Q3 2019 Earnings Call
Good morning, ladies and gentlemen, welcome to the third quarter 2019, Matador Resources Company Earnings Conference call. My name is Bridget no be serving as the operator for today.
At this time, all participants are in listen only mode.
We will facilitate the question answer session at the end of the company's remarks.
As a reminder, this conference calls be recorded for replay purposes, and the replay will be available on the company's website through November Thirtyth 2018 as discussed in the company's earnings press release issued yesterday.
I'll now turn the call over to Mr., Max Smith capital markets coordinator for Matador. Mr. Smith, you may begin.
Thank you Bridget good morning, everyone and thank you for joining us for Matador third quarter 2019 earnings conference call. Some of the presenters today, we'll reference certain non-GAAP financial measures regularly use been editor resources in measuring the Companys financial performance.
Reconciliations of such non-GAAP financial measures with comparable financial measures calculated in accordance with gap or contained at the end of the company's earnings press release.
As a reminder, certain statements included in this mornings presentation, maybe forward looking in reflects the Companys current expectations are forecasts of future events based on the information that is now available.
Actual results and future events could differ materially from those anticipated in such statements I.
Additional information concerning factors that could cause actual results to differ materially is contained in the companys earnings release and its most recently quarterly report on Form 10-Q .
Finally in addition to our earnings press release, I would like to remind everyone on the call you can find a short slide presentation summarizing the highlights of our third quarter 2019 earnings release on our website on the events and presentations page under the Investor Relations tab.
I'd now like to turn the call over to Mr., Joe for in our Chairman and CEO Joe.
Thank you bye.
Oh.
Good morning, everyone on the line and thank you for participating in today's call. We appreciate your time in interested mad effort or very much and we appreciate your comments and our discussions with you now I would like to introduce the Executive Committee, who is joining me. This morning, along with other members.
Of our management team and senior staff there were standing back for all your questions.
They are Matt Hairford, President, David Lancaster, Executive Vice President and Chief Financial Officer, Craig Adam say exactly Vice President Chief Operating Officer Lan Legal then administration, Billy Goodwin Executive Vice President and Chief operating Officer drilling completion, <unk> production van Singleton eggs.
Acting Vice President of land, Brad Robinson Executive Vice President of Reservoir Engineering, and Chief Technology Officer, Gregg Krug Executive Vice President of marketing and midstream strategy. We also have a special guest today, we had with us a Jason pivot though.
Who is the head of our field operations at their in southeastern New Mexico, and in Loving County and Jason.
Runs to the crews that and keep our production going good weather bad weather no matter what comes a piece he and his his crew have been there and then that and made sure that things have gone smoothly as we could then so Jason. Thank you very much for being here and thank you feel.
People for all but they did.
The as outlined in our earnings release issued yesterday, we're very pleased to report the third quarter of 29 team. We felt was the best quarter in company's history, we had many financial and operational achievements during the quarter and I want to take a moment and personally think the rest of the Mad dog.
Our staff for all their hard work and dedication it it our business too complex think one person does it and this is a great denali.
Each contributes but they work very well to <unk> to.
Together to make it work even more effectively.
Now I'd like to highlight a few key points before taking your questions. This morning.
Is the first is what I said about the team I want to mentioned our board and how supportive and helpful. They then over the last year in working out the strategies that weve been implementing and a that appear to be working.
Very well the second thing is is when we began the year, we lay data plan and we've been executing on that plane doing what we said we're gonna do that we thought we develop antelope bridge into another area of great interest force.
And it's worked out that way. We've also reached the production targets and beyond what we hope to achieve a you know we've kept at the six rig program.
Billy has managed to upgrade those rigs and those are working as good or better than ever we.
Continued to lower cost so we've actually had more wells drilled.
ER for less cost and so weve been able to do that tricky.
You know.
Through the Neris, where.
You eat you reduce your cafe, expanding but you actually get more for your dollar because you have more wells and better than expected production. The last thing is we continue to address the issues that you all know beat and we're making progress we believe on all fronts and there.
Narrowing the spending gap, which makes sell right.
And then next quarter to and that we've looked at other cards that we have to play that could.
Lead the increase valuation and finally, the midstream has received the attention.
Special attention. This this year, we began the year was doing another San Mateo deal and as we had indicated we would work that up to.
$25 million EBITDA quarter.
And we've achieved that now that Thunder you hear come then I don't know what do you hear it or not but a if it comes and it's not directed us [laughter], we consider that applause for mobile [laughter].
All right now let me.
Turning it over to you for questions.
As a reminder to ask a question you will need to press star one on your touched on telephone to withdraw your question press the pound cake.
Ladies and gentlemen, due to the time constraint asset you. Please limit yourself to one question and one follow up again, we ask that you. Please limit yourself to one question and one follow up until we've had a chance to ask a question after which and welcome we welcome any additional questions from you.
So first question comes from the line of Scott Hanold with RBC capital markets. Your line is open.
Thanks, Good morning, guys.
Hi, Scott.
Got you guys give some pretty good color on how you're progressing into the next quarter and you know by the way, obviously very strong third quarter exit rate.
I assume we can expect you guys to drive that kind of growth every quarter, but.
Obviously, you did running too you know some sometimes when you're gonna have to shut in wells from offsetting products and so it's it's going impact for Q can you discuss a little bit about like we're fourq you could exit, though you know versus where you exited in threeq.
Yeah, Hi, Scott, it's a it's David I think that you know I think that Oh, we.
Obviously, we are going have to shut in you know a number of the wells that we just had a recently completed particularly there in the you know in Rustler breaks for the.
For the offset operator for accident then of course, we're we're always a you know it's our it's our practice to kind of product we shut in wells as part of our own as part of our own completion operations I think that you know that Oh, we may see you know we do think Nov is gonna be you know a particularly low.
In terms of a you know production as Weve. If we noted I think that things could be down 6000 deal. We are so as a result of those shut ins because those were some very good wells and and kind of in the first part of their their production. So we're having to shut have been pretty early on in their lives.
No I think that says that we feel like that so we can get to we can get we can get some of that back you know in the you know in the in the month of December but.
I guess I feel like that.
Maybe you know maybe we May exit you know in December closer to a closer to what we averaged in the you know in the quarter. This this past time, Scott, but a lot of that will just depend on how quickly. We can get these wells back on production and you know if a you know if.
There is any kind of additional cleanup that's associated with them following the offset fracs.
Got it got it Okay and and you did then you enjoyed the you you'd mentioned in your prepared comments youre talking about.
I understand the need due to the bridge that a free cash flow gap right now and that.
