Q4 2019 Earnings Call
Ladies and gentlemen, thank you for your patience employees can see the standby your conference call begin momentarily. Thank you for your patience and please continue to standby.
[music].
Ladies and gentlemen, thank you for standby and walk into the Q4 2019 Comstock resources.
Earnings Conference call at this time, all participant lines in listen only mode.
After the speakers presentation that'd be a question answer session.
That's a question Jim session you many to press star one new telephone.
Please be advised that today's conference is being recorded.
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I'll now hand, the call over to Jay Allison Chairman and CEO. Please go ahead.
Hi, Michelle Thank you and.
You know, what we announced a couple report consolidation with Comstock on June 20, not change.
I tell you we were anxious for today.
Well, we could show you what the consolidation of the two asset bases looks like.
It really what the craftsmanship and the management of this group of 207 collective employees at Comstock from top to bottom.
Well, it's the GAAP start for can create.
It is extremely soft energy market.
Our results. It will show you today are really strong.
Were profitable we have free cash flow I think we had the lowest G.
Sector, we also have industry.
Margins at industry, leading low cost.
They created the strong results, but there were reviewed a day Ritchie.
Well.
We have a very deep inventory of drilling locations around 2000 that is probably 94% HBP.
For future growth.
I want to say, thank you for listening to our story I know, there's a lot of distraction. After today I want to thank you for listening.
I wanted to take jury jobs this family for believing in the business plan.
Along were dead on capital income before for believing to.
I also want to take our bondholders and our bikes that support us sort of course.
Almost 10000 equity owners through all the stock.
Tell you that includes ordinary shareholders and trayport to contribute to their oil and gas assets. The golf thought for stock in November 20, not chain.
Our goal to you what.
His to act right whatever market. We're in we're Gonna Act, but there were not in a good market.
We will not panic, we will manage where the steady hand, this group of managers and our board created our strong results in tough times. It nothing has changed it will continue to use our collective skills to capitalize on this market always focused on creating a stronger balance sheet.
So again walk from Comstock Resources' fourth quarter 20, you're not paying for nitrogen operating results conference call today I'll review, our fourth quarter 20, not paying earnings in drilling results. You can review slide presentation during or after this call by going through our website at Www I'll talk resources Dot com and downloading our quarterly result presentation.
There, you'll potter presentation titled <unk> fourth quarter 2019 results into quote.
Jay Olson Chief Executive Officer, Gobs talk with me as Roland Burns, our President and Chief Financial Officer, Dan Eriksson, Our Chief operating officer.
Well keep your reports to the pay that off your luck. Please refer to slide two in our presentation of note that our discussions today.
Will include forward looking statements wasn't amending its securities laws, well, we blame the expectations and such statements to be reasonable there could be no assurances that expectations for proved to be correct.
If you look on page three to 29 chain accomplish much.
On slide three we are lot our major 20, not doing accomplishments on June 16.
We completed the acquisition of Gabi, pork energy, which added significant size and scale to the company.
Required 250000 net acres the Haynesville shale with approximately 1200 net drilling locations. We added over 700 million cubic feet of day production at 2.9 trillion cubic feet equivalent of proved FCC reserves, which we successfully integrated the <unk>.
Russians and less than six month.
Including consolidating the two corporate offices that Youre, Prsco office, where type 41% reduction in headcount, we did achieve our combined targeted Pete and I have $30 billion is we advertised after the Gabi Park acquisition, we now have industry, leading low cost operating and we have high mark.
At 20 not date, our drilling program was very very successful we drill 64 gross or 46.5 net wells completed 61 gross.
45 point net wells with an average IP rate of 25 million cubic feet equivalent per day.
The drilling program drove a 37% increase your production or pro forma production basis. We also completed as I've mentioned earlier I bolt on acquisition.
By issuing 4.5 million shares of common stock, which added 3155 net acres 12.7, net drilling locations and 76 Bcf for your proved reserves overall, we grew our history shape proved reserves by 125% to 5.4 trillion cubic feet equivalent.
