Oasis Petroleum, Inc. (OAS) Q2 2012 Earnings Call August 8, 2012 11:00 am ET Executives Michael H. Lou – Chief Financial Officer & Executive Vice President Thomas B. Nusz – Chairman, President & Chief Executive Officer Taylor L. Reid – Chief Operating Officer, Director & Executive Vice President Analysts Irene Hoff – Wunderlich Securities Inc. Brian Lively – Tudor, Pickering, Holt & Co. Dave Kistler – Simmons & Co. International Neal Dingmann – SunTrust Robinson Humphrey Tim Rezvan – Sterne, Agee & Leach, Inc. Eli Kantor – Iberia Capital Partners LLC Michael Hall – Robert W. Baird & Co. Ronald Mills – Johnson Rice & Co. LLC Peter Christopher Mahon – Dougherty & Co. LLC Gail Nicholson – KLR Group Andrew Coleman – Raymond James & Associates Presentation Operator
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Please be advised that our remarks including the answers to your questions include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our earnings release and conference call.Those risks include among others, matters that we have described in our earnings release, as well as in our filings with the Securities & Exchange Commission including our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. We disclaim any obligation to update these forward looking statements. Please note that we expect to file our second quarter 10-Q today. During this conference call, we will also make references to adjusted EBITDA, which is a non-GAAP financial measure. Reconciliations of adjusted EBITDA to the applicable GAAP measure can be found in our earnings release or on our website. I’ll now turn the call over to Tommy. Thomas B. Nusz Good morning and thank you for joining us. I’ll begin with some general comments and then we’ll turn the call over to Taylor and Michael to cover more detail on operations and financial highlights. As we’ve discussed before, Oasis has been rapidly growing these past couple of years and in the midst of that growth, the company is developing a strong foundation for future success. This year has been largely a transition year for us. As we look back to 2011, it was all about scale and execution. We consolidated our acreage position and began coring up our large blocks, and we secured the services we would need to execute on our development program. The focus for 2012 has been in four areas. First, holding all of our drill blocks by production, and by the end of this year almost all of our inventoried acreage will be held. As we’ve talked about before, there is still will be some unheld drill blocks, but those will be out in 2014, ‘15, ‘16 and easily manageable.
Second we’ll be making progress on extensional testing in both the Middle Bakken, and Three Forks and associated well density. With that, the Middle Bakken is largely delineated across our acreage position, even up into North Cottonwood and into Montana. We will also make meaningful progress on the Three Forks this year. We commenced several in-fill and interference tasks in the second quarter to determine the optimal number of wells per horizon, on each spacing unit and to test communication between laterals.Third, operations optimization, that's optimizing services, including the start-up of Oasis well services, and continuing to evaluate different completion techniques in each of our operated regions to optimize well costs without degrading recoveries, and in some cases, even improving recoveries. And fourth, infrastructure development. We’re spending a lot of time on infrastructure planning and development to bring down unit costs, as shown in our financial results and improving operating run time and maximizing revenues on both oil and gas. We’re also beginning to realize cost reductions for both drilling and completions. We’re expecting to knock off approximately 10% from current well costs by the end of this year. And with the additional savings from pad development, we’ll be able to have an even larger impact on capital costs during 2013. With the second quarter, we produced a record average of 20,353 BOEs per day, an increase of 2,720 BOEs per day or 15% over the first quarter of 2012, and we were able to outperform our guided production range of 18,000 to 19,500 BOEs per day for the second quarter. On total completions, we initially planned to complete 22 to 44 wells in the quarter, a pace slightly below our first quarter. Due in part to mild weather, but in large part to our team continuing to push operational improvements, we were able to complete 26 gross operated wells in the quarter. These 26 gross operated wells had a 78% working interest on average compared to our budget of approximately 70%. Read the rest of this transcript for free on seekingalpha.com