U.S. Markets open in 35 mins

Edited Transcript of AXAS earnings conference call or presentation 14-Mar-19 7:00pm GMT

Q4 2018 Abraxas Petroleum Corp Earnings Call

SAN ANTONIO Mar 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Abraxas Petroleum Corp earnings conference call or presentation Thursday, March 14, 2019 at 7:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Robert L. G. Watson

Abraxas Petroleum Corporation - Chairman, CEO & President

* Steven P. Harris

Abraxas Petroleum Corporation - VP & CFO

================================================================================

Conference Call Participants

================================================================================

* Eric Engel

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Noel Augustus Parks

Coker & Palmer Investment Securities, Inc., Research Division - Senior Analyst Exploration, Production and MLP’s

* Ronald Eugene Mills

Johnson Rice & Company, L.L.C., Research Division - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 Abraxas Petroleum Corporation Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Steve Harris, Chief Financial Officer. Sir, you may begin.

--------------------------------------------------------------------------------

Steven P. Harris, Abraxas Petroleum Corporation - VP & CFO [2]

--------------------------------------------------------------------------------

Thank you, Heather. And welcome everyone to the Abraxas Petroleum's Fourth Quarter 2018 Earnings Call. Bob Watson, President and CEO of Abraxas joins me today. In addition, we have our Chief Accounting Officer, Bill Krog; VP of Operations, Kenny Johnson; and VP of Marketing, Steve Wendel available to answer any questions you may have after Bob's overview. As a reminder, today's call is being taped and webcast replay will be available immediately after the conclusion of the call.

I'd like to remind everyone that any statements made during this call that are not statements of historical fact are considered forward-looking statements, and actual results could vary materially from those contained in these statements. Factors that could cause our actual results to vary are described in our filings with the Securities and Exchange Commission, and we would encourage everyone to review the risk factors contained in these filings and in our press releases.

With that, I'd like to turn the call over to Bob.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [3]

--------------------------------------------------------------------------------

Thanks, Steve, good afternoon. Abraxas has always followed the policy of growing, but not at all costs and certainly not just for the sake of growth. But growing as a result of sound financial decisions. Our financial results are in yesterday's press release and I will not belabor them here other than to point out that, on a yearly basis, we reported a 12 months EBITDA of $0.51 a share, and you can do the math that -- I'll do it for you. That equates to enterprise value at a trailing 12 months EBITDA of 4.7x.

Now I know earnings are full of accounting mumbo jumbo, but nevertheless, they are what they are. And for the year, we reported earnings per share of $0.35 or $57.8 million, which generates a return on shareholder's equity, which is my personal goal, and I talk about it quite a bit with investors. That's what I feel I need to maximize. But our return on shareholder's equity last year is going to be approximately 35%.

Now our decisions going forward are driven by capital efficiency and our quest to generate free cash flow but still grow.

As previously announced, we reduced our 2019 CapEX budget to approximately $95 million, which should allow us to drill and complete. Now there's been some confusion that I've seen some of the analysts report, that is drill and complete 4 net wells and complete 1 net DUC well in the Bakken and drill and complete 4.75 net wells and complete 1.9 DUC wells in the Delaware.

Now you can do the math and look at the schedule that we're going to be talking about, you'll see that the Delaware is front-end loaded and the Bakken is back-end loaded, which should allow us to report fairly steady production growth quarter-to-quarter without the usual spikes up and down.

The timing of these wells should allow, at worst, neutral cash flow each quarter. And we plan to use the free cash flow to pay down debt. The timing should also allow us to grow production low double digits year-over-year using our published type curves, which we continue to beat in most of our wells. And we remain flexible in our budget to allow appropriate reaction to commodity prices, current oil prices and vendor comps, should they continue their current trends, could allow us to upsize our budget while still generating free cash flow.

Despite curtailments, delays and flarings in the Bakken caused by high differentials, weather and process and capacity constraints and occasional flaring in the Delaware caused by frustrating planned outages, current operations are running smoothly. I'm just very glad that we shut down our Raven Rig in the Bakken when we did because I'd hate to see all of the issues we would've faced due to the horrendous cold weather up there this year.

