXX compared million modest midpoint Our million to

of expense our guidance of guidance operating expense in lease to results which per total adjusted $X.XX transportation with is BOE, $X.XX $X.XX cost midpoint is BOE. in to per for This XXXX reported to $X.XX line while expected results. per BOE, our to $X.XX $X.XX Our lifting is be XXXX XXXX for the guidance

we of incur compensation XXXX. restructuring to of to our to compared guidance. XX% production midpoint any The midpoint share-based expect to expense and mark-to-market liability. $XX $X.XX $XX approximately Our that million It do is per BOE which guidance million of in other is is is G&A G&A meaningful XXXX guidance charges lower the for $XX million, expense not XXXX and important for approximately in note using is XXXX

our our infrastructure. earnings $XXX will Please where investment includes as this guidance for of to Finally, allocated capital guidance guidance The for see be excluding XXXX million, is XXXX annual details budget. capital our for quarterly activity, which Basin applicable. $XXX million acquisition XX% additional divestiture well and on Permian our release as midstream

I to summary will Tim to provide now turn a the to the call call before back opening questions. up brief

questions. over I think we'll go to just

Instructions]. [Operator

Our question of Gabe the Daoud Cowen. first comes with from line

smooth I XXXX, starting with some was is faster turn room guess, to more on Meaning out the captured wiggle faster, get production Permian. guess a in wells efficiencies there obviously, than how to bit? perhaps some the cadence if this I and impressive I impact curious, you does expectations the continue budget. initial to

we've that year for I be frac keep I to able think we're practical as now. crew mean could smooth looking talked rigs Gabe, to to our mean entire with is year. the to We're that's about too enough the question. I a it think you just going last busy don't throughout fast that preference at so much. the good constantly. drill it's

this need going quarter to shut fracking fourth at think down to point. we're I generally in

crew Our frac rigs. now is about X crew X can support -- frac

fourth X in with quarter, continue So the rigs drill to wells. running we

enabled to I wells started on we we have it to ready wells frac smooth much. and And so can now bringing in that But don't practical January. it's think think us to

see and if the cost, to as wells. then can on makes I that online, As but think year it don't additional to bring too though, think bottom of to wells you the sense lower progresses goes we right it's now, look practical many we'll all line, more to bring that

other was just was then at project How about to wells density section the follow-up, helpful. relative I to That's the given to it. that it's just the in performing expectations? your a like in as January. sales Spraberry, turned zones curious And are zones guess it Got relative XX two initial the Spraberry looks those there. Line, I exactly a County separate and university

Yes.

Spraberry exceeding Dean above the the Shale, We're on So bench, the certainly fracking zone. we're expectations. just C

average zone know our from don't of I would if Dean. say we're peak we But C a in north the So contribution X,XXX are rates day. getting barrels that

bench. in in We a X,XXX up wells have few the barrels day a C

in B X,XXX a of of barrels expected kind That peak bit to type rates. bench, up a good. type expectation compares X,XXX little the curve a X,XXX performing extraordinarily So peak X,XXX of stack, in to day. to curve is The higher kind of initial

We're can not bring So any wells interference of pleased. from And online. pretty we're issues. -- we number saw the really that seeing see you build to rapid

are have still we're making We being barrels number put XX,XXX ESP, now day. those of and that wells a a on

doing yes, So we're the is extremely getting But Spraberry well. encouraged. bench quite

Our SunTrust the next with from question of Neal comes line Dingmann Robinson Humphrey.

and first XX. Slide my XX your on is Tim, question

Spraberry say, Could area? maybe down You speak you're wider peers. Mustang particular this done guys a you than your in thoughts nearby some it Shale, your would in have spacing, job good -- the seems still and your bit in on of a to with space, I Springs maybe

Yes.

