Abraxas Petroleum (AXAS) 9 May 182018 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Abraxas Petroleum Corporation Earnings Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the conference over to Geoff King.

You may begin.

Thank you, Nicole and welcome to the Abraxas Petroleum first quarter 2018 earnings conference call. CEO joins and today. President Watson, of me Abraxas, Bob

you Officer our VPs to In Bob's that have Accounting answer have and overview. questions available addition, we engineering Chief our after and of any may operations

considered that a historical that a replay could statements, and those materially over during any described contained forward-looking and in the in of statements contained to cause the will being I'd like these call our releases. facts filings I'd call after to webcast the press our immediately our encourage results made reminder, call. results today's are statements. available to actual Securities are factors now Factors As of review vary could is to these Exchange turn conclusion from risk taped, are not call statements the Commission. that be Bob. remind and this like everyone in to filings with I'll and actual in everyone vary the

Thank and you, good Geoff morning.

quarter solid economic returns. focus showing on our Another

Although we wells, Bakken, the as in completion operated of production during on the where and remainder and were brought significant very frac to set no the the the for quarter drilling the quarter focused wells production, busy us QX a with ramp QX new X up quarter in year. XX in expect on a of Delaware, X up

continue to which Since on on around the in we've to a protocol drilling wells this well, from developed XXX go-forward where Specifically years. we've feet well completion those on with, which on zone, four one two spacing end in parent a importantly had been of These feet we To-date, a same is the been casing fracking that are the operations is XX downspacing XX on stages four Delaware. each issues basis up the casing issue adopting original our almost we process be before month. we in for test third production and developed wells. give Bakken test; our the of now wells be should integrity wells remediating going Delaware, in fracking integrity the completed of we flowback four well apart successfully the we off have well on on completed the with wells forward. we will about handle The us to-date is main in downspacing correct good a successful reason the XX we XXX

wells the indication monitoring various for offset during The the frac pumping first hits of is of stages. frac

We parent the other no indication well and gauges have date two wells, of pressure with to on are we it have and shut monitoring hits. pressures seen in frac in

and and monitoring pressures initial without as have are be pad. well We profiles of the data wells The hope any we'll quarter. about third lateral end The North rig Raven the weeks what X-mile pad early north which two rig well We or and mesquite These flowback by south be at southeast the the in the to Lillybridge on operation finish these Dakota central two RigX soon. frac pad Raven wells our drilling be move several of date drilled has Caprito the have north coming two well and gathering the to four closely pad completion which in next these Up will frac have flowback to pad a start time microsiesmic production May X-mile immediately will Caprito. start call miles QX call currently of XX schedule drilling on [ph]. DUGs drill Yellowstone of -- The Greasewood, of rig, conclusions. to should is drilling issues we on ahead we wells X well the central drilling four completed should we Yellowstone. well before X Permian after X also completed operations is on on we again north flowback four

to know four, you will I Three, to cost going differentials. try be up ask on the four second answer be questions One, Permian to a rig escalation. I'm takeaway have Delaware. on Now will that before Two, issues them. and will in service come And M&A. adding

not takeway lightly. question, taking gets press the negative mostly a it's Permian lot first The of one lately, and we're

interconnects MCS the because year gathering pipeline be in the differentials basin we with there issues there of they place our to last -- will of available for blowout hedged oil see existing the our basin face-to-face had the purchasers barrels said, problem have delivering all basin probably be we all systems. we and week our Last may have that in we in conversations concerned be oil. That no somewhere all to Within with have said but will problem gas subject who being were our and pricing. and basin

Although off, looking materialized hedges never which were we when is and far our thus for of we the opportunity. we rolled we blowout, the bit favorable made a money on so never the a have hedges, point missed saw entry

a on same day on working to production the focus while a County expanded our at will to opportunities opportunity up efficiency value; be added anymore. Winkler acreage on Second we're question; the area into participated consolidation all consolidating we first X,XXX this at in position in we and done will of new say months, day. Counties, can a non-op In our two where our that now be X,XXX available this laterals barrels done for these our to XX% footprint have X for over our net about And looking that foot footprint economics it's I Both opportunity M&A the and quarter, have in acres Ward-Winkler is we basis wells would the time X,XXX XX maximize rates consolidating not and to be looking of one Delaware are XX add acreage on interest. reasonable and do and at now. cost. to

