Anadarko Petroleum 2Q15 Earnings Call Notes

Driven costs down by 35% and drilling the same number of wells with half the rigs

“More specifically, we’ve driven our drilling cost down in the Wattenberg field by almost 35% in the last six months and doubled our rig efficiency over the last year, drilling the same number of wells with half the rigs.”

Drilling wells for $1m a copy, completing and equipping for $3.5m

“If you listen to Al’s comments about our drilling performance, where we’ve now been able to get our well cost, at least the drilling portion, down to less than $1 million a copy. You look at the completions, they’ve done a really nice job there as well of getting our cost down. So for about $3.5 million now, we’re drill, completing and equipping these wells.”

Amazingly, it’s still a seller’s market for assets

“we’ve been reasonably unsuccessful, if I can use that as a term, in trying to buy things in the Delaware Basin where I think we have a cost advantage, we clearly through Western Gas have a processing advantage, and yet we see time and again, people coming in there and buying things at prices that surprise us. I will also say that we’ve been – we fought fairly aggressively on a couple of things and were bid or rather were outbid by 2X. So to Bob’s comment, it seems to be a seller’s market”

Going to have a lot of wells that are drilled but uncompleted

“because we have drilled the wells, we are going to have a significant uplift in what we would call the DUCs, the drilled but uncompleted. We went in last quarter saying we’d probably carry over 125 into next year and as we see it now, we’re probably going to do – carry over around 200, but I would say based on your comments, we do tend to be very flexible here. We’ll probably stand up at least one completion rig to complete some of the extra wells being drilled. ‘

Asset values are high, corporate values are low

“Asset values are high, corporate values are low, that would lead one to believe that the opportunities, the better opportunities may exist from a corporate standpoint. However, few corporate opportunities are actually perfect fits from a portfolio perspective, so you introduce execution risk and whether or not you’re making your company as efficient on a pro forma basis as it is going into a transaction.”

It’s tough to know what the majors are looking at

“You’re latter question on the majors, I don’t know, I mean, it’s hard to know what they’re thinking of and what they’re looking at. So we’re just trying to focus on the way we can build the best company and hopefully be as attractive to all our shareholders as possible.”

Our objective is to get better, not bigger

“I’ll go back to a comment I’ve made on prior calls. And that is, our objective is to get better not bigger, and if getting bigger allows us to get better then that’s okay, we like the position we’ve got, we like the assets we’re in, we like the exploration opportunities that we have in-house. If we see a company that has assets that are complementary, then I think that would cause us to take a harder look at them, but just buying somebody that’s distressed with assets that don’t fit the piece of the puzzle the way we see the puzzle looking, probably should be considered way outside the white stakes.”

We may outspend cash flow next year in Capex

“as we get some little bit better clarity on where we think what that cash flow number is going to look like in 2016. We’re going to be working with the board to decide whether it’s within cash flow or something in excess of it. Either way we expect that we’ll be able within cash flow plus asset sale proceeds. And so, therefore, we avoid putting any pressure on the balance sheet or adding any incremental financial risk to the company’s profile”

These are permanent improvements in drilling cost

“We still see some improvement from the service sector in terms of our abilities to improve margins. I think there is a lot of things we’ve done that are permanent, as it relates to the efficiencies that we’ve put in place. So it’s not just price reductions from various service vendors that in a different hydrocarbon price environment would come back to us as a higher price, these are actually sustainable improvements that will weather the storm of higher prices when we have those.”

We’re still waiting for a production decline in the US

“The last time we were on this call, we were at about 9.4 million barrels a day. I think as most of you know we’re at 9.7 million barrels today. That was one of the reasons we were being very cautious last quarter. We did not see the drop off occurring in the second quarter. At some point the lack of capital being deployed into assets in the U.S. will cause 9.7 million to decline. I think like others, we’ll continue to watch that in terms of understanding how to deploy capital, as simple as that. “

Apache 1Q15 Earnings Call Notes

Decreased rig count by 77%

“we decreased our North American rig count by 77%, from 65 rigs on December 31 to 15 rigs by the end of the first quarter. We are highly focused on reducing all elements of our cost structure.”

Budgeted for $50 WTI

“We have budgeted conservatively at $50 WTI for the year. And while first quarter oil prices came in a little below that level, the second quarter is off to a good start. Should oil prices stabilize at these higher levels and cash flow increase accordingly, we are well-positioned to ramp up the drilling program in an efficient and cost-effective manner.’

