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spk_0: the gay and thank you for standing by welcome to the high peak energy two thousand and twenty two fourth quarter earnings conference call at this time or but it depends on a listen only mode at the peak of presentation they'll be a question and answer session to ask a question of during the session you'll need to post all one one on your phone he will then here an automated message advising your hand is raised to draw your question please post or one one again please be of our that today's office is being recorded and will know like the handle accomplice over to your first speaker today the see a full even poland it's a poland please go ahead
spk_1: thank you
spk_2: good morning everyone and welcome the i began or these fourth quarter of two thousand and twenty two earnings call representing high paid today or chairman and ceo gap hightower president michael how us vice president of business development ryan high tower and i am steven and the chief financial officer sir during today's call we will make reference to our march investor presentation and our fourth quarter of two thousand and twenty two earnings release which can be found on high peaks website today's call participants may make certain forward looking statements relating to the company's financial condition results of operations expectations plans goals assumptions
spk_3: and future performance so please refer to the cautionary information regarding forward looking statements and related risks in the company's se si filings including the fact that actual results may differ materially from our expectations due to a variety of or
spk_2: reasons are many of which are beyond our control we will also refer to serve nine gap financial measures on today's call so please see the reconciliations in the earnings release an hour mark investor presentation
spk_4: i will now turn the call over to our chairman and ceo jack hightower
spk_2: thanks to even good morning ladies and gentlemen and we want to thank you for joining our call a day
spk_4: as as we go for and think about the last year he just amazing that we've had such a banner year but also want to emphasize that everybody is aware that we have the ghana process or strategic alternatives
spk_2: and we'll talk a little bit about that today when i wanna just point out that we we posted a great year and twenty twenty two result hopefully you've had a chance to look at your press release and you can see them or expectations it further substantiate our long term strategic plan is that back on twenty twenty two unquestionably we've had a banner year we increased our business and i'm really responsible and mode and prong approach both through the drill there and three strategic a greedy bad positions
spk_4: that's how we'll particular grab an italian a balanced approach with organic growth through drilling and also to your creative acquisitions
spk_2: we moved from sixty one thousand acres at the end of twenty twenty one over a hundred twelve thousand acres today we grew our a presupposition we oughta delineated the majority of our acquired a in multiple sounds across aren't entire position we increased our production we increase cash flow we increase proved reserves over the past twelve months at right that no one else in the industry has been able to t and we did this by maintaining a very healthy balance sheet we also continue to improve our productivity of our primary runs gore's as have uninspired tony tony to venezuela and outperform are twenty twenty one in twenty twenty well results really proud of the fact that we've been able to continue improving through are operational efficiency yard
spk_4: learning about how to treat these this rock in terms of completion am a larger drilling pad infill child locations and a higher percentage of well within our signal peak area which we continue to be very excited about
spk_2: we maintain our pair leading margins and actually increased our cash margins out last year as are operating teams continued to make large strides in reducing our lease operating expenses and total cash costs
spk_5: this is tremendous improvements and continued improvement to the on the do this and of the future i'm really proud of our organization we have a lean organization everybody continues to work hard their efforts towards cost reduction on both sides of the equation maximizing capital efficiencies lowering operating expenses and optimizing well performance which we are actually one of the few teams in the permian basin there actually employ
spk_2: breathing on our well performance and the seamless as integration which allowed the company to accomplish these milestones in tony tony to it was a challenging year did many factors we had serious inflationary pressures we had supplied changes russians just like the rest of our peers dead the we navigated through the
spk_5: challenges and actually improve we ended on a high know and we fully expect this momentum to continue and twenty twenty three we're going to stay focused on op's optimizing shareholder value optimizing or returns and optimizing our accomplishments relative to our business
spk_4: the first bought i want to talk about his on page four of the deck
spk_5: and this is similar to our last fly that we talked about in our third quarter very summer but i think the important thing is that our production averaged thirty seven thousand three hundred barrels a day
spk_4: which is a forty two percent increase over the third quarter a hundred and fifty percent increase compared to last year's fourth quarter that is unprecedented growth
spk_2: we still have more the production we go up one quarter we maintain the next quarter we're gonna continue having love the production don't multiply that forty percent increase four quarters in a row
spk_4: but if you just think about we hit our guidance we're gonna continue hitting our guidance fill out this year we exited the year and close to forty thousand barrels a day with it which was at a high end of our guide we also had
spk_6: somewhere between a thousand in two thousand barrels a day curtail throughout the fourth quarter the this some midstream expansion project in if it was not for that we would have surpassed are high and on both are average an exit production guy changes we increase our proved reserves ninety two per se
spk_5: a year over year two hundred and twenty three million barrels of oil and we continue to expand our a crease footprint on which is now over one hundred and twelve thousand acres with lot of hot for additional and increases their so we're getting good contiguous and on as we expand it or acreage box we have to contiguous a box with hardworking interests were set up for long lateral with an average and somewhere around twelve thousand and twelve thousand five hundred foot lateral
spk_2: our capital efficiency on our development program low allow us to hold our and tar a crease physician with one the one and a half riggs
spk_5: as you can say we had several wells in progress at the end of the year which will all come on line during the first half of twenty twenty three presently we have almost fifty seven well that are in the process of drilling and completion so that well that are already drill and being in progress are gonna substantially add to our production as we got oh dear
spk_4: when several additional well as up
spk_5: in progress with help us that and ensuring our congressmen achieving production guidance numbers
spk_7: very very many of these are in other songs
spk_2: so any as you can see looking it's financial statistics on this line
spk_5: or per day projecting a billion five hundred and twenty five million having fourth quarter this year and this is used by the nanny dollars a barrel which is a price basically that it's been utilized but he hasn't budged purposes
spk_2: or prices a lower recognized prices below that right now and then we acted on fourth quarter of twenty four with almost two billion dollars in a bigger great improvement and would go or the next five five am on it or try to go through these fairly quickly the just hit the highlights on the slides but five five as a differentiating growth story that takes us from overspending to actually having free cash flow and issues with it had people ask me when is that gonna take place am the answer is we just don't know because we don't have a crystal ball as to wearable prices are gonna pay but if if the alice in the in our own internal a projections are correct
spk_4: we will start being free cash flow in the second half of next year
spk_2: we are on course to reset implied should point with material free cash flow generation it's just a function of is it this ninety days the next ninety days when is that gonna take place or as advice is actually grown organically from zero to forty thousand barrels per day over the past two years there's no way to have to prove how rock quality better than examining substantial production volumes and by executed executing our plan if the end of this year will have any but i'll run rate of over a billion and a half dollars and a reasonable all priced in addition will be position to continue increasing our production next year and in with this reasonable growth rate similar to the rig case that we presently have
spk_4: and that gives us roughly a billion dollars of free cash flow on a ninety dollar price per barrel in next year's business
spk_5: at that point in time are free cash flow yale than investment rights will compete with anyone in our industry
spk_2: so as you can say i'm very excited about what's taking place in the company not gonna turn the call over the might now that talk about our margins and provide you with an operational of day my face jack now turning the slide six margins
