Rose Hill Acquisition (ROSE) 9 Nov 192019 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Rosehill Resources Third Quarter Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s remarks there will be a question & answer session.

We will only be taking one question and a one follow up [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. IR. of Director Crain, John Sir, please ahead. go

forward-looking Thank conference call Marjolin. operating Executive Financial cover Officer, Good and opening our third highlights morning, today’s to and for the I After and welcome will and performance. Dave to Chief XXXX French, President everyone, quarter you, statements, comments review key provide Resources Rosehill quarter. the

President Freeman, Brian additional and Owen, Officer. financial be Vice Bryan operational Ayers, Craig details Operations; results of our Senior Geology; on providing President Chief Dave, Following Vice and of Senior will Financial

remind will our have the Also forward-looking includes We question-and-answer expectations assumptions. the Vice I’d believe will then certain you a and today statements reasonable to Commercial us with session call financial are comments. that and brief today’s of measures. Dave David on We Mora, Reserves. President close call some is based non-GAAP on call and joining like

cause to We our from factors included materially turn results call in GAAP of differ number reconciliations on disclosure yesterday’s filings full you a encourage our and forward-looking statements the over release. will that, could now However, I SEC to the With in discuss. Dave. to earnings we what read

everyone for earnings Thank you, and Rosehill's thank you today. third quarter John, XXXX attending to call

BOEs an that September to provided Total per early these to the As pleased a by results resumption upon finish earnings night's with the third given XX,XXX performance was were We growth. which strong built in and was highlighted of return of comments day. over production release, September, a operational the in view a with our we production in last activity quarter, we quarter. execution in drilling

few We're Southern about as through Ayers active and company will more on month, efforts year. that daily total talk both a completions providing as for Delaware technical the we we we Brian moments. assets. achieved backlog, record Northern for During in momentum nice our that very work finish a a production Mr.

the liquidity the a will meaningful enhancement On our details achieved in review. financial financial to Craig and those profile, we front, give

Moving to the update.

characterized growth. to volume quarter third of XXXX was The by returning

strong Our production increase few Northern was completions in in by supplemented a Southern the driven Delaware. Delaware, by pace of a

to back wells production, operations, SIMOPs, and shut-in also expanded to or returned XX. in North at Loving the the gathering in simultaneous several capacity We Kyle County

well have of first the of continuity, remainder new operationally a Turning practical currently Bone completed program hit continue one to that the for in digits cost These through to year advantage sand this year, we planned X wells reductions opportunistically by our targets. year crew will is to drilled plan. end the costs, think which in taking to going running to come are wells These second half be a end for from not XXXX and plans ground of We in early the rig Spring sense down uncompleted prudent recently the rig offset we makes XXXX. following drilling a of elected adding are total single previous compared for add fully formation the Keeping XXXX. our high are up alone. South inventory drilling and by step and the us of allows

guidance. So to small made full adjustments our we've necessary year the

NGL or lower gas last familiar markets lower time this negative XX% third noticed lowering gas for the EBITDAX situation the quarter, also Permian. adjusted price You by the year the in and pricing I'm natural NGLs. challenging we over with In are was modestly liquids, sure driven and full year, gas everyone's than

call the measured finer continuing planning points can work our the better. year, work plan third Before last providing for I'll more Bryan and our turning preview operational year's quarter. but turn flow to to around plan, look With timing. review formal similar a performance the of XXXX. for over brief mid-December, throughout the our targeting that more indicates to that, to to a now update provide neutrality our call I update of I'll cash I or early continuous Freeman, over to We're in a capital Bryan Freeman forward on a

to X quarter, Thank The we in drilling backlog, operations Dave. active Delaware through in for the in the around our operations the area. Northern in X was very the We end you, Overall, order wells with drilled as team the of XX standpoint year pausing wells spring first quarter work very our quarter our of inventory rebuild exhibiting from Southern continue I'm work. start DUC the area in plan loaded activity of DUC pleased wells comprised our as a efficiencies XXXX. completion Delaware quarter third with although mostly we the halfway resumed and in those similar through completed a wells through the and drilling before our just our restart drilling to of

quarter provided the the mentioned, a our or, dozen I'm Dave roughly in of in was mostly results replacing North. for Kyle in Wolfcamp production growth the XX impressive wells, pad of being the from of release to We average set return formation. online, several sorry, As a of placing function X-well producing BOE the with day A press IPXXs these Lower with most per X,XXX per the well wells

second with initial in results. with impressive online with been the results. second sand Spring well wells several extended placed the Spring impressed formation, formation also Bone We We’ve Bone especially