On footprint our of forward final increasing the in -- discussing objective our have we divestiture, We Even in them with to these our South look we still we parties help have future. reasonable yet. though and deals that other meet acreage talks that interested Texas stages near in no several that very has our several are properties. are in accomplish the expectations, are one

certainly $X.X to million month is free going cash so not South these a flow, properties give we're away. Texas generating about in

second people On We've much but huge Dakota in the speculated service costs not service so for the we've an see frac an have in has and And finding issue Delaware, confident of issue question, had about. thus not availability we fourth well. also issue it North Delaware. adding seen a as inflation, the crews increase in the the not creeping up rig finally, gradually been not

many of We by existing years production leases one as with have as plus XX mostly held rig the inventory program. our on

We fully and capable two rig. financial program we second have the to existing staff a of support Delaware rig have running capability a Delaware

doesn't year-over-year XX% a we and in and of make However, the XX%; the to a market growth that between rig that. guiding number we're with have questions Bakken seem move. to production one answer Delaware, we One, and program recognize to before

need second Two, we growth? recognize capital more it rig a support even would to would add balance to to So sheet. our

be issues current to add should both assured adding differentials favorable above our be sheet we penalize make and year us to could differential capacity half. and ample been our capital. conservative production And of takeaway proud the our We there issues next program, takeaway does to sense market three, although the plans have solved with for when it takeaway current of balance when year on are a certainly and within support

haven't Now now. all I ask answered them questions, if please your

question the line Green of [Operator Instructions] of Stephens. Will Our from first comes

now Your line open. is

the the Bob, questions would in I but like little that clarity to situations it differential topical. do on I know there of first a think because I you is just hit bit investor get four

So the far you to Delaware, how us can basin -- help you with so to how has did exposed you are been think this guys pricing; quarter, to specifically? pricing just about maybe in mention going be

latest are just have of in north differentials, April The I number we're $X.

but not that. I than be better have May it's what going So anything looks like not any heard to about

And of gives kind that that we Is Sure, XQ the in guys how move or we piece justified XQ? big think spend much that as given activity this seems spend it be How how us that? schedule think at pretty into about XQ off and going CapEx be pretty XQ, about big you year; off in we to of spend point. do XQ biggest kind starting completion a the should have least of going on. tapper a should than

another see be will biggest. we'll be wells. our don't I fracking think XQ quarter XX where I

wells, and the whether in amount the we're Bakken in Delaware four or or actual programs continue and Bakken drilling fourth a the couple will in -- probably in quarter. the the That four a the two-well end wells another be be quarter in in only and have possibly variability pad that's think the will completion fourth I northeast of the dependent the to Delaware, pads wells would five constant in another But quarter maybe XQ, well third -- money, additional be on additional pretty on the interest going towards completion four it a I least -- at the obviously quarter would go Bakken. probably the suspect -- each wells Raven three wells completions and in the of drilling. working

activity that quarter. So in each each drilling the be the you the will quarter a half see and be about will can same about completion activity

think in as biggest as it then in correct? XQ, some will And growth and we about so much to of maybe is the quite be not but the XQ, leap way see still XQ, probably kind

Correct.

question next Johnson with & Our Mills from of line Rice Company. Ron comes the

now open. line Your is

if is quarter? curtailment morning. wondering any? calls Ron do impacts, could if just of the on This of resolved see midstream where kind give the McIntosh saw future little in [ph] And first been surrounding have you the and I you color Doug you for was issues this those a

up midstream The in biggest issues Bakken. had we were the

just and on a there life hopefully and that up a We just either it issue didn't for be us thing, of good and much has which bit our production success. of than own behind which of it will fact stronger that is all working gas last they and are taken guess has taking expected, just I way pleased within our them figure to and a we're or expected, we've the all much quite our gas now of and we out so are firing been are wells so we're victim -- as guess Our week exacerbating it but than be didn't company they to been but a one a pipeline it's report to [ph] for much while will I stronger a take plan us.