At an all in finding cost of 72 cents Brinci EFI, while our S. U shaped PV 10 value grew what.
By 85% to $3.3 billion.
Our fourth quarter highlights, which is slide for most a lot for would cover some highlights for the fourth quarter. The fourth quarter results represent the first full quarter. It back to the operations of comedy Park and the numbers proved up the strategic operational and financial benefits of the merger there we ever John.
Yes.
Our haynesville a bodes for shale drilling program continues to deliver strong results <unk> drilled and completed a combined 217 operated wells says 2015, which had an average IP rate of 23 billion cubic feet per day.
That is more than any other operator in the play yet during this time period, our drilling activity drove the 37% year over year grows from the fourth quarter of last year over pro forma basis. We've also been driving down our well cost in the Haynesville, Dan Harris has done a great job at that and his team.
Our latest well cost per lateral foot or 20% lower than what we averaged for the fourth quarter or 28 team.
<unk> natural.
Gas production growth was offset by weaker natural gas prices in the fourth quarter.
For the quarter, we reported oil and gas sales were $309 billion.
Adjusted EBITDAX of $235 billion operating cash flow of $188 million or 66, six per share and adjusted net income of $49 billion or 22 cents per share now.
I have Roland bars to cover our financial results Moerdijk Rowan alright, Thanks James.
On slide five we cover our proved reserve base at the end of <unk>.
2019 degree our free reserves from 2.4, Tcs eat a 5.4 Tcf he and.
In 2019, primarily from the three Tcf the we acquired.
And last year, including the heavy park acquisition.
Our drilling activity at at 317 Bcf fee to proved reserves and we had 267 Bcf had a positive performance related revisions.
The reserve additions were partially offset by divestitures at 50 Bcf B and negative price related revisions of 232 Bcf.
Our all in finding costs for 2019 came in at attractive 77 cents per Mcf b or 72 cents. If you exclude the price related revisions.
Our reserves are 98% natural gas.
And 36% of our reserves for developed based on volumes at a value basis, 65% of the reserves for developed.
The PV 10 value of our proved reserves.
Was $3.3 billion.
93% of the pre reserves are in the haynesville or bowsher shale, 3% or in the Bakken shale and 4% or at our other regions.
In addition to the 5.4 TCH Tc EFI of FCC proved reserves, we have an additional 2.9 Bcf. He have proved undeveloped reserves, which are not included because they're not expected to be drilled within the five year window required by FCC rules. We also have another four TCV of Tupi.
Probable reserves and 5.5 Tcf the of Threepi or possible reserves for a total reserves of 17.8 Tcf He got a thethree basis.
Hi, six combines comstock and heavy parts production from the Haynesville bowsher sale since 2016.
And the fourth quarter last year production from our Haynesville Bowsher wells is up 37% to almost 1.3 billion cubic feet per day as compared to the 915 billion cubic feet per day.
That we had in the fourth quarter of 2018.
Production grew almost 14% sequentially from the third quarter due the completion of 23.1 net wells during the fourth quarter, which represents the highest number wells.
Ever completed during that they're in a single quarter on on a combined basis.
In the first quarter 2020, we see our Haynesville both your production staying relatively flat to this level.
With only nine net wells expected to come on production during that quarter.
Slide seven recaps the production we had shut in during the quarter and this this was mostly shut in for offset frac activity.
We're pleased to see that our fourth quarter shut in volumes decreased only 2% of our of our total production.
As compared to 3% in the third quarter.
On slide eight we summarize the financial results for the fourth quarter of last year.
Our production for the fourth quarter totaled 125 Bcf fee, including 577000 barrels of oil.
This is 247% higher than our production in the fourth quarter of 2018.
Oil and gas sales, including realized hedging gains for $309 billion, 109% higher than the fourth quarter of 2018.
Or prices averaged $50.36 per barrel and I realized natural gas price average $2, a 30 sets including hedging.
Our adjusted EBITDAX came in at $235 million 100 at 9% higher than 2018.
Operating cash flow was $180 million, which was 97% higher than 2018.