Now despite these excuses, which some have taken as a warning to reduce production in the first quarter, this is new information. Average production for January and February approximated 11,100 BOEs per day, which is up 6% over Q4.

Now the first half of March, it's a little lower. We've had a combination of continued weather outages in North Dakota, and now all of a sudden, severe weather in West Texas, which has given us electricity outages, which has lost us a considerable amount of production. Luckily, we have a number of initiatives underway, which I'll talk about for the second half of March, which hopefully will remediate these issues and allow us to report very good production in the first quarter.

In the Delaware, we've just started flowback this week on a 2-well Creosote Pad, which we now own 95.5% working interest in. We have a frac schedule to start next week on a 1-well Hackberry Pad where we own a 75% working interest. We're currently drilling a 2-well Woodberry Pad, which I've been asked, "Where is that?" It's actually in section 3 offsetting our Caprito block, and we own 100% of those 2 wells.

Now on completion of the drilling of the Woodberry Pad, the rig moved to a 2-well Creosote Pad where we also own 100% working interest. And on completion of the Creosote wells, the Delaware budget as currently stated is done. So that gets us back to the Bakken, which, on a timely basis, will start up activity when the Delaware slows down.

Now the weather-delayed gas pipeline to our Raven Northeast Pad in the Bakken looks like it's finally going to be in service within the next 2 weeks. That will allow first gas sales from this Pad, which, heretofore, have been flared and allow chokes to be bumped up to increase oil production.

The weather-delayed work over to retrieve a piece of coil tubing in the Raven 12-8, which is a new well, started this week upon success and continuation of drill -- plug drill out, which we'll get additional production from that well.

We plan to frac the 4 Lillibridge DUCs, as soon as weather permits this spring, which should coincide with the Delaware slowdown.

And we also expect to restart Raven Rig 1 on a 6-well Jore extension pad sometime this spring, depending on weather. And any results from our value crystallization process, which is just now getting kicked off in earnest, but with a very pleasing amount of early interest.

And with that, I'll ask for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And your first question comes from John Aschenbeck with Seaport Global.

--------------------------------------------------------------------------------

Unidentified Analyst, [2]

--------------------------------------------------------------------------------

It's Steve. For my first one, Bob, I was hoping you could walk us through a little bit more on the -- just the moving parts of production and CapEx for the year. Your prepared remarks certainly helped there. But just looking at it from a 30,000-foot view, what is a general quarterly progression of volumes in CapEX look like throughout the year -- at least, the first couple of quarters, I guess specifically, just trying to gauge your comfort on liquidity right now, absent the Bakken sale, which would certainly help. But just as you can continue status quo, just what does everything look like from a 30,000-foot view?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [3]

--------------------------------------------------------------------------------

Well, the budget in the Delaware is -- I don't have it right in front of me.

--------------------------------------------------------------------------------

Unidentified Company Representative, [4]

--------------------------------------------------------------------------------

$46 million.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [5]

--------------------------------------------------------------------------------

$46 million. And that's going to be consumed roughly in the first half. The final existing budget item in the Delaware is fracking the Greasewood Pad. I might have misspoke a minute ago and said the Creosote Pad. Where the Creosote Pad is on flowback as we speak, and then the last 2 wells in our budget are Greasewood. So that should get us to about midyear, at which time we expect to be fracking 4 DUCs in the Bakken with the attendant production growth associated with them. And start up the Raven Rig #1 to drill a 6-well pad, which, in all probability, would get us to a point where we don't want to frac those wells until the spring of 2020. So I envision production basically flat for the next 3 quarters. And then depending on when the Jore wells are completed, either a spike up or a continuation of flat. As far as liquidity goes, we fully expect to have a -- we've already had our bank meetings, we fully expect to have an upward increase in our borrowing base by the end of this month, and certainly we'll let you know that. So we have no concerns about liquidity issues. And we think the way we've rescheduled our budget, not only allows us to generate free cash flow but allows us to have some sort of a smooth growth pattern throughout the year rather than the soft tooth that we've experienced in the past.

