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FANG Diamondback Energy

Participants
Adam T. Lawlis Diamondback Energy, Inc.
Travis D. Stice Diamondback Energy, Inc.
Michael L. Hollis Diamondback Energy, Inc.
Teresa L. Dick Diamondback Energy, Inc.
Kaes Van't Hof Diamondback Energy, Inc.
Paul S. Molnar Diamondback Energy, Inc.
Neal D. Dingmann SunTrust Robinson Humphrey, Inc.
John Nelson Goldman Sachs & Co. LLC
Derrick Whitfield Stifel, Nicolaus & Co., Inc.
Drew Venker Morgan Stanley & Co. LLC
Michael Dugan Kelly Seaport Global Securities LLC
Asit Sen Bank of America Merrill Lynch
Timothy Rezvan Oppenheimer & Co. Inc.
Jason Wangler Imperial Capital LLC
Richard Merlin Tullis Capital One Securities, Inc.
Charles A. Meade Johnson Rice & Co. LLC
Michael Anthony Hall Heikkinen Energy Advisors LLC
Leo P. Mariani National Alliance Securities LLC
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Diamondback Energy Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. And as a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Investor of Director Lawlis, Relations. Adam begin. Sir, you may

Adam T. Lawlis

to Thank quarter third welcome you, Good morning, Olivia. Diamondback XXXX Energy's and conference call.

During found Representing will which Stice, our reference an CFO. Tracy President Hollis, updated we call and investor CEO; COO; Mike can on today Diamondback be website. our are Travis Dick, today and presentation,

actual materially objectives, to financial condition, that results this the may participants caution variety company's concerning differ on to can in the that During results these forward-looking indicated and could make with found from are certain We of SEC. operations, the plans, those future statements conference call, forward-looking be the performance, businesses. statements filings relating due these of a company's you Information factors. factors

make with to The to call be reference measures. Travis yesterday release can measures the will the GAAP in I'll non-GAAP reconciliations our found earnings over Stice. afternoon. issued certain addition, In turn appropriate now we

Travis D. Stice

Welcome, while and multiple, to you, long-term Thank on same We three production cash quarter-over-quarter for over maintaining call. quarter best-in-class strategic a execute XXXX execution near-term while months, to listening day BOEs third time initiative Diamondback's the everyone, was to conference last Adam. Diamondback able all thank the grew period. XXX,XXX a cost X% and efficiencies over our decreasing on operating focus margins. with you

growth implies capital year-over-year further three Diamondback organic cash done where North discipline look they flow, and within to companies what is XX% energy growth cash and are has American a no what now across past plan years. from now the XXXX is all production primary discussing do, over theme updated the production year-over-year Our than guidance XX% up flow. our world within In

metrics. not execute acquisitions share within has Maximized position philosophy and to operating best-in-class flow, cash metrics, operating and accretive our per on low acreage leverage, growth current maintain production Our changed.

All to quarter. of third do continue the which, we in

combination our with Energen. third the transformational quarter, we announced During

close for approval shareholder have for shareholder As with are received scheduled XX an the thereafter regulatory November meetings to the approval. merger, update, we shortly expected pending and deal the

operating currently baseline the merger Basins. plan Midland currently Energen our best is rig as integrate as practices forma the XX XXXX the instill split pro are Delaware We and we base. We operating and work rigs, XX see evenly count both for rigs company's asset this between and operating to across the

guidance structure, of close after to us our within in forma delivering primarily that pro in look rigs to presented ExL existing drilling the at begin were prices our drilling with the our to base complementary returns there will pads of months Diamondback our excess multiple and portfolio for capital acquisition can for the reservoir. cost We continue complementary These immediately, that our run right generate long-lateral will the to synergies production IRRs obligations develop compete greater the merger closes. the existing large, will XXX% Northern current also room and able allow to existing for Midland have away on significant which our acquisition. the acquisition coming Ajax three gives recently-announced will in well full-cycle merger Tier at XX,XXX efficiently We asset X running because multi-well present including add to than acquisitions commodity across assets to capital. block, assets multiple prices. this blocky Also development. cost the XXXX us and significant efficient, are nature these capital we acquisitions minimal capital and The look presentation we in reflect zones acres and inventory previously-announced Basin

and acreage business, of to cash grow grow balance add continue production of differentially inventory a our scale we and sheet, return size program the flow, through will our within dividend. compromising to With pro and forma look capital our without

turn the With our now call to Mike I'll to highlights operational over discuss now quarter. the these complete, for comments

Michael L. Hollis

of marketing third project In improving back we term production, over fourth six the our In have Gulf Diamondback been Pipeline over quarter to When These general, day space Thank projects, be the pricing the crude near this XXXX. Travis. its to signed near with expected long-term pricing, space lower XX% fixed is firm including In strategy, pricing multiple have on deals we differentials year lock-in and oil per Diamondback to benefit Coast third parties. EPIC and day respect the Pipeline you, and Gray marketing the of will per half strategies. in have of this agreements the quarter, in next the both through over differentials remainder XXX,XXX deals barrels weakest XXX,XXX various continue With Oak barrels MEH. linked to the have term, last with XXXX. between space take-or-pay. with pipeline year the construction, months from early to in long-term on throughout and completes the and execute overall EPIC gross of transportation that first our quarter service now and of Brent

have to space projects. at both also equity both a XX% held interest, utilize our incentivizes We in our long-haul efficiently subsidiary, option Midstream. Diamondback Rattler equity This in projects our