We reported net income of $40.8 million in the fourth quarter or 19 cents per fully diluted share.
Adjusted net income, including unusual or non recurring items was $49.1 billion or 22 cents per diluted share.
On slide down we summarize our financial results for all of 2019.
Production for the year was 309 Bcf fee, including 2.7 million barrels of oil.
Represent an increase of 180% from the prior year.
Oil and gas sales, including realized hedge gains were $821 billion, 112% higher than 2018.
Or prices.
In 2019 averaged $49.64 per barrel and I realized gas price averaged $2, a 35 cents per barrel, including any hedge gains that we recognized.
Overall, our natural gas price realization was down 18% from the prior year.
Our adjusted EBITDAX was $614 billion.
114% higher than 2018 operating cash flow was $468 million up 124%.
2018.
And we reported net income for this for 2019 of $74.5 million or 52 cents per diluted share.
But adjusted to exclude unusual items, including the.
The merger cost as a heavy park acquisition.
Our net income was 122.3 men or 77 cents per diluted share.
Slide 10 be present operating results pro forma for the company Park acquisition for all of 2019 since the acquisition.
Right into our numbers yeah.
In the middle of July.
So the fourth quarter was the first full quarter that included Gabi parts out operations. So pro forma production for all up to 29 team.
On a pro forma basis totaled 400, 450.7 Bcf fee with oil and gas sales of $1.2 billion.
The pro forma natural gas price for all of it.
29 team would have been $2.48 per Mcf.
On slide 11, we summarize the hedge positions that we have in place for oil and gas production.
For 2020, we have around 600 million a day of our natural gas production head and about 3450 barrels of our oil production hedged.
Since our last reported.
Earnings we've added 112 million cubic feet of.
Good day of gas swaps.
In 2020.
The weighted average strike price of our 2020 gas hedges as $2.66 per Mcf.
Our plan is to continue to target hedging, 50% to 60% of our production on a rolling 12 month basis.
Slide 12, we detail our operating cost per Mcf fee.
Operating costs.
Fell to 55 cents in the fourth quarter as compared to the third quarter rate of 59 cents.
Our gathering costs were 24 sets production tax averaged eight sets and our overall feel level lifting costs were 23 cents.
On slide 13, we detail our corporate overhead cost per Mcf fee, our cash DNA cost per Mcf. He felt the only four sets in the fourth quarter as compared to the third quarter at seven cents.
As we said before one of the most significant benefits of the heavy park merger is the approved but and this metric did the reduction and personnel from the two different organizations with this low overhead we now have the lowest cost structure in the industry.
On slide 14, we detail that the depreciation depletion and amortization per Mcf fee.
For the quarter inferred prior quarters.
So in the fourth quarter, our day to get a averaged 89 cents as compared to 79 cents in the third quarter.
[noise] [noise] on slide 15, we recap our 2019 spending.
On drilling and development activity and then what we expect to spend this year.
Last year, we spent $511 million development activities.
Of which 486 million was related to the Haynesville shale operations.
We drilled 64 or 46.5 net operated horizontal hangs they'll show wells.
In 2019, we also completed 15 or 11.6 net wells that we drilled in 2018.
We spent almost $20 million drilling for EUR 2.2 net.
Eagleford oil wells and about 5.5 billion out our Bakken properties.
In the fourth quarter.
We had $155 million and capital expenditures and we completed at 42 million dollar acquisition, but it interior entirely by issuing common stock.
In that quarter, we also generated operating cash flow of $188 million resulted in free cash flow of $23 million in the quarter. After we also paid the seat $97 million dividend on the preferred shares.
We were running a combined nine operated rigs in the Haynesville when the company part merger closed in November we announced we plan to reduce our rig count to six in 2020 in response to the lower gas prices at that time.
Given the further deterioration and natural gas prices, we're now planning to have a five rig program in 2020.
Using five operated rigs our budget will be approximately $421 million.
And we expect to reached total depth on 46.
Wells are 34.3 net operated Haynesville wells.
