Approach Resources, Inc. (NASDAQ:AREX) Q1 2019 Earnings Conference Call - Final Transcript

Good morning, ladies and gentlemen, and welcome to the First Quarter 2019 Approach Resources Incorporated Earnings Conference Call. As a reminder, this conference call is being recorded. All participants are in a listen-only mode.

The Company's earning release and presentation slides that management will refer to during the prepared remarks can be downloaded from the Investor Relations section of the Company's website at www.approachresources.com.

Please note that management's remarks include forward-looking statements that are subject to risks that could cause actual results to differ materially from those in the forward-looking statements. Additional information concerning these risks is set forth on Slide 2 and in the Company's earnings release.

Reconciliations of non-GAAP measures management refers to and the applicable GAAP measures can be found in the Company's earnings release, on the non-GAAP financial information page of the Company's website and at the end of the Company's earnings presentation.

Now, I will turn the call over to Chief Executive Officer of Approach Resources, Sergei Krylov.

Good morning, everyone, and thanks for being on the call today. As you may have seen from our recent disclosures, Approach's Board of Directors has made the difficult decision to change the executive leadership of the Company. As a result of the change, we have been able to reduce management expenses and increase corporate-level profitability during this very challenging and trying period for the Company and ensure a long-term strategic direction that leads to maximizing shareholder returns while protecting Company's balance sheet and liquidity.

Joining me on the call today are other three members of Approach's new management team. Troy Hoefer is leading our operations, including engineering, production and drilling and completion functions. Troy has been with the Company since 2013, and has over 31 years of industry experience, previously with Mesa petroleum and Pioneer Natural Resources. Josh Dazey is leading our legal, regulatory, land and administrative functions. Josh has been with the Company since 2016, and has over 12 years of experience in the industry as corporate lawyer and outside legal counsel. Ian Shaw is leading our accounting and information technology functions. Ian has been with the Company since 2014, and has over 13 years of experience in the industry and public accounting. The new leadership team is supported by approximately 100 full-time employees, both in our corporate office in Fort Worth and our field office in Ozona, Texas.

Our average employee tenure with the Company is about six years, which is pretty good for a relatively young company in the E&P industry. This also highlights that most of our current staff has been with the Company since Approach started to horizontally develop and produce in the Wolfcamp shale. This is the same team that through innovation and foresight found ways to become one of the lowest-cost operators in the Midland Basin. While we don't anticipate the need for any significant changes to our operations, we definitely see opportunities and room for improvement. We plan to continue harnessing the talent, knowledge base and innovative spirit of our