The you know, there's some opportunities to kind of accelerate that in the coming quarters were you just referring to new asset sales or is it a combination of asset sales organic growth than in other initiatives.
Yeah, they saw all the above Scott.
Is that that you know we're on a good trajectory as far as the.
You know, the red and better or the business, which is operations MP and midstream, but we're also yeah, we've been methodical and how to from time to time, Weve Seldon asset noncore asset in the Eagle Ford of the Haynesville.
And we could do that again.
They're profitable they get a favorite price on all about $3 more on oil and of course gas is little better.
But we would make you deal if we had a strong enough offer.
We've said that and we've had.
Or interest this quarter than some so we'll just say where that that goes. In addition, we're trying to be proactive.
You know, it's no secret that we've got a mineral package you know that not a package that we have minerals that we have lease them.
And if you know we're studying the various mineral deals out there.
And as we normally do the way, Matt likes to say the methodical that measured.
In each of the things that we didn't kind of steady it until we feel comfortable that we know the pros and cons. So.
That's not being ignored.
Or but to the side.
But we're studying that is we would some other promising prospect to know when and what we want to do with that and and speaking to that is we had a guy and our accounting group or.
There's some audits and another follow up work and to has.
Saved us a lot of money found some errors and we've collected on that and that's a top individual effort that we see across the board of our guys getting out there and save in little bit here in a little bit there on cost and and drive in the cost down as well as a capital efficiencies.
Ah that we'd been achieving this year and driving down the cost per foot completed well cost.
And as well as making reductions in G. and day and so you know it's a deal that.
Every avenue.
Everybody here is looking to find ways to get a little better work with his service kind of lease on.
On the finding ways to improve efficiencies there too I know, that's a long winded answer but.
It's on everybody's mind, and everybody's trying to do what they can to help.
Okay. Okay. So it sounds like it's a holistic effort I mean, you guys are just don't they're picking up every quarter nickel and dime on on the ground is that right.
That's right its comprehensive.
Yeah.
Thank you.
Thank you Scott.
And our next question comes on the line of Gaped out of Cowen and company. Your line is open.
Hey, good morning, Joe and everyone.
I was hoping I guess, maybe you could just start with the delivered footage expectations and Dean C.
Cost per foot slide and your duck, just given efficiency gains and as you've highlighted and on the animal bridge wells CMC cost per foot moving lower but do you think both of those numbers at this point could be a bit conservative and what type of oil growth do you think can be achieved in the Delaware on that delivered footage number.
Hi gave its David.
Well I think that.
But.
As to whether we think it's conservative or not I don't to I don't think than we ever intentionally though.
Oh God, the things that are conservative or or or you know what numbers out that the that we think we're conservative that's kind of our best estimate of of where we think that we can be is encouraging I think to see that to you know that to the Jeff Hartwell did manage to come in a little below a thousand.
A thousand dollars a foot so that was positive I will say that to you know when we started out this year that I think the first time, we put this slide into deck. It was showing about I want to say about a.
12, 13% decline for for 2019, and we managed to do 20% year to date so.
I think everyone will continue to push hard I'd give great credit to our operating team.
Drilling completions or you don't have done a have done a great job. This year continuing to a you know to be more efficient and in both parts of that operation and so I think certainly it's a it's possible that we could improve upon these numbers you know going forward, but but today, that's a that's kind of where we see the Gabe.
This this is Matt and just to.
Tack on what David said, there you see the slide there that we're projecting that from 2018 to 2020 with the same number rigs six rigs that were going to drill an additional 200000 food.
Completed lateral footage so if they get to that's a great improvement in efficiency and and believe it used to minimize ability to speak about this year in a minute what they've done in preparation for drilling these longer laterals is impressive we've gone.
And I worked with Patterson or selected provider for drilling rigs, we really enjoy that relationship and they've been able to to prepare these rigs for these longer laterals I mean, the rigs that we have currently the super spec rigs of Patterson provides are very capable drilling. These two mile two mile laterals, but with building his team, adding the third mud pump the high.
Torque top drive using high torque drill pipe in the number of other things just getting prepared for these longer laterals I think that's going to.
Great efficiency for us and.
When you're talking in terms of service pricing in and how that works, what we really like to do sit down with the vendor and show them. There's talk Mcgrath from so you know we're not talking about the same number of will stay number of completions a mixture that we were talking about this year, we've got improved efficiencies and so we're able to sit down and work with these guys.
And figure out to the solution for pressure pumping services for instance that makes sense for both saw US when are we can go in and push on these guys and then get less and less or more and more of a pricing discounts we want to make sure that we're adding value at same time.
Billy you want to describe the rigs he had a.
Make over these rigs this past year.
We have to Super spec rigs and though we started out with those back in the day, you know where there wasn't cool.
We really did a good job with those and will move forward and Theres, new equipments come available we've gone in.
The third mud pumps and high torque top drives like Matt mentioned and.
We've got three of the rigs outfitted that we already have a fourth one by the end of next month and a fifth will by the end of January .
Next year, So we'll have filed with the six upgraded.
And you know we're seeing good things there you along with a trying out.
Different kinds of motors stronger bigger mode or is different because we had oh.
Oh, you know this last week that was first time has been wrong.
You know working with some BJ Smith, this and send out a leading edge of those type things and also on the completion side you know moving from one mile demolishing a half in two mile laterals unit, we got out ahead and.
Just a new things Standalone slipping units and a you know found pound different methods of different tools and the kind of experimented with it and got those things lined out where they were running really efficiently. So when we actually got to start drilling the two mile.
The laterals and completing them we were ready to go and we didn't scramble. We just Oh, we did was get better you no longer laterals made us even more efficient. So so lot of work the guys put in ahead of time, and it's really paid off floors.
Good job and we've noticed the difference like on the Jafar at that was you're right. One of your first once and you did that in record time, because they're very good work.
That's great. Thanks, guys. If that's helpful color and I guess, just a as a follow up for me just taking a little bit more into the trajectory in 2020, I guess could we potentially see more of a back half weighted growth profile given some of the items you mentioned like more shut ins is getting ready for longer laterals.
Longer cycle times on the two stateline rigs.
Yes, it could we see a back half way there profile, but overall on a year over year basis still kind of get that double digit oil production growth number.
Yes so.
So without to providing 2020 guidance, which as I know, what you're asking me here Dave.
Thank you for the attendance.
But [laughter], but I was going to say a certainly I think is as we have a you know as we have indicated.
Pretty consistently that to we're gonna be running six rigs next year and and one of those rigs is going to run down and Wilson Jackson Trust and one of them is going to run up on the Stebbins property two of them are going to run between am Oak Ridge in Rustler breaks and two of them pending.