In addition, we'll be in various stages of drilling on eight or 7.4 net wells at the very end of 2020.
At the lower rig count and and with the current gas prices.
We still expect to generate significant free cash flow.
Of approximately $150 million to $200 million in 2020, despite the impact at this current lower natural gas prices.
On slide 16, we show our balance sheet at the at the end of 2019.
We currently have it went when bay in.
250 million drawn out our revolving credit facility, which has elected commitment of $1.5 billion.
Well.
1 billion 575.
Okay and borrowing base.
We had a year in cash position of $19 million.
Our current liquidity position.
Is that $269 million.
We also have.
They in 475 million of senior notes outstanding comprised of 625 day, and a 7.5% senior notes due in 2025 and 850 million of.
Nine in three quarters senior notes due in 2026.
With no debt maturities on 2024, and our current leverage ratio comfortably below our required leverage ratio covenant of four times, we're well positioned to whether the current low gas price environment.
Now I'll turn it over to Dan to cover the fourth quarter drilling results in more detail. Okay. Thanks Roland.
Net flip over to it makes a lot and see the is the latest outline of our current 309000 net acre position.
We currently have 1983 net locations identified on our acreage, which we will cover a little more detail than the flood.
95% of the acres is currently held by production, which translates into future drilling commitments. It allows us ample flexibility with our rigs and drilling schedule.
For for the changing more market conditions.
We also control the majority of the acreage with a 91% operated position.
An average of 76% working interest.
Our current well now has reached a 217 wells turned to sales since reentering the flight in 2015.
The new wells, having an AD was up into 23 million cubic feet per day.
Of note is 79 of these 217, new wells were completed in 2019 alone.
With an average lateral length of 871 fee.
On Slide 18. This is a detailed summary of our of our latest Haynesville Bose is drilling inventory is as of yearend 20 Nike.
Our total gross operated inventory now stands at 2395 locations.
Our average net interest is 76% this equates to 1809, Matt.
Operated locations.
We also have 1451 gross non operated locations just an average net interest of 12%.
This represents another 175 net non operated locations.
Within our gross operated inventory. We currently have 585 short laterals 936 medium length laterals and 874 long laterals.
[noise], 60% of our gross operated locations are located in the Haynesville and remain 40% all in the Bolger.
This inventory provides the company was approximately 50 years of future drilling locations based on our forecasted 2020 activity levels.
Overall slide 19.
You can see a summary of the 20, new wells were completed and turned to sales since our last call.
And also an outline of worthies latest wells are located across our acreage as you can see on the map. This new activity has been spread out fairly evenly across.
Our acreage position from east to West.
The initial production rates range from 15 million to 45 million cubic feet per day average out the of 24 million cubic feet today.
The wells were drilled with varying lateral lengths and included large number of short laterals than the last update.
They did links range from 4337 feet up to 10191 fee.
With the average link at 6926 feet.
All the wells were completed the sand loading sand loadings, ranging from 3000 to 3800 pounds per foot.
Average at 3550 pounds per foot.
At this time, we also have 15 additional wells that we are that we are currently completed.
Slide 20, you'll see an updated illustration of our all in DNC calls.
That we discussed on the last call.
We have been working diligently to keep driving down our cost and we ended 2019 within with an average DNC calls of 1136 hours, but this is down $287 a flatter 20% from our year end 2018 call.
14, 23 a foot.
The saw Frac market continues to be the main driver.
Hosting our call floor.
We're also seeing improved completion efficiencies, partially as a result of pumping less fluid and achieving faster cycle times.
With several of the current wells that are in progress we've started testing some smaller job designs and so we anticipate.
That our average occupancy costs will decrease even further through the first half of 2020.
That summarizes operations I'm going to turn it back over to Jay to wrap things up alright. Thank you Dan. Thank you Roland.
And the other 205 employees that created those two numbers those two admin gave if you go to slide 21, I'd direct you slide 21 will summarize our outlook for this year. This year, we are primarily focused on free cash flow generation and managing the company fit the cart low natural gas processing bar.
