Contango Oil & Gas Company (NYSE MKT:MCF) Q1 2019 Earnings Conference Call Transcript
May 09, 2019 • 09:30 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Contango Oil & Gas First Quarter Results Call. At this time, all lines are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today's conference is being recorded.
I'd now like to turn the conference over to Wilkie Colyer. Please go ahead.
Thank you. Before we begin, I want to remind everybody that the earnings press release and the related discussion this morning may contain forward-looking statements as defined by the Securities and Exchange Commission, which may include comments and assumptions concerning Contango's strategic plans, expectations and objectives for future operations. Such statements are based on assumptions we believe to be appropriate under the circumstances. However, those statements are just estimates, are not guarantees of future performance or results and therefore, should be considered in that context.
Good morning, and welcome to Contango's first quarter 2019 earnings call. My name is Wilkie Colyer, and I'm President and CEO of Contango. I hope everyone has had time to read through yesterday's earnings press release, including cautionary statements regarding forward-looking information and non-GAAP measures that apply to the statements on this call. So again, I will not repeat what's in the press release and move on to color around our progress at the Company since our last update, which is only a matter of weeks ago.
A big focus of ours, as you know, has been around controlling G&A costs to better align with our asset base. Our progress on that front met our expectations during the first quarter with a 36% decrease in recurring cash G&A expenses. April marks the first month under our new office lease, so those cost savings will be reflected in our results starting with the second quarter.
Around the time of our last call, we had just begun drilling operations for our first well in our Northeast Bullseye position. Subsequent to the end of the quarter, we have TD-ed that 10,000-foot lateral, the Iron Snake #1H. We were pretty excited by the oil shares we saw during drilling, and we look forward to completion and flowback of the well during Q3. Our precision rig has moved down to legacy Bullseye and is currently drilling the American Hornet #1H. The rig will then head back to Northeast Bullseye to drill two to three more wells before our expected rig release. The results from offset operators near Northeast Bullseye have continued to be very impressive, and we expect this area will be a valuable addition to our portfolio.
We continue to make hedging a priority at the Company as a risk management tool. Last quarter, we said we would look to add hedges to the portfolio for 2020, and we've since done that. We are now hedged and close to the maximum extent allowable for both 2019 and 2020. Additionally, we have hedged our base's exposure in West Texas for next year as