Coast, production will move Delaware all the anticipated position that position. production Diamondback's from Basin of our the Basin most that our from move current Gray our current Oak will expect of Midland EPIC We and Gulf to project anticipated project

In currently benefiting forward the five X,XXX and coming In the wells These for and with a to to quarter. lateral an extremely the feet that our this from strong Diamondback and Diamondback the long third businesses. accomplished an never leaning for quarter, quarter, for to Diamondback our activity. Gulf crews XXX% quarter. the I'd business with are make testing working strategic begin $XX the completed this asset partnerships. crews will San we've midstream solution length using we'll busy roughly executed of an deals this and area staff compete with average of not per on frac had throughout sand successful building our take years. our a over with on Delaware bring joint via our together We in true everything monitor a like marketers also thank XXX,XXX third we feet. to Midland lateral fashion, we've drilling remove with the Carlyle rig. over savings. water while with has from and true We has strategic foot the this we across export XX of successful We over realizing to execution. this look of while one to time missed beat our to the team use Basin, completion does partnership results quarter midstream We also the agreement to and lateral continue In risk development future for a and offset Pedro of wellhead are operated market reserve, the local allow tankage proactively of forward needed minerals XX all sand Midland development started happen. block With all and in both local This of rigs three secure Basin Coast. Pecos capacity partnership County capital developing us value area acreage our the Carlyle

these and cost with Basin, also rigs frac one We begun drilling to the one two dual higher completion have capabilities If supplementing the in our with gas. dual cheap and on drilling operations have crews rig economic sense, in use fuel crew Delaware we diesel of fleet. continues fuel natural make five currently

secondary test successful well to Spring Wolfcamp Bone results, announce A. a in to the to prove-up Moving we zone excited the two this County, look of continuing as and to Pecos are to forward target Second

acreage that on County A block. as early-time we of our have the well We is Wolfcamp completed as announced result also third any acreage that good eastern Pecos across

part are is note Regarding midstream budget budget infrastructure overall our begin capital. from levels overall execution total from move year, for midpoint of more agreement Delaware current rig joint achieved done as to spend cash will continued of budget Basin our due time, in the year. due our we the well to flow. for capital infrastructure XX% to the the the a primarily within an of Over of rate we our increased as in year. this at all been the Basin, and infrastructure has of that added with the count the our our investment X% midstream the increase capital closely Please This Midland the Delaware infrastructure exiting as range build Basin, Carlyle, of in in by our the increasing a development percentage to represent what roughly total

complete, over now comments to Tracy. call turn With the these I'll

Teresa L. Dick

other non-cash share. income was net income you, third per share, was items Mike. our diluted $X.XX for per Diamondback's XXXX and net adjusted and quarter Thank $X.XX diluted derivatives

and $X.XX $X.XX BOE. operating cash Our adjusted G&A EBITDA cost BOE LOE including for of the quarter $XXX million our per cash were $X.XX per and of per BOE was

increased while million acquisitions Diamondback of the in credit net quarter and Diamondback a times. midstream. non-operated cash ended free Year-to-date, third the on X.X on properties QX midstream, roughly drilling, on ended infrastructure of of liquidity. million closing After debt on generating the During non-operated $XX million annualized flow adjusting the the drilling, spent facility of on $XXX XX ratio ExL, $X of and quarter, million and have we completion and acquisitions. quarter $XXX properties of and EBITDA and in we October million billion with infrastructure $X.X to EnergyQuest our with excluding adjusted spent $XX $XXX XXXX for billion, Ajax, completion

on close has for XXXX. at on of XXXX line payable per of dividend open share, directors a board questions. business the third shareholders Diamondback's the $X.XXX please XX, record for XX, of to of Finally, common quarter declared Operator, cash November November the

Operator

And line from your Neal SunTrust, our is coming line first Thank open. Dingmann you. the of with question

Neal D. Dingmann

strategy, as the are benefits way ship what, going you as all as for my more wondering Kaes but lot Again, or strategy Travis, everything the you versus – point? – all taking I highlight guys. really guess, if to discuss, with just a want know bit to everything a storage there's itself. bit seems and all. morning, a the that, I a maybe proper options it far deem you I the Good to some as like far involved a at little give sort wellhead-to-water the just ship off that's the the know, I'm first sure and just of dig making Can this you you premature longer-term. question of, specifically. for talk what storage pay Could about channel, on strategy your the I into factors could or like this you others have