--------------------------------------------------------------------------------

Unidentified Analyst, [6]

--------------------------------------------------------------------------------

Okay. Got it. Got it. That's great, appreciate that. Then for my second one, I just -- was hoping you could discuss parent-child degradation, which is topical these days growing in -- growing as a topical discussion. I mean you guys have certainly been one of the more conservative operators with regards to tests of that and at your well spacing. But just curious, as pertains to your acreage, how many parent wells do you have on your acreage currently? And I guess what I'm really getting at, Bob, is if you do indeed believe that your Delaware assets are worth -- are much more valuable in the hands of a larger operator, I'd imagine if you had less parent wells, your asset could be relatively attractive. So could you just walk us through that? That would -- the color would be appreciated.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [7]

--------------------------------------------------------------------------------

Well, you're always on top of things, John, and I appreciate it. As an engineer, I like to have all the data I can get. The more data I can get, the happier I am. So we're still evaluating the downspacing tests that we did. But I can tell you that the production results are trending toward an optimum spacing around 900 feet. So that's why we continue to report our future net locations that we've identified on both 1320 and 660 spacing. So in all probability, the actual number is going to be -- come somewhere in between. And as far as parent wells go, and it depends on how close you want to cuddle up to them. The data that we have, albeit, it's a most small sample set, we have 1 parent well and 4 offsets to it, would appear that a well is 1,320 feet away has a 0 degradation from a parent well, it's been on production a couple of years, whereas a well 660 feet has about 20%, 25% degradation. Those wells are still economic in our scenario. So that doesn't mean you don't drill them. But there's probably an optimum distance in between wells, which I just spoke to. Maybe it's around 900 feet. So that being said, you can look at our presentation map and see how many wells we've drilled on each section and whether you call that 2-well pad a 1-parent well or 2-parent wells. There is some indication that both zones in the Wolfcamp A are speaking to each other. So if you have a well in the A1 and the A2, it's probably just basically 1 well, 2 wells producing in reserve associated with just 1 well. So it would be difficult to say how many parent wells we have because of that relationship. We don't have any evidence that the Bone Spring is speaking to the upper Wolfcamp A. So that would mean that an upper -- or Third Bone Springs well would be a separate parent well. And we actually have no indication that the upper Third Bone Springs is not communicating with the lower Third Bone Springs. That's a 2-well test that we have, so that's a rather limited data set. So it's going to be difficult to say how many true parent wells we have. But suffice it to say, we have a lot of locations to drill on 1320 spacing, even more on 900-foot spacing. So I don't think there's a whole lot of degradation in value from the drilling that we've done so far, it's mainly been delineation improving up zones that we can now book as proved. Although we can't, because we can't get to them within our 5-year timeframe, but they are certainly there.

--------------------------------------------------------------------------------

Unidentified Analyst, [8]

--------------------------------------------------------------------------------

Okay. Awesome. That's great color. And just to maybe attack it from a different angle. And I'm not sure if you have it in front of you but, just how many wells in total, both parent and children have you drilled on your acreage? I know you've only been active there for a couple of years, so -- and I'm sure you can go back and dig up that number, but if you have it handy, that would be helpful.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [9]

--------------------------------------------------------------------------------

Yes. We have 16 wells on production. We have 2 wells on flowback, and we're fracking 1 well as -- starting next week. And then of course, we're drilling a 2-well Pad as we speak. So 16 on production, 2 on flowback, 1 fracking and 2 drilling.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

Your next question comes from Noel Parks with Coker & Palmer.

--------------------------------------------------------------------------------

Noel Augustus Parks, Coker & Palmer Investment Securities, Inc., Research Division - Senior Analyst Exploration, Production and MLP’s [11]

--------------------------------------------------------------------------------

So just a few things. I think it was last quarter you were talking about -- again on the parent-child issue, preloading parent wells before fracking children, have you done any more with that?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [12]

--------------------------------------------------------------------------------

We have not, because we haven't drilled any more child wells. It's still under study whether that really has a significant impact or not. We are getting data from offset operators that we have data swap agreements with. And hopefully, between our data and their data we'll be able to come to some conclusion. But with our current budget in the Delaware, we have no child wells planned the remainder of this year. Now that could change, if commodity prices tell us to drill more wells and keep our rig going out there. But even on an expanded plan, I don't see us having any real child wells to drill for the next couple of years, really.