The approval in issuance of Ah of our initial permits on the on the Stateline asset are going to run at the state line and that you know today has it changed that still where we project that those that those rigs will be we'll be running a I'd I think is weve as we've made clear.
Sure It will when we start drilling those wells on the state line for example.
We plan to drill.
A minimum of two four well pads to begin with and so we'll have a at least eight wells that that our drilling and from the time, we start drilling hopefully in January until those wells are completed its probably going to in turned to sales. It's probably going to be you know late August or early September so there's going to be an eight month.
Period, there where those two rigs in 2020, you know don't contribute to any production once they do it's going to be a very significant events of course, we think and there will be there'll be a lot of production that that comes from those late in the third quarter in into the fourth quarter and so from that alone I think it it you know.
You would be correct to assume or conclude that our production growth is going to be a bit back weighted or you know into next year. So.
And we do you know we are optimistic that to you know that we will see growth year over year, but but I think that it. It is fair to assume just based on the way that that to the program will unfold next year that that you'll see a back weighted production profile.
Okay understood. Thanks, a lot David Joe and everyone else. Thanks.
Escape.
Thank you know next question comes from the line of John Freeman with Raymond James Your line.
Good morning.
Hey, John .
The I know my one was sort of a follow up to two it gave was it was asking so as as you all mentioned in the release as you kind of transition to these.
Longer laterals more of the multi well pads you. Just you know just sort of the nature of that is going to be a more kind of lumpy completion cadence and.
Given the sort of kind of the rig allocation that I, just sort of you know kind of outlined I'm just curious like how much if at all.
Factor is sort of trying to avoid a sort of yet the frac cats are kind of happened to shut and from time to time activity. That's kind of happening during fourq you or is that just sort of something that you. All just gonna have to bake into 2020 guidance and I'll just be sort of something that'll happen kind of I don't want to say.
Regularly but from from time to time.
Yeah, John the this is David again, you know first off I'd say, just two or just to be clear.
This is something we've baked into production forecast since 2012 in the Eagle Ford. Okay. So this is not the this is not something particularly new I think that to you know we we have the operating philosophy and always have but when we're you know whom we're completing.
Wells that are offsetting this we are currently producing wells that were going to shut the men. We do the same thing when we have a an offset operator, that's a you know that's completing a well.
Next to one that said, we have producing and we do that because we think that helps to protect those wells are just proactively from a you know from any any damage that might be a incurred you know from the Frac ops <unk> operation you know itself I think we've had good success in doing that and that's something that we will.
Want to continue to do I think this particular quarter is one where it was just it would just.
Kind of very significant and one reason that we wanted to pointed out do you know we have we had five brand new wells in the rest of breaks or asset area that were five very strong wells both on the oil and gas side all of which are now shut in as we noted in the release and will be for several weeks now.
As a result of of offset Frac operations that are being done by by another company and and so the significance of that being that that you know that was going to be a 6000 via we a day sort of impact you know for for a few weeks a you know certainly.
Through the month of November with something we just thought was a was worth pointing out we did so well production wise you know in the third quarter I mean really when you look at our third quarter numbers.
As a result of.
Just the outstanding well performance of some of the new wells that we brought on and the fact that we completed a few wells are ahead of schedule and got them turned on in producing we substantially you know beat our our internal estimates for where we thought we were going to be in the third quarter and frankly, we in the third quarter beat where we thought we're gonna be by the ended.
The year, so and so when we have to shut these wells in go just resulted frankly our.
Our total production is going to be above where we thought it would be it. The ended the year, we actually raised our production guidance you know so we've bumped our old production guidance, you know up a couple of hundred thousand barrels for the year as a result of Ah you know the result of all the good results that we've seen it just so happens in this quarter that to you know we've we've had to just kind of guy.
At our number down a little bit due to these you know due to these offsetting operations.
Going forward I think that to that there will always be you know not only the the times, where you have to shut in somewhere else, but just the timing of the operations as we go to longer laterals, they take a little longer to drill into complete we're gonna be drilling more of these wells on multi well pads threes for spas.
And as we do that there would just be longer periods of time between you know when wells get put on whom we're drilling all one mile laterals and drilling them what did the time or to the time or that was a you know there was a fairly more a little bit more I guess ratable completion pace.
It'll be a little more lumpy as we say no going forward and so that May result in times before while where we have a little better production quarter, and then one that may be flat or down and then much better and then you know kind of flat and I think that's something we've been signaling for a while I.
I think it's going to happen and it's something that we'll continue to keep everybody you know informed as we as we go forward I think it's a good thing by the way so because of the fact that you know I think that these wells are you know are going to perform well, they're gonna be more capital efficient and they're gonna have lots are you know returns and so I.
I can't think of any thing negative about it at all and I think really just maybe one of those times, where you kind of got to look at things on six months to six months ago, but you have it quarter to quarter things, maybe a little lumpy six months to six months, it's all going to be good, but but I'll tell ya I'll take a I'll take production being the you know a little down in one.
Quarter, if we can have wells that are generating much better returns with much better payouts and I'm I think we're all we're all for that.
Not absolutely yeah.
John I, just wanted to add what David was saying there I mean, there's really.
You know three different ways that we address these offset fracs and then number one or the wells that we.
Operator, which is.
Part of the holistic plan to to make sure our drill schedule minimizes the number of offset Frac hits, we have in and how things are spaced out and and all that so were.
You know pretty much in total control that like David said, the then on up stuff, we have insight into when those wells are going to be drilled and when they may or may not be completed and in some instances and this this quarter is one of those instances are not partners have elected to complete these wells sooner than what we had anticipated they would which is a good thing because.
We'll we'll also participate in that and in the third bucket is the stuff that we don't operate we don't have an opposition in and I think to the completion production drilling team even.
And Jason Thibadeau, the field guys have done a fantastic job, but making sure that we're communicating with other up other operators to to understand their completion schedules as much as we can like David said, sometimes it just seems that being lumpy.
Yeah I I appreciate that and then just the follow up for me.
Obviously really really strong results on those initial two mile laterals analog bridge and when I look at the cost per foot being below a thousand.
Per foot, which is actually already better than what youre kind of guiding to for 2020 is there anything you can you know when you look at those those wells anything you can identify that says okay, well this or that.
A lot better than than we were expecting and that's why the costs or even better than we were expecting.
In 2020 on on a on a per foot basis.
Yeah sure John there's there's lots of things that can happen what will your drilling a well and and the operations team did a really fantastic job on on those wells and you'll see the results. There you know the the bone spring wells are a little different cost them than Wolfcamp wells are deeper.