issues are The upgrade, now with is tied just we and other we been that hopefully now out a a pretty going back is week, gas too. on-stream one They were issue the every plants the varies selling plants of be us the essentially we're day this and where our has of XXX% that and will into. also significant it in behind flaring Permian good -- had day, it percentage each gas

quarter, So second then the curtailments first going quarter, forward. none fingers a hopefully, crossed, little in bit and

there you strings just you casing process? where operationally used back mentioned of risk. me Bakken; of I the you've Can if a tie-back to different using tie-back to strings kind to the was in develop could mention weren't through just just composition wondering you then What's walk that I standard eliminate And that guess? you integrity; than the that kind

that tie-back very If which you're saw than either pressure this Bakken down lower fracking don't in on; a we're happening has a frequently X.X-inch We your and a casing X.X-inch be intermediate string. we issues can't up prevalent. like afford tie-back X-inch, or small burst company string, use you really the early a quite X-inch to

then money, running the So running not early we on on fact, Out wells in of inspection very it busted strings ran rest people on And we fracs and issue, already. protect fracking proceeded tie-back here integrity up with one a have wall had and thickness tie-backs wells saw we Delaware, we that to there in any issue one-off. of on saw And try casing to done. on and an them. foresee started of integrity we've down issue so locks fracking X-inch too of you string try with had but had bit one thought the we much down save which ran was will fracked to a tie-back the we've people we it wells. now we casing a the issued And we a that. well, decided so was an the well X-wells that integrity for found where we us Fracking of or this to issues, these we sophisticated X-inch. kind before on little --

running we'll in the we of are the decided of Of be four about tie on the frac. by a issue we going continue wells, will string don't So we all flowback we'll all a that with worry on end hopefully that off, and back process squeezing basis the and just May. four then this on routinely forward. bullet run go-forward On so and every to well tie-backs have wells bit

in of just versus not? do kind then running terms the time And the tie-back What quick, there of and strings. in impact you cost cycle have

and you your have hurt frac doesn't because where between really It rig anything arrives. drilling time leaves crew the when

Then tie-back And until you can string slowing. rig. So the flow running pull then back the string, where run string back then the reuse and you basically two-wheelers. ultimate the tie wells your compression see a of through you tie-back it they to work over is

of lose one, the but to it. not the So time time you might run a then days that's you couple cost only is; and only the lose constraint;

And it be that but in can't liner. then pipe then as three you're times, well the as using many and up as that it use our Bakken, that the we'll for pipe time used

completely used eventually we anyway. it's so So it, unused

whole to little cost per run extra other So doesn't than it. and time a pull it a of lot bit it add really say of

of question Aschenbeck next Global. comes Our John from Seaport

is line now Your open.

as well. very thorough I appreciate the remarks prepared

here wondering XXXX for of steps. X; And how of appears So kind than portfolio, the assumptions like it me hoping by to Slide previous that you my results visual trying your get so think XXXX the for should there what then to eye-balling production a are was I at could pretty I is margin. underlying follow-up that; just here just the I on to that guess because curves your just rate kind growth looks it's at and was our guidance? really beat looking like on if QX, suppose is a upside we about potential first been I trajectory. QX I'm in year I'm tight continue looks question the higher wide your remind us on what you to exit what across it is,

tight to out and to alluded slide-deck today. always First to What the we're benefiting -- half. of back we all, is that. as drop curve our you to been off we're from wells the to obviously one type beating can anticipating what these original in modeling that notice We've we from they tight the we're basically their put acceleration this assumptions for quarter all curves; performed

capture mentioned, well higher the isn't to I'd to expectations and those substantially also thing lot continues Permian. we've has other that assumptions. we're starting -- noticed, That and those built be been in The our gas above, as Bob even a into had; more whole performance Bakken

these XX the Bakken, out right things course year, wells shows of above shouldn't we I'm of on timing very level of hiccup for ahead all a in that blended can timely talking confidence an there be that you. get that's over Permian upside high time. be about delays, on that are to if mean, will what I there, probably I bringing have an and barrels a much. basis. Again, drilling in really day schedule XX we'd in issue. diagram we're we that the in in the us execution; last A about the So If it's cost just us little time you're a

hiccup. although So don't is much it really an matter all operational that

PDP in good declines than less where perform we're about to continue So been for have we And wells the we than looking better overall, feel thought. base. are, we

that's appreciate potential the And of I is other wondering I the on color, taken having those lower some then a is great expected? pilot. taken here on That's my to that. -- or work those place wells any of will on given couple and follow-up just wells place initial on was there downspacing than has one risk rates the remedial

