Endeavor Reports Second Quarter 2020 Operating Results
MIDLAND, Texas, August 6, 2020
Endeavor Energy Resources, L.P. (“Endeavor,” or the “Company”) announces operating results for the three and six months ended June 30, 2020 and updates to the Company’s full year 2020 operation plans and outlook.
Second Quarter 2020 Highlights
- Delivered strong cost control measures with record low lease operating expense per Boe of $6.20 for the three months ended June 30, 2020 (“2Q20”), a 24% decrease as compared to the three months ended June 30, 2019 (“2Q19”).
- Average daily net production of approximately 156.5 MBoe per day (67% oil) during 2Q20, a 40% increase from 2Q19 despite voluntary curtailments of approximately 8.1 MBoe per day. With significant curtailment discontinued, the June 2020 exit rate was ~169.7 MBoe per day.
- Quick and decisive actions materially reduced 2Q20 capital expenditures by ~77%, as compared to the three months ended March 31, 2020 (“1Q20”).
- Record low drilling and completions cost of $704 per lateral foot, a 12% decrease as compared to 2Q19.
- Continued to improve cycle times across the Midland Basin. Spud-to-rig release cycle time decreased by 14%, and the number of stages completed per day improved by 16% in 2Q20, in each case as compared to 2Q19.
2020 Outlook Highlights
- Recommenced fracture stimulation operations in July 2020; utilizing two frac crews to complete certain of the Company’s drilled but uncompleted well inventory.
- Added two horizontal drilling rigs in late July 2020 and scheduled to add two additional horizontal drilling rigs in October 2020.
- Current plan anticipates exiting 2020 with 5 operated horizontal rigs and two frac crews.
- Increasing drilling, completion and equipping (“DC&E”) investment guidance to drill an additional 25 horizontal wells and complete an additional 35 horizontal wells.
- Raising full year 2020 production guidance from midpoint 140 MBoepd to 161-166 MBoepd.
- On July 22, 2020, Charles A. Meloy, the Company’s President and Chief Executive Officer (“CEO”), announced his intention to retire as the CEO of the Company effective September 24, 2020. Mr. Meloy will remain a member of the Board of Managers of Endeavor Petroleum, LLC, the Company’s general partner, and will stay active in the strategic direction of the Company. Lance Robertson, the Company’s Chief Operating Officer and Senior Vice President of Development, has been named as the Company’s successor CEO upon the retirement of Mr. Meloy.
Operational Update
2Q20 total net production was 14.2 MMBoe, a 40% increase from 10.2 MMBoe in 2Q19. Total net production decreased 10% from 15.8 MMBoe in 1Q20, driven primarily by a material reduction in development activity and voluntary production curtailments due to low commodity pricing.
During 2Q20, the Company spudded 6 and placed on production 29 gross operated horizontal wells. Endeavor’s working interest in operated horizontal wells placed on production was approximately 93%, with an average completed lateral length of approximately 10,175 feet.
Capital Investment
During 2Q20, the Company improved its DC&E costs per foot. DC&E costs averaged approximately $704 per foot, representing an 11% reduction from average 2019 levels.
Updated Full-Year 2020 Outlook
In response to the current positive change in oil and natural gas prices, the Company recommenced limited stimulation operations in July 2020 by adding two frac crews. Based on the Company’s current drilling and completion schedule, the Company added two additional horizontal drilling rigs in late July 2020, and two more additional horizontal drilling rigs are scheduled to be added in October 2020, dependent on oil and natural gas prices. The Company will continue to monitor the near and long-term commodity price environment and may adjust its development plan should it deem appropriate.
Forward Looking Statements
This release contains certain statements and information concerning Endeavor’s expectations, estimates, beliefs, plans, projections, objectives, goals and strategies that are not historical facts. These statements are “forward-looking statements” and may include, without limitations, statements regarding: our growth strategies; our ability to explore for and develop oil and natural gas resources successfully and economically; our estimates of the timing and number of wells Endeavor expects to drill and other development and exploration activities; our estimates regarding timing and levels of production; anticipated trends in our business; the effects of competition on us; our future results of operations; our liquidity and our ability to finance our development and exploration activities; amendments to our revolving credit facility and borrowing base determinations under our revolving credit facility; our capital expenditure plan; future market conditions in the oil and natural gas industry; our ability to make and integrate acquisitions; and the effect of governmental regulation. You generally can identify our forward-looking statements by the words “anticipate,” “believe,” “budgeted,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “scheduled,” “should,” “would” and other words that convey the uncertainty of future events or outcomes. Forward-looking statements are not guarantees of performance. The Company has based forward-looking statements in this release on our current expectations and beliefs about future developments and their potential effect on us. While our management considers forward-looking statements contained in this release to be reasonable as and when made, there can be no assurance that future developments affecting us will be those that the Company anticipate. Forward-looking statements contained in this release
are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and present expectations or projections. The Company cautions you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, the Company cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. Known material factors that could cause actual results to differ from those expressed in or implied by forward-looking statements contained in this release include, but are not limited to: declines in the prices the Company receives for our oil and natural gas; uncertainties about the estimated quantities of oil and natural gas reserves; drilling and operating risks, including risks related to properties where the Company does not serve as the operator; the adequacy of our capital resources and liquidity, including, but not limited to, access to additional borrowing capacity under our revolving credit facility; the effects of government regulation, permitting and other legal requirements, including, but not limited to, new legislation or regulation of hydraulic fracturing; difficult and adverse conditions in the domestic and global capital and credit markets; the concentration of our operations in the Permian Basin; potential financial losses or earnings reductions resulting from our commodity price risk management program or any inability to manage our commodity price risks; shortages of oilfield equipment, supplies, services and qualified personnel and increased costs for such equipment, supplies, services and personnel; risks and liabilities associated with acquired properties, including, but not limited to, the assets acquired in connection with each of our recent acquisitions; uncertainties about our ability to replace reserves and economically develop our current reserves; competition in the oil and natural gas industry; and our substantial existing indebtedness. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in our Offering Circular, dated June 2, 2020, circulated in connection with the offering of our 6.625% senior unsecured notes due 2025 in the aggregate principal amount of $600 million; our Offering Circular, dated November 28, 2017, circulated in connection with the offering of our 5.500% senior unsecured notes due 2026 in the aggregate principal amount of $500 million and our 5.750% senior unsecured initial notes due 2028 in the aggregate principal amount of $500 million; our Offering Circular, dated November 12, 2019 circulated in connection with the tack-on offering of our 5.750% senior unsecured notes due 2028 in the aggregate principal amount of $500 million; and, those risk factors and other cautionary statements found in our Annual Report for the year ended December 31, 2019 and our Interim Report for the three and six months ended June 30, 2020. All written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statement above. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and, except as required by law, the Company undertakes no duty to update or revise any forward-looking statement. References in this paragraph to “our,” “us,” and “we” refer to Endeavor and its consolidated subsidiaries.