A little different promotion environment. So that's gonna factoring, but I think is that we go forward again like we mentioned before I think the the operations team has done a nice job of getting these rigs prepared and I think there they're doing lots of planning Billy mentioned you had another bit record. So those things you can continue on when you get to the completions you start completing these longer laterals.
You can do with coal you can do a standalone snubbing units you can do a rigorous no units. So the completion teams done a really nice job them getting prepared and finding cost effective ways to go into make those things happen. So we're off to a great start.
No it's gonna be something that will evolve overtime. John This is Joe one other thing that factors into it we I think we take me through our Max calm room, where they're going 20, 471 factor that seems to make a difference since the advent of that room weve been able to stay and sound more often on our horizontal leg and.
When you do that means your Frac and you know that Ross rock and within that zone. You generally have a preferred sound smaller 20 foot some like that 25 foot and its east able to stay in that your wells are going to turn out even better and on wells.
Like the Jeff Harte, they did such a good jobs steering those through that time, the mass calm room working with the drilling rigs that we were in 100% Zonda, we consider ourselves kind of per se as a preferred zone. So the more they will say in zone will add to those reserves and then continue to improve there.
Results, along with what Matt was talking about and you got several of these little things like the S.
Jason in his crew at their monitoring these wells and putting them on they learn something about production out there every time, they completed well and put the online. Each one is different and then they give them a lot to individual attention and I think that pays off as well and that Jeff Harte.
As you know produced 70000 barrels in the first 30 days and you know has continued to hang in there very well. So a very pleased with these better than expected results. We want to keep doing the same things that keep looking for other waste improved.
Thanks, guys I appreciate it well done.
Thanks, John .
And our next question is on the line of Neal Dingmann.
Suntrust. Your line is open.
And Joe team.
Hey, Mike is really about the efficiencies. Obviously you continue to just it seems like improve every quarter and my question would be if you see these efficiencies continue improve to such a point would this allow you to when you think about it potentially even drop.
Another rig and would that still give you the growth you desire and maybe if you could talk about efficiencies and sort of your targeted growth if you could.
Yeah nail on Luckity safe is.
As these are not single variable deals. He got look at it feels outstand. It didn't just the amounts you asked me and it's what you get for the outspend and they you know if we continue to get more than we expected from outspend, that's a good day.
Although we're not trying to be.
The spendthrift, it's just it take khaki Lady deal is this worth the additional expanse or additional risk and will pay off in so far that answer as Ben.
Yes, Adam.
The same thing on these efficiencies it's conceivable we could enter into time period, where we could go to five range not that were seeking to do that but cannot we'd look at that what are we getting and if our opportunity set wasn't so strong as it is maybe we'd do that but where.
We've got tremendous opportunities here in front of machine everybody knows what rustler breaks is good and the incentives we have there with our San Mateo.
Joint venture with five point and then you look at stabbing Stavins came in.
Deliver in a very strong noted confidence that that's kind of be.
Ah that's gonna be an area of great answers to this going forward.
They've delivered some good results. There you go over to you know Arrowhead Ranger <unk> right well is is another well that so that's performed very strongly for saying we want to do more there and then Antelope branch not to mention Rodney Robertson and Stateline.
We think there are gonna be two of our best areas and there and yet.
We've had good results down there and loving county, so all the areas they are coming out and.
Looking really good and in that regard I would just mentioned this this notion about a list Senator Warren.
I don't think she can do all the face it she says.
That she can do eliminate fracking I don't think it'd be wise, we have a saying around here that's reserves or add to get smarter I hope. She excise is that right and he is sitting there in say the effect that going after K finance and the energy area three of our strongest businesses in this country.
With that.
That would not be.
Wise to do that if she does.
I don't think it's one thing not the least federal lands, but another two man Frankie from leases already granted and already producing and I you know almost all of our wells by the time elections over all going to be producing in that HBP status, which I think.
We'll be.
Crazy different but even if not we still have thousands of others locations out there in the Permian.
To do we've always adapted we've we think we have a great. All finding team we made the right decision we found gas in the Haynesville. We're one of the first to drill the Haynesville wells. We were early on into the Eagle Ford and we were early on back out here to the Permian, So I've got great confidence that.
Whatever opportunities come our way they were going to make the most of them.
And and.
Yeah, I think there's a lot of.
Rhetoric that as time goes longer reality sets in that this wouldn't be good too.
You know hurt thriving industries.
And I think she'll have to modify her approach if she seeks to be a elected.
Well I mean, if you find much somebody's going to underscore what Joe saying, they're about to the pace you know the six rig basin and dropping to five number one if we wanted to dropped five we could we have the the optionality to do that but I think one important thing to think about when when we're talking about pacing and the plan that we put together and then the Clement we're executing on it.
It's having midstream and the MP business has worked together you know for the then up with my midstream head on for the midstream team to be successful, what they're really looking floors and anchor tenant that's going to provide volumes and so they've got that with Matador and economics work for the midstream business based on that alone, but in addition, I put my Matador head on.
When I'm being incentivized to drill these wells to drill them, even faster, it's a very nice way to to build up both of these business lines together at the same time, because they absolutely do absolutely do feed off one another and also allows the San Mateo team to go out and secure additional third party to Mr. just gravy on top of.
The the medical volumes.
And Matt if I do one follow up just you guys have already talked a lot of around this I'm just wondering any additional color around the can potential completion design around that tested that Jeff Harte state, obviously, well was very prolific well I want I'm wondering was there some different things here that you did on the completion design or was this just.
You know that you could apply to future wells or this is more simply which all been talking about the longer laterals I. Just I just didn't know if there was anything else that down you know in that in that design that that was out there.
You know nothing specifically unique to that design Neal I will say that well, Joe saying earlier about the Max Com I mean to be able to drill these long laterals and stay a 100% Xone is very very helpful. And then to be able to come back in and continue to tweak Denoms you know you've you've seen in our investor deck, we talked about to you about the fluid volumes in the profit.
Volumes that were kind of settled in on it and how we're using diverting agents and doing different things in particular, the low temp diverting agents have been good for US. We've we've been kind of out in front of that in making those things happen, but when it comes right down to it it's just pretty much simple execution you get these wells drilled.
You know under.
We expect to time to the completion team comes in they are able to do more stages per day, all those things just struggles efficiency cost now.
Great and Joe Hope you can talk some sense in newborn thanks.
[laughter] Nike nail the here your give me skills I don't I don't have in it I don't have any.
Political skills I guess to have worked out in new Mexico from 40 years made people have raised the question out there about shutting down the oil and gas and you know there they're part of the country did you know needs the industry now that ER and.