New CFO

” It’s great to be a member of the Apache team. And I have to say, it’s everything I hoped it would be and more. In my three months in the role, I have spent most of my time getting to know the business and the people and understanding how we do things. I have been very impressed with our team.’

Now planning to stick with international operations

“he key objectives with us on our international portfolio were two. One, unload our LNG, which we have done, signed, closed. And then we announced the sale of Australia. I think that leaves us with a portfolio now that we plan to stick with, we’re excited to have. We’re 60% to 70% North America. If you look at our North Sea and our Egypt operations, we’ve got world-class people there as well as leading positions.”

Even through the Arab spring, never skipped a beat in Egypt

” I think clearly the investment area there is improving, and if you go back, even though the Arab Spring, we’ve never skipped a beat. So, it’s in general, the investment has always been good for us. We’ve got a great relationship with the Egyptian government, and we did set record times and bring in Ptah and Berenice on, but we’ve been that way in the past. So, lot of advantages. It’s, clearly the sentiment is turning, and like the rest of our business we’re excited about it, and that’s one of the options we’ll have on the table as we start to think about if we have incremental cash flow, where would we put it.”

EOG 1Q15 Earnings Call Notes

Not going to accelerate production at bottom of the cycle

“We have also stated that we have no interest in accelerating oil production at the bottom of the commodity price cycle. Instead, we are drilling but deferring completions on a significant number of wells known as DUCs until oil prices improve.”

Double digit growth at $65 WTI

“If oil prices recover and stabilize around $65 WTI, EOG can resume strong double-digit growth for the balance CapEx to discretionary cash flow program.”

Slowdown giving more time to focus on efficiency

“the slowdown in activity is giving us more time to focus on efficiency improvements. While much has been made of service cost reductions, we expect, we will gain the most long-term benefits from efficiency gains.”

Going to take advantage of down cycle to add acreage

“Objective number four, take advantage of opportunities during the down cycle to add acreage. We are using our exploration skills to define high quality acreage and are having good success capturing leasehold interest in emerging plays. Competition is down, acreage is available, and leasing costs are low compared to previous years, and we are optimistic more opportunities will materialize as the year progresses. We are also evaluating tactical acquisition candidates.”

If forward oil curve continues to improve then will increase completions in 3Q

“As we described on our February call, our production profile will be U-shaped this year. If the current forward oil curve continues to improve, our plan is to increase well completions in the third quarter. Therefore, we expect our oil productions to return to growth in the fourth quarter, building momentum as we head into 2016. We are right on track with this plan.”

U Shaped production

“And so the ramp up will be, as we talked about, the production shape is going to be U-shaped this year and the second and third quarters will be the low point, but the fourth quarter, with the current plan, is to ramp up production growth and the heading into 2016 on a very strong note.”

A big spread between bid and ask on acquisition front

“There’s still a pretty good spread between the bid and ask on the acquisition front. I think we’ll be very selective. We continue to be very selective in our approach, and what we’re looking for, and I think we’ll see some opportunities as we go forward, but there will be smaller, more tactical acquisitions, as well as just continuing to be able to accrete leasehold in some of our key plays and emerging place.”

This has been the plan since February

“We made the call to defer drilling, because we thought this would be or could be a short-term cycle, and we’re hopeful and certainly we’re encouraged by the current firming of the products. So we’re hopeful that’s what will turn out.

But we still, as I said earlier, we’re more optimistic in the forward curve than what it is right now. So we believe being patient and waiting on that products to continue to come up, while also continuing to take advantages of the cost reductions in the wells and the well productivity improvement. Those will all make a very significant difference in the returns we get on the wells when we begin to complete them.”

Not tried any refracts

“we’ve not tried any refracts. Our outlook on that is that it really — technically, we believe that just drilling a new well and kind of starting fresh and making sure your lateral is in the very best target and making sure that you can redistribute the frac very evenly along the wellbore with the new well is probably the preferred way to go. We just think that the upside on the completion will be much greater than if you try to refract the well.’

We’ll be able to ramp pretty quickly since servicers have kept people in place

“If we were ramping up here in the next month or two, I think you can ramp up pretty rapidly. And that’s why many of those operators are trying to keep as many services in place even if reduced work levels just to maintain that support that service companies.”

