Battalion Oil Corp (BATL) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Halcon Resources first-quarter 2016 earnings conference call. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Mark Mize, Executive Vice President, Chief Financial Officer, and Treasurer. Sir, you may begin.

Okay, thank you and good morning.

This conference call contains forward-looking statements. For a detailed description of our disclaimer, see our earnings release issued yesterday and posted to our website. We have also updated our investor presentation for certain items, including some minor changes to our 2016 guidance, which has also been posted to our website.

Production for the first quarter averaged 39,527 barrels of oil equivalent a day, which was down about 4% from our fourth-quarter levels as we have scaled down drilling and completions and are now only running one rig in the Bakken. We're still guiding for a full-year 2016 production range of 37,000 to 39,000 BOE a day.

On the operating cost side, LOE plus workover expense was $7.89 in the first quarter versus $8.36 per BOE in the fourth quarter, representing right at about a 6% quarter-over-quarter decline. Given the cost improvements that we have experienced, we reduced the full-year 2016 LOE plus workover cost guidance to $7 to $9 versus the previous guidance of $8 to $10.

And then after adjusting for some selected items, cash G&A expense was $4.52 per BOE in the first quarter. We still expect cash G&A for 2016 to be within our previously indicated $3 to $5 guidance range for the year.

Taxes other than income came in at just over $2 per BOE for the quarter and gathering, transportation, and other, after adjusting for a few selected items, came in at $2.23 per BOE, both of which are in line with full-year guidance ranges.

Overall, total operating costs adjusted were just over $16.50 per BOE in the first quarter versus $[17.80] in the fourth quarter of last year.

With respect to D&C CapEx, we incurred right at $52 million during this quarter. Our 2016 guidance range of $140 million to $160 million is still a good estimate. We expect the first quarter to be the heaviest period of D&C spending in 2016, considering we were running two-plus rigs on average for much of the quarter.

Regarding hedges, we realized a net gain on settled derivative contracts of $108 million. The mark-to-market value of our hedge portfolio today is right at about $220 million. For the remaining nine months of 2016, we have approximately 25,300 barrels per day of oil hedged at an average price of about $80.50, and as we always do, we will just continue to monitor the strip to see if any opportunities come up later in our additional positions.

We did end the quarter with $564 million of liquidity, which consisted of cash on hand plus undrawn capacity on our revolver with a current borrowing base of $700 million, which, by the way, is at the upper end of the previously indicated range of $650 million to $700 million.

Finally, from a balance-sheet perspective, early in the first quarter we did make some repurchases of about [$]100 million of our senior unsecured notes for right at about $10 million in cash. We have postponed any additional debt repurchases at this time while we continue to explore more comprehensive balance-sheet restructuring transactions.

And with that, I will turn the call over to Floyd.

Thanks, Mark.

A couple comments on operations and a quick update on our efforts to lighten up our balance sheet. We are not going to have a Q&A session today, but if you have any questions, just reach out and find us and we will answer them.

We are running one rig up in the Williston Basin. We are flexible in running that rig or not. With prices staying low, we probably wouldn't be running it except it has been on a multi-well pad and efficiency says to continue at least until we're done with that pad. So we will evaluate that as we move forward and as we continue to watch the hedge market -- the futures market, I should say. We are looking for another place to start hedging and we're not quite there, but it is looking interesting.

We are -- our costs in the Williston Basin are down to just over $6 million per well. Our average wells are going to put out in excess of 900,000 barrels of oil equivalent in Fort Berthold, which is where we are running the rig. So it's very economic at today's price, and of course, with our hedges, it is okay as well.

We paused drilling at El Halcon, simply because we can. We have a huge asset there. It is a wonderful asset. We have over 500 operated locations and it can be very economic almost where the strip is now. So we're going to maintain that great position there.

We may add rigs, depending on how our efforts go on this balance-sheet business, or we may reduce rigs. We can go either way. We have got a very experienced operational staff.

Efficiencies across all of our operations and in the back office are being driven by all of the fine people that work here. These actions are Companywide. We're reducing, of course, field costs and we're reducing internal cost as well.

So we feel very good about where we are, operationally speaking, today. We expect, strangely, that operations and efficiencies and, more importantly, effectiveness of our completions will continue to improve. Even though we're basically at the top of anyone's game right now, we continue to find areas where experience and a slightly different approach yields a better profile and we will continue to do that.

Mark mentioned that we have acquired some of our outstanding debt during the quarter. I can't remember the exact number. It is kind of $100 million or thereabouts. We are talking to all of our stakeholders on a more comprehensive balance-sheet effort, and these are, as you might expect, challenging discussions, but very direct in that, unlike some companies, we are very liquid and we have an awesome set of assets to operate. While we are encouraged, we don't have anything to say about that at this moment.

We just have options that a Company in our position sometimes would not have. We, of course, didn't plan on $30 oil or $40 oil, but we do have that.

So, there is no timetable for all of this. We will continue to operate the Company in an appropriate manner. We will drop rigs or add rigs when it is right. We will add hedges when is right and we will continue to cut costs, whether it is through efficiencies or increasing productivity on the wells or just a general cost cutting.

We are in a position now where we are curtailing both rigs and we are not especially rushing to complete wells, and once we have IP'd wells, we may not be rushing to produce them at their fullest. There is no hidden message there; just that we are maintaining optionality for the future.

With that, I think no point in me summarizing all of that. If you think of something we didn't cover, just give us a call, and hope to be able to speak with all of you directly or in another call someday soon with a report on what the other activities that we are doing. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.