They they have been very sensible and what they've.
Asked of operators and there's a good working relationship and I would hope that she would pay attention to people from her party who are out there.
Are.
That you.
You know warrant that continue say their state economy thrive I think yeah, it's an amazing number that of the amount of taxes.
And monies pay did by the industry into the state I think it's a third fan is at.
All right and that's just at least bonuses.
These and that sort of thing, but not really including all the jobs that it brings into the state the additional spending.
Thanks.
From that as well.
Yeah, I mean that the most jobs have been created.
You know in our industry.
Of light and then dish in you know too.
You know.
Centers to warn has his plan about paying 2% well all add below or is about 2%. So we're already in that 2% category pay it down and that great and jobs, where in an area where there wouldn't be job. So you know I I think we should all work together.
And find solutions that are bi partisan is not.
As my real point and debt and I think in the long run that I. Thank our candidates, while we'll do that I think that's what we all want let's let's get good government and and affair system.
Great. Thanks, guys.
Thank you and our next question is from San with Bank of America.
Thanks, Good morning, everyone two quick questions.
Thanks for all the details on drilling efficiency gains, but de was wondering if you could update us on your base decline rate and expectations.
2020.
Well I think as we've answered that question in the past I said I think for.
For 2019, you know the the the base decline was a 30% to 40% and the for the company as a whole and you know I would hope that that would the that would continue to shallow as we.
So as we become a more mature organization and also I do think that to that as we drill more of the longer laterals I think that our observation has been that a those wells are tend to exhibit a bit shallower declines early and so as a result, I'm hopeful that that will also contribute to the improvement in the base decline.
Going forward.
Okay, great and.
The second question I was on send materially EBITDA was higher than expected so to what extent was Ah.
It's driven by the Gulf Coast Express coming online and I do how do we think about differentials to trend going forward.
So so first of all the San Mateo.
Adjusted EBITDA didn't have anything to do with the with the transition to Gulf Coast Express So what it had to do with was an excellent execution on the part of our midstream business, a really all year long, but particularly in the third quarter and the continued addition of Oh third.
Marty volumes to the system. So I think that you know a San Mateo has hit on all cylinders and probably then some you know this year I don't know if you picked up in the release, but in case you did not want to reiterate the fact that to the plant at various times in the third quarter.
The 260 million today have a have a processing capacity. We have was around 95% you know full I mean, so you know we had to we had been contractually full for some time, but we were full fall from the standpoint of Ah you know actual gas that was being run through that system and process.
So it was a it was a excellent quarter you know for you know for San Mateo and we were really pleased with those numbers, but had nothing to do with Gulf Coast Express you know what Gulf Coast Express, we think will do for US are going forward. This it is approved our natural gas price realizations on.
The residue gas that comes out of the you know out of the back to that plant and the and other places in the Delaware Basin, but you know after we've done the processing or we have been the residue gas and that's what a you know is going to be.
It's going to be transported to the Gulf Coast now you know large volumes of that in the.
In the Gulf Coast Express pipeline and because the pricing there is based upon Houston ship channel pricing as opposed to walk you know we would expect an improvement in the kind of overall realization that we receive for our natural gas prices going forward and you know I again, I give a lot of credit to our our marketing.
Team there that decision was one that we made about to Oh, you know 18 months ago, when or we could sort to see some of the issues with the you know with.
You know transportation and natural gas in the Delaware Basin knew that we wanted an outlet to the Gulf coast.
And signed up for a lot more volume than we had at the time you know anticipating that by the time. This day came in the pipeline was ready that we would Ah that we would need it and and so we made that decision. We made that call. We've signed up we're thrilled we habit and and glad to see that.
That that pipeline the came in service a few days before you anticipated and now that we have a you know a significant quality of our natural gas from the Delaware go into the Gulf Coast by the Gulf Coast to express pipeline.
Great very helpful. Thanks for the details there.
Yes, Sir.
Our next question is on the line of Sameer Panjwani with.
Tudor Pickering Holt your line is though.
Hey, guys good morning.
This morning.
I wanted to.
Earlier questions on Monday anti fraud.
You saw the thousands.
On some of the passing your drilling the industrial <unk> third quarter, I think either smaller on average for pad size and what's the plan for 2020 out assume you continue to get better from here, but the only outlook has cost going back up to call. It 10, 75, Cintas help bridge the gap there.
Well first of all Samir good morning, It's David are you know I think that to Matt alluded to to some of the answer or in one of the previous comments that he made the Jeff Harte, well or the third bone spring that to that we called out in the release.
He is a third bone spring well, so it's a shallower well we will continue to drill a lot of Wolfcamp, a wells and Wolfcamp b wells that are going to be deeper and higher pressure and ER and the that to you know will require for casing strings and you know there, they're just going to they're just going to.
Be a little more expensive to drill and complete I think with regard to the wells that are that are the two mile laterals in the in the second bone spring in the first bone spring in the third bone spring and the occasional Avalon or Brushy Canyon that we may do next year, the shallower zones, you'll probably see that the DNC cost per foot there may be after.
<unk>, but I think when you kind of put it all together and it becomes an average number.
The average number will you know we still think right now will be in that thousand too you know 1100 foot I think the the graph we have projected as it's kind of right in the middle of that you know thousand 50 or thousand 70, something like that but I think thats why its just because it's just not all one kind of well there are some that are deeper the cost a little more there.
Some of their shower the cost a little less and given the weighted average of all that that's that's where it comes out.
Okay. Okay. That's helpful.
There's also some commentary on the trajectory of production in 2020. It seems to me that the implication here is that while see the benefits on costs next year overall capital efficiency uplift on both cost and production will be more of a 2021 event, which means 2020, something more of a transition year and maybe not a good I guess bench.
Mark for go forward capital efficiency am I thinking about that correctly.
Well I guess Samir when when I think about you know capital efficiency I think of it in terms of of.
You know in terms of the you know the dollars per foot I mean, you know the or are we are we able to deliver more completed lateral feet for the same amount of money you know and I think that to that you clearly we'll see you will clearly see that again I think your comment is correct and it's something we've.
Talked about for a while is that to you know it's it's just the nature of our business you have to get a well in the ground.
Before you start seeing any production come out of it right and so usually the capital efficiency associated with the drilling and completion happens before you begin to see the production and the the return come from that well. So there will be a little bit of delay. So I think that to 2020, you will definitely see continued improvement.
In capital efficiency, but you'll really start to see the production impact of that as we get to the latter parts of 2020 and into 2021 I think that.
But we could we could certainly see the the production impact to really be very positive in you know beginning in early 2021, maybe if you just think for a moment.
