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WPX Energy Inc (WPX) Q1 2019 Earnings Call Transcript

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WPX Energy Inc  (NYSE: WPX)
Q1 2019 Earnings Call
May. 02, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Q1 2019 WPX Energy Incorporated Conference Call. (Operator Instructions)

I would now like to turn the conference to your host, Mr. David Sullivan, Director of Investor Relations. Please go ahead.

David Sullivan -- Manager of Investor Relations

Thank you. Good morning, everybody. Welcome to the WPX Energy first quarter 2019 call. We appreciate your interest in WPX Energy. Rick Muncrief, our CEO; Clay Gaspar, our COO; and Kevin Vann, our CFO, will review the prepared slide presentation this morning. Along with Rick, Clay and Kevin, other members of the management team are available for questions after the presentation. On our website, wpxenergy.com, you will find today's presentation and press release that was issued after the market closed yesterday. Also the queue will be filed later today. Please review the forward-looking statement and disclaimer on the oil and gas reserves at the end of the presentation. They are important and integral to our remarks. So please review them.

So with that, Rick, I'll turn it over to you.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Thank you, David and good morning to everyone who is joining us. We sincerely appreciate your interest in our -- in hearing about our first quarter results as well as our outlook for 2019. All of us at WPX share your high expectations for our company, our results and our reputation. I'd also like to thank our employees who are listening today. Their efforts drive our success and I'm grateful for their ongoing commitment to excellence and innovation.

Getting things done is exactly what we do at WPX. We have a rock solid record for execution, I'm quite pleased with what we've accomplished over the past five years. But today, it's all about capital discipline, generating free cash flow and leveraging those resources to reward shareholders in a tangible way. We originally presented a goal of returning capital to shareholders in the year 2021. Since that time, some things are starting to line up in our favor, and we believe there is a chance we could accomplish it sooner.

As we've said, this could be in the form of debt retirements, dividends and-or stock repurchases. Let's turn to page two. We're off to a good start this year, sticking with our plan and doing what we said we're going to do. On capital, we're right on track to stay on budget, we're confident in our guidance range and we believe our actions throughout this year, will give you reasons to share our confidence. These reasons include significant cost savings, we're realizing in the Delaware Basin. Now Clay will have more to say about that in a few moments.

We're also continuing to apply the lessons we're learning from our basin leading technical work, which drives efficiencies and stronger well results. Our financial strength is enhanced as well by the up trending commodity prices. At today's strip we believe we can generate more than $100 million of free cash flow this year. Even with stronger commodity prices once again our capital plan is firm. With regards to debt, we expect to finish the year at about 1.5 turns of leverage on a trailing 12 month basis. Now on the transaction front, we've already executed a couple of midstream deals that came together, ahead of schedule and we're really pleased with the returns we received, we turned about $125 million of investments into net proceeds of more than $500 million within a 2 year timeframe. All of this contributes to a rather robust value proposition for WPX shareholders and at this we'll turn to page three, and I'll turn it over to Clay.

Clay M. Gaspar -- President and Chief Operating Officer

Thank you, Rick and good morning everyone. We've enjoyed a solid start to the year and we're very encouraged with what we see going forward. Our Delaware team continues to strive for operational excellence everyday. You'll see that as we've moved into full development mode, our well performance continues to improve and our well costs have materially improved even relative to our 2018 average numbers. We've aggressively incorporated the lessons we've learned from our pacas state tests and that is immediately translating into value. In North Dakota, we fought a prolonged subzero temperatures period including the coldest February since 1936. I'm very proud of how our field organization was safely able to keep existing wells producing while fighting off 40 below temperatures.

On the completion side, we elected to slow down a bit and make sure that we're not going to jeopardize the safety of the people on location or the environment. As I'm proud as I am of our production performance, I'm even more proud of our safety culture. This is a great example of our team keeping our eyes on the big picture, rather than just a short-term win. While our first quarter numbers for Williston were unaffected, we will have delays of some of our second quarter for sales. This will dampen our second quarter Williston production. So we have steps in place to catch us back up in the third quarter.

The Delaware Basin experienced March windstorms that left a portion of the basin without power for a period of time. While our team can fight off harsh conditions, they can't operate the fields without electricity. The power outage impacted the Delaware oil production for the quarter by about 1400 barrels per day. I get that all that sounds like quite a bit of granular given and take. Here's what you need to know. As we stand today, I have full confidence in our ability to meet or even exceed our full-year production capital while we hold firm on our capital plan. Also, we will accomplish all of this with a very healthy safety culture. Our midstream strategy which we rolled out over three years ago has created an impressive downside protection and the significant shareholder value. It's never been more evident than in this quarter.

