HighPoint Resources Corporation (NYSE:HPR) Q2 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 09:00 am ET

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HighPoint Resources Corporation (NYSE:HPR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2020 HighPoint Resources Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions]

At this time, I'd like to hand the conference over to Mr. Larry Busnardo. Thank you. Please go ahead, sir.

Executive
Larry Busnardo

Good morning and thank you for joining us today for the HighPoint Resources second quarter earnings conference call. Speaking on the call today, are Scot Woodall, CEO; Bill Crawford, CFO; and Paul Geiger, COO.

Before we begin, please review the disclosure statements provided within the forward-looking statements of our earnings release, which you can find on our website at hpres.com. You can also find and review these disclosures as they are referenced in other filings with the SEC or in our 10-Q, which we filed yesterday afternoon. We will also be referencing non-GAAP financial measures during our call and a reconciliation to GAAP financial statements can be found at the end of our press release. In addition, we've posted presentation to the Investor Relations portion of our website that we will also be referencing on today's call.

With that, I'll turn the call over to Scot.

Executive
Scot Woodall

Thank you, Larry. Good morning and thank you for joining us today to discuss our second quarter 2020 financial and operational results. I'd like to start by thanking all of our employees for their continued professionalism, hard work and dedication during these challenging times. Their health and safety as well as those of our communities remains our top priority.

I'm pleased with how seamless our employees have adapted to the new norm, which is evident by our strong second quarter results and demonstrates our ability to execute, as we exceeded our operational and financial objectives despite the many macro challenges that our industry is facing.

The quarter was highlighted by continued positive well results from both Northeast Wattenberg and at Hereford as high fluid intensity completion continued to exceed previous well results, highlighting our ability to positively impact well performance. This contributed to total production volumes exceeding the high end of our guidance range by 12% and oil volumes exceeding the high end of our guidance by 11%. Importantly, this was accomplished with a capital expenditure that was 38% lower than our guidance, highlighting our commitment to capital discipline.

Consistent with our updated plans for 2020, as provided in March, we've suspended new activity due to lower oil prices. Given a sudden drop in oil prices, we quickly and decisively took immediate action to align our cost structure to the expected future operating environment. This resulted in immediate tangible benefits and a material reduction in second quarter reoccurring controllable operating costs of 12% compared to the first quarter of this year. We continue to look for opportunities to reduce costs further.

We're currently monitoring future oil prices along with the pace of a broader macroeconomic recovery to determine the appropriate time to resume activity. We have an inventory of over 20