Travis D. Stice

for term that the is near strategy of outlined a long-term strategy not wellhead-to-water couple Sure. gains. one our Well, we've sacrifices that on times anything

think our structure think that's this advantaged set up drives I a fit allows Midstream, ownership that our that firm really long-term in Rattler is transportation. us that differential now our as value going equity within pipelines to be and to seen to going this we've the we've shareholders. really strategy that got to really way investors creative two have We we've strategy with ensure

Michael L. Hollis

mean, position our current not I the systems paying Yeah. Neal I upside our for going our to our on, to barrels long-haul going ownership equity water. market we're us one and the is for we're on if move on foreseeable to that about going be to you Midland long-term, we're will the future. systems of think And touch the to the think, via the ourselves barrels be

near where to some experts strategic partnerships over. we're So the year. getting essentially exporter, we this then a barrels commitments on. We're And a the near an market then used almost secure in in tight with firm those our marketer. that's pipes for those in term, the we're term pretty scale exporters what Christi we from free. to And transportation not In take and Corpus handle to the have that to is not Permian

comes get start ease on discounts have couple Brent over dips then the to So gross QX us And a barrels benefits next and MEH maximize and investments. fixed at the we'll in protected year, the to of QX once now to to next or these XXX,XXX quarters. through production we start EPIC day of

Neal D. Dingmann

you How more the Delaware. one highest you Springs in of second five, Great looking landing zone and about about have important zones my versus in slide about actually, high you're that to takeaway at you landing you mention is zones, where think sorry, in talk Wolfcamp you talk I'm Southern sort XX Mike. this of the the specifically achieve Bone – slide results? – the graded sort the about order and thickness here graded Okay. color. the maybe Mike, And showing the of look it the but at sort that about then just could where B I if C? for A, when high landing talk to Could

Michael L. Hollis

Absolutely, it's and important, giving got XD high-resolution Neal. stay just the seismic, in us thickness And ability is thickness our we've and the data that targeting. that quality within the to are utilizing Bone well in within that premium A is some target but we're XD Again, very Wolfcamp rock that's where for you important. and Springs. both the

work publish to the we you to we we're Pecos these and as in can been show off. adjust results well able that data County down continue But it we really go model get paying the where So refine to place we that able is doing wells guys, and to so continue our forward. have and from are we that test

Neal D. Dingmann

much, Great. guys. so Thanks

Operator

And with from coming the line line Nelson your now Goldman John open. our you. next Sachs, is of question Thank

John Nelson

synergies Good all Travis, $XXX Energen update. announcement. the billion math than million on the of says for of detailed $X you more congratulations credit is the giving alongside morning and about Diamondback our acquisition the only market

of one, So a if for synergies at executed risk do acquisitions maybe you how, of And kind my Energen question view some the through outlined? the on? the I previously can you walk you other all, team's the is; achieving different of guess two, then; numerous that from timeline execution

Travis D. Stice

track our while on acquisition, we of front in always overcome too. placed XXXX we anticipate – we a we're every has to pivot hurdle always but that's it John. been are execution. record Every the now of that's guide presentation, prepared us outlined And in yes, done challenge the think I a our a a has We large time when flawless larger that had market our – been in is expect We going front up there execution. This the that time or in made update acquisition our we address to is that us. Diamondback synergies been and to Yeah. had well look, be of remarks, And acquisition, large company challenge we've organizationally, that's as what we

feel of these time front those acquisition the foot really those more say that the But billion merger I deliver over about wells. organization opportunity I So acquisition are hasn't get confident in also integration pro a that of become goes think forma And as closed through. yet. second couldn't company the to to And well dollars in the upon. of a excited and initiatives presentation. synergies outlined executed I some real synergies we couple synergies. on outlined. that exited seeing It's this high Basin we're too as more primary I we the of really Energen going we is look, strategic Obviously, And in the would be things, $XXX as more going, Midland how the about

to is So about able upcoming really excited what company forma in to I'm be quarters. the going do pro this just

John Nelson

just great. and Basin push on I believe to started to any team, the think XXXX. or that fair target? kind some in was achieved? further XQ the kind And along be the the beginning timing a little is there a G&A to of to bit, to be little That's Midland with that reason early Or of as see evaluating Is later getting D&C still integrating of bit work in you on will a

Michael L. Hollis

guidance be is per to cost done John. we've $X be G&A XX on program. a per to across per with line XX-week what with $X BOE today we the XXXX lateral than doing And what guide, in plan traditionally, We less No, our side, which our we're foot barrel. rigs plan

John Nelson

long-term as Perfect. spend And two the time. more that D&C you over get now you should years, think to But in down trajectory then over prepared Mike just of kind is and at infrastructure the XX% how hit to of XX% kind migrate think should second question, on target. we to capital next the the that to than one about your remarks

Michael L. Hollis

about amount, it total. bought and really there are little and asset, infrastructure down we that and infrastructure in Delaware XX, now five smaller The was Basin a as dollar total slide on the to much out into Delaware new put in We're of horizontal John, County of the a we percentage country place. out X% Pecos Midland the Yeah, when years program Basins. a Basin, comparison a County and Reeves in Midland in no

of amount two XX% So we've there ramps hopefully there that the decrease but is system oil of over batteries the count capital and is see our been the out in gathering the And as is out than place, we there, last by electricity time, money you of XX% spending about rig will this total and a lot less have be probably in over number that year, place, out the Delaware years. XXXX.