on results Southern three declined his the from in four XX well decided we Lethco this online completing quarter, our Ayers XX will a Dave southern and well, results extended Neal is comments. our As X-mile continue these brought are the about that the the in XX% of this which acreage. the wells IPXXX we for Section future on more formation target Z&T of to program provided be near XX continuing to seeing few a quarter drilling release. noted, lateral technical in along area, levels. the and of Delaware included review in results EXXX results we Brian aspects all Based the wells, IPXX encouraged the this we’re success, fourth the moments. which border In around talk our The in by in of our only XXXX we plan we area, additional with mentioned in Overall, optimizing

current operations. to Moving

us the year. review Ayers mostly power. can the supply earlier, need generators, additional quarter that, we a and had drilling very to through areas. of crew moving our efforts two pad is In now it due Wolfcamp an have operating crew both turn wrapping North, With I’ll natural completion hope down a focused lateral. mile quarter, before the ensuring remainder additional you mentioned The a the have program call Our operating lease the the been These or which a expense installation will to on the over reduce completion be now in newly in summary, busy was third technical work. Other up the South revised in two a formation to our well of upgrades targeting personnel to the in gas area resulted the power is for that the to the wells B field in year. ongoing to the through we rent activities, of than Brian drilling see through active commercial D&C the in of expected end productive future keep case plan to adequate we’ve complete

update a going we’re our work thanks, across to Well, focused provide operating I’m the on Brian. brief on areas. currently

can. of effectively on great of asset I’m been details ours top development goal and year. to key lower those Compared aware, fractured, we very wells. is and many than we we class challenge complete of the deal share trade so most pore to we’ve always about generally we’re the of a this is we highly you stay is of slightly of foundation efficiently our associated since pleased first theme efforts. That a As to began has and We’ve and is model. well, to ratio frac is are a gas or This the South as geoscience on north. ensure the developing advancements alive In confirmed as learned rocks, South, the a source assets is Rosehill’s and essential around more that land lower some middle an oil. also to And last much somewhat additional the our South a also presents pressure is shallower, how with has mature, where positive to North but it naturally latest less world hence the with and regards

we’ve operational from of to approach into and results data, our general new new We’re tranche with very improvement experienced each drilling. in our implement quick changes

establish also wells target drilling have avoid areas north, based our an well an Our spacing review drainage plan to help work we avoid work landing software, implement and a the once potentially the the that general, threefold: forward we're now a to the future. that, type; avoid some We we're With in optimal to major array XD results landing to latest In the recent lessen goals results B turn Along a X, of future spacing doing call our the in potential own a geomechanical we imperative of upon on of these out target; with online quarter. focus of to firm X, are models, chance the upcoming over thought engaged rock impact, optimal way work. X, it's the recent sophisticated wells. around and to to building footprint study to this. our targets, confident XD but model we've a I'll given had approach and completions work service impact. based because providing this seismic place a to and engineered we've results the use Wolfcamp parent-child B. long to wide In determine tremendous for wells with the a We a financial historical model this a and but and the see oilfield approach parent-child determine near a adverse tools will and completion conduct well go or in on into Craig the north, short-term of data. look very The our to our involves subsurface develop ideal using offset our same

pleased the Brian. results our on quarter. Thank to report you, financial strong I'm for

comprised day, XX% oil per production NGLs Third totaled quarter and natural XX% revenues and were of oil, million XX% crude of barrels XX,XXX equivalent gas. $XX.X

third of third for XXXX, per XXXX, quarter commodity or million derivative $XX.X of driven prices instruments. the increased included third of the quarter, EBITDAX expenses. $XX.X $XX.X Rosehill gain of commodity on lease which pretax and diluted million the to a noncash lower adjusted of share, quarter income by decrease compared reported XX% million a $X.XX generated primarily net For We operating

equivalent total per and price, for $XX.X price second an on basis. average Our both oil barrel, price unhedged realized was quarter realized $XX.XX the is per BOE,

natural quarter pricing in the experienced natural us on This the front, processing was capacity. NGL the current and $X.XX to a impact the price challenged and points, remaining costs Waha pricing Mcf. some of constraints Belvieu by continued continue is realized increased which Permian gas, gas with supply costs. significantly a third to per price export gathering Mont For transportation of prices in be and function Permian low, tight impacted is resulting EP Basin inclusive pricing of quarter domestic mainly and during

Our per barrel, compared XXXX. as quarter quarter the decrease $X.XX the average to for realized XX% third price was NGL of third a

movements. while protecting price very a to hedge have risk, exposure downside our commodity We also strong upside book, providing

expected vast oil the the XXXX hedged majority quarter per have high-XXs of We production fourth barrel. in