--------------------------------------------------------------------------------

Noel Augustus Parks, Coker & Palmer Investment Securities, Inc., Research Division - Senior Analyst Exploration, Production and MLP’s [13]

--------------------------------------------------------------------------------

Got you. And just speaking of your rig in the Delaware, I'm sorry, were you going to add something else?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [14]

--------------------------------------------------------------------------------

No. We're...

--------------------------------------------------------------------------------

Noel Augustus Parks, Coker & Palmer Investment Securities, Inc., Research Division - Senior Analyst Exploration, Production and MLP’s [15]

--------------------------------------------------------------------------------

Okay. Sorry. My next question just was as far as your rig in the Delaware, while what sort of -- do you have that on a contract or commitment?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [16]

--------------------------------------------------------------------------------

Yes. We're committed for basically the rest of our program that's in our budget and then that's it.

--------------------------------------------------------------------------------

Noel Augustus Parks, Coker & Palmer Investment Securities, Inc., Research Division - Senior Analyst Exploration, Production and MLP’s [17]

--------------------------------------------------------------------------------

Okay. Got you. And speaking of data from offset operators, anymore thoughts on the second Three Forks up in the Bakken?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [18]

--------------------------------------------------------------------------------

That's a good question, and we've actually discussed that quite a bit in the last 5 days. The best data we have happens to be wells that are directly offsetting us that we actually have a working interest in. There are 6 wells in the second bench of the Three Forks operated by Continental, they are Wiley and Bailey units. We have a small working interest, but what that means is we get all the data. And those wells are performing very well. So I think the seasoned operators up there are counting the second bench as a true target. But people outside the play are not giving anybody credit for it. So we looked at -- and when we did our reserve report this year, we had to layout a 5-year plan to get PUDs booked for the SEC, and because we don't have all the data on second bench Three Forks that we would like to have, yet, we have very good data in the Delaware, we kind of swapped out those wells, moved them from PUD to PRUD probable undeveloped, and replaced it with Delaware wells that we have ample data to give us comfort that, that makes a drilling program worthwhile going forward. So we're going to keep watching it and studying it and watching those Continental wells and talking to our geologists that has worked, and worked and worked that area. There is no geologic difference between our leases and the Continental leases. So I guess the big question is, how much is the second bench communicating with the first branch? Now the fact that the Continental well, second bench wells are better than their originally drilled first bench wells would tell you, maybe not a lot or maybe it's just improved completion efficiency that's causing better wells. But hopefully, time will tell. And by the time we get around to our second bench locations, we'll have enough knowledge to go one way or the other.

--------------------------------------------------------------------------------

Noel Augustus Parks, Coker & Palmer Investment Securities, Inc., Research Division - Senior Analyst Exploration, Production and MLP’s [19]

--------------------------------------------------------------------------------

Okay. Great. And just a last but sort of a bigger-picture question. Of course you're looking at -- or you're in the process of marketing the Bakken. And I was just thinking, as you look ahead and suppose that we spend an extended time in kind of this $50 a barrel type range. As far as, I guess, where capital should go in your basins and in the industry, we've kind of turned the corner from that time a couple of years ago when private equity money was funding a lot of people to go out, try new concepts, prove them up with the acreage. And that all slowed down in a big way last year to the point where you even saw some of the exits people were making actually being for equity instead. And I just wondered what your thoughts were if you look forward to maybe where you've monetized some of your assets and you're in a position, again, with some money to spend just how you think of, I don't know if you call it, exploratory or kind of a step-out business model, like that, given the different basins you've been in to date.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [20]