John Nelson

Perfect. I'll hop on. Congrats, somebody again. let else

Michael L. Hollis

Thanks, John.

Operator

coming Stifel of next with Financial. question our Whitfield from line the Derrick And

Your line now open. is

Derrick Whitfield

strong morning, Good on all, congrats quarter. and a

Travis D. Stice

Derrick. Thanks,

Derrick Whitfield

the between asset, broadly this for Spraberry guys XXXX level you Reading Trail lines, excited should about and XXXX? look potential north are of the as Middle out truly assume Spanish to the there. area of you we activity What

Michael L. Hollis

Derek, we before about asset – rigs running to the rigs. It's we there expect added We'll XX,XXX to be acres. X.Xs – we looking per acres. at one had we'd then three the between XX,XXX were about reasonable two additional one,

four So the forward. you running rigs area the have three, somewhere in going in

Travis D. Stice

develop and that that can are rig Derek, a obligations the we tried rig take we highlight to in a pads. and fact the thing, the lease multi-well park here there other actually so was the minimal, think I prepared remarks

eight intend right after another. park of a rigs couple zones one about And XX XX-well prices well than that's to pads greater we've these and that I what three to at talked is again we rate develop in acreage return. has there pad to think has that XXX% today's do previously

projects going maybe a those XX%, quartile to not top capital XX% perspective, top compete So are of allocation portfolio. from of overall Diamondback's even the in the top

us So to one look as hard to that on we and in lean accelerate as can.

Derrick Whitfield

second update. and comment on could within discussed Spring Great you wells? AFEs in on release, Great. as targeted the the your And you wells Spring formation those Bone Bone your zone then regarding press that

Michael L. Hollis

little – are The yes. are a drill AFEs lower bit the they than shallower, are Derrick, when these pressured they Wolfcamp again we A. wells,

we as use we the And to able X in So of be sand as to local the area, a again we XXX,XXX that realize somewhere million Again bit in savings. the as some as the rack targeting, continue to again in now. right in difference. the more see wells the area wine to we'll actually little targets we we'll far an in do several this call to Spring, have what we we continue upper Bone But three hit so lower. develop

a lot some to have delineate bought. of we development across able to about, don't So to but we wanted whole acreage be acreage talk the

Derrick Whitfield

Thanks. guys. Very Great. helpful

Operator

of Our with next Stanley. Morgan Drew question from the Venker line coming

is now line open. Your

Drew Venker

think a regulations? setting and Good the balance return profile? over between of of then we cash, just growth as and the morning, your corresponding free you Should slowing everyone. think do of and program the flow pace and capital that time, How also about about increasing thinking cash about

Travis D. Stice

dividends. capital continue XX high we've pretty has flow from right allocate Yeah, return of to and been now count going projects is are I our the rate And rig – within going been. and to from what to at we We're clear think Energen. look Diamondback pay XX strategy to cash

those depending I need flow, is are really what can cusp like gas back we we we'll special allocation to energy capital. not and having to on and growth, that the a for for. XXXX. decades we we come. as the can of dividend And that's we flow look, have cash what we our that's carry do think increase think journalist to been that's we a doing all and with cash that's within commodity And has think really if in created what multiple look oil be leverage. not we the that – so to free years generate all and specialist initial that's pretty been to can have going bolt-on And peer-leading on we'll half forward looking grow of touched if the matured than I levers So special and of But, as this strategy look we Diamondback price looking to of going think – And company, think also company that's turn less space because a we've in the feel for, company. only acquisitions

Drew Venker

terms would is and Energen, some as far And of the really with the you Thanks or County there? there anything for move Travis. ahead in full lawsuit with there other timing Howard how either guys as that you in then can structure with to share development acquiring acreage proceed

Michael L. Hollis

about We Energen about ago Energen talk ruled had but too that days the XX can't much favor in put that out did Yeah. in lawsuit. it, Appeals X-K of an of Court

think I days. counterparty the sometime next over opportunity appeal XX has the the that to

to be resolution in comes going and a or patiently deal hope fashion. shape some So to we're this waiting

Drew Venker

Thanks.

Operator

next our from coming the Kelly with of line Global. Seaport Mike And question

Your line is now open.

Michael Dugan Kelly

guys, morning. good Hey,

Travis D. Stice

morning, Good Mike.