Anadarko Petroleum 1Q15 Earnings Call Notes

Teams doing well cutting costs and growing volumes in a difficult environment. Able to raise production guidance

“In both fields, new horizontal well performance was outstanding, and the benefits we’re getting from lower service costs, we’re seeing significantly improved economics. The asset teams are also doing a great job of realizing additional volumes by moderating our base production decline. As a result, we’ve invested less than expected in the quarter and we’ve delivered sales volumes that surpass the high end of our guidance. All told, the efficiency gains, outstanding well performance, cost savings, and reduced downtime enabled us to increase our full year sales volume guidance by 5 million BOE, and to reduce our initial capital spending expectations”

I’ve always thought we’re pushing the later innings of productivity improvement, but these guys are proving me wrong

“Well, there’s a good chance that – as we’ve done for years now, is we’ll continue to improve these things. We’re testing some additional processes that make our drilling faster and more efficient in Wattenberg as well the Eagle Ford. So, I would think that you’ll continue to see these. The rate of change is always dependent upon our creativity and execution, and we’re going to work really hard on those, to make sure that we can do the best job we possibly can. So, I foresee it continuing. I’ve always thought we’re pushing toward the later innings, but these guys have continued to prove me wrong. So I’m excited about how things are going.”

We need higher sustained oil prices to really get back into growth mode. It’s a reservoir by reservoir basis though

“Everything’s got its own characteristics and own reservoir uniqueness. So, there’s not really a price point by which we would say, oh, we’re now back into a growth mode. I think what we would say is that we need to see higher oil prices than we have today. But most importantly, they need to be higher and they need to look – appear to us to be sustained.”

Higher prices could bring higher production than people are anticipating

“I think we still have some concerns that, as we achieve higher prices, we could see activity increase and prices, unfortunately, could suffer as a result of higher production than people are anticipating. So, we’re going to be a little careful in terms of adding to that production number. We – if we need to, we’ll continue to drill and add to inventory until we’re convinced that we’re actually going to get good rates of return at the wellhead with that capital on the margin.”

There’s a lot of capital waiting to go into our business

“in January at your conference, I think the outlook was pretty dire for what commodity prices, and oil in particular, could look like for the balance of the year. Prices are a little higher than I would’ve anticipated in January. We have an awful lot of capital sitting on the sidelines waiting to go into our industry. Whether it’s private equity, the public capital markets, or other forms of capital that – sound like the mushroom is starting to get over $100 billion waiting to go into our industry, broadly defined.’

We may have some opportunities we’d like to acquire, but it has to be a really good deal

“So it may be a situation where we’ve got a lot of capital chasing few early opportunities. So I’d say early on, where we have opportunities to add to assets where we’re active, in particular the Wattenberg, the Delaware basin or in the Eagle Ford. We would like to add to that where we think it makes good sense. But I also would caution that comment quickly to say, it’s got to be a deal that really makes a lot of sense to us, because otherwise we’re pretty happy with the inventory we’ve got, and opportunities have to look attractive on the margin, relative to the way in which we would feed capital into our current portfolio.”

Happy with the way a new administration in Mozambique is treating them

“And, as Jim made reference earlier, we’re quite pleased with the way this new administration has been working with us. We’ve made significant progress to date, and still have a few things to get done prior to getting that plan of development submitted.”

We’re still in a negative FC environment for most companies. We still don’t see service costs synched with the environment. There are some companies that are going to bet that prices will run up. We’re not going to be one of those companies

“I think what you’re seeing as an the industry, we’re still in a fairly negative free cash flow environment for most companies. That’s one of the reasons, I think, you should take from the comments from this morning. We’re fairly cautious because we don’t quite yet see service cost synced up to the environment that we’re in from a hydrocarbon price perspective.

Until we start to see more of that synchronization, we’re going to be pretty cautious. I think most of our industry will be fairly cautious. There probably will be some that made – decide to take a bet and thinks that prices are going to run up, and they’re going to get ahead of it with their operations. We won’t be one of those.”