But our Haynesville drilling program generated economic returns even with the low natural gas prices are we currently live in that we've got back the number of wells, we're drilling in order to generate free cash flow.
There, we will use to pay down our debt and strengthen our balance sheet strength that we have is our industry, leading low cost structure and are well economics, we still expect six 8% pro forma production growth in 2020, oeyvind worth or reduced activity, we prioritize free cash flow goals.
In 2020 over production growth, but have maintain adequate investment to keep our production flat on a longer term basis, we've hedged almost half of our production for the next 12 months and have adequate liquidity of 269 million is rather than reported.
The last slide page 22 is really for the Modelers.
To go to slide 22, we could give financial guidance for the year for all the Modelers out there.
Our total 2020 production is expected to averaged 1.25 to 1.45 Bcf per day, which 97% to 99% is expected to be natural gas.
Our lease on freight cost are expected to average 23 to 27 cents per Mcf fee and 2020, our gathering and transportation costs are also expected average 23 to 27 cents friendships bigger 2020, our production taxes are expected to average six to eight cents per Mcf C or D.
In a REIT is expected to average age 85 cents to 95 cents Brinci EFI and our cash DNA is expected to average five to seven cents per Mcf fee.
For the rest of the call, we'll take questions from the analyst.
Who follow the company, so Michel I'll turn it back over to you.
As a reminder to ask a question you would need your press star one new telephone. So it's all your questions press the pound Keith.
Please standby, we've compiled the Q and a roster.
Our first question comes from done Mackintosh with Johnson Rice. Your line is open.
Good morning, Jay Congrats on another strong quarter, Dan maybe for you just going back to slide 20, some odd really impressive improvements you made over the past year on.
Cost referred I was wondering if you have kind of an idea of how much further you may be able to drive those down in what the implications could be for your current 2020 budget of about $420 million.
We do.
So we.
No what kind of depends really on how much we have smaller we go home all of the Frac jobs in 2020.
But we're testing some of the smaller jobs those are primarily on the infill locations, where we're kind of doing the full.
Elements up around the Greenwood wall summit.
And so we you know just with the current if we just keep up in the current size jobs and keep doing what we're doing.
We're still probably looking at another 50 Bucks a foot we can get down about another 5%.
But if we pushed forward with the some of these smaller jobs that were testing I mean, we could go a little bit lower than that.
So if we say for every 100 bucks a foot that we say that skill mcus down approximately $30 million less known our budget numbers for 2020.
All right.
That's good to hear and then maybe just kind of around the 20 programming and payment and the end to 19 is about nine rigs and now you're going to five wondering if you could just gets more color around kind of capex cadence and production cadence over the course of 20 I know, it's probably a little early for 21, but.
Yeah, I kind of how you see yourself exiting 20 going into next year.
So we're gonna be we should be you know just slightly single digit growth. This year with the five rigs. We currently have six will be drop in the one rig probably early next month since.
We should be exiting 2020 with.
Slightly higher production then we've got currently.
And 21 that probably is a little bit far off to.
It really forecast so many rigs we're gonna be running but.
I would say that are at a minimum we would be continued one five rigs and maybe maybe six rigs.
Yes. Thanks.
Matt I mean shippers in such a volatile glut of natural gas, we don't know where the prices are I.
I mean, it every quarter, we want to give you a profit every quarter. We want to give you you know free cash flow well toggle our capex to give that to you and then you know the beauty of this I mean again, 94% of all the inventory we have they should be paid.
We can toggle this back we can grow it in a hurry or we can pull it back in a hurry.
If you look even at a at the rigs we have I would you give 60 day notice we probably don't have any rigs. So we don't have any long term commitments are on the surface and if you look at at the the farm transportation or minimum volume commitments I mean, they're almost zero. So we have we have that's just group. This group. This group is.
Manage to a quite frankly to be in this off market. There. We're in today. So we just had to give you again, we have to act fraud and went to give you the numbers that you'd be pleased with that we'd be plays within 2021 that is do we keep it five rigs we dropped Ford we added six rig put the beauty is we could do all of those things.
Thanks.