Rick mentioned the monetization of nearly $0.5 billion in the quarter with the sale of equity interest in both WhiteWater and Oryx II . Remember, these sales do not negatively impact our flow capabilities or our rate structure. In Q1, our Delaware oil realizations averaged $0.09 below WTI when you include our basis hedges. Finally, despite a significant basis blowout in Waha late in the quarter. Our natural gas realizations were $0.76 below NYMEX including our basis hedges. In addition, our Midstream Partners Howard Energy are currently commissioning our second 200 million cubic feet a day processing train, and it will be in service late in the second quarter.

Now let's turn to slide four, and we can talk specifically about the Delaware results. This is a pretty busy slide, but that's because there's a lot going on in the basin and there's so much good stuff to talk about. A hot topic and resource plays today, is the impact of parent child well interference. This is something that we've been focused on since our early efforts in 2016. We now have more than a dozen spacing test investigating various horizontal and vertical spacing, completion designs, ceased sequencing impacts and they are planted in various parts of our development area. Of course, commodity price and well costs also significantly contribute to the calculus of seeking the most accretive solution. Today I can humbly say that I believe we are well ahead of our peers and this important work and I have great deal of confidence in our development plan.

That said, we embrace learning mentality and we will always continue to evolve and improve. The plot in the top right shows exactly this and some great insight on this very topic. As you can see, we have one mile well, and we have seven two mile wells on this recent pad. The performance of the Group of the two mile wells at the top are exceeding what we have held out as our directional guidance for two mile full development. Also there is a one mile well that's exceeding the one mile type curve. Two questions I anticipate from this plot are one, why drill one mile well and two, why is one of the two mile wells underperforming the rest?

Well, as we go back to develop these two mile drilling spacing units. We need to work around the existing delineation wells. In this case the one mile well complements another one mile well that we drilled in the opposing section. In the case of the underperforming two mile model well, we need to tuck this well closer than ideal to the parent well that is several years old. We needed to do this to get our spacing pattern back in line for the rest of the DSU. That well will still generate a solid return, but it's not nearly as economic as the properly spaced wells. I like this plot because it clearly shows the importance of two mile development as well as getting the spacing right. I should also note that when we first presented our one mile $1 million barrel type curve, it was for parent wells. As you can see, we've been able to drive well performance to the point that we can maintain that same type curve, even as we move to full child development mode. And that's a really big deal.

On the left side of the slide you can see the efficiency gains we're achieving on the drilling and completions front. Our days from spud to rig release have improved from 32 days in 2018 to 23 days in Q1. As we move to delineation to development, we have more room for improvement. Recently, we had a two-mile well with the record spud to rig release in just under 16 days. The team is already looking for improvements beyond that impressive mark. On the completion side our lateral feet completed per day has improved approximately 90% over the last year. Many of the efficiency gains are directly tied to the changes we made as a result of the paper state project. The gains have allowed us to utilize one frac crew for a very efficient five rig program that we're now running. Last year we would have needed almost two full frac crews to keep up with the five rigs running at a slower pace.

Now let's turn to slide five and let's talk about the Delaware midstream. Our midstream strategy continues to deliver. The objectives of our strategy are to capture physical flow assurance and have a diversified transportation portfolio to multiple markets to enhance value and minimize downside risk. The impact of this strategy is evident when looking at the first quarter realized prices. The plot in the top left shows monthly realized oil price and how we stacked up relative to WTI. The results show that we've taken very significant risk out of the system. This is still a very dynamic market and could change quickly. In fact the June Midland basis is back out to $5.50. Note that we are protected when the basis is blown out and just as importantly we are not massively underwater when the basis closes back up.

Although, gas is not a financial driver, the same way that oil is we also pay attention to that market and do everything we can to protect downside risk. As you can see in the top right, our realized prices are towing in very well even in a very disruptive (inaudible) market. When you include the value that we've created marketing the open capacity we have within our contracts we have essentially closed the gap, all the way back to NYMEX prices. Once again, our focus is on physical flow assurance and diversity of markets. When that strategy is executed properly, these are the results that you get. Now let's look forward a bit in the back half of 2019 approximately 75% of our Delaware barrels will receive gulf or international pricing. This percentage increases to over 80% in 2020, I think it's important to remind everyone that many of our takeaway contracts out of Midland, were signed well before the Midland basis became an industry wide concern. This is the reason our weighted average cost is so much lower than what the current market spreads.

As you can see in the bottom right bar chart, our transport contracts are well in the money despite the tightening of the Midland WTI spread. This bar chart shows the relative uplift MEH pricing with many of our barrels actually receiving international prize, the actual spread is even higher than what's depicted here on the chart. I would like to point out that with the pipeline projects coming on late in 2019 our transport costs will actually decrease by about $1a barrel in 2020 and our exposure to international pricing will increase. This also continues to support our work to get light barrels to the preferred international markets.