--------------------------------------------------------------------------------

Well, I think you can look at our corporate presentation and see that we're generating considerably better economics in the Bakken than we are in the Delaware. So if I had all my wishes come true, I would wish that we would have more acreage in the Bakken similar to what we have. That's probably not a realistic wish, because everybody else wants that acreage and no one's going to give it up. So I think if we do, do something with the Bakken to where it's no longer us, and we have a extremely clean balance sheet with a whole bunch of cash to finance the Raven Rig down in the Delaware until we get free cash flow, I think we've got certainly enough upside running room in the Delaware that, that would be -- have to be where we would go. Now if I was starting up a new company, would that be the case? Maybe not, because cost of entry is so high. But it's still a pretty good place to go and it's kind of unique and it has so many landing zones that people are just now getting to, and we don't know what the ultimate number of locations is going to be because of that. So it's an interesting area. And I'm hopeful that when we have the experience in the Delaware that we've garnered in the Bakken and use that experience to drive cost down that we can get equivalent to economics in the Delaware that we've achieved in the Bakken.

--------------------------------------------------------------------------------

Operator [21]

--------------------------------------------------------------------------------

Your next question comes from Eric Engel with Stifel.

--------------------------------------------------------------------------------

Eric Engel, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [22]

--------------------------------------------------------------------------------

Just hoping to get a little more color on the level of interest you're getting in the Williston asset sale. And then what type of buyer this sale is attracting.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [23]

--------------------------------------------------------------------------------

Well, Eric, that's a -- all we can say, because it's a very competitive situation is that, we've had a very pleasing amount of interest to date. And that it varies from the very large to the small unknowns. And it varies from public companies to private companies to private equity-backed companies. It's the whole gamut. And that's very pleasing to us because we don't know which one is going to offer the best deal for us if anybody does. So we're just glad to have the interest that we have in there, and we're getting more and more every day. The data room really just went live, this week or last? This week. So we're -- the process is just now getting started. Now, I don't want to be -- sound cavalier about it. And as soon as we have something a little bit more concrete than we can talk about, we'll certainly be talking about it with you.

--------------------------------------------------------------------------------

Eric Engel, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [24]

--------------------------------------------------------------------------------

Okay. That's understandable. And then if the sale goes through, how do you plan to prioritize the proceeds? Or what do you plan to do with them?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [25]

--------------------------------------------------------------------------------

Well, it would be in this order: pay off debt completely, even though we said pay down debt, no payoff debt completely; then fund our Raven Rig #1 to move to the Delaware and can start a continuous program with enough cash to where we don't have to borrow any more money to get the new Delaware program up to a free cash flow basis, and then continue to operate on a free cash flow basis thereafter. If there's anything left over, I am hopeful that our board would let us go in and start buying back stock.

--------------------------------------------------------------------------------

Operator [26]

--------------------------------------------------------------------------------

(Operator Instructions) Your next question comes from Ron Mills with Johnson Rice.

--------------------------------------------------------------------------------

Ronald Eugene Mills, Johnson Rice & Company, L.L.C., Research Division - Analyst [27]

--------------------------------------------------------------------------------

Bob, just one last quick question. Since that -- since the data room just went live last week, any sense in terms of when the Petrie guys or how long they were expecting the process to take? Is this something that could be as early as the second quarter event? Or -- I'm just trying to get a frame -- a more broad framework of that.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [28]

--------------------------------------------------------------------------------

All of that depends on whether we have a number that we're okay executing on. It could come down to where Petrie says, well, the market says keep your asset and just cash cow it. But if we do have something we might execute on, we expect it to be mid-second quarter -- no, no, actually mid-April time frame, so start of the second quarter.

