NGL Energy Partners LP (NYSE:NGL) Q2 2020 Earnings Conference Call - Final Transcript
Nov 08, 2019 • 11:00 am ET
many overall. And then just on that 20 years of figure that you are drilling, should we expect that -- something that probably declines a descend bit the following year?
I can take that Mike?
This is Doug. We are running a lot of pipe large diameter to move the water from New Mexico to our existing capacities in Texas. Our New Mexico capacities, we only have -- we only drilled seven Devonians, inherited, 17 Devonians from Mesquite. Those are infield. Those are staying very full. When we engaged our three new customers in the Hillstone acquisition, all three of them told us they are outpacing their forecast and they have come and asked us for additional firm capacity above and beyond what was contracted. That basis is where we are coming up with the additional wells that we drilled. That's particularly in Loving County, where the demand on the Hillstone system is.
And to answer your second part of your question, our expectation would then be to only be drilling additional wells in the future based on additional forecast or contract -- new contracts. But we are continuing to see the forecast of the magnitude of water under our contracts, continue to increase. That's what would drive obviously additional investment in new wells.
Got it. I appreciate that color, Doug. Second one, Mike, this one might fall on to the fake news category, but there has been some expanded discussions around risk to drilling on federal lands, depending on the results of the next election. So it sounds like maybe there could be some impact in New Mexico. I'm just wondering what your thoughts are around risk there? And how you'd expect the mix going to react as you're giving up vital energy is now?
Yes, that is fake news. Thank you. And we've already been through this once in Colorado with a setback. So we have opinions, but those really don't matter. So we engaged a law firm in the Southwest that was an expert in this area. They have provided us an opinion which took 10 days or so. So it wasn't -- it was well thought out. What really can an executive -- and someone really shut us down or they shut down the producer's next executive order is assuming it doesn't -- it's not something you can get through the Senate house.
Their opinion was that the -- democratic President cannot shut down fracking on the BLM way [Phonetic]. So then we said, okay, what happened in Colorado, there was a rush to the vital producers to get as many additional drilling permits approved as possible. So they would have a large inventory obviously in case it setback passed. That is not happening in New Mexico. There is not a rush on the drilling permit folks to grant thousands and thousands of new permit.
So that's an indication, I think of what the producers are thinking. So we don't believe a change in administration