And then hopefully you'll trust it will make that rod decision.
That's a good to hear and then if I could sneak one more and knowing that you've all you've been active obviously, which can be park acquisition and a couple other smaller transactions wondering what the Andean M&A markets looking like given the volatility that we've had in the in the commodity in the past couple of months.
Well, there's a lot of Ah nope.
Energy bonds that are maturing in the next 1234 years those shifts there.
I think the borrowing bases will be stressed because I think to the process will be pulled back.
From the banks like to have to be a little bit.
But I think the capital is very constrained if there's any out there I think private equity.
The benefits I made.
I think that they'd like to monetize some of those it's I could say modem for 567 years ago.
And I do think that we're one of the the unusual kind of brought lots out there because we are a public oil and gas company and we do say.
That I think we're the only kind of public energy company our size it has been rebar.
By the belief of the jury Jones and his family they what they called US in January of 18, when they're looking at a depressed market and really acquired the ownership in GAAP stock will we were we were in tough times same thing happen to 29 today, we acquired Covey Park, one entre tough.
So we've been rebirth in tough times. So that's that's where you look at this cost structure the high margins and low cost were public. Thank a lot of companies would like to deal with the public entity because at some point Tom the sector will turnaround you will want somebody to be you know a winner.
And we want to be on that winning circle. So a weird I think well I think we attract a lot of a lot of those opportunities now.
We're cautious because we don't want to hurt the years and years, we put to get where we are.
And we don't want to hurt relationships or we're not going to get weaken the market oriented. We we do anything I mean, it'll be it'll be a.
Create less now bridge.
And it will create a stronger future. So that's what we're looking to doing.
Great. Thanks for all that and congrats on a strong quarter and a good outlook for 2024 job. Following the story I forgot one thank you for your support.
Our next question comes from Phillips Johnston of capital One your line is open.
Hey, guys. Thanks, just a follow up and the question about the trajectory of production going forward. So it sounds like you should exit this year slightly above where you are today, so I guess you're at.
Five rigs going around 34 wells for this year so.
Is it safe to say that something slightly above maintenance capex level and.
Hey, maintenance program would probably be something more like Florida, four and a half rigs and maybe 27 as 30 wells or so.
I think that's a pretty good number I mean, we looked at what gives you a 60% production growth.
This year now we'd come off the strong fourth quarter and share with nine rigs. We've got some some kinda talk into very first.
But I know, we're looking at we don't want production to drop we want to stay flat and maybe grow a little bit.
I always want to protect our borrowing base settling at the prospects may come down a little bit so rather than you might want to add to that.
Yeah, I think Thats correct, I think you'd have.
Closer to four operated rigs is probably that maintenance level of keeping kind of production and reserves flat. So we're just slightly above that but the five rig program and well continue to.
Yeah, well continue to look at whether we want to keep five rigs running I mean, that's that's a something that we can change you know we can change the program and trim it back or yeah.
Then about 30 or 60 days of making that decision. So we will continue to monitor that obviously with a very very weak.
Gas prices that are out there.
Got it compounded by this very disappointing winter.
People like us in the natural gas business Filipino is probably say five months ago that we.
Said, we're going to drop from nine to six rigs by January one and we did whereas six rigs January 120, 20. So that we said okay do we need to dropped to five and answer is yes. So we were at five and then like Ron said, if we need to dropped four we can we can do that we've got a pretty decent hedge book I wish you were a little stronger.
It's not it is what it is just about half that debt to 60, something so but then if you look from Dan side and in your question is how many rigs.
Our cost of come down 20%, that's a big number we think maybe they can come down another 5%.
Quality of these wells have been better than we have we predicted strong results and I think that's what encourages the Jones family to say you know what we made a big bet in January of 18, and we see today that to all those wells 217 of them.
This was like from a good as good or better than we thought and.
We're going to soft market you know, we didnt projected we'd be in a super strong market, we thought to be saw for while that's one of the regions you got to really great marriage of the caveat of golf Shaw.