we've think -- we've got about think I it right. I Neil,

back As XXXX, interference did a And affected high-density we you see we tested can rates. 'XX, production did and test. recall, our the and in limits it we

about and right. got We're Dean. the so we've test think And by in the initial our I encouraged Wolfcamp Spraberry Shale the the is view very

going in expect a see We're at don't least we'll each to X time. to as watch a I about or Springs. back be get year changing to and and So of modify it X to at, Mustang we we that you're We're it take over bench, have this X adding with We'll lot going we're that look talking that. it wells, to if wells. data, apply we'll not thinking production probably

second question Got X, your cost. it. then showing my the And on Slide lowered

could chop we materially from there? just You to wood wondering, to Or there see cost XXXX. lowered certainly have such notable material 'XX to still I'm continue improvement? is

set range. to movement. got think We of we've in down $X.XX oil ago, that increase to target that us that the million $XX over we've anticipate we do a in get of We rapid And time. production the $X. year a with you've at CAGR seen expected the -- made below gets kind kind time. A current The don't

So stage. we're now optimization into the

behind organization So the improvement. stands every how remain entire I out looking dollar, it continuous take and you think We're still for do efficient.

We that have things some out. more take clearly dollars will

floors a sold we obviously, vacated We have X the sublease. building. We -- of to lot

are there happen could a little the current in we year bit to want it this do time market take for of but of put we things. believe So with there number some because of didn't things the that in time, those to a budget will

Our from line next the David question Advisors. comes Heikkinen Energy with of Heikkinen

comment Just to thinking your any more of unlikely cadence through wells. get and

have -- XX the just talk splits giving half-weighted you wells quarter tapers timing frac the first just think a also And but budget for the you the Can quarter second first So about know trying not basin? have in then quarter to XX guidance, capital in of and you you're fourth each in again. the holiday I how off full into that about I'm year.

Yes.

don't that it So let about little think me little working -- if David, bit. right sorry, you that just way. those are But still But different a a a We're we're kind working we still bit. XX in we're answer ones. of -- think work-- I

faster last We're bringing number going you now. cadence, as little So of a a we're bit did than on year. think about wells the we

start to quicker. popping actually wells we moved bit little plot, frac the we're and a away that those of from the we of a in showed end the the able On crew DSU so have DSU, number

is we production, that think we say second picking between divided preparing in build to we're second and it now as the quarter be with we more and call the kind for third of third. the one our so of kind then the prepared And the Actually things of equally could quarter.

of thing the a if for So those in the fourth bring equal forward. wells third think good on going the completions makes still we about do the that of a the everything and We're to no to cadence Permian, think relatively it put sense split you can. or now. you second to that's kind with I We all quarter for think in consider

the from going dropping that just months thought cadence in good think adjust up to you quarter difficult guidance. And kind on substantially. how even out. of going back to really to of model second have you a and when to coming for when kind But now first we'd oil I about it's guys of quarter barrels what We're sense couple the so of we production off reason for are we're we the quarter going understand, August, the give when be. continue where line of then stated we to about kind barrels is about a of it's that XXX,XXX this, missed And ahead fourth XXX,XXX that of profile, said actually by probably we our we

So we're at the right of to earlier the some that starting year. point. And we in accelerate hope volume

we continuous not first all. to tank County in I'm is the It's we're Line. a of learning as just trying -- at go. so And kind done we've time model evasive This be

X and then on of exact we're a cadence what lot a will fourth. third early in to into indications quarter the encouraging. know more the months and be Our heck extremely going second are And

then during That months. and of joint coming August, kind third, we are same on And production unit. Williston, interest wells it's those already drilling we're those spud XX,XXX kind fracking and in fourth foot that refracs lateral now our on we'll X are of with start you'll the quarter March, disco the see the from over the go of end clear. wells in activity the pretty in the partner the cadence. going are we've Those then And We're the refracs that summer the -- In goes to drilling wells. wells. completed through the

from which going we're both operated the help quite that us production wells standpoint. in bring will So frame, on a in and few to nonoperated, time a quarter fourth August

thinking 'XXs? in the the $XX in annual the and the Okay. of this world, kind And addressed I XXXX or will think cash is term, about free plus And you just What about -- minus, you Do thinking I'm do revolver then repayment flow trajectory think to trying think just trajectory, the senior when through know of you usage and you near How to XXXX XXXX? about notes notes. have the be you'll those have the be? that notes. any do on

and then I'll Bill. hand over Yes. to it start

we've to plus the sight anything the So a balance got cash then year. this sheet. from clear the We'll you in 'XXs, the any on proceeds line tax else that. take generated refund year real We'll as take said, cash the we of do on and also the