Michael Dugan Kelly

for Specific me. one

Just attributable and a much day here to kind little these I if guidance at of barrels roughly X,XXX ExL. for that? increase on folding sense Ajax was a could in of you Thanks. guys XXXX, is in of acquisitions how I production that unclear updated your give you're look

Kaes Van't Hof

is I'll a Yeah, further this Mike, Kaes. take this back. step

midpoint we barrels production, X,XXX say, day into you of guided midpoint guidance Ajax a of this let's day production of If together, barrels a all of a just that months that and two barrels for XXX,XXX X,XXX would we if raised. day at the about when credit And it's out XX,XXX production even a you day look XXX,XXX ExL production. barrels be new year is take we our the a came day today

production specifically guidance for So year, X%. we're raising more our organically the by

X%. Ajax flow raised more QX, acquisition this at attributable flow barrel about of going by cash our the XX% that Going within into We for raised guidance But well the to XX% a to all to of cash the is by midpoint. results. about X,XXX specifically which it now day outperformance a to XXX X% the grow of increase. barrels last day we ExL, year the barrels say, we're quarter we're I'd quarter XX% again to XXX is out within grow X% due to going

Michael Dugan Kelly

Awesome. That's of lot detail. that. Appreciate

Kaes Van't Hof

I'd So, the to acquisitions of say, related XX% for XX% related growth organic the growth the year for year. and

Michael Dugan Kelly

the Okay, color. another great. that Appreciate here, on granular then be differentials. And fairly to one

than off guys little WTI You were more $XX in QX on oil front.

Mike has for in mentioned with QX care to that, exposure, – think but oil get pretty, maybe just not to frame I QX, start that still once could contracts us? you oil ultimately out to be at a everything all realizations term pipe. half relative us going in Midland fixed of kind incorporating Would things you you XQ and little change you to end these those how the be of see to XQ maybe expect and a WTI laid bit, the where you second Thanks. trend of you the it could year,

Michael L. Hollis

Yeah.

I than better of that over in were quarter had think Midland will the to differentials in We two MEH deals that priced market. at QX that because the the fixed QX second improvement quarter. look

currently in some we then are looking year. next all deals those have better, then, market that improved. place deals throughout other the Midland through year so, are of because quarter first And next and pricing has And

than EPIC that, Oak clears early, come look on. when better other on And of kind will then but year. the QX overall, the Cactus that of and pipe comes differential, to have tightening So, WTI until large we'll differentials QX space through next our on the QX basin I Gray pipes and think,

Michael Dugan Kelly

incorporating you mean that have said think a it to relative crude you're of you I get – to pay sense to Coast, you can is the be fees you'd to of done, Kaes, – terms the have expect all incorporating yeah, in that actually priced When WTI transportation? what kind frame going at to and do assuming do to to the

Michael L. Hollis

be or the in at Coast and about Gulf going in different interest in-basin $X, with $X gathering it less I'll of I that pipes Corpus the equity that we'll of way XX% ourselves or of pay price Christi. with we're think to a Rattler. to take $X to probably get $X ownership our our And that

Michael Dugan Kelly

Got Thanks lot Perfect. guys. it. a

Travis D. Stice

Mike. Thanks,

Operator

of next the Asit with question Our from Merrill line Lynch. of coming Sen Bank America

line now open. is Your

Asit Sen

Good morning, Thanks. guys.

unrelated On are strategy. looks like Travis, acreage. early two Basin So, about pruning, talked and on It you've the the term? some prime you've what that nice Central near your grading, are thoughts high past, grow for thoughts question. added areas In or Platform prune and

Travis D. Stice

Asit, the of has those think, areas. – in you slide that assets Anything as our it are what those or ellipses presentation, of we're ellipses I look on are we're outside presentation, any core any our development around considering kind if our available what calling core areas circles for pruning.

we the we as our to that that the up. that Central the core with Platform, closes. after can't And to But Basin look, thing the the divesture that swap first and the clear that reserve is up, swap first, this core candidates. try Now, were it can as start acquisition merger quick and for with and sale presentation we're called of going Energen we'll to extent we – and do process to during becomes essentially we've is

Asit Sen

rigs, on dual potential to expect? Great. up thoughts savings potential Thanks. early one opportunity, to And then like reliability the go the looks natural on on trying and the switched you five issues to fuel that were we which rig gas,

Michael L. Hollis

run roughly Delaware, to crews, XX% on of Reliability, the fuel or high size stream. fuel the Savings of it's $XX engines, running Midland it as gas of as but can again, opposed part well depends wise upwards issue the maybe or and completion We the XX% no as they whether a as have foot. diesel stream $XXX,XXX diesel. about a to on gas in job general, natural the Absolutely. is natural

less it's drilling of a the side. side, use diesel on lot the drilling of On we course

it's the $XX,XXX somewhere in a well So to $XX,XXX range there.

Asit Sen

Very helpful. Thanks, Mike.

Michael L. Hollis

bet. You

Operator

you. next Oppenheimer. Rezvan coming our line from of Tim And the Thank question with

now line open. is Your

Timothy Rezvan

on to get tack-on I'm some you night. folks. morning, last context Good ExL the trying announced

production. and acreage highlighted You

you total in that Can talk assets or are? understand about trying relation assets. minerals related mentioned also it to those just the kind to of Is infrastructure value You related what price.

Michael L. Hollis

Yeah. acquisition. Nothing just some that and batteries came with It's major. infrastructure the

Timothy Rezvan

Okay.

will into into guess Rattler? get folded those I So

Travis D. Stice

Correct.