spk_5: it sounds like a broken record minutes but are be oh he he's are not the same as everyone elses we continued to expand our margins differential eat your peer group our fourth quarter margin for bewley was forty seven percent higher than are pure average this theme will remain over the coming quarters of natural gas prices state oppressed
spk_6: don't forget the gas prices in the fourth quarter or higher than what we're seeing today
spk_5: with our high oil eggs high peaks margins will expand even further compared are peer group next four
spk_2: on a relative value bases are average peer would need to produce about sixty thousand he always per day to achieve the same cash flow results that we do with forty thousand the always for day
spk_5: and in today's market a company that produces in line with sixty thousand barrels a day typically viewed much differently my wall street and forty size matters but i disagree with that thought process the impetus should be on efficiently converting oil and gas into dollars and spans and that is exactly what we focus on it ip
spk_2: although we're very bullish on oprah or oil prices long term
spk_5: in the short term price volatility looks like it'll continue to we're very fortunate to produce such valuable barrels which will help us remained financially strong even during periods of price volatility
spk_8: so in addition to our view is being very oil rich in highly profitable we continue to drive down are operating costs which will further increase our property
spk_9: upper level twice them
spk_5: cash cost all in cast calls per view we continues to decrease we reduced or yellow we fifteen percent world a quarter
spk_2: now in the fourth quarter dna was a little higher did he or in bonuses
spk_6: but it's reasonable to expect that it would continue to drop as evidenced by or previous quarters
spk_2: we continue to keep it clean and efficient workforce as volumes increase
spk_5: and as the denominator grows the fixed costs will continue to be deluded again expanding the margins
spk_10: this is a great time to throw shoutout your ip organization twenty twenty two is jackson was a great year for our company and none of this is melissa
spk_2: that to the shit out of lesson
spk_5: campbell you make will we do easy thanks
spk_2: we continue to drive operational excellence in all facets of a business we are continuing to remove causally generators
spk_5: are fixed costs continue reduce their production increases
spk_11: and without looking up the structured in signal key which will further reduce or caught in that area the feel
spk_5: our margin for be a we is the best in the business and will continue to expand further differentiating id from our peer group now turning your flight eight yesterday we've been very transparent with our goals and initiatives fortunately for us we were the original architect of our position
spk_2: we were able to set up everything with the fish and operations
spk_5: and environmental stewardship in mine
spk_12: power we run a very energy intensive business so it's imperative that we be efficient clean and scale
spk_5: we oversize or substation which allows another reader to to utilize high line power up a flat top
spk_12: and we've also added another frac for your dual fuel
spk_5: facilities we build very large scale central taint batteries that minimize or footprint in may for adding additional wells cheaper and more environmentally friendly to connect
spk_2: recycle we continue to recycle high levels of or stimulation fluids
spk_7: and are expanding our recycle capabilities the cross both large a grudge blocks reducing costs and the need for make water
spk_5: san we now have three frac cruz utilizing logo wet sand which greatly reduces our emissions
spk_12: and cost
spk_13: all of our years initiatives are both financially and environmentally rewarding for sheer hours
spk_12: hi pete looks at these initiatives
spk_6: as just doing the right thing now turned to like nine
spk_5: flat top operational update
spk_2: east howard county has always been plagued by the reticence of strong as to whether we have good rock and enough inventory multiple formations the work we've done today it demonstrates very robust economic results across the entirety of why
spk_5: from the north west to the southeast and from the southwest to the northeast
spk_2: the and and bullied number one extended the lower spray berry and wolf can't pay into borden county four miles northeast of our main development area for the wolf camp a
spk_5: in almost seven miles east of our existing lower springer wells in both of these conrad wells are performing similar to the development the core the flat top area again expanding the footprint for inventory
spk_2: freeman fat old number two a for well stack lateral pan with a wolf can't using david briefing her test in a wolf can be is in beta test once so lower spray very and wolfgang a bay these world provide maltese also poor
spk_12: work for additional inventory down in this area
spk_2: the griffin pat bowlen number three it's a five lo pan
spk_6: three morphing a bays and few lawyers bravery wells again solidifying that the lower spray very and the wolf can't be formations are good across our entire board and a a rich
spk_2: se laptop very old number for the red box
spk_5: as demonstrated similar well results to the well as back to the west again giving his confidence in this area as well all of these results in line as lied to the inventory runway and ability to continue to efficiently grow high fees production i think searches or that number five houses are field office
spk_2: or one million barrel recycle facility and home to the solar farm you'll turn down a flight ten
spk_12: signal peak operational lucky
spk_2: there's a kind of exciting activity going on signal be
spk_12: i think as previously delineate the base lower wolf camera d across the entire block
spk_6: we are now producing twenty six well as in the lower base wolf can't be we continue to delineate the wolf campaign and the lower spray barry as shell with bullets three four and five
spk_12: multiple three finger war camp be
spk_5: and wolf can't see hello test or in progress has shown with bullets won in two
spk_2: we are expanding our recycle capabilities and overhead electric our system which will continue to drive down or lifting cost
spk_4: and we are excited and look forward to sharing these results from our upside wells and locations in the coming quarters are now hand the call back of the jack to discuss or here and research
spk_5: thanks my the next fall on our five eleven
spk_4: gives you are year and proved reserves some rain and as i mentioned are only has an arm of success of the last two years as evidenced by a hundred and thirty percent compound the a compound annual growth rate of our proved reserves remember though that are below ease are different and they currently have forty seven percent higher margin than other reserves from our peers
spk_2: our reserve replacement ratio and twenty two was five hundred and fifty percent through the drill bit non including acquisitions in a p look at our twenty two acquisitions are replacement ratio then increases the over seven hundred and fifty percent unprecedented in my fifty three years in the business and trump's a growing
spk_7: of course if you didn't have any reserve been early the well and was a discovery it was a tremendous growth of when you now consider that we have over two hundred and twenty wells drilled the continue with this growth process
spk_5: that have editing the same jaded and you can have expectations in the future
spk_2: they continue doing this our to the trajectory of the prey preserve growth will continue with for the stress that are of oh resource potential for these as said that or that we have of over twenty five hundred locations and we have intentionally been very conservative in our annual reserved booking process or not changing anything you know it's not broken just change the conservative republican that six percent really lackluster of original implies were not booting reserves from one end to the field to the other we do step out very concerned leave and keep in mind that in any five year period without sad engineers it doesn't matter if it's never and civil rodders got colleague gillespie our own internal engineers the go right down the list
spk_5: he have almost double reserved success especially if i think of it and over a period of time with each five year period of technological our reserves are gonna continue going up our recoveries you're gonna continue going up and technological safe access in fact we're also improved name for ten liberation and route improving on deliver ability
spk_2: return on investment parameters
spk_5: right been better and better and better and are known as for in this so
spk_4: we're gonna continue being conservative are booking process well we got a lot of made left on the bomb thursday
spk_2: the next slide to like at his
spk_5: and i mention this once before that we wanted to compare our area in each howard county to western howard county more in that as we go deeper into the beta and more compared to some of our larger peers in the area
spk_2: we've talked about our reserves how fast are growing but eastern howard county is a very active area and the margins are differentiated from other areas of the base the the year arkham the production process of eastern compared to where
spk_5: and looking at results from twenty twenty onward shows against story is the actually outperforming the west on a recovery factor of oil or he his in addition half acres outperforming it's peers and it's peers in the area