Let's turn to slide six and discuss our work in the Williston Basin. So Williston delivered a strong 8% sequential growth quarter-on-quarter. This was accomplished despite severe winter temperatures. First quarter winter weather and road restrictions have impacted the timing of two pads coming on in the second quarter. Our Badlands pad and the spotted one pad have both been pushed out about a month from their planned timing.

This chart on the slide, never get old. We've shown this several times, but it continues to amaze me each time we update it. The plot shows the average 12 months cumulative oil production for all WPX wells drilled in Williston from 2012 to 2019. Our rock in Williston has always been top tier but this chart shows that we are continually pushing ourselves to raise the productivity bar from this incredible rock.

In addition, we gained ground on well cost and we're headed back below $7 million for drill, complete, and equip well costs including artificial lift. As you can see the start of 2019 is looking to be very even improvement over 2018. This is driven by the results we're seeing on the Good Voice, Young Bird and plenty Sweet Grass pads.

Now I will turn it over to our CFO, Kevin Vann for the financial update.

J. Kevin Vann -- Executive Vice President and Chief Financial Offcier

Thank you, Clay. As obvious compelling progress in our operations and in our financial results. Speaking of, in my remarks last quarter, I referenced how we conquered debt. During the Q&A, the comment was rightfully challenged, at the time we had conquered our year-end leverage goal. We did it, of course, but then we set a new target. True to our company DNA, we're still putting downward pressure on that metric.

As Rick mentioned earlier, we expect to be at a turn and a half by the end of this year. Many companies don't have the underlying assets to continue to improve their leverage especially at $55 crude pricing, we do. Constantly getting better is a big deal, it generates new value maximizes our portfolio and most importantly help strengthen margins and that's part of what makes our disciplined story so good. For us, staying disciplined is bigger than just sticking with the plan. We also have the discipline to know that the race brand is never over. We compete against the market everyday and in our business it's either fight or fall behind. You don't have to guess where we stand on that.

Now let's turn to slide eight and review our first quarter results. For the quarter at 96,100 barrels per day, our oil production is 46% higher than the same period of 2018. Our Williston Basin drove this increase. From a sequential quarter perspective, we were effectively flat to the fourth quarter. Again as Clay mentioned, we were negatively impacted by approximately 1400 barrels a day. As a result of weather that cost unplanned downtime in the Delaware.

Despite these weather-related issues, our full year guidance is not impacted. On an equivalent basis, we're up 31% since the first quarter of last year. For the first quarter we are reporting Adjusted EBITDAX of $312 million which is $112 million higher than last year. This 56% growth in EBITDAX is impressive given our realized oil prices in 2019 were nearly $10 a barrel, lower than 2018. We did benefit from some modest hedge gains this quarter, but more importantly our realized margin margins per barrel continue to improve.

We have indicated, many times in the past that our asset base generates great returns even at $50 crude with realized pricing around $50 per barrel, this quarter, the results continue to confirm this statement. With these first quarter results in the books and the remaining forecast the balance of 2019, again I'm pleased to say that our leverage will approximately 1.5 times by the end of the year and we will be generating free cash flow in excess of $100 million.

For the quarter, our operating costs have trended right as we expected and nothing has changed regarding our expectations for the rest of 2019. For the quarter, we are reporting adjusted net income of $22 million versus a net loss of 22 million in 2018. The improvement was driven by the same factors impacting adjusted EBITDAX, however, our DD&A was 58 million higher than last year. Despite this absolute increase, our DD&A rate continued its downward trajectory by nearly $2 per barrel. Same story at different quarter here, we are drilling better wells at lower cost.

Our capital expenditures incurred for the first quarter totaled $425 million. Of this amount, $102 million was for land and surface acres acquired during the quarter, which we had guided to previously and were funded by the sale of our Whitewater equity investments. All other capital expenditures totaled $323 million and keep us in line with our full year guidance. As you have already heard in this call, our capital plan for this year is our capital plan, we will remain disciplined.

Turning to slide nine. You've heard Rick discuss the additional free cash flow that we will be generating this year, you've also heard about the amazing returns on capital invested, we've realized from equity investments in two pipeline projects. The next obvious question, one for which I have been asked repeatedly over the last couple of months is, what is WPX going to do with all of that additional cash flow? I've answered that question with the following. First of all, we need to see the higher commodity prices realized into cash. We are four months into the year, we still have a lot of ball to play this year.

As far as the expected proceeds from our recently announced or Oryx ll monetization, if you read the 10-Q that will be filed today, you will see that we had just about the same amount pulled over as we did at year end, those proceeds will be used to pay off the revolver. So again our capital plan for 2019 is unchanged and unwavering. We are absolutely committed to it. As a matter of fact, we even changed the metrics that drive our annual incentive program. This annual incentive program establishes the behaviors that we want to reward our employees. At least 50% of those metrics now incorporate some kind of capital or cost control and incentivized the behaviors of sticking to our capital plan and generating the free cash flows that we have discussed this morning. Their metrics are designed, but if we outspend our capital plan the result is punitive to all WPX employees. We take this seriously.