As an to you made water we cash we And just how decisions know, But there. looking at 'XXs business. payment. of be build example Haven't a all be the may that the we're that. any would with able deal through

that over into go the 'XXs, I'll hand you to to discuss. Bill As

Hey, David.

plan So our 'XX straightforward. as 'XX, into don't have by on the pretty year Tim But as and we exit time alluded is this we borrowed to -- as expect revolver 'XX. our to, well again, the anything yes, in

And know that amount say, figure I of middle of 'XX, kind let's that's what to out plan. current do. time of now, and between have our about to So we

the we those obviously, market, as in addressing that's them plan purchasing or refinancing if paying that's Now or open -- on possible, things soon whether as available. addressing those --

what let best everything here is. last the of going going have our on to forward kind to we minute. We're play out plan little bit wait kind of So the But market to kind is things just certainly table. not with see the a until of

have guess, is assumption I and asset revolver that you capacity base that the some is the... maybe some So sales,

between senior another wanted If Yes. could do put debt. we we the It if can on the to, certainly doesn't wanted we Correct. differentiate the We to, kind there's way David, that. Yes. notes revolver. of

have the notes debt refinance 'XX on. we so we'd that facility do revolver the some do credit of course, come will, to and on flexibility management, due. you before market Now, to open if But have purchases the of

So yes, at that's it. a good way to look

most other window, will hedges have unfortunately. to just be companies lot the note, I you guys have now. missed to happy that And have A think

on job good that. So

comes of Gail Our question Stephens. next line Nicholson from with the

You've just about really stands LOE Permian. you where specifically talk corporate in thoughts the Can get in of down done as a LOE the kind And that down great you improvement, driving lower? then even Williston? the kind on in Williston of overall job any

Permian. far this in to probably the cost last in were a range question. mean And pack feel kind number year -- Yes, in if we work use the I'd think in the that the of of the 'XX. down year, the if kind look that's driving a we good $X.XX the I X-plus. as the you as you LOE to on of deck, look at Permian, that. Slide down some down. on we're $X about at And In XX of to I Williston, We bottom $X good getting continue

Indian We sites. water have That things at structural to Indian working in that. there. some the on take to have getting that. the power higher work the the have on power are delivered quite out We significant. on sites. bit will than we amount of disposal a quite reservations generation The Also is huge each do reservation We're of a cost

down in at to get the the of I'd up a focus We if you So efforts kind of reasons Permian We're average, have. initiatives keenly highlight, the for now, X that's to that guidance and look sight the number focused in a split down. of But quite line with average Williston. X, our you we've initial we you cost honestly got Basin. that to where say, you the a of take production

So feel about the Permian. good

We do have anything Joe, else in to the to Williston. that? go more room up add to you have

our our drive number No, of focused have down and would add going wells we've improve on to there that a kind use of out results just able to down been forward. of we've our that failure initiatives maintenance We're rates year-over-year contract labor. been brought planning workover activities, on I'll

So we're planning improvement continued asset. that for with

What confidence the also CapEx that $XX then doesn't of you And Capex? in year. you that? reallocate materialize, Williston. It this that bank degree just have somewhere about million with And Great. like just looks that of the non-op sticking do or is if

Yes.

