Callon Petroleum Company

Ladies and gentlemen, thank you for standing by and welcome to the Calendly Petroleum third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question on today's call, you can press star 1 on your telephone keypad. To remove yourself from the queue, you can press star 1 again. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker, Kevin Smith, Director of Investor Relations. Please go ahead, sir.

Thank you, Lisa. Good morning, and thank you for taking the time to join our conference call. With me on today's call, Joe Gatto, President and Chief Executive Officer, Dr. Jeff Palmer, SVP and Chief Operating Officer, and Kevin Haggard, SVP and Chief Financial Officer. During our prepared remarks, we may reference the earnings results presentation and our third quarter earnings press release, both of which are available on our website. So I encourage everyone to download both documents if you have not done so already. You can find the slides on our events and presentations page and the press release under the new settings, both of which are located within the investor section of our website at www.calend.com. Before we begin, I'd like to remind everyone to review our cautionary statements, disclaimers, and important disclosures included on slide two of the presentation. We will make some forward-looking statements during today's call that refer to estimates and plans, Actual results could differ materially due to the factors noted on that slide and in our periodic SEC filings. We will also refer to some non-GAAP financial measures today, which we believe help to facilitate comparisons across periods and with our peers. For any non-GAAP measures we reference, we provide a reconciliation to the nearest corresponding GAAP measure. You may find these reconciliations in the appendix to the earnings presentation slides and in our earnings press release, both of which are available on our website. On our prepared remarks, we'll open the call for Q&A. And with that, I'd like to turn the call over to Joe Gautam.

Joe? Thank you, Kevin, and good morning to everyone on the call. As a reminder, please refer to the earnings presentation on our website as background for a commentary. I will be highlighting a few pages in particular as I walk through introductory remarks over the next few minutes. We posted strong results this quarter. They were underpinned by sequential production growth of 7 percent on a BOE basis and 8 percent on an oil-only basis. exceeding both our guidance and consensus estimates. These gains were driven by well performance that was above expectations and consistent execution in the field, particularly on the completions front with reduced cycle times in the Permian and Eagleford. At a bigger picture level, our commitment to a life of field development philosophy of our multi-zone resource base, paired with continuous improvements in drilling and completion designs, has resulted in year-over-year improvements in Cowan's well performance at a time when concerns around inventory degradation are increasingly becoming a focal point of the industry. Pages 8 and 9 of the third quarter earnings presentation provide a reminder of the benefits of our philosophy. Specifically, we've provided illustrative gun barrel diagrams that compare the co-development approach that we've employed over many years to an alternative strategy of near-term high grading that comes with negative implications for capital efficiency over time. We highlighted an approximate 20 percent improvement in Delaware productivity versus 2021 during our second quarter earnings call, which has continued to increase into this quarter, and have delivered a similar level of improvement with this year's Midland Basin activity, as seen on pages six and seven of the presentation. Additionally, we realized a reduction in our per-unit lease operating expense, which contributed to another increase in our adjusted EBITDA per BOE and an 18 percent sequential increase in free cash flow generation. despite lower benchmark oil and NGL pricing relative to the second quarter. Operational capital was within our guidance range, and this capital cost control also benefited our free cash flow profile. Turning to operating costs, we initiated an ESP conversion program in the Delaware Basin earlier this year. After accelerating this activity in the second quarter, we realized a sequential reduction in work over expense in the third quarter as our conversion program reverted to normalized levels. Offsetting this reduction in our lease operating expense was an increase in fuel and power costs this quarter that were driven by higher prices and surcharges related to grid congestion in the summer months. However, we are starting to see relief on these line items as we head into year end. Before moving to our outlook for the remainder of the year, I want to highlight that we published Calend's third annual sustainability report in September, which details another year of substantial progress across several important initiatives, including a 49 percent reduction in flaring rates and 11 percent reduction in GHG emissions intensity. With these achievements, we remain on track to achieve our goal of a 50 percent reduction in emissions intensity by 2024. If you have a chance, I highly recommend you read the report, which will be found on our website. Looking ahead to the fourth quarter, we expect to maintain the positive momentum from the third quarter and deliver our best quarter of free cash flow for the year with production in the range of 105 to 108,000 VOE per day. We recently added a sixth rig in early October to ensure the security of high-quality drilling services in a tight market and to support our operational plans in early 2023. These plans now include multiple large-scale Permian projects, each with over 10 wells targeting multiple zones in keeping with our co-development model. With the early addition of a sixth drilling rig, we created more operational flexibility to execute these projects without significant modifications to our overall 2023 DNC plans and associated timing of production. Importantly, we will be completing these projects using two simultaneous crews running consistently in this mode of development through the first quarter, adding the benefits of improved cycle times and resulting capital efficiency to the economies of scale of larger projects. The 6th rig is scheduled to begin operations this quarter, And we also plan to run one completion crew for the remainder of the year for adding back a second dedicated crew for simultaneous operations at the beginning of 2023. The number of gross wells placed on production in the fourth quarter is expected to be between 20 and 24, and our operational capital spending to be in a range of $180 and $195 million on an accrual basis. I will now turn the call over to Jeff to discuss operations. Thank you, and good morning, everyone.