In previous years, those metrics were more aligned with growing the cash flows to reduce leverage. Again, we set a leverage goal established the compensation metrics to align employees to that goal, and guess what? we hit it. Now we are pivoting our goals to continue to create shareholder value, much like we have done over the last three years. As we begin to accumulate free cash flow on the balance sheet, our ability to begin returning value to shareholders comes into clarity.

With that, I'll turn it back to Rick for some closing comments.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Thank you, Kevin. As you and Clay discussed, our commitment to continuous improvement really shows in our results. As we said in our recent annual letter to shareholders, we will work hard to keep earning your trust by focusing on margin growth and precise capital execution. Yes, we're positioned well for 2019 but we're also well positioned for 2020 and beyond. Our plan is simple, and it can be summed up in three words: sustained, value, creation. Simply put, that's our job every day. At this time, we can now open the lines for questions and I'll turn it back to the operator.

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from the line of Gabe Daoud from Cowen. Your line is open.

Gabe Daoud -- Cowen -- Analyst

Hey, good morning, Rick. Good morning, everyone. Maybe just starting in the Delaware. Obviously volumes are down a bit here quarter-over-quarter and there was some weather and a sale, but can you maybe just give a little bit more color around the Delaware in 1Q and just how volumes trend over the next couple of quarters, particularly, just given the number of wells you guys did turn-on in 1Q. And then also considering your -- how 2Q volumes look, not just in Delaware, but I guess also just overall considering your comments on Bakken. Thank you.

Clay M. Gaspar -- President and Chief Operating Officer

Sure. Yeah, I'll take that. This is Clay. You're right, obviously the turn in line numbers on a quarterly basis are important. But I would argue there probably more important for the trailing quarter than they are in the current quarter. As an example, the 31 wells we brought on the Q1 about eight of those were in the last couple of weeks of the quarter really netting no material gain for the first quarter. We will continue to see steady progress in second, third and fourth in Williston, am just giving in Permian.

On the Williston side, it is a little bit more lumpy bring on some big pads, they tend to kind of come and go. You've seen that in our prior numbers, you can track over time. I would suspect as we are rolling the numbers forward, plan on Permian being kind of that steady growth quarter-after-quarter and then Williston as I mentioned in the call my prepared remarks, second quarter is going to be a little bit light and then third and fourth quarter will be pretty strong, Williston. Hope that helps.

Gabe Daoud -- Cowen -- Analyst

Yeah, thanks, Clay. Thanks for that. And then maybe just a follow-up, you mentioned in the press release $100 million plus or so of free cash this year. And then obviously you combine that with some of the midstream proceeds seems like you have enough dry powder for, yeah -- to think about accelerating that capital return timeline, but any specific updated thoughts on that or are we still kind of waiting on corporate base declines to moderate a bit?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, either we're going watch this thing. I think if you ask, Kevin, he is going to say first things first. Let's get the proceeds in from the sale and let's -- let's watch this year stay up progressive. As I said earlier, we are very confident in our plan, but I think first things first. Let's go ahead and get that -- get the cash in the door and we'll go from there.

J. Kevin Vann -- Executive Vice President and Chief Financial Offcier

Yeah, the current commodity pricing, the proceeds that we expect to be receiving this quarter from our works two sale that definitely helps accelerate kind of the foundation that we need in order to lean into a dividend or some type of other return of value to shareholders. But I'll preface all that by saying we need to realize this, we need to see what is the balance of this year does and then we also need to be thinking about what 2020 looks like in terms of commodity prices, and then just what are based cash flows look like in that environment.

Gabe Daoud -- Cowen -- Analyst

Awesome. Thanks a lot, everyone.

Clay M. Gaspar -- President and Chief Operating Officer

Thank you.

Operator

Our next question comes from the line of Derrick Whitfield from Stifel. Your line is open.

Derrick Whitfield -- Stifel -- Analyst

Good morning, all and congrats on the strong ops update.

Clay M. Gaspar -- President and Chief Operating Officer

Thanks Derrick.

Derrick Whitfield -- Stifel -- Analyst

Perhaps for Rick or Kevin, over the last several weeks gas (inaudible) has become a topic of discussion for Permian producers in light of recent lower prices while your gas is relatively insulated due to strategic actions taken on the midstream side, could you share your thoughts on in views on local gas macro and how long gas prices could remain depressed in the basin?

