Q1 2020 Earnings Call

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Good afternoon, I am Julie and I will be your conference facilitator today.

With my to welcome everyone to the extraction oil and gas first quarter 2020 financial and operating results conference call.

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Extraction will not be hosting a question answer session today.

Please be advised the remarks today include answers to your questions include statements that the company believes the before it looking statements within the meaning of the private Securities Litigation Reform Act.

These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different those currently anticipated.

Those risks include among others, Matt is that the company described in his financial and operating results News release issued this afternoon and his filings with the Securities and Exchange Commission.

Extraction disclaims any obligation to update these forward looking statements.

Well the company believes these forward looking statements are reasonable there are subject to factors such as commodity prices general economic conditions competition technology, and environmental and regulatory compliance the company's drilling schedules coupled plans and other factors that may called is results to differ materially.

I would now what the from the coal Ovature, Louis Baltimore Extractions Director Investor Relations.

Thank you and good afternoon to everyone. We're glad you could join US today for first quarter earnings call.

With us today on the call we have about olin's, our president and CEO and married telephone ski our VP of finance.

I'd like to remind you that today's call. In addition to the aforementioned forward looking statements also includes a discussion of certain non-GAAP financial measures.

Please be sure to read our full disclosure on forward looking statement and GAAP reconciliations in our earnings release and in our filing on form 10-Q, three provided earlier today after the close of trading.

I'll now turn over the caught about LNG or president and CEO to quickly touch on the quarter and provide some additional details on our go forward operational plans.

Thanks Louis.

Good afternoon, everyone welcome to our first quarter earnings call.

I'd like to quickly touch on our first quarter results and our thoughts about the future as it relates to the cobot 19 pandemic and turbulent commodity prices.

Then I'll turn it over to Maryalice boesky, our VP of finance to talk more about our liquidity position.

Extraction is known for having some of the best acreage DJ Basin and for an operations team that uses outstanding management practices to safely develop those assets.

During the first quarter, our ops team once again delivered as we successfully drilled 34 gross 25 net wells with an average lateral lengths of 2.3 miles.

We completed another 28 gross 23 net wells with an average lateral length of 2.3 miles and we turned to sales 13 gross 12 net wells with an average lateral lengths of 2.1 miles.

On our last call. We told you about our first set of three mile Wells, we turned online and Broomfield.

These wells have produced at a peak 90 day rate of approximately 1500 Boe per day, with 73% being crude oil, which compares favorably with our expectations.

During the first quarter, we completed and turned online another three mile lateral Windsor further demonstrating our ability to drill long lateral that access more minerals cost effectively with less surface disturbance.

We have drilled three three mile wells and over 115, two and a half mile wells.

Our ability to reliably drill and complete these longer laterals has already become a game changer for us in areas, where surface access can be more challenging.

Our production averaged over 94000 Boe per day during the quarter, including just over 38500 barrels per day of crude oil.

During that time, we invested $155 million.

Which 147 million was for D N C.

This was all largely in line with our prior plants.

However, the world has changed significantly since we announced our 2020 plan back in November of 2019, and our updated plans last quarter.

You'll remember our most recent update with the day before the Saudi brush up price War began.

As you know, we're now operating in a commodity price environment, driven by glut of crude supply coupled with unprecedented demand destruction, resulting from the Kobin 19 pandemic.

And adapting to these challenging times, we have taken the prudent and necessary steps to reduce our cost structure and capital expenditures.

With respect to the low commodity price realizations expected over the next few months our operations teams have gone well by well and pad by pad to put together is shut in strategy med to reduce elouise by shutting in or reducing production from pads with the lowest operating margins, while still maintaining production from our highest margin wells.

Although we have not yet decided to curtail in meaningful amounts of our overall production. We are monitoring the pricing situation closely and are ready to act swiftly if warranted.

On the cost reduction fraud, we were able to reduce our agencies by over 16% compared to our previously published well costs with further price decreases expected if the commodity downturn continues.

We now expect a two mile Niobrara wells to cost $4.1 million and a two mile codell well cost $3.8 million.

These are the lowest anticipated well costs since the company was formed in 2012.

Turning to our capital plan for the remainder of the year due to the continued uncertainty in the commodity markets. We made the decision during the middle of April to release, both our operated drilling rigs and our completion crew aside from possibly completing one drilled but uncompleted pad and greeley during the second half of the year we're delay.

Hang further operating drilling and completion activity until prices improve.

I'll now turn it over to Mariella to discuss our financial position and liquidity.

Thank you Matt.

We ended the fourth quarter with 32, Melini passion, our balance sheet and 470 million drawn on our revolving credit facility.

After giving effect to 49.5 million is seen by letters of credit we had just under 441 million liquidity.

In late April the lenders more credit facility, where does the company borrowing base by 300 million to 650 million.

That's what a termination producer available liquidity to just over 80 million after taking into account.

I'll be made earlier in the quarter to make rod below impact statement.

And out of an abundance of caution and decent certain times, we drew down that remaining 80 million to hold on our balance sheet.

After the draw US have made 720 20.

We have 600 point fivemillion drawn on our revolver and approximately 94 million in cash on the balance sheet.

You haven't gated by choice, that's me validate our strategic options and challenging environments.

We will keep you posted on any additional much is developing.

With that I'll turn the call over the map to close.

Thank you Mary Noah.

As previously announced we won't be hosting acumen eight today.

Before we say goodbye I want to take a moment to think each member of the extraction family for their hard work dedication. During these last few weeks.

Our employees have worked safely and diligently managing uncertainty in our business environment as well as in the midst of an unprecedented pandemic.

I'm extremely proud of our team.

With that I want to thank everyone for tuning into the call. This afternoon had a great day.

And with that ladies and gentlemen, thank you for participating in today's program you may now disconnect.

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