Michael L. Hollis

Yes.

Timothy Rezvan

on cash three announced sort within in forward, Okay. back growth about Travis, then same been of there's the time, you've discipline. bit, And – At this pretty in separate cash and just approach Energen. moving $X the acquisitions last if you've and we the billion about talked a been at hinted step dividend over growth clear flow from capital little months

you down how do muddies the or for capital the kind looking might sort acquisition of resource clarity do investors about of Diamondback capture? that this picture for on think guess you And when are appetite how who I So discipline? dial

Travis D. Stice

to look bring they felt like Spanish area do like now could the our because we Well, the of seen, And good would We clear to too could we that capital not fortress I'll But be right opportunity to we sellers do maintained weren't compete way. go like North, sheet And knowledge our felt on. for process an you have we felt these had we broadly. have of so balance expertise differential calling of try history, transacted we just without was at Trail willing that We what again, sheet legacy the always had we – that activity. immediately marketing if wells in type for risk. the just at and balance back the a we're acquisitions opportunities. you've putting this look that our

in of that's is merger Going are that us, going challenge very our during to understand we right said sidelines challenge the We execution. essentially a in front. sense is what presentation Diamondback Energen is as acquisition I defined the the on be and on front that Jim, clearly now. forward, And where large

we lines throughout us those that understand organizations, plans So, on our to the both drawn spent for the much time to which on detailing synergies now we really when for and for those. why going deliver timeframe so we're battle the execute or are is synergies,

synergies less on of the integrated start I So, inventory look, I things where delivering more Diamondback. we until we're really on I think we positive now. about. this merger And, our like like going, we've And got the materially sidelines or get talked for very we and said, sits that it lot think direction right a

Michael L. Hollis

And plus with I'll of definitions is lot have probably be a To the our has a mantra philosophy. full to to the to discipline. cash And cash going of our which core sense of dividend, our capital do small to acquisitions just right that's capital capital that deals our our returns compete us of couple expect that CapEx grow, equals us, capital are discipline existing flow. is And part see investors for created operating not ExL discipline acquisition market. tuck-in infrastructure but operating like any in our do add you cycle make and continuing out-spending And we away our expect plus inventory. flow,

Travis D. Stice

a not listen, accretive. covered and mantra are acquisition, you've is know Tim, new. you capital these Yes, that And long us immediately something Tim, for time, discipline the

less disciplined than terms out, quarters in in energy discipline I've pointed that we price single unique capital that's deviated of row XX being And right XQ so XXXX, been commentary collapsed think spending a capital after has I of one in space we a the strategy. In right the make. now this we capital-allocation our As quarters in from are row, quarter XX now. essentially have oil fundamental strategy. a in to not

our not done. is of believed discipline known I that Diamondback we capital what of investors understand So have think because we what that because but any have say of

Timothy Rezvan

guess running you're XXXX price. and sort commodity through Okay. the I And you context. to if appreciate a that of I models have decent close just loop,

cash You can see pretty flow. healthy free

we dividend of you about of how kind that cash you're free kind look So just all resource opportunistic that the to capture sort flow? work of besides thinking putting on is should to

Travis D. Stice

returns the and have That's forms. at crack is can return that investors we discussed. But look can take real of Look, that within on. capital the levers you one of strategy XXXX capital the board to Diamondback of when we it's its and beyond. at that real many our a And visible

Timothy Rezvan

you. Thank folks. context, the all Appreciate Okay.

Operator

from question Wangler of line the Capital. next with Jason Our coming Imperial

now Your open. line is

Jason Wangler

kind Hey, XXXX. everyone. Appreciate Energen of on plans and the of good the morning, update kind the

Energen look of the of keep that expect allocation How your XX do kind you on kind going and those XX you think rigs, XX rigs combined at of properties do you to As forward? on starter? to of

Travis D. Stice

immediately they are flexible. drilling These to we think like way schedules the

they six out fact, about to front. months In are in really nine months

to late Diamondback merger Energen the able properties. won't drill operating be XX continue the half on we're it on the the properties substantially. year we're going start modifying So until probably rigs back goes Diamondback XX once and through, before And the or XQ of to schedule the

Jason Wangler

that your you Can grab of next you the you stage as end see kind that Energen what spend spend do for they will closing think of talk obviously, comparable bunch a be where amount in deal? going infrastructure Or you of at the spend on forward? then, on the kind And lifecycle? year Do are a assets about about look as significant to you talked to you assets and need look would as well. helpful. XXXX you that the and you it Diamondback of and that's Okay, them

Michael L. Hollis

been They've us what's they about smart we where have had in been probably or have Basin especially for the they twice today. how Delaware infrastructure exciting in they've three actually place. that capacity how really Yeah, see the SWD is built much times to their

set they've the in and long time have system. they've a operating for up Delaware been infrastructure a great So

really So be I'd acres it. expect percentage XXX,XXX Delaware Basin to total percentage of with our of The to capital their thing closer Midland capital. in nothing on with Basin, the us total

money oil, of a a And spending as with lot all last gas, of But to and long-term months. percentage realizations been at the moment. put total the benefiting creation. SWD electricity, had we're So it's in LOE midstream it's and as Delaware in we over XX the just value water,