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

I think there is going to be a lot of -- a lot of gas coming on over the next several years in the Permian. And so I think you're going to see some pressure on that pricing. There are numerous projects on the drawing board from an industry perspective, I think it's going to help alleviate part of that but there is going be a lot of gas coming on. I'm going to turn it over to Greg Horne, who is our VP of Midstream & Marketing and let him, give you a little more detail around that.

Greg Horne -- Vice President of Midstream and Marketing

Sure. Thanks, Rick. And maybe the only other color I would add to this is that we've seen this situation occur a number of basins that many folks in the management team here at WPX have been involved in in the past and really this being an oil basin, people are very focused on oil and we've got a lot of folks that also have a lot of gas background at WPX as well. So from a macro situation the way we look at what's going on out in the Permian Basin is that, you certainly need infrastructure to evacuate the gas from Waha to get it to the Gulf. And there's a number of pipelines-- they are going to come on at the end of this year, (inaudible) pipe and there's another one that comes on in 2020 depending on, let's say, Global demand, the health of the economy, et cetera. If we continue on a pace that we're on the, you kind of need a new pipe maybe every one to 1.5 years.

So you'll continue to see this pressure especially in shoulder seasons, which is what we're in now and we expect that Permian gas will continue to be pressured. So you'll have to certainly keep an eye out on the future and and be synced up with what the demand is that's coming down the road.

Clay M. Gaspar -- President and Chief Operating Officer

You know, one thing I may add is, if you look at Permian producers. I think with the strong balance sheets, you've got a lot of the majors that obviously have a big presence there. I think over time people will get it, they will sign up for firm transportation underpinned some of these projects and I think it'll be a big plus. But at the end of the day, producers have to recognize the importance of the associated gas and and be ready to handle it.

Derrick Whitfield -- Stifel -- Analyst

Very helpful color and as my follow up perhaps for Clay. Referencing slide four, could you speak to what's driving the relative performance of these wells? If I recall your 1.7 times rule of thumb multiplier for long lateral development is really based on unbounded wells. These wells are clearly bounded, a point you referenced in your prepared comments?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, I think that the math hold. So the 1.7 for those that haven't heard me talk about this before as we walked into the Delaware Basin. I mean, very early on the idea of the question was, if you can do all this land work, what is the uptick or the benefit in doing so? And I said historically speaking you kind of see a 1.3-ish multiple on costs and a 1.7, maybe even 1.8, multiple on EUR productivity and obviously, that's a very accretive proposition. So what we're seeing here, that 1.7 is holding true. Your question is, "Hey, that was kind of parent to parent.'' The math should work on child to child. As you see on the one mile well that we have on this plot, it's a fully bounded well as well.

And so, as it's outperforming that 1 million barrel type curve, take the 1.7 times it we're still seeing that uptick and that's something that we're really proud, but I don't think it's kind of one of those subtlety that can kind of get lost. But we threw out that type curve as a parent well knowing that we are quickly moving to a development mode and really trying to understand this well to well interference. Our well performance has caught up or, I would say, outpaced the degradation of the well to well interference. And so, it ends up being a wash and when to Wash sometimes it is kind of lost on the casual observer, but it's a really big deal. We're really proud of that one million barrel type curve for these child welled full development mode for one mile lateral and what you can see here that 1.7 multiple holds up really well for a fully bounded two mile development. So really exciting. It's a very insightful plot, pretty excited to have that to talk from.

Derrick Whitfield -- Stifel -- Analyst

It's very helpful. Thanks for your time, guys.

J. Kevin Vann -- Executive Vice President and Chief Financial Offcier

Thanks.

Operator

Our next question comes from the line of Will Thompson from Barclays. Your line is open.

William Thompson -- Barclays -- Analyst

Hey, good morning guys. It sounds obviously there is a clear emphasis on your plan is to hold the line on '19 CapEx and you've captured some meaningful cost savings and what sounds like more structural efficiency gains, but given last quarter there were some discussion about adding Permian rig at some point down the line. Correct me if I'm wrong, but the belief was that you were under scaled five Permian rigs, particularly with some leasehold activity. Just wanted to get your current thoughts on 2020 and beyond, and maybe what could be the capital efficiency gains if you do decide to add a rig on line.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Well, I think one thing we need to do is is continue to focus on these efficiencies and we're really, really pleased and I think that would drive rig count, those sorts of things. But the bottom line is we took down the CapEx and if you keep a focus on free cash. I think you'll hear us really talking more about is the capital spending and I think that that will drive what your rig count actually is. I think Clay and the team are doing a nice job managing, covering our acreage or CDC's that we may have to deal with, while at the same time building out the infrastructure. And infrastructure can be pipe, it can be redundant power systems that sort of thing. That is one of the things we're really looking at as we've tested with a lot of our growth out there, not just us, but a lot our ops, and when you get Stateline area it's a good rock, it sure is the world and so a lot of focus from a lot of good companies.