--------------------------------------------------------------------------------

Ronald Eugene Mills, Johnson Rice & Company, L.L.C., Research Division - Analyst [29]

--------------------------------------------------------------------------------

Okay, great. And then as we go in the -- as we look in the Delaware in the well performance, but when you look across the zones from the Bone Springs to the A1, the A2 and the B, as you continue to add more recent wells, should we be thinking that what results from like the A2 and the B, likely potentially continue to improve like they did in the Third Bone in the Wolfcamp A as you had a couple of more wells of more recent completion vintage brought on? Or how should we think about the upcoming Delaware completions?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [30]

--------------------------------------------------------------------------------

Hopefully, they'll keep getting better. We continue to tweak our frac design. The -- we are going to test the Wolfcamp B in a Greasewood well coming up. So we're not sure about the rather poor performance of our first Wolfcamp B well, whether that was mechanical or a reservoir. Looking at the rocks, we tend to think -- we had a number of mechanical issues drilling that well, and we've had 2 frac hits on that well. So we're hopeful that, that caused the underperformance as opposed to rocks. So we'll give it a try again. It looks like the A2 is perhaps not as good as the A1, but they're still pretty good, both of them are still beating our type curve, the A1 keeps beating it a little bit more. The Third Bone Spring's is a very pleasant surprise, but we have a limited data set on that. So even though we've got 16 wells on production, we're in 5 different zones. So we don't have a big universe of data in any one zone. So I guess we have to hope that they're going to continue to improve. I know our Bakken results over 9 years have improved every generation of frac design and some of them have improved considerably. And I'm hopeful that will be the case in the Delaware as well.

--------------------------------------------------------------------------------

Ronald Eugene Mills, Johnson Rice & Company, L.L.C., Research Division - Analyst [31]

--------------------------------------------------------------------------------

Okay. And what do you think your average lateral length will be this year? Are you still sticking more to 5,000 to 6,000 foot laterals? And any commentary on what you expect from well cost as we go forward given the current environment?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [32]

--------------------------------------------------------------------------------

Yes. We did that study that we announced at your conference last September, which opened some people's eyes. And we still hold by those results. That was a 450-well study. So that's a pretty good universe of data. We are in the process now that our year-end reserve report is finished. Our engineering group is in the process of updating that study to see if it has changed any. But those of you who are out there that are not familiar with that study, we determined that, to the best that the data will allow us to say, that short laterals have a higher rate of return than longer laterals for a whole number of reasons that we don't really need to go into right unless you want to. And so, our thought process is, we'll continue with 5,000-foot laterals until the data says, you need to be going long, if it ever does.

--------------------------------------------------------------------------------

Ronald Eugene Mills, Johnson Rice & Company, L.L.C., Research Division - Analyst [33]

--------------------------------------------------------------------------------

Okay. And on the well cost side?

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [34]

--------------------------------------------------------------------------------

We've actually had a reduction. I think [our ASEs] is what...

--------------------------------------------------------------------------------

Unidentified Company Representative, [35]

--------------------------------------------------------------------------------

$7.6 million.

--------------------------------------------------------------------------------

Robert L. G. Watson, Abraxas Petroleum Corporation - Chairman, CEO & President [36]

--------------------------------------------------------------------------------

$7.6 million for a 5,000-foot lateral, and that's a 26-, 27-stage frac. Isn’t that it? Yes. So they've come in a little bit. One is from just learning curve efficiency, and two, pressure pumping costs have come in considerably, obviously, using in-basin sand that saves money. So hopefully, our experience in the Delaware will track our experience in the Bakken, where we've driven cost down over time. And I know our last 10 or 12 wells in the Bakken were all between $6.5 million and $6.7 million, incredibly consistent, and that's what we're trying to achieve up in the Delaware.

--------------------------------------------------------------------------------

Operator [37]

--------------------------------------------------------------------------------

And I am showing no further questions at this time. I'd like to turn the call back over to Steve Harris for closing remarks.

--------------------------------------------------------------------------------

Steven P. Harris, Abraxas Petroleum Corporation - VP & CFO [38]

--------------------------------------------------------------------------------

Great. Well, we appreciate your participation today in the Abraxas earnings conference call. As I mentioned at the start, a webcast replay will be available on our website and as well as a transcript, which will be posted in approximately 24 hours. So thanks, everyone, and hope you all have a great day.

--------------------------------------------------------------------------------

Operator [39]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you all may disconnect. Everyone, have a wonderful day.