Geoff Jay • Daniel Energy Partners

Answer

Eric Jacobsen, President of Upstream, attributed the outperformance to a combination of operational execution, optimized well placement using subsurface data, and engineered completion designs. He clarified that since these advancements benefit both new drills and refracs, the company plans to maintain its capital allocation of approximately 80% to new drills and 20% to refracs, as both programs remain highly competitive and accretive.

Ask Fintool Equity Research AI

Answer

CEO Tom Ward confirmed the plan is to drop the Permian rigs and add rigs in the San Juan. He stated the current San Juan rig will leave, and the plan for 2026 is to pick up two Mancos rigs and one to two Fruitland Coal rigs. This shift to gas-focused drilling would displace some oil-focused locations, depending on the price environment.

Ask Fintool Equity Research AI

Answer

Executive Tom Ward explained that the decision to add the rig is driven by having sufficient operating cash flow to stay under the 50% reinvestment cap, rather than a specific gas price, as the project's returns are robust. On the commodity outlook, Ward stated he is 'less bullish' on natural gas than last quarter, foreseeing a more balanced market through the end of the year due to storage levels, new pipeline capacity, and LNG demand dynamics.

Ask Fintool Equity Research AI

Answer

Executive Tom Ward confirmed that the addition of the third rig is fully funded based on current strip pricing. He specified that the year-over-year increase in natural gas strip prices provided enough cash flow to add the rig while remaining within the company's 50% reinvestment rate target.

Ask Fintool Equity Research AI

Answer

President, CEO & Director Eric Hambly explained that the outperformance resulted from a combination of factors. He detailed that they adjust multiple completion design variables, and for the recent successful infill pad, they actually reduced fluid and proppant loading. He also credited an optimized flowback strategy as a key contributor to maximizing both rate and ultimate recovery.

Ask Fintool Equity Research AI

Answer

CEO Daniel Brown explained that the primary gating factor is ensuring repeatable mechanical success. He stated that the company needs more repetitions to confirm they can consistently drill, complete, and clean out the wells effectively and see production contribution across the entire lateral. Once this is proven, he expects a swift move toward a more full-scale four-mile development program.

Ask Fintool Equity Research AI

Answer

CEO Kaes Van't Hof countered that the lowest-cost operator should act prudently in an uncertain market, noting they were prepared for lower prices seen three months ago. He firmly rejected the idea that efficiency would be lost upon re-acceleration, stating that managing activity changes is a core competency and using it as an excuse for maintaining activity shows a lack of detailed business management.

Ask Fintool Equity Research AI

Answer

Chairman & CEO Michael Wirth reframed it as being on the 'precipice of a wide expansion in free cash flow' rather than a sharp decline in CapEx. He noted the larger system requires capital, and CapEx will step up with Hess's assets in Guyana and the Bakken. However, he reiterated that capital discipline remains paramount, with a focus on investing only in the best opportunities and delivering strong returns and free cash flow.

Ask Fintool Equity Research AI

Answer

Justin Loweth, President of Seneca Resources, attributed the D&C cost-per-foot improvements primarily to enhanced operational efficiencies rather than service cost deflation over the past year. He emphasized that since they are in the 'early days' of this development, there is still significant opportunity to improve through better planning and execution.

Ask Fintool Equity Research AI

Answer

Justin Loweth, President of Seneca, stated that he fully anticipates the trend of capital reduction to continue beyond 2025, driven by efficiency gains that allow for production growth with less spending. He attributed the LOE improvements primarily to a detailed focus on controllable costs by the operations team, rather than just higher production volumes.

Ask Fintool Equity Research AI

Answer

President and CEO Brendan McCracken explained that cube development ensures durable returns and free cash flow by sampling across all premium inventory, insulating investors from quality degradation. EVP & COO Greg Givens added that while D&C tech is deployed uniformly, the operations control center competency is more mature in Canada but is being built out in the U.S.

Ask Fintool Equity Research AI