But what you see, is you see infrastructure getting stressed on and we're seeing it on the power side, and so we're going to be attacking that. So I think from our Permian rig count perspective, no play in the team we'll just balance all that and see what the net effect is. But just please hear us that we're really focused on generating free cash.

William Thompson -- Barclays -- Analyst

Okay, that's helpful color and then regarding your early work on the midstream arrangements. So you clearly seeing the benefit on closing the gap with WTI pricing, even before the basis swaps with 80% of '18 volumes, sorry, 20 binds are to be linked to international gulf pricing. Would look for under $2 a transport cost base on that slide. Should we think about modeling a premium to WTI at some point? Just curious on how you think it's going to play out.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Yeah, I think it's all going to look at what the strength of the brand is, I mean that's going to drive a big part of that. But I do think we're well positioned with the arrangements that we've had and that's the thing that gets us really really excited about our Permian growth that we're going to see over the next several years and you'll see more of that exposure. And so, I think it's going to really, really lead to some very, very nice netbacks to well here.

William Thompson -- Barclays -- Analyst

Thanks for taking my questions.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Thanks.

Operator

Our next question comes from the line of Brad Heffern from RBC Capital Markets. Your line is open.

Brad Heffern -- RBC Capital Markets -- Analyst

Good morning, everyone. Greg, I was wondering if I could just get your updated thoughts on M&A, obviously we have at least one of the big players getting bigger. So your thoughts on the importance of scale, either through you guys doing a new acquisition or some sort of merger of equals would be interesting. Thanks.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Well you know, obviously the large transaction is under way out there with (inaudible), but it's going to be really interesting to see (ph) where that -- how that really plays out and I'm surprised actually there's not a third player in there that seems like a logical player in that role. So we'll see how that all plays out. But as far as WPX perspective, we've shown that we can operate quite well like our assets and so I think we're going to just focus this year on our portfolio and I really like the growth that we're going to see. We talked about 20% growth over 2018, living within cash flow generates free cash. And I think that's going to be our focus. We always have opportunities come our way for small acreage. They're not even some of them are more small open, not even boltons but I think our team will continue to look at those and try to optimize our portfolio and focus on that. So that's kind of where we're at. I know that there's a lot of talk about the M&A out there, but you know for every positive I hear a lot of people that the pushback on things and so until the market gets more receptive a lot of talk, but I think people are going to be by large on the sidelines wait and see.

Brad Heffern -- RBC Capital Markets -- Analyst

Okay, thanks for that. And then there's been more talk about West Texas slide and general crude quality discounts in the Delaware. I was wondering if you could talk about sort of what's your average API is across the production and be -- if you're seeing any issues with that in any areas?

Greg Horne -- Vice President of Midstream and Marketing

Sure, I'll take a stab at that. This is Greg Horne. It's good question, appropriate concern and here's how I'd answer it for WPX, regarding kind of the light barrel in the discount and I'll maybe let Clay opine on the gravity. We've largely demonstrated our core competence at WPX identifying constraints or opportunities in the market and then taking action to mitigate those risks or position of the company to be in an advantage position so regarding the light barrel discount, we saw it coming and locked in physical deals with fixed discount to WTI for equity barrels.

So for example, if the discount goes to $2, $3, $5 dollars, we're in good shape, we're protected well below those levels. That's kind of for the balance of '19. Beyond '19, we've got the P-66 Gray Oak line coming on where WPX holds capacity. Our capacity ramps from 20 toward the end of this year when there's early in service about Q4 quickly goes to the 30 and then eventually goes up to about 50 over time.

So really it's more long haul capacity opens up later this year and into '20 where our barrels move to Corpus and down to the gulf in general, hit the export markets, that's where those markets desire the light barrels. So we see that discount just in general for the basin being alleviated a little bit when these pipes, come on, but for WPX we've taken care of it in 2019.

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, I'll just add something and reiterate a point. Gravity 50 plus or just over 50 probably on a lot of our barrels, 48 to 52 is the range. Remember that is on a worldwide basis that is not a negative. Much of the world crave those barrels and so the trick is not to be stuck in West Texas with a bunch of barrels where it is not a local market for it. So, as Greg mentioned, getting this pipe, getting the barrels to the Gulf Coast really opens us up to that international kind of a premium market that we're really excited about. So we've done a great job of mitigating kind of the time between now and when those pipes come on and then once the pipes are on then were freed up to market the barrels internationally.

Brad Heffern -- RBC Capital Markets -- Analyst

Great, thanks for the answers.

David Sullivan -- Manager of Investor Relations

You bet.

Operator

Our next question comes from the line of Jeff Grampp from Northland Capital Markets. Your line is open.

Mr Jeff. Your line is open, (Operator Instructions)

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Go to the next call, operator.