XX% For production X production XXXX, per and of at both guidance, our both using the approximately approximately midpoint XXXX hedged levels $XX of hedged of years barrel. at we're XXXX with

exposure million upside with our end the movements. At was All of us net. hedge these to of commodity quarter, $XX provide price value the positions book

and $XX.X cost. $X.XX lease Turning $X.XX expense direct $XX.XX or operating $X.XX per expense per BOE, $X.XX and or operating per per expense BOE, $XXX,XXX $XX.X of which million consisted $X.X million million $X.X or production BOE, in or in million were to per expenses cash or BOE. gathering G&A transportation BOE, cash in taxes Total in

quarter the to due commercial required items, in workover generated costs impacted rentals including by our several activities and to, availability. were alluded Bryan As unscheduled power intermittent

plans these We various requiring less operating are expensive work-over with by activities. working forward solutions, costs to fewer commercial going reduce and pursuing power along

close million. our made out facility, comfortable was revolving of XXXX we revolving our expect XX size with up redetermination of and quarter, into hand under liquidity base, capital cash under borrowing as base as credit on very feel we operating an the $XXX of $XX And credit to investment. to Total availability in XXXX, borrowing the $XXX cash million we its resulted from million, the and and During moderate with our levels moving to flow closed head facility. of our increase liquidity current of level our which fall September strong

a potential area. Lastly, Northern the update water I’d the on Delaware in our brief to assets provide like sale midstream of

said we the the savings. way path a earlier attractive As for Rosehill look the and believe we for the in the operate own and assets realize year, At current themes to our overarching for the to assets right partner. value for continue in cost the to market, these forward time, realize to was associated plan with this is potentially these right

We are to entertaining an a smart that, Marjolin, And to questions. with opportunity present continue to we be should will open itself. transaction ready take

Your Instructions] first comes Thank of from question sir Dingmann you, the line Neal SunTrust. from [Operator

open. is Your line

out about should yet, only realizing growth around or have as build really year you’ll help that end be It I’m you not throughout. just bit have but full start going of now we year but just maybe should DUC guidance there with little wondering the you CapEx, given earlier, how XXXX thinking? is increase mentioned we trajectory question at the we the in first My a think to the like don’t kind what that’s wondering, of overall, XXXX just just seems the year for --

I’m there? So wondering your just thoughts

year. would is us first this XQ of those Dave. think the hitting I of momentum to is to to Neal, the reason part DUCs Yes, the into part put give next

some I I think alluded simple with kind I words. as would of to --

plan a terms year. through in expect the activity, similar think of fairly we continuous that’s certainly I

we’re quarter, I first off think profile third to focus on spend quarter, not, think high we improve going throughout see that more moderated being had of so year. the high kind I trying flow to you’ll certainly neutral, look that. And cash if also

a generate would cash year. standpoint be in do our within and So, some with spending from I CapEx means perspective probably a throughout our continuous the many so probably think live ways, profile

Okay. black maybe Great could out you environment just what's And of opportunities that, continue follow a kind M&A, I and I you the acquirer wondering, base, know, you answer maybe I'm a see given now don't you just acquiree, I'm up there. to I'm asset broad southern view wondering strong a going And given that'll get too sense, the developing have but this I really now one in when forward, and challenging. going there or trying white, more as mean, is Dave? guess, just yourselves on all anything just add

on. we're Yes, what our in sitting being bit the on we both the that talked Ayers technical like little to a obviously, Neal, I looks opportunistically, the acreage profile think south the assets we in like done, the And, north, Brian pencils our about We development continue got. like. sharpen things have think we're to honestly, and, I

are continuing we our footprint. think I certainly open expand to to

to now right enough grace have of size. we think and say volume in over I terms

about be certainly, the to south. there of will Really, blend up, always our us us we that north combinations quarters, to see lateral sense acreage interested as talked is pick go that If case made want to we're direction was where probably previous year. for we trying in the, we to you'll a So to. next get the in focus in and X-mile

broad-based a that needful we're to that I So focus. something drilling acreage there's longer of allows view would in our be don't we're says the think for extent that material.

the edge well on we got deliver things that the industry in make focus we've terms we'll of think best I So in especially the and to have sure technical performance.

Stifel. of line the from Scialla comes question from Mike next Your

David, your follow-up on just a comments. XXXX

more X the to the crew next need neutrality measured full-time keep And achieve and rigs. imply just don't, that want going probably it like you about you're does you order about and efficiencies I a year? with free to pace. at not can wondering, you cash to back can am with better It you full-time, said that? that some go go flow crew a if point or seems target would little You busy X-rig you you talk in to

all about wondering worried see pace? to slip or if go a little efficiency year slower just any seeing if some, So you you're next at at you're if going

to is, probably probably view is, we'll This definitely I'll well. take hand as X parts drilling would of I be, Bryan So I'll my over guess, of and continuously. Mike, it think

intend So rig the the operational improvements throughout would be own the to we year.