field, So the a Antelope good next next to to in the just Antelope, goes our $XX parts million the single the operator to adjacent, best of South Vegas a of with strip pad. project one South

are in drilling And We've of and we're to help the going production outcome. wells latter this so us already XXXX. already those into year now. certainly looking approved really AFEs, It's part the the and forward to

is million done. $XX So

high it The throughout other confidence $XX million, I've that got go year. will the

in discerning If you compare where back very not ended doing doing the for acreage had AFEs that some We've that joint -- million. years not bit. We work. up quite and basis. not project, very on but too have it's years we $XX accretive many to past to gotten that. years, we're that we've could cash interest had a number been we're If year, a doing, that not came what competitive Last on selling

we We to the be right we acreage core in $XX there. I the million, lot spend hope there'll that money projects have good don't can on. so think And give a that

the comes line of Greg with Our from Tuttle next Simmons question Energy.

LOE whether are around that full-out through later. or does water I'm not partial sale, once rather sale. My or out the divestiture a thoughts to then disposal to a does trying balance have that you how as curious of you And sooner a for JV that preference just guys occur? care expense a take program are than

Yes.

business So and recycling. disposal between can both is you balanced our balanced water water slides, -- see water between in one the of

different of Line County eventually at particular and our between different time. as what extraordinarily disposal field, we We of competitive $X.XX I we're barrel have at And a you when the so $X.XX Ranch, to disposal, down the and from the areas probably use and cost Robinson double to with think we Springs Mustang the any areas one -- in recycling built of moving -- it's look between per down our issues the of we've capacity, down barrel.

a water access So of and JV capacity. that have disposal water the to don't necessarily of starts very have that structure. recycling are our towards company leading both There that effective internal a bring to to kind considering we number for system

I So door capital would infrastructure of in put we've of to more place, probably in cost that the a one but brings offset outcome think kind would the successful of water of be to some importantly, EBITDA that helps to help the that offset and capacity any say, additional from costs that grow additional XX% system company the selling, to system increased business. can bring that the the

the that's preference. So certainly

that unless get we path and to become move sell enough that really not see cash forward. positive the business and EBITDA, accretive will in the time, then can XX% that sold that grow we've end see We make a at we and front we that payback

So that about kind it. process the where of we're to in We're make not that's the decision stage certainly of thinking now.

I us with engaged a are desires, we'll decision see where make and think and understand it that the companies our out comes that accordingly.

Our from comes next Josh Research. question the with Silverstein Wolfe of line

questions A for couple you. of

this the $XXX year. You hedge have million benefit

then I free year. next volumes can guess, that margin before. I mentioned away, Where you pull call Because support goes some guys, year? the outlook and no next expansion guess, cash I no for would was to for and think levers this

So some expand opportunities for to you where margins? guys are there

Yes.

of our easiest is what of you learning time one early on speed. So We're County at, got the XXXX these to replicate of working learnings in started on we've of data Line. all We're volume more we taking to we're that going cost. look the lower as can some looking at for efficiency already Obviously, some wells budget. again, the

So that's one opportunity.

that the We're talked of business, companies. huge segments to we've flow don't at are of be small business generate business. segments could We of important -- amounts about other but looking water maybe cash at looking the the

kind those think I potential to mean, open sales sales we're -- But process think middle into January January we've a in So down going taken the process. And of of from substantially. XXXX, transactions. this a of to did what do -- I we about

XXXX just So talked X,XXX have although you we're a and we'd adopted talking I like, higher ago, and getting and have not ingrained with X numbers per foot mindset peak that. when and than the employees we about the I be what to ready we to would look months those better keep side. never top day have continuous a about And really will improvement talk thought

And that bigger. of rates rates Shale, of Spraberry these are the seeing the we're are some out

debt. a Josh, and our with sell ability all need cash, down more to structure about number starts that from reservoir, look some cost and more what generate mix, us, start will think that of at pay things. assets We confidence at just and I to look look -- give think there's building So that I and to continuing of at rock the certain our towards to what

it. Got

Next you thing was sale. these business sales, water of mentioned other a couple the

want today. company to you do this price were the half the you of that potentially I value, back You cap well the But in probably was on wouldn't if to for sell market it over a that something explored I ago. there haven't year mentioned that reason why Bakken the the wouldn't table? be was know any Is sale. it's environment. know even

out about curious might that be just So whether transaction there?