Operator

Our next call comes from the line of Brian Downey from Citigroup. Your line is open.

Brian Downey -- Citi Group -- Analyst

Great, thanks for taking my questions. On the co-development, you clearly have solid result out of the CVR pad there and you indicated additional wells on that same time the X, Y in the Upper and Lower A, you also touched on some of the lower Wolfcamp intervals in the how you Pad as you delineate acreage there. Medium term, would you start adding any Wolfcamp Bs or other zones in your co-development plans in any of your areas and does that affect the calculus as you mentioned on co-development?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, I think it's great question. We have, -- we think about this a lot, we actually recently tested A-B well in conjunction with Wolfcamp development right in the middle Stateline. The results are telling us that where we picking the landing zones in the A and the landing zone -- this particular landing zone in the B is that there's not hydraulic communication between the two. So what that does is it freezes up from needing to co-develop the B at the same time as the A. Now in the right, rig program right commodity price right environment, we certainly could do that, but right now we're trying to take bite-size pieces and make sure that what we leave behind is ready for a rig to come back and be in a very good productive state.

Now contrast that down with-- in the Sand Lakes area, where we're finding that B landing zone is in hydraulic communication with the Wolfcamp A. So when you see us have rig program down there, we will actually be developing the lower , excuse me, the B, the lower A, the upper-A and the X, Y, all the same time in one rig visit. So it's really a little bit unique to the area. You mentioned that HARDY which is a little further out to the east on what we call the river tracks. We've tested the B, we've tested the D, tested the A, obviously the D is clearly in a different flow horizon, but we continue with a relatively small percentage of our overall capital to continue to test these landing zones and understand the bigger picture.

I'll point back to the 41.44. The other reason I like it so much it's right in the middle of Stateline and it's very representative of the two-mile development that is the heart of what we're going to be doing as an organization for the next several years. That's the basis of our growth program and so it's very encouraging really excited to see these results and again on the back of some really good technology we applied, we've learned from, we're creating massive value when you pull all that together.

Brian Downey -- Citi Group -- Analyst

Great, that's very helpful. Any ancillary effects there as you go toward the B? I know that the gas cut and oil cut changing a little bit. Anything on that front?

J. Kevin Vann -- Executive Vice President and Chief Financial Offcier

Yeah, generally speaking, as you're going down in section from the X, Y down to the D, you're lessening oil increasing gas. We mentioned in the release, one of the wells that we drilled in the HARDY, we had I think a A and D, maybe B as well. The D well in that particular case was 26% oil. So obviously that's significantly lower than the preponderance of our development right in Stateline we're just north of 50, call it 50%-55%, oil for the Wolfcamp A. It would be the same thing in Stateline as you move down in section, it becomes a little bit gassier.

The good news is you get a lot more energy. The EUR is going to be higher. The flow rates are higher. And so there is some mentioning trade off. And in the right commodity mix, the right commodity pricing environment those Ds will become compelling and we will queue them up and get ready to develop at some point in the foreseeable future.

Brian Downey -- Citi Group -- Analyst

Great, I really appreciate the color. Thanks guys.

J. Kevin Vann -- Executive Vice President and Chief Financial Offcier

Thank you.

Operator

Our next question comes from the line of Neal Dingmann from SunTrust. Your line is open.

Neal Dingmann -- Suntrust -- Analyst

Morning, guys. Clay, you and Rick, you guys have done a great job of just creating value around your midstream and my question is around sort of like go forward. Do you still see a number of other ways to create internal midstream value, whether it's with the water system or how our JV and the other things you have?

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Yeah. Neal, we do have the water system, of course there is lot of value there, the JV, lot of value there. But the other thing I think that a lot of folks don't understand is once you have shown an established track record of value creation and investing at the right time and monetizing at the right time. You get more opportunities coming your way. And so, that's one of the things that we're really focused on is just looking at opportunities and seen that if that fits with us and can live within our capital budget. We're going to be once again-- We'll sound like a broken record, but we are going to be very, very disciplined around that but we do see from time to time some opportunities present themselves that there are very intriguing. So I think on the water and the JV will continue. There are still some what I think mature. We are really excited about the recycling capabilities that we now have and that's a growing part of our business. So I think you'll just continue to see value growth in both of those arenas with water gathering and the JV.

Clay M. Gaspar -- President and Chief Operating Officer

I will just add a quick comment. I fully agree with Ricks thoughts around water and all the other things we've talked around the gas that we have been ahead of the market on this light barrel business. I mean, clearly, we've got that box checked as well, but think about the announcement from last quarter, the TPOP, the surface acreage. That opens up a whole new arena of value creation for us. On the call I believe I tried to convey how important and value creating this $100 million investment is going to be for the company and you tell you as we stand today we clearly seen time and time again opportunities coming our way because of that position that we hold. Multiple times over potential value creation of what we have invested in it. So it lines up exactly with what Rick was talking about and what your question was around our culture of thinking about forward value creation in creative ways.