ConocoPhillips Investor Day Notes

1.5m barrels per day, 8.9B barrel reserve base

“Today we’re about 1.5 million barrels a day. We produce that from an 8.9 billion barrel reserve base and a 44 billion barrel resource base. We have multiple sources of growth from a growing inventory of low cost to supply opportunities. We have some key significant resources in some key resource trends around the world today like oil sands, LNG, conventional oil and North American Gas. We’re 80% OECD which we think lowers the execution risk in the portfolio”

We always plan for a range of prices

“At ConocoPhillips we don’t plan on just one particular price path, we run scenarios on those supply and demand factors and we want to be resilient to a broad range of prices and that’s how we’re running the company. But as we think about that going forward what does that mean? We’re planning on lower more volatile prices over the next three years, but we think we have a way to win in that environment and how do you do that? You do that through the portfolio.”

Planning to drop capex and then keep capital spend flat and expect to grow the company still

“So while we’re keeping capital flat at $11.5 billion there are some internal workings that are freeing up more flexibility for the company as we think about the capital program and we’re going risk to the commodity price environment over the next couple of years. But even at this lower capital spend we still are going to grow the company. So you see here our plan is to take the company to 1.7 million BOE per day by 2017 and that’s from the base today of about 1.532 million BOE per day.”

The dividend is a top priority

“So here is what you should listen to for today and I don’t want to sound like broken record but I am just sounding like a broken record. The dividends are top priority use of our cash; we will pay our shareholders first.”

People are still working under the assumption of $75 oil in 2017

” the difficulty about talking about cash flow is that you have to do it relative to a certain price level, and this morning we’re going to talk about cash flow in terms of 2017 price level that is $75 Brent, $70 WTI and $3.50 Henry Hub. And you remember just on Ryan’s presentation few slides back he showed a range of analyst projections out there people who’re making forecast about all the prices and this is kind of midpoint to below midpoint of where those ranges are.”

EOG 4Q14 Earnings Call Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

It’s clear that oil prices are too low right now

“our overarching goal this year is to prepare for oil price recovery. It is clear that current prices are too low to meet the world’s supply needs and the market will rebalance. We would be ready to respond swiftly when oil prices improve and resume our leadership and high return oil growth.’

We don’t believe that growing oil in a low price environment is the right thing to do

“we do not believe that growing oil in what could turn out to be a short cycle low price environment is the right thing to do. And let me repeat, we do not believe that growing oil in what could turn out to be a short cycle low price environment is the right thing to do.”

Our top lays still return 35%

” returns are what matter. Therefore we will focus capital on the Eagle Ford, Bakken and Delaware Basin plays. At $55 oil, these premier assets deliver a direct after-tax rate of return greater than 35% without factoring in the potential for additional service cost reductions.’

Going to drill wells without completing them

“First, we will reduce average rigs 50% down to 27% for 2015 and intentionally delay any of our completions, building a significant inventory of approximately 350 uncompleted wells. This allows EOG to use rigs under existing commitments and when prices improve we will be poised to ramp up completions.”

Lower costs mean higher returns at lower oil prices

“as a result of cost and oil productivity improvements in the Eagle Ford Western acreage, we can now generate better returns with $65 oil than we did with $95 oil just two or three years ago.”

Low oil prices mean unique opportunities to add high quality acreage

“low oil prices mean unique opportunities to add low-cost, high-quality acreage. We will continue to grow our acreage portfolio through leasehold, farm-in or tactical acquisitions.”

Take advantage of low service costs

“Delaying completions will also provide an opportunity to take advantage of lower service costs that will likely materialize in the coming months. ‘

40% decrease in capex from 2014

“Our 2015 CapEx estimate is $4.9 billion to $5.1 billion excluding acquisitions. The expiration and development portion excluding facilities will account for approximately 80% of the total CapEx budget.

2015 CapEx represents a 40% decrease from 2014. As Bill mentioned earlier, we’re not interested in growing oil production in a low price environment.”

The supply imbalance is not that large

The current supply demand imbalance is not very large and current prices are far short of what is necessary to sustain the supply need to meet world demand growth. When prices recover, EOG will be prepared to resume strong double-digit oil growth. For now, EOG is intentionally choosing returns over growth. In fact that’s the way it’s always been here at EOG.”

It makes economic sense to slow production until supply response is realized

“As we compare today’s oil prices to our expectations for a more balanced market, it makes economic sense to slow production until an industry wide supply response is realized and prices respond accordingly. This strategy maximizes the value of our assets and it’s the right strategy to create long term shareholder value.’

