Delphi Energy CEO Discusses Q3 2010 Results - Earnings Call Transcript
Delphi Energy Corp. (
)
Q3 2010 Earnings Call
November 09, 2010 11:00 am ET
Executives
David Reid - President and CEO
Brian Kohlhammer - VP Finance & CFO
Analysts
Brian Kristjansen - Canaccord Genuity
Ray Kwan - Macquarie
Presentation
Operator
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Good morning ladies and gentlemen, welcome to the Delphi Energy Corporation 2010 third quarter results conference call. I would now like to turn the meeting over to Mr. David Reid, President and Chief Executive Officer of Delphi Energy Corporation. Please go ahead Mr. Reid.
David Reid
Thank you Thomas and good morning everyone and welcome to our third quarter 2010 conference call. As mentioned, I am David Reid, I'm the President and CEO of Delphi. I am also joined today by Brian Kohlhammer, our VP Finance and CFO.
We'll start the call with some general comments on the company's progress over the last quarter, followed by some specific comments on the third quarter financial and then provide some brief remarks as we look into 2011. And finally, we'll open up the call up to your questions.
Firstly, be advised, that statements made in this call other than statements of historical fact may contain forward-looking information and I refer you to the forward-looking statements disclaimer included in the MD&A attached to today's press release and inform you that this disclaimer applies to any forward-looking information disclosed in today's call.
For those of you joining us that are less familiar with Delphi, we're predominantly a natural gas focused E&P company, about 80% by-production in the third quarter with over 95% of our production in reserves and 95% of our undeveloped land located in the deeper parts of what we call the deep basin in northwest Alberta. We operated approximately 85% of our production and consistently operate about 95% of our field capital programs.
We are very pleased to provide some detail around our operating and financial results for the third quarter. We feel we have hit the mark on all our targets for the quarter. We had a very active third quarter in the field. We have now drilled all of our contemplated operated wells with a 100% success. The 12 well program 8.3 net was really focused on our light oil projects in Bigstone and Hythe, as well as our high NGL gas projects in Wapiti. By high NGL, I mean 50 to 100 barrels per million so very significant.
We do have approximately seven other wells on a gross basis that will be completed in fourth quarter, some of the non-operated stuff that is yet to be drilled, but we do expect that to happen in the fourth quarter. We did achieve our budgeted production target for the quarter, as well our light oil in NGL volumes remain very strong and we are very happy with the performance of those Doe Creek wells and the Bigstone Cardium wells.
Our operating cost efficiencies continue to improve helping our bottom line with our production growth really driving the efficiencies within our core areas, as well as we are enjoying the full benefit of the disposition of the non-core assets in east central Alberta.
Weather did have an impact on the e-capital programs, really minimal on the drilling program because we did get an early enough start in the third quarter, but it did affect the next phases of completion encrypting a tie in. So we really didn’t have a lot of new production on that benefit of the quarter, we will see that in Q4. We are starting to catch up. Our last operated well is being completed actually today as we speak, that’s the Doe Creek Horizontal. So we are catching up and we are looking to have most of our operated wells on production through the fourth quarter probably at latest year end.
From an operations perspective, overall we are very pleased with the test rates and initial production rates we achieved on the wells drilled over the summer. We have tried to outline in the press release as much data as we can, some of it's only test data, some of it's seven day tests but we are possible put in there the 60 to 90 day production performance of a number of the previously drilled wells to give you a sense of how well we are doing. And we are very pleased with the oil wells in both the Cardium and the Doe Creek and the success we are enjoying at Wapiti is going to play a key part of our capital program going forward with the liquids content that we do enjoy there. It competes very nicely with some other light oil projects that we are doing.
So from a financial perspective we have very strong cash flow on a per unit basis. Again just over $20 of boe, that is our target we are trying to maintain that, that’s despite very low gas prices, vehicle gas price in the quarter and that’s really in part due to the production mix of light oil and NGLs as well as heat content within our gas, our operating costs and cost structure improvements, as well as the hedge position that we have enjoyed throughout the year.
So before I turn it over to Brian, I’d just like to say we are very optimistic and confident in our ability to execute the go-forward plan through the winter drilling program in this rather challenging natural gas price environment, we are maintaining very strong cash flow and our fuel results are allowing us to grow within our cash flow.
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