If the first eight wells, we drilled it Stateline for example, it just talked about it if they or if they come on you know in the right about the end of August or the first to September . The next batch of eight is probably going to come on right. The ended the year are probably early in 2021, So you're gonna have eight wells that are still.
You know in pretty much the early stages and kind of flush they use their production and eight more that are then in the.
Very initial flush stages of their production and so when you kind of think of how that's all going to unwind.
I think that's probably what you're referring to is the fact that to you know the the production impact will come a little later, but that's to be expected, but I think we'll see the capital efficiency impact of it all year long mixture.
Okay, Yeah that makes sense and then finally I think mayor on.
Yep smear. This is Joe I, just think of it you didn't build in one story buildings for a long time.
And your shifting to build in three or four storey buildings, well that doesn't mean, you're having a bad year, you got more demand and you've got more technical expertise you've got more of ever think it just affects the near term.
You know the near term effect that you can't rented out because you're building a bigger building, but as soon as you get the first one or two done then they capital efficiency shows up your revenues are up there and and you're all the better that's just a natural product part of growth in progress.
And we're not gonna have a bad year, it's still going to be better than what it was it yes.
As the reality, we're calling that to your attention that we're going to work hard it's going be a better here, but it all Indiana happened within a neat little quarter. It may transition over a quarter or as David pointed out to the back half a year, but matador still getting better.
And it has better assets, where they drill these wells, even though they're not yet online, but you can count that data has more reserves are ready to go and.
You know, it's just a matter of 90 days or something.
Also for these wells so the asset is there just like behind every share.
Of Matador, a chair represents a more than one barrel, all said and mcf of gas or your midstream business and yet for free.
You know your minerals your acreage all of that it doesn't mean they didn't there. It's just waiting to come on line as we proceed in a very orderly.
Methodical way as Matt like say proper growth at a measured pace and that's what this is happening to get to the right to change story and the capital efficiency. Yeah, you have to wait a few days.
A month or two or three or whatever but its common and what's the well was drilled the asset is there.
And it's better to wait a month or two to get twice the asset.
That you would get where the one mile lateral we think thats good business.
Right.
Thanks for that color, John it's really really helpful fighting to squeeze one more question in my time I think we're all in the same page of the merits of a frac banned by the definitely seems like the markets already starting to price it into some degree. So if we assume a frac ban on federal lands goes into effect and you've kind of provide some context around your acreage.
Exposure, but can you talk through your Optionality to work around this maybe from a permitting standpoint or in terms of how many years of inventory you'd have available excluding federal leases.
Well well some air we've got.
Several thousand.
We have several thousand.
Locations that we could drill if theres a frac barrier that before the Frac may and goes into effect I think you had years of litigation with your major can these Exxon Chevron Conoco, Yeah, you go on and on down that line that they've got so much in bested out here they're gonna.
Probably lead the way and and objecting because you'd have a KCI.
Oh property by that ban and they do process concerns. So you know I don't.
That's why I think.
On Unleased federal lands, she might be able to do more but before she tackles, where are you bar a bit and granted the lease and they sorry spent money in production.
Dan cheese additive look at paid for them monies that people have been out as he's tried to change the rules and you know while the horses in midstream.
You know I did that just doesn't same practical and debt for her.
Activities, what she wants to go to she's got to find a way to pay for it.
And that this has been a big source of revenue. So I, just don't say or the last thing. She is going to go after our those leases with wells that are producing.
And in smear, maybe just to add one just small comment to what the what Joe said I certainly agree with what he said there in the you know just just add to that we we do have many many locations that are on fee in the state lands, but not on federal lands that we will be able to pick.
It too and ER and the and re or you know just reorganize our schedule. We are organize our program. If that you know worked to happen you know with this Bam on federal lands I think that I think that if we've done anything over our time as a public company, we have and is a private company for that matter I think medical.
Sure as always demonstrated that it's a pretty resilient organization and that the that we got a lot of smart people and that to we're able to understand and meet the challenges that they'd come our way and I think that to everybody in this room today feels the same way and so while I don't think we.
Perfect to be faced with that challenge. If we are you know we will have planned ahead for it and we'll be ready to me that at all and so you know, we'll we'll we'll cross that bridge when when we tend to it if we should ever.
One thing I would add to David statement, one competitor pointed out if that were to happen. There's a ban on fracking you'd see oil prices go to 100 or $150 a barrel that my belief.
And if so.
It would be no problem anymore about our outstanding.
It's a better effect I think what are those commentators with severe so.
If I recall correctly rights Amir.
You're correct.
[laughter]. So thank you for that type.
Yes.
But yeah weight suddenly have no outstanding problem [laughter], all those locations on fee and state land become that much more valuable.
And.
You know you you should have before it could go into effect is already drilled and completed according to our plan. We're gonna have a lot of this develop prior to the election.
So.
You know I think were in pretty good shape, we're going to be more wary.
And and as I said I will have a plan to adapt if that's a change in in the circumstances and the most important thing again as we have our team here that's found.
The best Wells the core the core in the Haynesville the core of the core in the Eagle Ford and out here in the Delaware. So let's give them a you know some regard that they can go find the next best area.
Great. Thanks, guys.
Thank you Samir.
Thank you and our next question is from Irene Haas with Imperial capital. Your line is open yes, very quickly just taking a look at all the demand is going on.
For San Mateo. The fact that you can't really high capacity, you know utilization Watson.
Well first time until next year would it be kind of similar spending as it is currently as I have.
Yeah I read this this is Matt and the you know I think weve been messaging that the the Capex will be about the same for next year in regards to send material to.
We've talked about before we're adding another 200 million cubic feet today at the plant. There you know rustle breaks or the Black River plant. We're also adding gathering systems for all water and gas to Stateline area and at Stephens area and billing gas trunk line to to get back to the gas plant there there and Rosso broke so all that is.
There's currently no is on time and on budget. So we should have that plant operational sometime in the summer next year and we'll be building the gathering facilities to go along with it so.
That's kind of the plan that being said you know there we're going to remain open to different opportunities or something really good comes up from <unk> perspective, we will take a look a bit too but right now we don't have anything in the works.
Thanks.
Thanks Aaron.
Thanks IRA.
Our next question.
Our next question.
Hi.
Good morning, guys.
[noise] join us on you've addressed enough academia.
Your line is coming to marry jumbled.
Even better Mike has really been told this morning, I'm not sure which was there.
Can you hear me now.
Yeah Yeah.
Sorry about that night, I don't think of coal but.
But you sound much healthier than [laughter] may go visit that checked out after the call but [laughter].