We'll in XX know about let days. you

hits where two actually a will We've we've we at microsiesmic him, didn't or have the we're seen one more the would or going. gathering, would are to them which As experienced We we're least have running that of two them. going to be half that -- got interesting. almost done. we in basically now. see the are lot by fracs seen Would all if one What I of wells I is were sorts that science see frac thought very any said, these tracers fracs mention have

will our the that sustain a of degradation is guess to we be production of for designed us. to would very but I plan if future be or if well. parent degradation, see extremely just tell, It us don't help these closest any the degree there not. All a a well degradation, us XX% hopefully we little if on time bunch to on operations. is that will had activities And and We've still to we especially point. know our guess there interesting degradation, done XX% this only to would economic are at probably bit wells of that's

and color Okay, Understood, for it appreciate got it. that's me. the

Our of Engel line Stifel. of from Instructions] Eric next question [Operator the comes

Your line now open. is

wells, capture roles guys mentioned NBIC clearing the November? from bit down coming the So a your do the are on you then in of guys stand that quite up gas how in gas

running flowing basis right We past were limit and our limit, until week of [ph]. XX% up watch a daily on that this we XX% on our

again. taking one-oak to Now our is now won't and us issue that up it is behind all the of gas, system visit that have hopefully,

And that on how the there? tweaks completed give Greasewood, completion from there you well? color color you just planning on any using you're techniques for the Caprito additional are some then can then And the

is on to always be now ahead recipe we frac any tweaking planning I and tweets. considering biggest would is The difference learned. say probably before strengths we we right subject those aren't we'll Our wells. what frac tie-back that depending major running

[Operator [indiscernible] the of question Instructions] of next line comes Baird. from Our

is line Your open. now

Thank you for my taking questions.

half. basin were the and that in narrower interrupted the comfort for do -- of what move clarify, will in particular, if to you on next Just XXXX, as over XXX% give you we'll a get can year year gas to cause a you year that think interruption? you Marked

our from have have all purchasers we gathering out that's two number is no our the take the basin, interconnects Certainly can a cap. our any of small system. guarantees transportation onto to barrel pipelines firm of that other of we they have small assurances All everybody because were else of not unlike on

on reason relying if we very we And us, to can have what interconnects to we not we their do true one all to but go place, move is can care one place. these issue tell of no have long-term will just so to what is they we're got they us again, it's another we so And we we've have us have an with instead all told barrels interconnect, moving relationships purchasers assurance suspect to hopefully on. barrels multiple take the it, with of --

something a can can; priority answer offer it and any for of sure risk us, the that's minimizing spending best day-by-day has you. be lot on a very and that two, we're that we that's high marketing So basis it's and understanding; for other monitored become one, time by -- I us will with

and the other Only all everything else be developing in to area we're on-pipe. area Caprito let's is is, remember this that thing all going add I'd

volumes risk. minimizes our be So highest trucked which

[ph] [indiscernible] Milan gas side; exposed the are on for on pricing Basin production. to Delaware Also, Waha and you

are. we Yes,

in on away return keep on give is? down what guests takes basically some can like it X% other rate free on you Only these mind we the economic I'd gas and thing pricing note sensitivities We and to for assume ran our just wells. to the about in that of

So that not important. really

Genuity. comes question of Sam line Roach next of Our Instructions] [Operator from the Canaccord

Your open. line is now

that from $XX acquisitions me; in million the of QX, is Just growth budgeted really of is dispositions or question that quick number? net

a that That's one, it's not multiple just upto if $XX And million. growth add number. deals

to you out new can but it to on existing missed give color have may additional stepping working whether I I'm that's any interest? lines. adding And

and a There joining working land are but some new it's added some interest land.

joining new to a stepping So existing area. Everything joining land; is it's land. new out not

I'm [Operator back showing Instructions] this hand like to for call I'd over closing time. questions no to any remarks. further the at management

Abraxas's Thanks, conference earnings Nicole. participation call. We appreciate your today in

have As I hours. the start be and at a posted day. on replay and in a XX webcast the transcript call, our will great approximately a available website will mentioned of be Thank you

gentlemen, in for and Ladies participation you today's. today's This conclude does conference. thank

great You may have day. a all disconnect. Everyone