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» Vanguard Natural Resources, LLC Q2 2010 Earnings Call Transcript
Scott SmithThank you, Lisa, and good morning everyone and thanks for joining us on our conference call to review our results for Q2 2011. Joining me are Richard Robert, our Executive Vice President and Chief Financial Officer; and Britt Pence, our Senior Vice President of Operations. During the call this morning I’ll briefly review the Q2 production results along with capital expenditures and then we’ll turn the call over to Britt for more specifics on the drilling we have done this year and our current activities in Q3. I’ll then wind up with a discussion of our business development efforts and provide an update on the timeline of the proposed merger with Encore Energy Partners, LP. I’ll begin with a brief summary of this quarter’s production. Average daily production for Q2 was 13,286 BOE per day, consistent with Q1’s average daily production of 13,273 BOE per day and up 191% from the 4,569 BOE per day produced in Q2 2010. The increase in total production on a BOE basis is primarily due to the Encore acquisition effective December 31, 2010. The combined asset base of both companies continues to deliver production results which are very impressive when one takes into account the minimal amount of capital that has been expended on the properties during the first half of the year. Much of the credit for our stable production profile is attributable to the hard work done by our field-level employees, but primarily those in our largest operating areas being the Bighorn and Williston region and the Permian Basin. Breaking down the production of each on an individual product, during Q2 average daily oil production was 7,367 barrels, NGL production averaged just over 1000 barrels of NGLs per day, and our natural gas volumes averaged 29,482 MCF per day. With respect to our 2011 CAPEX program, during Q2 we spent $4.5 million in total, which was split between Vanguard with $3.8 million and our approximately 46% of ENP’s CAPEX at $1.5 million.
Now Britt will provide a more detailed summary of our activities to date and what we have planned for the balance of Q3.Britt Pence Thanks, Scott. As a reminder in the 2011 guidance that we put out in March, Vanguard’s capital budget was forecast to be between $27 million to $28.5 million which includes VNR’s 46% interest attributable to ENP’s planned capital spending for the year. Our 2011 drilling efforts are focused in three areas: the Parker Creek Field in Mississippi, the Bone Spring play in Permian Basin, and the Sun TSH Field in South Texas. The drilling in the first half of the year has been in the Parker Creek Field. These wells have some of the best economics in our drilling inventory of proved locations. Therefore we wanted to get these wells drilled first in the first part of this year. Prior to initiating this year’s drilling program we and our partners reworked the 3D seismic data and decided to drill three 14,200-foot [Hawston] development wells, which were [ASE] for $3.5 million per well. Vanguard’s working interest is 53% in each well. Now that all the wells have been drilled, we believe the actual average well cost will be approximately $2.8 million or 20% less than budget. Read the rest of this transcript for free on seekingalpha.com