where I is. we what equity where getting you at and full also you enough that leverage So and could accretive we mean make hopefully, know, of together add be look Josh. as get below debt and we're kind to X leverage We to X.X. at keenly focused we're, Yes, closer our that, need the to they down? structure say, do the our sure all when look on number we that down

It's math Are difficult. say to be as Permian? not our doing sort of open when and so it, make said you to willing as this when I'd are conditions open remain we And absolutely. market let at might opportunities. companies acreage, -- look And that about certain what and math think to transaction alone just is to accretive you we the hard in when of the the work. undeveloped different even that we calls things around parts it's in any for market, portfolio incoming pay PDP,

of situation all to continue to that a that looking ended we the And say, and if and so math structure smaller full of debt us at can doing equity it help handle company, with leverage up down? we're bring the

[Operator Instructions].

Our from Derrick Stifel. the next question of with line Whitfield comes

through to with trending comment understand you was and respect in your average wells guide best trying your to improvement, your quite on further well potential of XXXX impressive. could Tim, referencing on PowerPoint, X of your completed are the Page $X.XX? your In XXXX improvement where average for costs Midland

Yes.

the I -- think They what are our The in. Springs. of would drilling to industry higher costs had they a mean expensive projecting at, that's we Mustang County more Line. organization, to is water into coming substantially below going flat we to to in committed in $X.XX, bit I quite flat. we're and talk $X.XX. staying Line average relatively you when County Line in have which than we're expected Historically, drill County down, is

Springs are interconnect ways as to help of bit We at we recycled with County They have every point, But much don't Mustang those so absorbed are that. Line costs higher. looking and this water, that. to and at have

I to organization be say of I that sustain time range pleased we're to $X.XX County And so And $X.XX I stepped that our we'll again, if that, me. has think think kind Line, every surprised able up in that. and with

trying give can we've ways you bank done you looking we're take for that going already We're to So to down. not what and what slow down on. to

quite Great. the industry. as to that's outlined positive you relative Again,

to performance conducted guys like Could to As my follow-up, you longer-term switch over you to the speak the XXXX? of Bakken. in I'd the refracs

Yes.

about XXXX? about? you're So you're early talking in that talking Is what

That's correct, Tim.

Yes.

the we fracked. are So those out turned be actually wells that to best wells

curves. outperform to type continue wells those so And

fracked. fourth wells outcomes. based that We quarter were the of study done have high-grade to detailed on of in this year, all a the the prepare full range the a of We've XX for knowledge

hits And affects high-density hit understand oil that, offset that, refrac. production cumulative we locations GOR how really how the how so

in going have. really Antelope still feel in South that high-graded XXX year confident we've what between I are locations good our we the We So and FBIR.

at South than wells, they when in to turned a X performing Antelope ones XXXX and that -- were being the FBIR But they're criteria, wells. as Tier actually we bit X our Tier little the out look be stronger locations.

no are further There to you. management to any Thank back questions over like remarks. turn at call would for this the time. closing I

say thanks your Now I'd joining for comments. call. constructive the for Thanks just

proud and can be already what XXXX To they price in to point cash. Just what and got competitive to say we get focused there keenly to I more to do for environment. more year where last organization this going kind am we're the we're the of Josh's to generate endured on question, of how continue to

So plan I thought the to could. things back. hopefully look on update cash delevering And stay many positive to in again, the And delevering a we to We're us sheet, that balance months. thanks a year don't of think even just focus we very delivering organization. forward you giving ago, few a

concludes conference. Thank today's you. This

Thank lines your disconnect time. your this wonderful now may participation and you day. at You a have for