spk_2: we now have over seven hundred wells
spk_4: and our results are over five hundred thousand barrel recoverable compared the four seventy one of our peers and the where we're almost ten percent higher on the you are and almost ten percent higher on economics not counting consideration of having a hard look at once the local newspapers and midland the middle and reporter telegram announced in the last few weeks and howard county is the fastest growing producer of oil in the entire united states
spk_2: and howard county has now moved into the number three position in the permian basin as far as oil production so we were in a great area it's gonna continue improving as we go forward and these results are indicative of our success in southern border county as well as my previous i walk through our delineation of lore spray brain will pay of this area
spk_5: that's gonna increase additional shareholder by so we're not just buying leases to buy gold pastures felt it's fake were buying leases and expanding our footprint and as we drill or that it's becoming very commercially successful in fact both of those wells are making over a
spk_4: hundred barrels a day now we're really excited about that era
spk_2: the next five thirteen just shows are inventory and it gives us a sense of with running a full program with thirteen hundred primary locations where over fourteen years of primary him toward runway every time we make a presentation and thirty days we have ten more well and we're delineating other's arms now and so when you look at this chart you see all the way from the mills bribery all the way down to the what the and that includes the will the three fingers and also the huddle now we are developing all of these zones now and we're going to have a lot more information and some of our offset operators are also drilling and leaves out at in the middle spray very in the joe mill so we have expectations to be oh was continued on par with up formations and we hope that several of these upside locations will add to our primary count within the last and with the next few quarters as we see the results of these well
spk_5: ah i mentioned earlier that are locations are averaging over twelve thousand and foot lateral now we have the opportunity to do that because of our contiguous acreage creech bought a lot of our peers have more acreage inventory but it's unattainable like reach it's very difficult for them
spk_4: them to put unit together to deal with peddling problems and a deal with other companies and arguments as to who's gonna hop ray what pop on and some well gonna sell into the water the marketing characteristics who had better marketing week control everything in our area so we have the choice
spk_5: the drill and to space are wells primarily bath that gives us the maximum shareholder return and ultimately leads to higher free cash flow fellow generation it's why forty thousand barrels is equal and sixty thousand barrels with up with our peers
spk_2: though and five fourteen this is an exciting side also we measured message and january press release that we plan to step down from our sex trade program which we were running in the second half and twenty two to running for raves the ref twenty three and twenty four many things considered that
spk_4: not because we don't have the results of drilling activity we want to keep a strong balance sheet on the gas prices went down during that period we have a higher number of wells what we expect to turn in line this year with fifty seven wells and progress
spk_5: the backlog of those wells and progress at we built our running our six for you program last year and this point is the primary reason for the delta and are catholics budget and twenty three compared dark forecasted cafe budget in twenty four we didn't wanna over drill want to get maximum return on that one so we're being conservative with on development of our paths and with are spacing program our unit costs per be away which is are a very competitive with our peers is gonna continue to increase and will further expand our period leading margins this was and by accident this was a plan program all the way to our and the way we have always differentiate ourselves from our
spk_4: appears to have higher return on investment and higher in turn right to return the keep on in this slide and to show where we're going on
spk_5: we're gonna become free cash flow
spk_2: and it's gonna be a free cash flow machine i've had i investors ask me will when is that gonna happen
spk_5: well if i knew exactly when prices are gonna be projected are the owners say when that's gonna happen but i'm comfortable with it's gonna happen in the second half of this year and next year were projected zero see eye to the t free cash flow and a break even all the way down the forty five dollar well that is unprecedented most companies can't even get their money back for have any kind of profit is forty five dollar or
spk_2: practice day around ninety dollars a barrel we estimate are free cash flow to the in excess of billion dollars and twenty twenty four isn't allowed to completely pay down one hundred percent of our outstanding debt next year
spk_6: i if we chose to do so we could also increase our drilling program
spk_4: and process stay in that naughty dog one hundred dollar range but the point is we all have excess free cash flow available on or about she saw our investors in like a bad if the excited about what's happening over the next twelve months or so even though i know wall street she's like quarter to quarter we take a little long term for it
spk_5: longer term good
spk_2: and on a separate note i want to share of with our shareholders know that we are constantly more monitoring the market volatility in commodity prices and service costs we have the ability to be flexible with our drilling program we can either increase or decrease our program if
spk_4: necessary we don't have any long term contract they can effectively methods her so to speak and causes the have what i call the perfect storm i interest rates and low on gas prices were gonna continue with that program
spk_5: so in closing our last five fifteen this is kind of encapsulates what we've always talked about come to use acres inventory consists of well results operational and are now focused lady margins in free cash flow and grow
spk_4: but looking at the value proper age a proposition here you should look if is and it counted tells you why you should own happy stock in the hold around your stock for the rod relative to us continue with our strategic
spk_5: are alternatives we have a large contiguous a priest physician providing for maximum capital efficiency we have a tremendous amount of inventory there are we now proven the rock wall and the of this area
spk_4: in inventory like this is a huge scarcity in our area back his notice were one of the ceos recently said it was like or mean is it peak production are only five years here our inventory has defined by consistent how return results across more than two hundred wells of the grams a day or development program is environmentally sound and physically rewarding are high well covered in oil costs operations
spk_2: truly lead to a differentiated period leading margins
spk_4: in the name is lead to our projection of generating large amounts of free cash flow for years and years and years to come
spk_2: all of that is from one vantage point today in addition we continue to improve all aspects of our business from repeatedly decreasing our lease operating expenses improving our well performance and in improving the number of formations that are economically sound providing for long term return on investment anna an additional upside to exceed our expectations
spk_5: considering these points as is why i'm extremely confidence are confident in our ability to off to my shareholder value that's what everything is about and the continue operating in the future in implementing the process for strategic up are alternatives
spk_0: we talked about that process it's a process providing optionality relative to motor relative to outright sale relative to refinancing and equity increases to increase shareholder value so bad that now turn the program oh over two questions if anybody has any questions were five answer now thank you
spk_14: as a reminder to ask the question please post star one one on your phone and wait for your name to be announced to your question please post ah one one again
spk_0: stand by as he compiled a q and a roster
spk_3: one moment please file first question
spk_15: but
spk_6: while moment alpha question will come from john white of rock mk on capitol hill nine it open good morning gentlemen and that congratulations on some very very strong result
spk_4: thanks john thank you
spk_5: on the front page do not want to make sure i'm ready they thrive on the front page of the press release tuesday you extended development the case a little lower spray very in the board county based on three lowest very well are those the wealth draft later in the presentation the conrad and the griffin pat
spk_6: yeah john i'm in my whole elaborate further but it's always it's from the western part all the way over to the eastern part of the conrad and brick and wales with go ahead my can lead to let you bed yeah john of the guys we've picked up a grew up in the board county
spk_5: the near the crockett operating a bridge and we'd take the candidate sixty five hundred acres it was kind of our first or a in there we put on multiple acquisitions and leases from the and your most of that was predicated in underpinned by the of work camp a activity that we're seen i didn't notice but we got