We're be I think we one where bringing to year. continuous throughout we the supplement, see think needs in But rig, our view throughout. would plan a about would second probably necessary. think rig I on if capital

So you'll with maintaining to by shorter same that number improvements certainly days continuity our and you We've terms rig seen going the and get down you're tremendous and crew to holding see in wells, which that targets. have the profile. similar costs well us. for allows the that of advantage is talking a crews well to I of

the they learn the way the way learn deliver wells. we way So learn the we work, do we target,

I certainly plans thoughts Bryan, second So know, your on of in would that. terms year? to add anything next the I there's,

the you question. think with and efficiencies X it keeping should an to have, with with rig, be rigs little rig since that hit stay that are, X the we our I one XXXX. time on, thanks ahead in rig is that partnered spot we we have But able much H&P, budget the we DUCs the frame we for that everything Dave, a Mike, But we one coming early efficient. have start the into with have

you Basin. so developing of about far since talked Delaware the the some And learned you you've good. started Brian, things Very Southern

if And to drilling plan to hopefully of so, on you anything the It that? completion a design the like take or a have detail terms maybe in of more advantage what of or wells future extent early sounds on do you? Just anything fracturing there's little natural surprised natural surprise. maybe the you wondered fracturing been if might that

broken. extremely is I case. Spring Wolfcamp highly much or in Mike, with than pretty found that, interval, on Trees It that and us, that’s bump, Bone impact where still wells, play land the core. to complete than because in the ranch that how How up most stage would a you the and north we how impact frac those cracked. something fractures, south there length rock And an deep and that secret of fractured found long the And an the will, have expected we fell connect fractures, interval good prop have an we’re is many effectively how more we you wells. And is out in the fractured more has Northern we come all we FANG sauce, on the you per Yes, perfs of Wolfcamp our so where a the end drilling. the on it’s way in and does that is a to It learning area far different rock how we A rock. stage, The that we’ve source that’s that. if of that's

we’re plan Neal frac have the next complete, going upon based XXXX a that customized to about State fractures. to well is fact, Lethco HX, In our rock types,

better. wells wells drilled We’re And going and we, differently tranche here than complete gotten we of out to and fracked to each course have prior it this. has we of

this think I step-up going with see next big well. we’re to a

[Operator from Instructions] a Mike have You Stifel. of question

line Your is open

Delaware Brian, you a your been is looks did so a in geology keep location? Basin. XX it differently that Or just and the with little of maybe Anything to being may here. guess Maybe drilling well Silow I there follow-up, that the function that at different completion? the best Yes, like have going Southern I’ll far

and wells to vary be We think, well. have I east anything the actually implemented didn’t results to we you to upon landed to very, we’ve sweet rock, well the do from the and is what in consider is But in that how with ones, frac That out actually did drilled we good add not that to land of play, what based same good the as prior, them there. also last turned new very at north very and where to it be rocks And of west well. quite again, would honest. spot we’ve in or? the good, would the Well, complete from specifically we I we be, done Bryan, changes like wells south well each we and to

every next I we looking applying technology, well, we’ve this here Like well the weeks. latest to new, have No. said, we this what very everything couple next been forward have in coming learning up of

wanted just could more like then stands detail differently you Maybe things give build-out the And to some little And the good. with where now? if see a compression. you’re sounds it on infrastructure doing that. Very of

Yes, Mike.

facility out that out is Our building the out up in started build year, complete. compression, we spreading XXXX north additional in quite well. capacity the We're out plan. probably it last with the for south The

multi-well So will pads. our holdup in for we're be system. no ready There SWD

plenty have built of We in capacity there.

last And I on, the of to still I one. just to midstream. then if Any know the been for maybe looking your that's anticipate Any at update probably hasn't the that you exactly but just at want XXXX? portion a you're market monetizing liking, know something potentially point update see one there?

on comments. mentioned indicated to hold we hold this prepared We're to Craig. that going that. we'll to is great the now. in for Mike, Certainly, a it briefly asset. What on I

but going footprint. compelled market have and the gotten time has within we're benefit market, realize not softer in do the any our transaction for the to given at we're something or Just right the general. savings that to our to right those out and to and just run time, open cost matter. But right away The assets

how market, changes but we're there time. that not still a moves out term, it but we'll as goal over see strategic what having continue So near we'll to and listen, the

this to French Mr. no back and I the like would at showing questions now turn Sir? further CEO. Dave to time. I'm conference

preview work into relentless forward of that lot and solid momentum focused we execution heading XXXX. the shareholder the we're reiterate our There's up shaping everyone like quarter through our and a joining finish call with overview look potential the today. I I'd everyone a acreage. strategy up Rosehill, gave plans delivery our to XXXX, for to thank value for hope everyone to our and of sense a Marjolin. for of you, plan third of disciplined we'll Thank in mid-December. we To our at as the of creating on good

less rest everyone, expect our Take your you This enjoy from nothing us. thank in the third of care, call. can You day. I a day. and your concludes Rosehill, earnings for interest have great quarter

call. gentlemen, Ladies Thank concludes and today's this you for conference participating.

disconnect. now may You