Jason Wangler

you. Thank appreciate. I

Operator

coming Richard the question next One with our Capital line And of Securities. Tullis from

line Your now open. is

Richard Merlin Tullis

questions But program D&C I meaningful pressures you. they if it just believe anywhere Thank mentioned D&C for side Diamondback been Travis. you the of to basically Are have entire being morning. cost year. seeing current even already, Lot cost for next are intend any asked cost to that use was Good year. on the my D&C the offset by efficiencies? other back next going

Michael L. Hollis

this Mike. place all with today. that and price that tariffs quick in With along see is oil increasing, are obviously Richard, steel The cost of yes. answer go those service is we

absolutely of some into So, forward, budget, inflationary account in we going taking our pressures. are the

put that into the set we what working of take some have that sands those. of some as account we well the we get the on from eyes to efficiencies on and savings have pressure However, in deals pumping cost well we local today operational as our also as place as today

yes. inflationary current to today apply forward, to But well in have some that properties. We're structure, take pricing So the is will Energen coming. answer pressures going going we be it as current our there the yes,

Richard Merlin Tullis

And then one. Mike. lost Thanks, just I

in of So the second take are year. track half relieved the to bottlenecks on looks like away industry get next

longer term, couple slow potential issues any next it's projections are that growth the et you over Looking the side cetera? strong could water seeing on of years the industry whether

Kaes Van't Hof

be to Richard, doing everything There's of issues. Permian. the we're can issue ahead new be we in all these to always going a

NGLs think are solved, crude is getting I solved. getting

XXXX. by getting And important. of is the For gas most us, solved end it's the

we're that we're we've our I issues to have we've of systems so thumb issues. Basin, that do of in a be to that a ahead of. water growth our ahead years rule present any major put two So you capacity ahead think And themselves lot got and getting Delaware looking of into stay the ramps of

think expected, us of projected to the away have are solved Now, barrels on our for this long oil crept-up nice faster than now but it. home issue time. a we growth a on gathering going or oil and water we've all And take barrels I

Richard Merlin Tullis

All all for That's right, Kaes. Thank me. you.

Travis D. Stice

Thanks, Richard.

Operator

Meade from with coming question next Our line of Rice. Johnson the Charles

now open. is line Your

Charles A. Meade

– that you Good Trail team North Spanish you're – there. area morning, to and the little a in maybe your to new Travis, wanted bit I your creating. explore future plans

good fashion. But southeast of that County. there job done the to connect that look like as strike it extend pretty the perhaps that's quick or of seems with kind Central position map, you've got in the of me energy in a and that to dots You've Martin Northwest, assembling chance towards kind I

you that spot? to that, can expectations help possibility of our also may but calibrate on appetite do not there us your be just in are sellers So other the

Travis D. Stice

together. opportunistic in pretty X plus we've all up got think been location putting that this We've XX,XXX position XX,XXX set we over Well, now for laterals. Tier

be bolt-ons continue be area, make now. And like looks earlier, But they Spanish Kaes bolt-on cap company be sense North market accretive, about they our deals pro historical our and very so, And as are And do can with if large forma we're small couldn't basis, opportunistic from billion for and a development we'll and for right $XX excited a we'll to relatively to tuck-ins on do to plus opportunistic position that pleased be deals. tack-on Trail highlighted perspectives. these we more what scenario.

Michael L. Hollis

whether And we'll the it's you between acreage that the Charles whether as can sense. take our far connecting as it dots, in make of infrastructure, anytime with do with it we or advantage

We to do I take here gatherings, our of reasonable to that ability same to that it place the expect one that another. we from think we'll things capacity, so fluids and tie-in other do would SWD can across like we'll care acreage, of be oil thing. move increase and our So all

Charles A. Meade

third area of your that grading there? on Eastern wells County of my any acreage. have talking to for your those advantages some wells de changed the your back guys about. risking perhaps you could Can those about about of or second some Pecos If in have was ask I it in surrounding of either question, Right. I been going of go in It's alternatively by those, remarks prepared over whether you believe talk high the one you way new the comments scale inventory inventory, let view

Kaes Van't Hof

the confirmed area. our initial assessment of Charles, it

excited any our And and call it Pedro area. east very our productive hasn't of happen even It's to of the about us and San in further the what may end so, it's south that side. changed makes no, area plans. we there. also the what really At It into eastern down

exciting again we're see acreage block. to the it's productivity – entire across the So

Michael L. Hollis

to important remember Basin we're I probably X,XXX-well in Yeah, program. very think it's wells a XX that the Delaware into early

two with We all started the to rigs start we're ramp there. rigs across up a and we running So, our and Delaware. they're geos engineers now ton ops and team, as seven reservoir learning

So, certainly every learning drill. well things we

Charles A. Meade

That's Thank help color. you.

