Midstates Petroleum Company, Inc. (NYSE:MPO) Q3 2018 Earnings Conference Call - Final Transcript
Nov 09, 2018 • 09:00 am ET
our RBL so far this year, leaving us at a low net debt at the end of the third quarter of $22 million, which is $10 million less than our third quarter EBITDA. I am very pleased with our efforts today to reduce costs and further enhance our competitive margins.
Moving to our operational performance during the quarter, we continue to reap the rewards from our substantial workover program, which we kicked off early this year. Third quarter production came in and approximately 18,000 BOE per day, an increase of 5% from the second quarter of this year and 16% higher than our first quarter.
A quick recap of the workover program. The workover program consisted of the two main components: one, focused on extending downhole pump run life; and the second to increase well productivity through wellbore clean outs and restimulations.
On the extended run life effort, our target is to double the average run life of our downhole pumps. Success on this front will lead to less wells going down per year and thus lowered average yearly workover expenses.
Secondly, less downhole failures will lead to reduced well down time increasing average yearly production. Early results have been extremely positive on this front and these efforts will continue to read benefits going forward. In total, this enhanced workover program has been highly economic with very short payback period so a great use of capital.
As we noted last quarter, the enhanced workover program is largely complete and currently we're down to only needing to run one workover rig in the field. We saw capital and expense items come down in the third quarter of this year and anticipate these items coming down a bit more in the fourth quarter.
On to our development program. It's still early time but are two mile lateral wells continue to track well economically. The first two mile wells brought online in the second quarter continue performing as expected. Additionally, we brought online two more two-mile wells during the third quarter in Quinn, our Western expansion area we have not drilled in for some time.
The first of these two wells achieved our best to date initial two-mile well production rate with a peak 30 day IP rate of 700 barrels of oil equivalent per day with or oil at a strong 65%. Further, we drilled and completed this well for an attractive $3.5 million or only $1.75 million per one mile of lateral.
Thus we continue to be encouraged by the early success of our two-mile program, the combination of significantly lower per mile costs and from our early analysis, productivity multiples of 1.5x IP and 2x EUR are leaning to economic improvements over one-mile well results within the play.
As we discussed in our release, early in the fourth quarter, we had the opportunity format our drilling rig for period of time which allows us to further evaluate the results of our 2-mile lateral tests, generate additional free cash flow and