We thought we had to have that marriage and up with the results. We have today because stand alone I don't think he's a company. Good again this top resolved.
So it's a good thing we appreciate your support.
Yes, Okay, and Jay I guess you.
You also mentioned protecting the liquidity on the RBL what are your expectations going into the next.
Really redetermination.
Well you know the thing that we have for you know you never know the outcome I mean, we think it'll be favorable but the thing we do have 60 of 18 or so when our group, but it's a we've dealt with 16 of the 18 before.
It is a new banking group, it's not Latino they've been around 10 2030 years. This same opening.
They got back end this facility that 1.51 point Pops up 5 billion borrowing base. So its new I'd second thing is.
We're profitable.
I'll take the third thing is we have free cash flow and that takes to free cash flow will go to pay down well we've drawn down. So those are three positive things I think a lot of the company. So they have a and then I think we come in and they have to see if we did what we told them would do and we have and I think our reserves look strong.
Our will performance looks strong so I think that's the key thing is that the yeah. We did add a lot of.
Reserves, especially in the PDP category since the last a spike redetermination.
We'll obviously be used in heavy use and lower price decks. You know that are out there in the bank market we are.
Very mindful of the bank markets, very soft and and but we cannot take will hold our own through this cycle in a matter of fact, we're going to try to yeah, we're going to get that over with and died in March. So we'll try to where they get that kind of settled in the early part of the Redetermination season, Yeah, we thought to be better for the.
The company.
And the site coders to go ahead and get through that process. So no kind of the middle of March will have a bank, beating by the end of March we hope to be out of that.
Because we do take our numbers look strong enough to get to that early.
And given that the given that well results in the good thing, it's even though you look you're using lower prices I mean, the wells or sell creating a lot of value that low gas price because of our very low cost structure and I think that's a positive and lot of that basins you know.
Can't do that and this really low gas price environment that exist today.
That's great Plains.
No I was just I was just because it's a good point I did I did notice that youre your cash cost guidance for the year was.
Pretty impressive so that's that's certainly working in your favor and the free cash flow in the first quarter was certainly above our expectations. Thanks guys.
Yes, no. Thank you we've been told our banks that we have the very Lois or overall.
Cost structure in their gas you know universe of companies. They lend to so I think that's that will help I mean, obviously.
Yeah, yeah that you'll have to it.
I have to overcome the lower base prices, but I think that the haynesville with a tight differentials to Henry hub and they very low cost structure that the wells provide is the is one thing you know that that kind of stands out during this period and in stands up well.
Well it Philip as you know unfortunately, it is a big world now.
The joined I have and have not yet that saw jetstep profit chip tip location chip the results yet to have integrity I made it did banking groups decides whether they're going to have future business with your dog lot of that goes in the equation to it I think we have all those things.
But you know that was only credit since 2015, so the only reason we have that.
Because of wells, we drilled proved up to where we are.
Yes.
Sounds good guys. Thank you. Thank you.
Our next question comes from Jeffrey Campbell of Tuohy Brothers. Your line is open.
Good morning, and congratulations on another strong quarter.
Earlier in the call you mentioned that then fill jobs are getting smaller and I'm I'm presuming. This is to avoid interference with parent wells could you first could you identify what percentage of the 2020 program are gonna be these sort of infill wells as opposed to undrilled pads getting their first completions.
Well site.
As far as the 2020 program, there's really not I wouldn't say the majority of the program is infill wells.
So we are testing the smaller jobs, where were test them. We're pumping on a few of the wells we're drilling some infill wells in the Greenwood Wasco Maria.
No. We are currently we've got four wells left to drill in that area and we're going to have that area. There's got to be basically drilled up so the remaining part of the program at 22, and he's going to still be.
There will be basically spread out amongst the other the other acreage.
Depending on kind of the results we see from these smaller test will be notice out if we want to maybe continue pump and a few more those.
Okay, and that's helpful and also slide 19 shows that there was some activity amphenol account in 2019.
Fourth quarter, maybe I was just wondering or do you have any plans today, Texas Haynesville drilling in 2020.