Keep our powder dry

“we want to keep our balance sheet clean and low and we want to keep our powder dry so that we will be able to take some advantage of what could be some unique opportunities in this downturn. 2016, yes if we – if things go as we think they might could and we would have say a $65 oil environment in 2016 and we believe that we could return to our very strong double-digit oil growth that we have been marching towards a last few years and that we will be able to generate very high rates of return on our capital and we would be able to stay free cash flow neutral.”

We agree with consensus that production will durn flat to negative by the end of this year

“I don’t think that I’ve talked about our shape of the recovery. But, our view now is that we really believe with the consensus opinion that as we go forward due to the response of the industry that we could have flat to maybe even negative U.S. production growth on a month-over-month basis by the end of this year, and that certainly going to slowdown U.S. production growth this year.

So, as that slows down there should be a price response and I’m not going to predict whether it’s going to be V or U or W o really what the price is, certainly the forward curve is very indicative that prices will increase in the future and we’re just going to wait and see how that goes and we’ll respond accordingly.’

Completion costs 60-65% of the well

‘our drilling cost is roughly 25% to 30% of the cost of the well. So that gives you the completion, of course, I guess we could put facilities in there so the facilities would be somewhere around 10%. So, the balance being completion’

Apache 4Q14 Earnings Call Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

New CEO

“Steve announced last month that he would be retiring from Apache following more than two decades of leadership. During his tenure he helped grow the Company to one of the largest and most successful independents in the world.”

Cannot predict length of oil price correction

“We cannot predict nor control the length or depth of this oil price correction, or the timing and extent of the rebound. We have therefore acted quickly and decisively regarding the things we can control. Our activity levels and cost structure”

>10% well cost reduction

“our competitors are talking about just seeing 10% well cost reductions that’s going to have to be more than that. We’re seeing more than that.'”

Not planning to rework the portfolio at these prices

“Right now in this price environment a lot changes a $100 price environment to $50, so right now as I stated in the prepared comments, we are not proceeding with anything on the spinoff of Egypt or North Sea. We are looking at possibly still monetizing or the non-LNG assets of Australia, but at this point in this price environment I think you’re seeing strength of our international assets complement our North American portfolio.”

It wont be hard to ramp back up

“o we are going be pretty prudent, in terms of what we do we will continue to look at what is the best organization for North America in terms of where things are going and do not worry about being over ramp up, I mean its easy to ramp up after you’ve been there before, I mean we’ve got great capabilities in the Permian and our other regions and it will not be hard to ramp up.”

There will be some opportunities for acquisition if things stay this way

” mean I think the point is we would be opportunistic. I mean we see a potentially if things stay where they are there’s a lot of folks that are significantly out spending. There is a lot of clocks on acreage. We’re seeing things pop-up right now and for drilling a well we can earn pretty big acreage blocks. I think there’s just a lot of opportunity that could surface and we would expect to surface.”

Anadarko 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Cutting capex in line with peers

“I think it would be fair to say that you can anticipate once we have reviewed with our Board, received their concurrence that our capital plan for 2015 will be significantly lower than it was for 2014. And I think you can expect it will probably be in line with the type of reductions you have seen from our peers.”

Not going after growth in a low commodity price environment

“I mean we don’t really see the need to grow in an environment where we don’t have well head economics, purely for the simple purpose of having production growth as an objective.”

If we can push down service costs then 70 will be the new 90

” If we were fortunate enough to be able to find a [indiscernible] to save 20% reductions in service calls and you think about it being in a prior world at $90 per barrel and the economics they gave us at the well head, $70 could be the new $90 or $90 could be the new $70, however you want to look at it.

So we think that $70 gives you the same economics that $90 with the 20% reduction in service costs. I think that’s sort of the way our industry is going to have to look at things.’

This is going to be a new environment

“This is going to be a year of transition, to a different service costs that gets synced up with a different commodity environment. ‘

We’re in a U shaped recovery camp

“I think today we would concur with those that are in the camp that think we have a U shape. We’re not anticipating it being V shaped. ”

Got short term contracts

“Most of our contracts now are on a well-to-well basis and we’ve lowered our completion crews from 16 to 11 already and the predominance of the 11 work for us on kind of pad by pad basis. So we’re getting — we are in a really good spot to take full advantage of whatever the price concessions that we can get.”