spk_6: much of your many more brings the extra up in that area the walking a bay is phenomenal looks just like down south in the flat top ah but as we use started developing the lower spray married is all the results and plaza
spk_2: the walk look very similar up on this a virgin board who we send it up and where you see the ball and number three on the griffin add and job to lower spray very well as a wine rack with of with a walking away those two well ah look almost like a lay down to the wolf campaign the areas
spk_16: so again very encouraging added additional zone to that entire area
spk_2: so then we that all the way out toward where the conrad is about seven miles west or east of where we are drilled the griffin pad and is jag mention that lowers for a very wolf camp a there are phenomenal ones do it over nine hundred barrels a day and once in that suggest a loyal and want to read on andre
spk_17: and it's very early in the queen of cycle so again gives us confidence that we can go a feel between between lead to develop an area is our lives roughly another seventy five eighty well ah that wait until very confident that age twenty twenty three or will be on the don't belive that a very machine like
spk_6: development very low cost the fishes and i continue to drive these marches off
spk_18: thank you
spk_5: and bad looking on like in all the all the peak at pick for the yeah
spk_19: through the wolf camp
spk_5: d it looks like get your confidences increase
spk_2: yeah development of that down and
spk_5: yes are gathered paying six on slide can in our the lower base wolf can be so we've drilled those across the entire acreage block feel very confident the results we had with the lower base ah we have seen some of our appear
spk_12: years to the west and to the north others
spk_20: drill a little shallower in the wolf can be so are we call it the three fingers there's very little streets on the wall of them were able to see much more parental should hold of right better all of the geo mechanics or geochemistry petra the goal now is all landed
spk_5: south or suggested those wells will be even better than the lower base de so what we've shown here on the chart is where we've done the three fingered test or we drove some of the wells we'd fraxel of the well i look tab results here in the next month month and a half
spk_2: so over the next few quarters will be on the update you on that shadow over his own pin the ah
spk_5: we also walk through some wolf can't see hello tess
spk_21: very similar nature we got one drill wow about the come online in a couple others that were drilling today so the word yet again give us another quarter to and will be of the present to the street and like jack mention hopefully we'll be able to move those from upside locations in to our
spk_2: our primary though our primary locations again just fix feeling that runway of high rate of return inventory something that we talked about the past as the walking have a lower spree very ah the his clothes will the very reasonable to two hours forty three and a laptop
spk_7: animate she three different test air or they were drilling in completing those well old copy coming on a build up
spk_22: so here's the next week workers are going to be very
spk_23: or even store or
spk_0: i see the difference i'm talking like far as a clean air long as you to that twenty here are a to be on the keep these gonna return arms and were shown today thanks very much for all that detail and die congratulations again and i'll pass it back
spk_24: thanks young
spk_5: thank you again to ask a question please first or one one on your phone and leave your name to be announced to withdraw your question i star one one again one moment please on next question honest question will come from jeff rafa kind of what a tower research your line it open
spk_6: thank you good morning
spk_2: mike on the sides nine and ten was some of the pads you're showing or or any of those results additive to the inventory channels you show in notes or couple slides later and deck
spk_5: and then secondly are you testing anything over the next couple of months that not included in the locations that you show on the inventory slide
spk_24: so you have all the locations that we have our in our inventory mix that we have shown in both the primary the ups five locations ah what's gonna happen here that these wells are developed improve of those those again we had the
spk_2: you were very very conservative on those that fly zones and what we thought that they may be a little by so again with all of the all of the data that we have collected in what weeks what we truly expect out of these zones they will absolutely will bump into the primary numbers
spk_25: so it will increase the primary numbers but as far as adding to the total of the twenty five hundred that we have all of these wells are captured in that now over time as we develop more of these the areas that we had picked for where they are would be upside will most likely expand and you'll see some growth and that twenty five hundred number but that's that's gonna have were attacking it
spk_5: such faiths it's just continued the rescue from the upside the primary to move move move categories that is correct and again at every time you go step out you tend to move the box around where you thought and up by zone would be perspective
spk_2: the question just on delineation between
spk_4: the show on slide twelve
spk_5: jackie mentioned i take a six percent recovery factor that college gillespie use and for your reserves had his recovery factor on a flat top and or signal peak compare to the more central part of our the western part of our county
spk_2: you know that's a great question because everybody
spk_5: use uses different with packers factors internally for their reserve bookings it's it's typical for the majors to use and speaks for fan recovery factor some of the smaller mid cap companies ah to compare western the eastern is about two percent difference running from six to eight percent recovery factor but as you can see in evaluating twenty seven hundred well that to the worse
spk_2: to the seventeen hundred ah
spk_5: going very quickly after a pay nothing hundred in the next twelve months the is actually performing outperforming the west but the typical route a difference on a macro scale he has about two percent difference that twenty five percent plus
spk_2: difference between west a nice and terms or recovery tractor am in terms of the side with the companies that are ah we know it's going to increase and many companies are using up to fourteen percent recovery factors even in our area
spk_26: gorgeous we're gonna take a conservative approach and we're gonna go with what we have is factual right now
spk_5: in in used arkansas river of recovery factual we can always add to it in a good is a potential meyer the off and really the book whatever like one of the and terms to reserves we don't have to worry about revisions and right down and impairments we're just gonna take a conservative approach it as long as we're get the hundred and fifty plus percent increase on an annual basis
spk_4: it doesn't really matter as we delineate this year he could be even higher recovery is with might sad a step further and not have more pod development then we did in this year's bit
spk_2: hopefully that for sweater
spk_27: it it it does with respect to the revisions and in this year's reserve report i think before you all had shown maybe five to six rig cadence from twenty twenty maybe beyond twenty twenty three
spk_24: is some of the revision two year and reserves just related to how you're stacking up the current plan for five year development that was included a dead and the december report yes mean it is very nominal anyway and in it's just a function of thought we were in gonna be drilling versus what we ended up deciding that drill am
spk_25: indeed it's very conservative and we didn't consider that we considered mainly just maximizing shareholder by and keeping a strong balance sheet
spk_19: last question if if the high peak
spk_28: chose to drill more
spk_2: over twenty three and twenty four maybe just think about twenty four and not be as conscientious about a free cash flow from this asset micro jacked you have an idea of what what you could do not to outrun me existing infrastructure
spk_5: on the sacred space in terms of the number regs you might be able to runner
spk_6: how you think about operating
spk_24: we actually had a flat top we have increased and added to our infrastructure
spk_4: and of course we have the ability as we drill additional well that these we are improving that infrastructure or improving our you did system and are tight battery system we design everything with the ability to expand a particular hey married facility so if we decided to go back to six or seven or eight or even hendrix with what we have plan and twenty twenty three with signal v we could actually at accommodate that without having to make major changes to our infrastructure which is be calm and add on to with all end of the twenty to thirty million dollar expenditures him to add an additional production it's all now plan jeff in the the future the even me almost god like the yeah capacity of are it
spk_19: jack that's where have and a continuous a virgin being that back to the original developer of these zones on the sacred kids
spk_29: i'm a real after structure advantage to future government
spk_30: no question that that is a major component of our position we developed earth
