Delta Petroleum Corporation ( DPTR) Q3 2010 Earnings Conference Call November 9, 2010 12:00 PM ET Executives Broc Richardson – VP, Corporate Development Dan Taylor – Chairman Carl Lakey – President and CEO Kevin Nanke – Treasurer and CFO Analysts Jeff Davis – Waterstone Capital Andrew Shapiro – Lawndale Capital Management Kevin Cabla – Raymond James Presentation Operator
Today’s speakers from Delta are Dan Taylor, Chairman of the Board; Carl Lakey, President and Chief Executive Officer; and Kevin Nanke, Treasurer and Chief Financial Officer.With that, I will turn the conference call over to our Chairman, Dan Taylor. Dan Taylor Thanks Broc. Good morning, everyone. I would like to discuss a few highlights regarding our results and efforts in the third quarter before turning the call over to management. We completed four wells in the Vega area during the quarter. The results of these wells like the ones before with the redesign completions continued to perform as well or better than expected. Carl will discuss these completions in greater detail in his comments. During the quarter, as a result of the asset sale, we underwent another reduction in our employee base. While reductions in staff are always difficult and painful, especially in the current economic environment, we must make the necessary adjustments to official manage our asset base. Kevin will discuss the impact of the staff reduction on G&A expenses. As discussed in our last quarter conference call, Kevin and our financial personnel have been focused on securing a new credit facility to replace our current one, which matures in January. We realized that the progress on this has been slower than we anticipated, but we believe we’re very close to having a commitment letter and expect to have the facility in place by the end of this month. Kevin will discuss the status of our refinancing efforts in his comments. I would briefly like to add a comment on Delta’s direction and strategy. Over 80% of our production is natural gas and virtually all of our undeveloped leasehold sits on probable natural gas reserves. We monitor the current price and forward curve of natural gas and are definitively aware of its recent erosion.
We certainly have no control over gas prices, which affects our financial performance and our stock price more than anything else. We have and continue to focus on controlling our capital spending and reducing our operating cost in an effort to improve our operating results with a laser focus on improving the risk reward profile of our primary asset to improve completion methods and testing of additional zones.We continue to believe the natural gas prices will rebound at some point. We believe that we have an ideal natural gas asset in the Piceance basin and we are positioning the company to excel when this price recovery occurs. I will now turn the call over to Carl for his comments on operations. Carl. Carl Lakey Thank you, Dan. You’re exactly right that we are completely focused on working and changing the things that are in our control with the knowledge and confidence of improving the fundamentals of the business will make Delta stronger and whatever the commodity price of the future holds. With that in mind, the company closed on a $130 million Wapiti transaction and successfully worked with Wapiti to finish the post-closing items related to the release of the funds held in escrow. With that transaction now successfully completed, our undivided focus sharpens totally on our core asset in Piceance basin. The two additional wells that we completed in the Vega in the third quarter using a new stimulation techniques are performing very well thus far. We have five wells to date that have been completed using this new fracture stimulation procedure and all continue to support the higher expected reserve recoveries of approximately 1.7 Bcfe per well. We will continue to provide updates on these wells in the future quarters as they are indicative of the upside potential remaining under roughly 1,960 under a well locations in the Vega area. It is important to know that the in addition to the two new completed inventory wells in the quarter, Delta also performed to uphold recompletions using the new stimulation techniques. These recompletions are performing well and appear quite attractive from a cost benefit standpoint. Read the rest of this transcript for free on seekingalpha.com