We do have we did have some continued drilling in Texas, a 20 to 20 I'd say is probably be about the same percentage that we had this year.
Recall that number will stop some ahead, but.
Yes, I guess, maybe about four six something like that I'll say 567 wells I think we got plan for Texas. This year correct. Okay. Okay. Great. That's very helpful. Appreciate it.
Thank you.
Our next question comes from Gregg Brody at Bank of America. Your line is open.
Good morning, guys and thank you for all the color.
Just a quick one.
Cash flow I know in the past you've had tax refunds.
I wasn't sure if you spend one this year.
And then also for dropping the Rick do you expect any sort of working capital impact in terms of outflows.
GAAP in the right.
Yeah that we yeah, we will get around $5 million and additional A.M.T. tax refunds.
And this year and then again in the following year, that's really the way that the new tax act kind of Dan.
The overall refund when they eliminated corporate empty.
So I'm not as large as the 10 million that we got in and in a 29 team.
And then I, obviously working capital Yeah, we'll adjust.
Yeah with the lower activity, you'll have some working capital.
You said the cash flow.
Yes.
We spend a little bit less on Capex and it's got it well so you had.
But the acquisition Kevin in the third quarter, you had quite a bit of cost related the acquisition you know that they've thought of that as kind of settled out you know as you got into the fourth quarter.
But obviously a lot of changes and the company's overall balance sheet much larger.
Much like larger base, but.
Are those are those impacts and your free cash flow Smith I think you set the 150 to 200.
That's out there that's all that accrual number.
Okay.
Okay.
Alright, thanks for that.
Our next question comes from Wells Fitzpatrick of Suntrust. Your line is open.
Hey, good morning.
Good morning.
Oh, all but am I correct in thinking that all the wells on slide 19, our Haynesville and can you talk to any any plans to do any boes your test and 20 point.
All of the wells than our own.
Our Haynesville wells.
We do have some moser wells planned for.
I think in early 21.
Not in 2020, so I mean, just in the current with the current prices whether it and these market conditions. You know we're drilling we're drilling the no the better acreage somebody in the Haynesville across the board, obviously better performing than the Bolger.
So that's kind of where we're going to be concentrated efforts in 2020 still.
Okay. Okay makes makes sense and then.
Can you talk to that the George Mills, well I mean, obviously it was.
A little bit.
A little bit better than than than there is around it I mean anything different on the completion. There was that unbounded I mean is there anything that we should look for with data that kind of outlier performance.
Well, obviously, the the acreage over to Elm Grove is made that is you know that's core acreage is really good rock over there the doors mills was relatively unbounded didnt have wells on either side.
We did spend a little bit more money on our flowback rig up to where we could flow that when a little bit harder.
Got the 45 million today about the I mean, it's held up really well since then but.
But I mean, all of the acreage over in that area certainly has the potential deliver those kind of results.
And so.
But yes kind of answer your question I mean, it was on bound it was not it was not.
It'll have a group of wells.
Okay, Great no no. It's a strong right that thank you guys had a tough.
Thank you.
As a reminder to ask a question. Please press Star then one.
There are no further questions, let's turn the call back over to Ron Mills for any closing remarks.
This is Ron voice this is Jay.
Okay.
No I was thinking for some closing comments you know all the big companies energy companies for kind of in a box hold now I mean, we are.
It's a pretty terrible market, maybe the overall market is but everything starts and ends with I relationships and that's the listeners on this call. I mean, you obviously are in our foxhole period.
So you know perseverance and hard work is what we will continue to give you a period Dutch defaults were made to the trial. There. We're in provides us with the opportunity.
To do better quite frankly, our team energy, which people I mean, that's why I got a lot of our team energy is redo data yet and that's a chemistry of this team. Yes. That's results are we gave you today.
That's result of the coffee combination with Comstock. So again I wanted to close I want to thank you for your time it might be the most valuable thing you have a we know it's valuable. So thank you for the entire 45 50 minutes if your time today.
So we'll keep sharpened you. Thank you Sheryl. Thank you you're welcome ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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