spk_0: not to be critical of private equity with to the in consideration of a building something long term for the future and the major company development and would make this an attractive access to give optionality for a potential purchaser where they can control their deaths in a because the profit margins are so great here i literally could move drilling rigs into this area and be able to improve on and improve their production in return on investment by focusing some of their kept on this area and growing it if they wanted to do so they would have that luxury to date
spk_31: right as you very much jack thank you again and again to ask a question on make a comment is by far one one on your phone can buy as he compiled a on a roster and and he no further questions and que this will conclude concluded a conference call thank you are participating you may now disconnect and have a pleasant day the conference will begin shortly to raise and lower your hand during culinary you can dying star one one me
spk_32: oh
spk_0: the conference will begin shortly to raise and lower your hand during una you can dial star one one and the conference will begin shortly to raise and lower your hand during una you can dial star one one and the conference will begin shortly to raise and lower your hand during una you can dial star one one
spk_1: money
spk_2: and the conference will begin shortly to raise and lower your hand during una you could dial star one one money and the conference will begin shortly to raise and lower your hand during una you can dial star one one and the conference will begin shortly to raise and lower your hand during una you can dial star one one
spk_4: and
spk_2: the conference will begin shortly to raise and lower your hand during una you can dial star one one
spk_4: it's
spk_2: it's reggae and thank you for standing bash welcome to the high peak energy two thousand and twenty two fourth quarter earnings conference call at this time or but it depends on a listen only mode at the peak of presentation they'll be a question and answer session
spk_4: to ask a question of during the session you'll need to press dar one one on your phone he will then here an automated message advising your hand is raised to tell your question please post or one one again
spk_2: with the of i that today's gop is is being recorded and will know like the handle conflict with your first speaker today the see a full stephen poland is a poland please go ahead thank you good morning everyone and welcome the i began or fourth quarter of two thousand and twenty two earnings call representing high paid today or chairman and ceo jack hightower president michael how us vice president of business development ryan high tower and i steven bowl and the chief financial officer sir
spk_4: during today's call we will make reference to our march investor presentation and our fourth quarter of two thousand and twenty two earnings release which can be found on high peaks website today's call participants may make certain forward looking statements were to the company's financial condition results of operations expectations plans goals assumptions
spk_5: and future performance so please refer to the cautionary information regarding forward looking statements and related risks in the company's fcc filings including the fact that actual results may differ materially from our expectations due to a variety of or seasons
spk_6: are many of which are beyond our control
spk_4: we will also refer to serve non gap financial managers on today's call so please see the reconciliations in the earnings release an hour mark investor presentation
spk_5: i will now turn the call over to our chairman and ceo jack hightower thanks to even good morning ladies and gentlemen then we want to thank you for joining our call a day as as we go for him think about the last year it's just amazing that we've had such a banner year but also want to emphasize that everybody is aware that we have the ghana process or strategic alternatives
spk_4: and we'll talk a little bit about that today when i wanna just point out that we we posted a great year and twenty twenty two result hopefully you've had a chance to look at your press release and you can see them our expectations it further substantiate our long term strategic plan is that load back on twenty twenty two unquestionably we've had a banner year
spk_5: we increased our business and i'm really responsible and mode and prong approach go through the drill there and three strategic a greedy back positions
spk_2: that's how we'll particular group of young young a balanced approach with organic growth through drilling and also to your creative acquisitions we moved from sixty one thousand acres at the end of twenty twenty one over a hundred twelve thousand acres today we grew our a presupposition we asked to delineated the majority of our acquired a creature multiple sounds across aren't car position
spk_4: we increased our production we increase cash flow we increase proved reserves over the past twelve months at right that no one else in the industry has been able to t and we did this by maintaining a very healthy balance sheet
spk_2: we also continue to improve our productivity of our primary runs gore's as evidence bar tony tony to vintage well outperform are twenty twenty one in twenty twenty well results really proud of the fact that we've been able to continue improving through our operational efficiency are you
spk_5: learning about how to treat these this rock in terms of completion am a larger drilling pad infill child locations and a higher percentage of well in our signal peak area which we continue to be very excited about
spk_2: maintain our peer leading margins and actually increased our cash margins do that last year as are operating teams continue to make large strides in reducing our lease operating expenses and total cash cause this is tremendous improvements and continue improvements to be able the do this and the future
spk_5: i'm really proud of our organization
spk_2: we have a lane organization everybody continues to work hard their efforts towards cost reduction on both sides of the equation maximizing capital efficiencies lowering operating expenses and optimizing well performance which we are actually one of the few teams in the permian basin there actually him proving on our well performance
spk_5: and the seamless asset integration which allowed the company to accomplish these milestones in tony tony two it was a challenging year did many factors we had serious inflationary pressures we had supplied changes russians just like the rest of our peers dad the we navigated through these challenges and actually improve it we ended on a high note and we fully expect this momentum to continue and twenty twenty
spk_4: three we're going to stay focused on off optimizing shareholder value optimizing or returns and optimizing our accomplishments relative to our business
spk_5: the first i want to talk about his
spk_7: ah on page four of the deck
spk_2: and this is similar to our last
spk_5: fly that we talked about and our third quarter very summer but i think the important thing is that are production averaged thirty seven thousand three hundred barrels a day which is a forty two percent increase over the third quarter
spk_2: a hundred and fifty percent increase
spk_5: compared to last year's fourth quarter that is unprecedented growth
spk_2: we still have want the production we go up one quarter we maintain the next quarter we're gonna continue having love the production don't multiply that forty percent increase four quarters and row but if you just think about we hit our guidance we're gonna continue hitting our guidance to our fish year
spk_4: we exited the year and close to forty thousand barrels a day with it which was at a high end of our guide we also had
spk_2: somewhere between a thousand and two thousand barrels a day curtail throughout the fourth quarter they just the mid midstream expansion project and if it was not for that we would have surpassed are high and on both are average an exit production guy changes
spk_4: lee increased our prove reserves ninety two percent year over year
spk_2: two hundred and twenty three million barrels of oil and we continue to expand our a crease footprint on which is now over one hundred and twelve thousand acres with line of hot for additional and ah increases their so we're getting good contiguous and on says we expand it or a for each box we have to contiguous a crease box with hardworking interest were set up for long lateral with an average in somewhere around twelve thousand and twelve thousand five hundred foot laugh
spk_4: general
spk_2: our capital efficiency on our development program low allow us to hold our and tar a crease position with one the one and a half rick's
spk_5: as you can say we had several wells in progress at the end of the year which will all come on line during the first half of twenty twenty three presently we have almost fifty seven well that are in the process of drilling and completion film that well that are already drill and being and progress are gonna substantially add to our production as we got oh dear when several additional wells up
spk_6: in progress with help us that think and chain our congressmen achieving production guidance numbers
spk_5: very very many of these are in other's arms
spk_2: so any as you can say looking it's financial statistics on this line
spk_5: or per day i'm projecting a billion five hundred and twenty five million exiting fourth quarter this year and this is used either in dollars a barrel which is of price basically that it's been utilized always of are few such of purchasing purposes or process a lower recognize prices are below that right now and then we exit on fourth quarter of twenty four with almost two billion dollars in a on