Joe I know you've addressed this in the past, but is some investors would like to see midcap MP companies merge.
Just wanted your latest thoughts on on M&A or or the possibility of a drillco.
Well Uh huh.
We've always said we play a strike Guy you know we sell first Matador, we so far to our haynesville position to chest. They you know were made to deal with Enlink on one of our.
Our early midstream projects, we've made to deal with a JV with five point and so you know we think we play a very straight game show.
You know a time, we get a serious offer will give it serious consideration.
What I again have found most often that people.
You know when they look at things, particularly from can raise I tend to look at things too narrowly and you've got to also look at okay. If an offer comes in if that is just the fact that price there, but as Matt spent some time point now that between midstream may mean pay one hand washes together.
Our E. P helps provide an anchor tenant reduces the risk for the midstream and the midstream by being there to hook up just when you are has a lot of operational advantages. We're not flaring you now and when we hooked up we're almost all on pot now so we take.
One thousands of trucks off the highway that really helps our E.S.G. program plus it reduces the the cost of a disposable water disposal.
So you've got to look at both sides of that and no one yet has come in and made.
Chad.
Strong offer.
That has really ratcheted, alright, alright tension yeah, they come in and most of the time they want to just pay.
You know.
Some of them now that's maybe get for somebody who's a financial partner. They only has money at it but where we have enhance operations there needs to be some.
Something taken into account there and also to offer terms assure us that we won't have a decline.
And the quality of the services. So you know they.
I just hadn't had that hadn't happened.
But we play a strike guy yen and tap ever other assets, we now we're a public company.
But you know.
We also know the value.
Of the operational advantages in a way that.
Most investors on the street would find it hard to.
No and understand.
How helpful. They there has to have people want their when you're ready to turn it on taking your gas or during the winter.
Heavy on top line or or when their gas problems that help that it's been a marketing that we probably have more options and somebody that just cells. These gas and that's in that I think those are the people that suffered most at wall and so.
It hadn't been a hard choice it all.
The advantage of keeping the S and run it when it's growing at the right that it is the only thing and a couple of years it could be.
Two or three times, what it is now.
Given that that opportunity.
For a little short term pay yep.
It hasn't even been a close call, yes on what we should do but we fully.
You know one to get the most value out of it and its disgusted ever board meeting and its discussed internally.
You know.
At least wait wait two or three times.
Thanks for that and.
That makes sense to you Mike.
Yes, It does Joe.
Want to see given that your Ah Ah sounds like your near capacity a or were at times at San Mateo is there any potential to be constrained there before the next plant comes online and if so what.
What would be the the alternative would you would you flare gas for for a short period or for your thoughts about the.
Yeah, Mike This is Matt Spicer, that's that's a real good question you know if you look our contracts on our gas side, where we've had a lot of success. We have some interruptible volumes on that on that system, as well, which is allowing us to fill up the plan or 95%.
So so as matador or other from customers come on with more gas, we don't see constraints. We just move aside the interoperable gas it's on the system.
Very good thank you.
Thank you Mike.
And our next question comes in a line of Richard Tullis Swiss Capital One Securities. Your line is open.
Thanks, Good morning, everyone.
I stepped away from home and hopefully you touched on these two topics but.
Hi, Joe real quick as far as 2020 goes I know they.
But it hasn't been released yet, but you know at a high level with the recent efficiency gains and likely more to come as you move into longer lateral development next year, what could the spending gap look like next year at say $55 oil in current.
Gas and NGL pricing.
Well, Richard or I don't know what he heard it David Thanks, everybody for tried to get to the 2020 numbers.
And like I said here.
[laughter].
That that the first thing that out I would tell you. We think this pending gap is nearing steadily.
And we're looking.
Not only for the narrowing that's occurring naturally as we have these better and better quarters, but also we know we have some good cards to play a we set out the first year, you know, making yeah two of our priorities the doing the midstream.
Deal, which we did a which there is that because they're drilling and savings in there and then the second thing was the BLM, which gave us the rate of change the capital efficiency story now that we're prudent I was up and we're making the kind of wells that we are with these longer laterals that was a tank we want to prove in that.
Now it leaves us more flexibility the deal work one of the other cards that we have you know either can you know we've made some small.
Not small their million dollars. That's a lot to me I started with $270000 say over a million is still a lot of money to me, but we've made a number of sales and lead lease minerals. We've recovered judgment. We've recovered you know oh on audits or the scrapping this has.
Has recovered a lot of money, we're continuing to do that were.
Very pleased with those efforts and we're pleased with the quality of the offers that we're now beginning to see or other noncore assets and.
The.
ER.
They are the noncore asset so all that is happening and you're saying the results of this.
Oh, Okay. For example, we kept.
In the Haynesville, the L.A., while laughing Wales.
They are making 40 million.
A day a piece.
More Chesapeake is sad that was of the best Haynesville wells that they drill we have 49 per se.
Roughly half of that well, that's one reason why our gas.
Went over the edge, what you would have hated to sell that.
For stance on the dollar that just shows the deliberate method. So we have.
You know to 40 million a day wells, that's a great outcome.
Yes, they did a great job on that we've enjoyed continuing to work with them and that's an example, why you want to be deliberate and in the sales. So I think van and kept me and Craig they've done a terrific job and but we'll probably expand the effort there.
Yeah.
Now what kind of results will get but expand the effort.
Because now we know more what we have and a new Mexico, and then loving county, and or other areas. So.
If you like kind of why we did it over the last two years, where we collected drilling phase and sold some properties that's a mandate to.
Tens of millions of dollars and I think in aggregate probably out well over 100 million.
And I think those efforts will be stepped out because now we we have a lot more certainty on the assets, we expect to retire.
Thanks, Joe and then my last question.
Related to GMP asset sales I know you just touched on that is basically do you think you you could be out of the Haynesville and Eagle Ford totally by saying yearend 20.
Well, we always get yeah, if you.
If you want to sell it just except the offer you get if you really really want to sell it tell me all except last.
I understand you know that.
Is that and I'm not trying to be facetious, Richard It just saying is that we've tried to make clear on all the sales they sold it out a number of well known names that you would recognize.
Here and there is that we always make clear is commit with a strong golfer, but don't try to come in with a tire kicker and expect to get a response Chesapeake did that they came in strong offer we made it deal we made the other deals with them since then and.
You know Weve I think work well with other.
There are bars and other areas, Matt you looked like you're ready to say how I was just thinking you know with with the Haynesville Richard I mean, that's a that's a very low cost operation for us. So many of those those wells are they're great wells and Jos talking about these two of 40 million today, that's a lot of volumes and they're very very.