Operator

Michael question Hall Advisors. from of coming with next Heikkinen Our the line Energy

open. line is Your

Michael Anthony Hall

morning. Thanks, good

the seen the relative the and of XXXX you Just of profile efficiencies think curious kind on we've late. – to about as activity

kind kind case? profile XXXX? the take the I think fair and the feet down crews. new the scale equipment up kind XX and with integrate Is when new completed if do with in footage something third of XXX,XXX then little lateral dip of of assets five will you normalize would of quarterly think just rigs as it quarter the completed for you kind a you over to Or that's it it that

Kaes Van't Hof

Michael, crew – it on per lateral feet we per completed day. about a we think expect

on right On per average per day, the Delaware our to Basin XXX that lateral crews day. throughout now about Midland side, quarter. the feet And we're all feet the crew includes side, X,XXX lateral per move-time closer

five. and split we're Post-acquisition And Midland now. five those running we'll run crews XX crews. evenly So, between will or right and merger completion, be about Delaware probably crews five

right So, we expect away. hit those to operational efficiencies

Michael Anthony Hall

Diamondback? exactly And have guess the of What of to side equation? you that any on then sort on of That's have water the water what provide I end where contracts chain relates on taken does secured? kind I guess that and if as helpful. you the can wellhead in additional details you to it strategy, What value

Kaes Van't Hof

case going We're sell Yes, Permian. expertise commitments export them the to our they capacity allows into marketer pipes our to minimum the the the when on in the that wellhead and transfers and is that Christi. marketer be Corpus pipes, volume they the this at planning need to these ends, barrels our via and And our step tankage And still and in Coast. will to to particular know expertise. secure the then the these over our barrel tariffs ends move our marketer's pipe in to the what then to

Michael Anthony Hall

helpful. that's No, Okay.

all Congrats, time. the appreciate I that's for have now. think I guys. I

Kaes Van't Hof

Thanks, Michael.

Operator

from next Securities. the Our question NatAlliance of Mariani coming Leo with line

now is line Your open.

Leo P. Mariani

guys. Hey,

question quarter from Just like got guys it demonstrated. performance. stronger this a your you on well quick wells Certainly, for you what here seems

improved provide the little what behind You better guys some the well out performance just of seeing XD you're maybe field. late reasons in the in having some you bit of that? did of on Could about a terms of there talk and color some more

Paul S. Molnar

our Yes, – with is to obtain Delaware Southeast geosteering. obtaining area. XD Paul helping this it's the continuing us in really And We're Molnar.

less we're see, lot is well difficulty their a vertical coming operators staying targets. having in, you And as primary down in success can there, had intervals. more XD a targeted and in lot As there's control prior the staying our

Travis D. Stice

continuing learning, side And the we're operational piece, optimize other to the of of Leo from every course, day.

go. So, we back, the with, we've how whether it's the volumes, distribution the points all those, seeing to with I And and which are with to whole. all we together rock to of wells in in we'll whether the we able spot sand in use continue intensity is flow change the and changed recipe put properly cluster being from all we the use of as stimulate wells with better given wells, think industry you content, answer how of better landing to those a fluid of seen what sand size, those over frac get that spacing and things you've as But performance. well across we continue we the the time are right what's in size, and the the that we is diversion, the spaced

Leo P. Mariani

this for looking bit of just your couple little guess, been here And it helpful. a in oil last guys bit terms coming guess for noticed at that's that with oil reduced I it's guess the and Okay, I I of cut. quarters update you little I cut in guidance a XXXX, kind certainly down of your

get sense was what you little to were know that. of activity if to just maybe different a driving behind guys wanted I shifting Just but color a that. areas, don't

Michael L. Hollis

prevailing. but the ourselves therefore, a as percentage Ethane interesting stream. stream see moving And NGL been getting also out total. gas Permian of into with NGLs tighter and Yes, takeaway been has to increasing economics natural Leo, it's our not residue only of the across the and

credit more one an molecule to So, getting as six is one one to NGL.

oil oil cut for midpoint kind our our something the so So future where really NGLs Really to the have is cut front. us of of we the range that grown the think lower on until foreseeable are or – ethane year. oil led out-grown growth, new for the changes

Leo P. Mariani

Okay.

So you there'll of do that stream see guys mean, how lot several said just on XXXX? to playing future, we for into ethane I you that work expectations a you out just have next the of mean, be respect what quarters? to as with I continue out ethane, there the pulled do foreseeable

Michael L. Hollis

takeaway in Basin. it's ethane is market both to seems in ethane now versus a Yes, market. I be right the NGL mean, tightness acceptance – the natural the the gas rejection and pricing forward, norm But the push

Leo P. Mariani

Thanks, guys.

Michael L. Hollis

Thank you.

Operator

to you. I I'm would closing the CEO further turn for Mr. Travis this at to questions. Stice, And no call showing over time, our back remarks. Thank like

Travis D. Stice

Thanks, today's everyone to participating call. in again

If you contact have information us the any using contact please provided. questions,

Operator

conference. program. Ladies and concludes today's gentlemen, This thank you participation for in the your

You may now disconnect. Everyone great day. have a