spk_2: great improvement and would go or the next five five am on it or try to go through these fairly quickly to just hit the highlights on the slides
spk_5: but five five as a differentiating growth story that takes us from overspending to actually having free cash flow and this year's visit i've had people ask me when is that gonna take place am the answer is we just don't know because we don't have a
spk_8: read the wall eyes to where all prices are gonna pay but if if the analysts in the in our own internal a projections are correct we will start screen free cash flow in the second half of next year
spk_9: we are on course to set on should point with material free cash flow generation it's just a function of is it this ninety days the next ninety days when is that gonna take place
spk_6: or as advice is actually grown organically from zero forty thousand barrels per day over the past two years there's no way to have to prove how rock quality better than examining substantial production volumes
spk_5: in by executed executing our plan at the end of this year will have any but i'll run rate of over a billion and a half dollars and a reasonable price in addition will be positioned to continue increasing our production
spk_2: next year and in with this reasonable growth rate similar to the rig case that we presently hair
spk_6: and that gives us roughly a billion dollars of three cash flow on a ninety dollar price per barrel in next year's business
spk_2: at that point in time are free cash from yale and investment rights will compete with any one in our industry
spk_5: well as you can say i'm very excited about what's taking place in the company nominate turn the call over the might now the talk about our margins and provide you with an operational of my face jack now turning the slide six margins
spk_12: it sounds like a broken record minutes but our pyrenees are not the same as everyone elses
spk_5: we continued as expand our margins differential eat your peer group or fourth quarter margin for bewley was forty seven percent higher than are pure average this theme will remain over the coming quarters of natural gas prices state oppressed
spk_2: don't forget the gas prices in the fourth quarter or higher than what we're seeing today
spk_5: with high oil next high peaks margins will expand even further compared are peer group next quarter
spk_12: on a relative value bases are average peer would need to produce about sixty thousand v always per day to achieve the same cash flow results that we do with forty thousand the always for day
spk_11: an mark a marketing company that produces in line with sixty thousand barrels a day
spk_5: typically viewed much differently my wall street and forty size matters but i disagree with that thought process the impetus should the only fish illegal legal burning oil and gas into dollars and spans and that is exactly what we focus on that ip although we're very bullish oh lord provide oil prices long term
spk_2: in the short term price volatility looks like it'll continue to we're very fortunate to produce such valuable barrels which will help us remained financially strong even during periods of price volatility
spk_5: so in addition to our view he's been very oil rich in highly profitable we continue to drive down are operating costs which will further increase is our property
spk_9: upper left my that
spk_5: cash cost
spk_12: all in cash calls per view he continues to decrease
spk_2: we reduced or yellow we fifteen percent world a quarter
spk_5: now and the fourth quarter dna was a little higher did year in bonuses
spk_12: but it's reasonable to expect that it would continue to drop as evidenced by or previous quarters we continue to keeping mean inefficient workforce as volumes increase and as the denominator grows the fixed costs will continue to be deluded again expanding the margins
spk_6: this is a great time to throw shelter id organization twenty twenty two as jackson was a great year for our company and none of this is about how
spk_5: shut up
spk_2: kindle you make what we do easy thanks
spk_5: we continue to drive operational excellence in all facets of a business
spk_2: we are continuing to remove causally generators are fixed costs continue reduce their production increases and without any of the structure in signal key which will further reduce or cost in that area the feel our margin for be a we is the best in the business and will continue to expand further differentiating id from our peer group
spk_5: now during the flight eight
spk_2: yesterday
spk_12: we've been very transparent with our goals and initiatives
spk_2: fortunately for us we were the original architect of our position we were able to set up everything with efficient operations and environmental stewardship in mind
spk_6: power we run a very energy intensive business so it's imperative that we be efficient clean and scale
spk_2: we oversize or substation which allows another rigor to to utilize high line power up it's top
spk_5: and we've also added another frac for your don't feel
spk_2: facilities we build very large scale central time batteries that minimize our footprint and may for adding additional wells cheaper and more environmentally friendly to connect recycle we continue to recycle high levels of or stimulation fluids and are expanding our recycle capabilities the cross both large a grudge blocks reducing costs and the need for makeup water san we now have three frac cruz utilizing local wet sand which greatly reduces our emissions and cost
spk_12: all of our years initiatives are both financially and environmentally rewarding for shareholders
spk_2: hi deep looks at these initiatives
spk_12: as just doing the right thing
spk_6: now turn the light nine flat top operational update
spk_12: east howard county has always been plagued by the reticence of strong as to whether we have good rock and enough inventory multiple formations
spk_5: the work we've done today it demonstrates very robust economic results across the entirety of the why
spk_2: from the north west to the southeast and from the southwest to the northeast
spk_4: the conrad and bullied number one extended the lower spray berry and wolf can't pay into and county
spk_5: four miles northeast of our main development area for the wolf camp a
spk_4: in almost seven miles east of our existing lowers bravery wells in both of these conrad wells are performing similar to the development the core the flat top area again expanding the footprint for inventory
spk_2: freeman fat old number to a for well staffed lateral pan with a wolf can't and david three finger test in a wolf can be is in beta test once a lower spray very and wolfgang and bake these wells provide maltese all support for digital image tory down in this area the griffin pat bowlen number three
spk_7: it's a five well pan
spk_5: three more campese and few lawyers for a very wells again solidifying that the lower spray very and the wolf can't be formations are good across our entire board county a rich
spk_4: se laptop variable the number for the red box
spk_2: as demonstrated similar well results to the well as back to the west again giving his confidence in this area as well all of these results in line of lied to the inventory runway and ability to continue to efficiently grow high fees production i think searches bullet number five houses are field office or one million barrels recycle facility and home to the solar farm guilds are now the flight ten signal peak operational lucky there's a ton of exciting activity going on signal be
spk_4: i think is previously delineate the base lower wolf camera de across the entire block
spk_7: we are now producing twenty six well as in the lower base can't be we continue to delineate the wolf campaign in the lower spray barry as shown with bullets three four and five
spk_2: multiple three finger war camp be and move can't see hello test or in progress has shown with bullets won and two we are expanding our recycle capabilities and overhead electric our system which will continue to drive down or lifting cost and we are excited and look forward to sharing these results from our upside wells and locations in the coming quarters are now hand the call back the jack to discuss or year and research
spk_5: thanks my the next fall on our five eleven
spk_33: gives you are year and proved reserves summary
spk_5: and as i mentioned are only has a normal success of the last two years as evidenced by a hundred and thirty percent companion compound annual growth rate of our proved reserves
spk_2: remember though that are below ease are different and they currently have forty seven percent higher margin than other losers from our peers
spk_4: our reserve replacement ratio and twenty two was five hundred and fifty percent through the drill bit nom including acquisitions
spk_2: in a p look at our twenty two acquisitions are replacement ratio then increases the over seven hundred and fifty percent unprecedented in mma fifty three years in the business and trump's are growing of course if you didn't have any reserve been running the well and was a discovering it was a tremendous growth of when you now consider that we have over two hundred and twenty wells drilled the continue with this growth process
spk_4: that have had it in the same chanted and you can have expectations in the future
spk_2: the continue doing this our to charity trajectory of prey preserve growth will continue we've only stress that are kind of oh read or potential for these asked
spk_5: two or that we have of over twenty five hundred locations