He fishing to operate in terms of Eagle Ford you know that's still a great asset for US I mean, we've we've got production. There we have a number of undeveloped locations everything that we did as an operator company in in Eagle Ford was in the lower Eagle Ford, We didn't do anything it up or we've done some Austin chalk testing, which has turned out really well for us so there's lots.
Opportunities still in both those assets, so Joes point or we don't want to just to have a far so we'll get rid of we still think there was talking about either.
Thanks, Matt I understand I appreciate the comments and thanks as well.
Well, Thank you Richard and the last thing is we boosted our production matthijs sell some in the Eagle Ford It Didnt have a quite happy effect. These 240 million a day wells.
You know they get that preferred pricing.
Up there in North, Louisiana, and the Eagle Ford got preferred pricing certainly is a big help last summer when law prices got low before the Gulf Coast went online now the Gulf Coast is online we're not so same state the prices anymore. So looking at it holistic Lee.
We're probably more ready today than we were but you know, we we like our properties their cash flow and well and we see more potential there.
But we'll always try to play strike Guy.
Thank you Joe.
Thank you Richard.
Thank you and our next question is from Jeff Grampp with Northland Capital. Your line is open.
Well I guess, thanks for that ma'am.
Hi, Jeff.
Just a quick one on on the San Mateo side I mean, it looks like you guys took took a little bit more money into the the corporate side with the credit facility I'm just kind of wondering strategically how you guys think about utilizing that are what the appropriate leverages for San Mateo Yeah. It looks like it that about you know maybe two and a half times on on a run rate EBITDA basis, I mean is that.
Kind of where you guys would like to keep it so as that ramps up you know maybe you guys could put some more money on the the San Mateo credit facility and pull somebody back into the corporate entity or just kind of wonder how you guys strategically think about that.
Hey, Jeff, It's it's David well I think that to you know we're just to.
We're just sort of looking at it is a sort of what's the what's a good way to you know to finance that business.
I think it's a pretty well understood the to that folks are look there are generally more comfortable with a little more leverage on the you know on the midstream you know businesses. So I think you're right I think we're currently at around two and a half and I don't think that we would the would be uncomfortable with the leverage on San Mateo, nor what our banks you know go into a you know going to.
A higher level I think we have a about it you know five times you know debt to EBITDA covenants, you know when the bank group. So there would still be a there would still be you know room to move there, but it's not something that will that we'll probably.
Do with Great. Your question do you know I think we'll just be a very measured in terms of our use of leverage and San Mateo like we have been in Matador.
[noise] all right for the time guys.
Thank you.
Thank you and our final question comes from the line of Scott Hanold with RBC capital markets. Your line is open.
Hey, guys. Just one quick follow up and I don't want to get in into too much in the Frac band debate, but.
When you look at the state line those are obviously going to use some pretty prolific wells in important for you guys. You get online can you just give us a quick update on.
Where are your AD and getting those permits on those and in the is there any way to accelerate that so effectively you know can you get the majority of the wells you Montral anyway prior to in theory, something you know that could occur.
Ah, Yes, Scott, it's David again look where we're very pleased with the progress that that we see in yeah in the and the state line permits. So I think we're still very optimistic that we'll have the purchase a batch of those permits.
Sometime this fall and that Oh and that when we receive them goodwill move ahead with our plans to move a couple of rigs down there and get started as we said in the release that to that we put out on our federal acreage exposure. We have a we currently have 88 permits submit.
Got it for.
You know for that to for that particular asset and they are in various stages of the a review and approval process. We're very.
You know.
Thankful and appreciative of the BLM staff there in Carlsbad, you know who continue to work a very diligently you know not only on our permits but you know permits throughout the industry. We think they're doing a great job. We really appreciate to you know how we've worked with them I give a lot of credit to our own internal you know.
Land team and those that have been specifically focused on a on working on the the permitting process for us.
No they have a they've done a great job and these you know these permits are involved process as you know they era that that's it's a fairly significant amount of information that's required to be submitted and our our teams have pulled all that together and to have all those pending in front of the in front of the deal and so I think.
Our expectation is we'll get an initial batch and then those those will just continue to come.
No it a fairly regular pace throughout next year and certainly.
In plenty of time to enable us to continue to.
To prosecute our development at the state line at the pace that we plan to and perhaps even give us the opportunity to accelerate that should we should we decide that's the right thing to do so.
You know very very.
Very optimistic very satisfied with the you know with the progress that we're making there.
I appreciate the color. Thank you.
Thank you and that does conclude acuity portion of this morning's conference call I'd like to turn call over to management for closing remarks.
All right I'd just like to.
Simply close by again mentioning Stephens.
Is becoming an increased interest area. We've had good results or initial wells up there. That's also tied into San Mateo to.
And that'll be a big part of that have that deal.
The.
Second thing at.
I just want to thank again, the staff for the wonderful job that Dave.
They've done and Ah.
You know the third.
I think it just to mention that we think we have a lot of ways to pivot that's got to be one of our strengths is the ability and we have pivoted from we were all in the Haynesville. If you remember chest pain came along it made us the proverbial offer we couldn't refuse. So we did that deal with them did the JV and pivoted to.
The Eagle Ford, which was an old province to prove up that the frac jobs could go through the.
Narrower poor throats of the yeah, the larger oil molecules could go through this smaller fourth row to the shale proves that happened started building that position in the Delaware and we did that when we were going public and we advised everybody that looked at as saying that that would be our third leg.
They give the stool and it.
Progress well enough that it's a big part, but we could.
Pivot back.
Either the haynesville or the Eagle Ford if necessary I don't think related.
We've got plenty of locations, but we have built in that kind of flexibility, saying thank him a rigs we could drop one there on short term relatively short term contracts don't want to do that got a great relationship with Patterson, a they've worked with us and Halliburton and everybody else. So we we.
Thank the business has a lot opportunities.
Going forward.
I do want people to feel careful that we do what we say we're gonna do some only merely point out.
That you have the natural effect of the you know going with the capital efficiency is you're going to be drilling more laterals longer laterals more pads that you've got some that bill 10, that's the.
You know that you've got to.
Make that.
Except that challenge when he got to do that but it's going to pay off in a big big play for us.
And so we like our chances and all these areas and.
That if you will and we're addressing.
All the concerns that I've heard today.
We are addressing each of those and on the plus side, we're continuing to head with a plus side and as good as some most of those <unk> is gazelles results are they're going to get even better.
Going forward and so thank you to the staff Nike to the shareholders. We know you have a choice we hope you'll keep picking matador and I think you'll be really glad that you did.
Ladies and gentlemen, thank you for your participation today. This concludes the program.
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