Earthstone Energy, Inc.

Good morning and welcome to Earthstone Energy's conference call. At this time, all participants are on a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. Joining us today from Earthstone are Rob Anderson, President and Chief Executive Officer, Mark Lumpkin, Executive Vice President and Chief Financial Officer, Steve Collins, Executive Vice President and Chief Operating Officer, Scott Galander, Vice President of Finance, and Clay Jaunshaw, Director of Investor Relations. Mr. Jaunshaw, you may begin.

Thank you, and welcome to our third quarter 2022 conference call. Before we get started, I'd like to remind you that today's call will contain forward-looking statements within the meaning of federal securities law. Although management believes these statements are based on reasonable expectations, they can give no assurance that they will prove to be correct. These statements are subject to certain risks, uncertainties, and assumptions, as described in our annual report on Form 10-K for the year ended December 31st, 2021, the third quarter of 2022 earnings announcement, and in our Form 10-Q for the third quarter that we filed yesterday. These documents can be found in the Investors section of the website, www.EarthstoneEnergy.com. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially. This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in our earnings announcement issued yesterday. Also, please note information recorded on this call speaks only as of today, November 3rd, 2022. Therefore, any time-sensitive information may no longer be accurate at the time of any replay listening or transcript reading. Today's call will begin with comments from Robert Anderson, our President and CEO, followed by remarks from Steve Collins, our COO, and Mark Lumpkin, our CFO. And then we'll have some closing comments from Robert. I'll now turn the call over to Robert.

Thanks, Clay. And most of you know Clay. He joined us a few months ago. I'm glad to have him here. And good morning to everyone on the call today. Thank you for taking the time to join the call or listen on the web. I'm a little bit hoarse, and I'm sure it's because of our Astros. And we've got one more good game left out of town tonight. Let's get started. I'm very proud of how we have transformed Earthstone in such a short time frame. And we continue to see the benefits from the seven acquisitions we have closed in the last seven quarters. Our targeted consolidation efforts have materially repositioned the company and provided our shareholders with an investment in an entity that has a substantial operating footprint in the Permian Basin. I'm incredibly proud of our team, and I want to thank our existing and recently added workforce for their outstanding hard work and dedication, which enabled us to report the strong third quarter financial and operational performance we announced yesterday. This includes record production levels that exceeded the top end of our guidance range by approximately 5%, as well as record-setting levels of adjusted net income, adjusted EBITDAX, and free cash flow. And I'm pleased to report that we reached over 100,000 BOE per day in September. Our overall outperformance for the third quarter was primarily driven by the continued success of our development programs. which highlights the quality inventory from all the acquisitions along with our inventory from our existing asset base. The strength of this large, low declining asset base also assisted in our outperformance. Steve will discuss our targeted cost synergy initiatives and recent well results in greater detail in a bit. But when you have 14 of 19 wells brought online in the quarter with oil rates above 1,000 BOE per day, it sure highlights the asset quality we have accumulated. As you'll recall, we closed the Titus acquisition on August 10th with assets in the northern Delaware Basin, including the state-line trend area of New Mexico and Texas. I'm particularly pleased with this immediately accretive acquisition, and while we are continuing the integration of these assets, they contributed to the company's results this quarter. We remain committed to capital discipline and the continued strengthening of our balance sheet, and we delivered on those commitments. During the quarter, we generated over $174 million of free cash flow. Year to date, we have generated over $374 million of free cash flow, and you will recall that this includes three acquisitions this year, which closed in February, April, and August, so only a partial year for all these acquisitions. Our continued generation of substantial free cash flow resulted in the paydown of a significant amount of debt which Mark will address here shortly, and allowed us to deliver on our promise of strengthening our balance sheet by achieving a leverage ratio of about 0.8 times at the end of the quarter when using third quarter annualized adjusted EBITDAX. In early October, we were presented with a unique opportunity to repurchase a portion of Warburg Pincus' ownership position in the company. We proactively repurchased 3 million shares of Class A common stock at a discount to the closing price. The repurchase shares have reduced our total outstanding share count by 2%. We viewed this as a highly accretive, opportunistic use of free cash flow, while at the same time not decreasing our growing trading liquidity. The strength of our balance sheet remains the top priority for Earthstone. In support of that effort, we will continue to focus on investing our substantial free cash flow generation in reducing our debt, as well as evaluating other opportunities that provide the optimal return for our shareholders. We expect to have a better view of how these options will play out as we move into 2023. We are leveraging our expanded position to drive down overall corporate, operating, and development costs, and we will continue to execute our deliberate asset consolidation strategy as appropriate. To be clear, we are not interested in simply growing scale. Our efforts have been and will continue to remain focused on profitable growth that benefits our shareholders. In short, our consolidation strategy is focused on, one, strategically expanding our operational footprint, two, increasing our inventory of high rate of return drilling locations, and three, and perhaps most importantly, continuing to build upon the foundation we have created with our growth to date in sustainable free cash flow, which will benefit all of our shareholders. Now I'll turn the call over to Steve to provide an update.