spk_2: and we have intentionally been very conservative in our annual reserve booking process we're not changing anything on is not broken just keep the conservative republican that six percent regular original implies were not booking reserves from one end to the field
spk_5: to the other we do step out vary considerably and keep in mind
spk_2: that in any five year period without five engineers it doesn't matter if it's netherlands and so rodders got colleague gillespie our own internal engineers the go right down the last you have almost double reserved success especially on him written over a period of time with each five year period of technological our reserves are gonna continue going up our recovery you're gonna continue going up and technological safe access and we're also improved name for some libraries and route improving on deliverability return on investment primers and you break been better and better and better and are known as before in that so
spk_5: we're gonna continue being conservative are booking process has will we got a lot of meat left on the bomb south bay
spk_4: the next five to like at end and i mention this once before that we wanted to compare our area in each howard county
spk_2: to western howard county more and that as we go deeper into the beta and more compared to some of our larger peers in the area we've talked about our reserves how fast are growing but eastern howard county is a very active area and the margins are differentiated from other areas of the base yeah the the year arkham production process of eastern
spk_4: compared to where
spk_2: and looking at results from twenty twenty onward shows against it is actually outperforming the west on a recovery factor of oil
spk_5: in addition half acres outperforming it's peers and it's peers in the area we now have over seven hundred wells grew up of this and our results are over five hundred thousand barrel recoverable compared the four seventy one of our peers and the were we're almost ten percent higher on you are and almost ten percent higher on economics not counting consideration of having a heart loca
spk_4: the local newspapers and in the middle and reporter telegram announced in the last few weeks and howard county is the fastest growing producer of oil in the entire united states
spk_5: and howard county has now moved into the number three position in the permian basin as far as oil production so we were in a great area it's gonna continue improving as we go forward
spk_2: and these results are indicative of our success in southern border county as well as my previous i walk through our delineation of lore spray brain by of this area that's gonna increase additional shareholder by so we're not just buying is to buy oh the pasture sodas fake were buying leases and expanding our footprint and as we drill or that it's becoming very commercially successful in fact both of those wells are making over a hundred barrels a day now we're really excited about that era
spk_5: the next five thirteen just shows are inventory
spk_2: and it gives us a sense of with running a forward program
spk_5: with thirteen hundred primary locations where were fourteen years of private him toward runway
spk_4: every time we make a presentation and thirty days we have ten more well and we're delineating other's arms now and so when you look at this chart you see all the way from the medals bribery all the way down to the what the and that includes the will be three fingers and also the hot
spk_2: of up
spk_4: we are developing all of these zones now and we're gonna have a lot more information and some of our offset operators are also drilling in the out up in the middle spray very in the joe mill so we have expectations to be ellen's continued on par with up formations and we hope
spk_5: several of these upside locations will add to our primary count within the last and within the next few quarters as we see the results of these well
spk_6: ah i mentioned earlier that are locations are averaging over twelve thousand foot lateral now we have the opportunity to do that because of our country usa creech bought a lot of our peers have more acreage inventory but is unattainable like reach it's very difficult for them
spk_2: the put unit together to deal with cooling problems and a deal with other companies and arguments as to who's gonna hop pray work pop on and some well gonna sell him to the water the marketing characteristics who had better marketing week control everything in our area so we have the choice to
spk_4: drill and to space are well primarily bath that gives us the maximum shareholder return and ultimately leads to higher free cash flow fellow generation it's why forty thousand barrels is equal and sixty thousand barrels with up with our peers
spk_5: though and five fourteen this is an exciting side also we measured message and january press release it we plan to step down from our six read program which we were running in the second half and twenty two two running for rigs throughout twenty three and twenty four many things considered that not because
spk_4: we don't have the results of drilling activity we want to keep a strong balance sheet oil and gas prices went down during that period
spk_2: we have a higher number of wells what we expect to turn on this year with fifty seven wells and progress
spk_5: the backlog of those wells and progress at we built our running our six rig rig programme last year
spk_4: and this point is the primary reason for the delta and our capital budget and twenty three compared dark forecasted cafe budget in twenty four we didn't want to over drill want to get maximum return on investment so we're being conservative with the development of our paths and with our spacing program
spk_5: our unit costs per be away which is our a very competitive with our peers is gonna continue to increase and will further expand our period leading margins this was and by accident this was a plan program all the way to out and the way we have always differentiated are so
spk_2: as from our appears to have higher return on investment and higher in turn right to return the key point of this slide and to show where we're going on
spk_5: we're gonna become free cash flow
spk_2: and it's gonna be a free cash flow machine i've had i investors ask me or when is that gonna happen well if i knew exactly when prices are gonna be projected are the owners say when that's gonna happen but i'm comfortable with that it's gonna happen in the second half of this year
spk_0: and next year were projected zero see eye to the t free cash flow and a break even all the way down the forty five dollar well that is unprecedented most companies can't even get their money back for have any kind of profit is forty five dollar oil if whole process day around ninety dollars a barrel we estimate are free cash flow to the in excess of billion dollars and twenty twenty four this will allow us to completely pay down one hundred percent of our outstanding debt next year if we chose to do so we could also increase our grilling program
spk_3: and prices stay in that naughty dog one hundred dollar range but the point is we all have access free a caterpillar available on about she saw our investors in like it that if the excited about what's happening over the next twelve months or so
spk_15: even though i know was treated as use a quarter to quarter we take a little long term for longer term p
spk_12: and out a separate note on wanna share of with our shareholders to know that we are constantly mark up monitoring the market volatility in commodity prices and service costs we have the ability to be flexible with our drilling program we can either increase or decrease our program it
spk_7: necessary we don't have any long term contract they can effectively methods her so to speak and causes the have
spk_26: what i call it the perfect storm
spk_4: high interest rates and low on gas prices were gonna continue with that program
spk_5: so imposing our last five fifteen this is kind of encapsulates what we've always talked about can to use acres inventory consists of well results operational and are now focused lady margins in free cash flow and grow but looking at the value proper age a proposition here you shouldn't look if his and it can i tell you why you should own happy stock in the whole around here star for the rod relative to us continue with our strategic alternatives
spk_2: we have a large contiguous a physician providing for maximum capital efficiency we have a tremendous amount of inventory there are we now proven the rock wall and the of this area
spk_6: in inventory like this is a huge scarcity in our area back is notice were one of the ceos recently said it was like or mean is it peak production are only five years here
spk_5: our inventory is defined by consistent how return result across more than two hundred well of grown today
spk_6: our development program is environmentally sound and physically rewarding are high up cut and low costs operations
spk_17: truly lead to a differentiated peered leading margins in the name is lead to our projection of generating large amounts of free cash flow for years and years and years to come
spk_6: all of that is from one vantage point today
spk_5: in addition we continue to improve all aspects of our business from repeatedly decreasing our lease operating expenses improving our well performance
spk_19: an in improving the number of formations that are economically sound providing for long term return on investment anna an additional upside to exceed our expectations
spk_5: considering these points this is why i'm extremely confidence are confident in our ability to optimize shareholder value that's what everything is about and the continue operating in the future in implementing the process for strategic up are alternatives