Do have relationships with our service providers

“I would say, certainly the larger companies and we want to work with our service providers. We do have a partnership here that goes beyond the next quarter, or the quarter after that, but we will work hard to try to figure out ways to sync up to where if we have the types of service cost reductions that allow us to go back in and see capital at good rates of return we will. We won’t chase growth just for growth’s sake.”

Chevron at Jefferies Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Jeff Shellebarger – President, Chevron North America Exploration & Production Company

Beneath the surface of a deepwater rig

“The well is on the seafloor or about 6 mile deep. The anchor chain could hold this thing in place would be anchored on the Northeast, Northwest, Southeast, Southwest corners of 610. And then the fields that we are producing from are Beltway 8 and I10 on one side, and Beltway 8 and I10 on the other side. So 15, 20 miles away there is seafloor pumps, booster pumps all kinds of kit to bring those things from the wellhead to this floating production unit and then there is an export pipeline that takes it to market.”

Innovation has re-opened North America

“when we talk about why are we back in North America, the headline I guess I would say is that the technology innovation over the last 10, 12 years in the industry is really unlocked or allowing us to pursue plays that we never thought possible 15, 20 years ago”

North America represents 30% of Chevron’s global production

“We represent – at the end of the third quarter, our year-to-date average is 731,000 barrels a day. This is about 30% of Chevron’s global production. Third quarter average was about 751,000 barrels a day. We are growing production year-over-year in North America most of that is driven by the activity that we got going on in the Permian Basin.”

Been in California a long, long time

“California is really the poster child of our base business. We have been there a long, long time. The Kern River field, Midway Sunset field, we are very actively investing in California today. Those are some of the best basis of investments we have in our portfolio.”

EOG 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Liquids production up 33%

“Total company crude oil and condensate production was up 27% for the third quarter and 33% compared to the first nine months of 2013. Total liquids production, including NGLs increased 27% for the third quarter and 31% for the first nine months.”

Eagleford is great

“In the Eagle Ford, I can characterize our current activity in three points. One, the Eagle Ford is on track for multiyear growth; two, we continue to make enhancements in completion; and three, the Eagle Ford is the industry’s best crude oil asset and we’ve captured the sweet spot”

Still generate positive returns on capital even at $40 oil

“At $80 oil, the eagle ford will still generate direct after-tax rates of return in excess of 100%. At less than $40 oil, we would still achieve a minimum 10% direct a-tax rate of return.”

Problems with using Texas Railroad Commission’s data

“we would caution those who used monthly Texas Railroad Commission’s state data as a measure of company current production and a forecasting tool for future production. Remember, the State Data tends to lag and it’s potentially incomplete on a month-to-month basis for a variety of reasons.”

Sufficient cash flow for growth at $80 oil

“At $80 oil, we should have sufficient cash flow to fully fund our Eagle Ford, Bakken and Delaware Basin plays and sustain double-digit oil growth through 2017 and beyond. We plan to invest in our highest return crude oil plays and reduce our activity in our combo plays. We still expect to be a leader in organic growth — crude oil growth next year.”

We would cut back spending in some combo plays in an $80 oil environment

“What we would cut back on is the combo plays certainly the Barnett Combo, some of our drilling in South Texas, in the Mid-Continent, in East Texas and even in the Permian where we have the Wolfcamp Combo. We would not spend as much money in those.

But we need to be thinking that we would fully fund the Eagle Ford, the Bakken and the Delaware Basin plays and that we would have very strong double-digit production growth next year, oil growth and we would continue to be a leader in organic oil growth in the U.S.”

Not really interested in making acquisitions of distressed companies

“the acquisition businesses as you all know, historically, there is a lot of competition in M&As and acquisitions and usually they turn out to be very, very low return. So we are going continue to maintain our focus on growing the company organically through exploration and low-cost, acreage acquisitions in that process”

World oil supply demand is not an area we have a lot of expertise in

“We are pretty good at some things, but the world oil supply demand situation is not an area that we have a lot of expertise in. And a special insight and we read a lot of the same reports and follow the same analytics that many of you do and we are going to kind of leave it up to them, to kind of give direction to others, a lot of opinions out there on what oil prices could do.”

The company is an organic prospect generating machine

“the company is a very prolific organic prospect generating machine. And we think it’s — we can continue to do that as very, very low cost. As we — in the last few years our exploration costs have been relatively low in the company and a very small part of our budget.”