spk_12: we talked about that process it's a process providing optionality relative to motor relative to outright sale relative to refinancing and equity increases to increase shareholder value so with that now turn the program over
spk_5: or two questions if anybody has any questions were five answer man
spk_12: thank you
spk_2: as a reminder to ask the question please post star one one on your phone and wait for your name to be announced to your question please post all one one again stand by as the compile the q and a roster
spk_5: one moment please file first question
spk_2: alvarez question will come from john white of rock mk on capitol hill nine it open
spk_5: good morning gentlemen and that congratulations on some very very strong result
spk_2: thanks john thank you
spk_6: come on the front page do not want to make sure i'm really they thrive on the front page of the press release you say you extended development the case a little lower spray buried in the board county
spk_2: based on three lower spray very well
spk_22: are those the wealth addressed later in the presentation the conrad and the griffin pat
spk_23: yeah john i'm in my home elaborate further but it's always it's from the western part all the way over to the eastern part of the conrad and group and wales with your head my can lead to let you bed and yeah john you know as we picked up a grew up in the board county
spk_0: the near the crockett operating a bridge and we picked the candidate sixty five hundred acres it was kind of our first or a in a we put on multiple acquisitions and leases from the and your most of that was predicated in underpinned by the of work camp a activity that we have seen i didn't notice that we got him much of your many more brings the extra up in that area the walking warhammer bay is phenomenal looks just like down south in the flat top ah but as we use started developing the lower spray marion is all the results and plaza the walk look very similar up on this a virgin board who we send it up and where you see the ball and number three on the griffin add and job to lower very very well as a wine rack with the with a walking up a those two well ah look almost like a lay down to the wolf campaign the area
spk_24: so again very encouraging added additional zone to that entire area so then we set all the way out where the conrad is about seven miles west or east of where we are drilled the griffin pad and is jag mention that lower spray very wolf camp a there are phenomenal
spk_5: ones do it over nine hundred barrels a day and once and that's just a loyal and want to read hundred and it's very early in the queen of cycle so again gives us confidence that we can go in feel between lead to develop an area is it's roughly another seventy five eighty wells ah the wait until very confident that in twenty twenty three four will be on the don't belive that a very machine like development very low cost efficient and i continue to drive these marches on thank you and bear looking on fly in all the yeah all the peak at being for the yeah to the wolf camp the it looks like get your confidences increase in that development of that down match yes are gathered pick six on slide can in are the lower base wolf can be so we've drill those across the entire encourage block feel very confident the results we had with the lower base ah we have seen some of our appears to the way
spk_25: ask them to the north others
spk_2: drill little shallower in the wolf can be so are we call it the three fingers there's very little streets on the wall of them were able to see much more parental should hold of right better all of the geo mechanics or geochemistry patch the goal now is all land and
spk_25: south or suggested those wells will be even better than the lower base de so what we've shown here on the chart is where we've done the three fingered test or we drove some of the wells we'd frac some of the well i love tab results here in the next month month and a half go over the next few quarters will be on the update you on that shadow herself piano d
spk_5: we also walk through some wolf can't see hello cass very similar nature we got one drill love about the come online in a couple others that were drilling today so the word yet again give us another quarter june will be of the present to the street and like jack mention hopefully will be on the move those from upside locations
spk_2: in our primary though our primary locations again just fix feeling that runway of high rate of return inventory something that we talk about the past as the walking have a lower spree very ah the his clothes will get married for them to to our free around a laptop
spk_4: animate she three different test air
spk_2: they were drilling in completing those well old copy not a canonical that i'm so again the next week others are going to be very or even just over half and be the difference and twenty one summer and clean gear lot on as you to that twenty here
spk_5: the way to be on the keep these gonna return earns and were shown today thanks very much for all that detail and die congratulations again and i'll pass it back
spk_2: thanks young thank you
spk_5: again to ask a question piece first star one one on your phone only for your name could be announced political your question i saw one one again
spk_4: one on athlete or next question
spk_26: honest question will come from jeff rapa kind of what a tower reset your nine it open
spk_5: thank you good morning
spk_28: mike on the sides nine and ten was some of the pads you're showing or or any of those results additive to the inventory channels you show in notes or couple size later and deck
spk_5: and secondly are you testing anything over the next couple of months that's not included in the locations that you showed on the inventory slide
spk_4: so you all the locations that we have our in our inventory makes that we have shown in both the primary the ups five locations
spk_5: what's gonna happen years as these wells are developed improve of those those again we had the you were very very conservative on those that five zones and while we a may be a motive for by so again with all of the all of the data that we have collected
spk_27: and what weeks it's the truly expect out of the zones they will absolutely will bump into the primary numbers so a will increase the primary numbers but as far as adding to the total of the twenty five hundred that we have all of these wells are captured in that now over time as
spk_34: we develop more of these the areas that we had picked for where they are would be upside will most likely expand and you'll see some growth and that twenty five hundred number of but that's that's gonna have a were attacking it to them
spk_35: such faiths it's just continued to rescue from the upside the primary to move move move categories
spk_24: that is correct and he had at every time you go step out you tend to move the box around where you thought and up by zone would be perspective
spk_25: the question just on delineation between the show on slide twelve
spk_19: jackie mentioned i think a six percent recovery factor that college gillespie using for your reserves had his recovery factor on
spk_28: the laptop and or signal peak compare to the more central part of or the western part in howard county
spk_2: you know just as a great question because everybody uses different recovery factors internally for their reserve bookings it's it's typical for the majors to use hence speaks percent recovery factor of the smaller mid cap companies ah to compare western the eastern is about two percent difference running from six to eight percent recovery factor but as you can save in evaluating twenty seven hundred well that to the worse to the seventeen hundred going very quickly after a nineteen hundred in the next twelve months the is actually performing outperforming the west but
spk_4: the typical route a difference on a macro scale is about two percent difference bad twenty five percent plus
spk_24: difference between west nice and terms of recovery tractor and in terms of the size of the companies but are we know it's going to increase and many companies are using up to fourteen percent recovery factors even in our area we're just we're gonna take a conservative approach and we're gonna go with what we have is factual right now in in used are conserved
spk_4: uber of recovery fact we can always add to it in a good as a potential buyer the opportunity to book whatever they want a book in terms of reserves we don't have to worry about
spk_5: revisions and right now and impairments we're just gonna take a conservative approach as long as we're get the hundred and fifty plus per percent increase on an annual basis it doesn't really matter as we delineate this year he could be even higher recovery is we might decide to step further and not have more
spk_4: the ballmer then we did in this year's bit
spk_19: i'll play that for smasher
spk_29: it it it does with respect to the revisions in this year's reserve report i think before you all had shown maybe five to six rig cadence from twenty twenty
spk_30: maybe beyond twenty twenty three
spk_0: is some of the revision two year and reserves just related to how you're stacking up the current plan for five year development that was included a dead and the december report yes man is very nominal anyway and in a just a bunch of of we were and gonna be drilling versus what we ended up deciding that drill am indeed it's very conservative and we didn't consider that we considered mainly just maximizing shareholder by and keeping a strong batch
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