Neal Dingmann -- Suntrust -- Analyst

Great and (inaudible) as much. And then just a follow-up. Clay you strategically added that that surface acreage ground state line last, could you just maybe comment on the benefits you're seeing from that and has anything changed or you think you'll continue to see just sort of the fruits of that labor?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, Neal, that's exactly what I was talking about the TPLT as maybe a little bit inside speak on the surface acreage. We invested $100 million last quarter to buy 14,000 acres over the heart of our Stateline field. How that's materializing in value, I can tell you it's dealing with other surface owners, making sure that all of this value creation Rick was just talking about around the water business and the recycling that is imperative that you have a strong land position because otherwise the surface owners can essentially hold you hostage to a lot of the decisions, you'd like to make, but it's also really showing value in our conversations peer to peer with other operators, they see the value creation opportunity that we have and the opportunities that we're seeing for trades working deals with some of our partners. I think those things are continuing to flow our direction, really on the back of this surface acreage acquisition.

Neal Dingmann -- Suntrust -- Analyst

Thanks Clay for the details.

Operator

Our next question comes from the line of Kashy Harrison from Simmons Energy. Your line is open.

Kashy Harrison -- Simmons Energy -- Analyst

Good morning everyone and thank you for taking my questions. So I was just wondering if you guys could share some color on how you think about maintenance CapEx to hold year-end '19 oil rates flattened to 2020. Just given all the cost improvements that you're seeing in the Delaware here more recently.

Clay M. Gaspar -- President and Chief Operating Officer

Okay. Yeah, Kashy, this is Clay. We've talked about is fourth quarter, we are reiterating the 5% to 10% growth on the oil curve that's obviously replacing a lot of the base decline. As we continue at this pace our base decline is significantly shallowing. And so as you march through time that maintenance capital piece becomes smaller and smaller, compounded by the fact that well cost is going down, efficiencies are going up. So if you think of our DC&F investment for this year $1 billion to $1.1 billion for 5% to 10% growth. Now we're talking about generating free cash flow on that same investment. Obviously, it's something less than that. Without giving you the stab of the specific number, I can just tell you all of the the metrics moving in the right direction in that regard from the time component and from a cost component as well.

Kashy Harrison -- Simmons Energy -- Analyst

That makes sense. And then the year-over-year improvement in Williston well performance, that was certainly interesting just given the last year was augmented by North Sunday Island and so, maybe a question for Clay. Is the right way to think about where you all considered to be core Williston is -- does that well performance would like what we saw in 2018 and what we're starting to see in 2019? Should we think about that kind of well performance as your core wells moving forward?

Clay M. Gaspar -- President and Chief Operating Officer

Let me think about how to answer that. I think, yes, we are clearly testing a broader geographic area. Most of the balance of our inventory is representative of what we're drilling now. Not just in the first quarter, but this year last quarter over this time period you see us, if you keep an eye on our rigs, we're not just kind of hold up to one corner of our acreage position. We are moving quite a bit around the acreage position. Now, I will say we have a significant step out to the Southeast, the Badlands test, that's one of the two well pad, that was delayed this quarter, excuse me, first quarter and the second quarter. That's an important step out, maybe I will talk about next quarter, might be the quarter after. But that one, that is testing a little bit different rock. We are encouraged by what we've seen so far, from a drilling and completion standpoint. But the real test is productivity and how that ultimately translates into value.

Kashy Harrison -- Simmons Energy -- Analyst

Makes sense. That's it for me. Thanks again.

Clay M. Gaspar -- President and Chief Operating Officer

Thanks Kashy.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Thanks.

Clay M. Gaspar -- President and Chief Operating Officer

Thanks.

Operator

Our next question comes from the line of Leo Mariani from KeyBanc. Your line is open.

Leo Mariani -- KeyBanc -- Analyst

Hey, guys. I just wanted to touch on the Permian oil pricing as you roll into 2020. I appreciate that you get some step-up in terms of the pricing there. I was hoping you could take that kind of 80% of your barrels that go to either the Gulf Coast market or international markets and maybe give me some sense of what the split is between international versus Gulf Coast there.

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, we haven't gone in that level of detail on that split, we just talked about it in an overall bucket MEH and international or Gulf Coast and international, it's several contracts we do quite a bit of work to get into that granularity. It's probably something we're not willing to share at this point.

Leo Mariani -- KeyBanc -- Analyst

Okay. I guess just following up on your comments about some of the delays in the Bakken. It certainly sounds like you guys are expecting to see Bakken production come down a little bit in the second quarter versus first quarter here. I just wanted to get an overall sense, I know the Permian is going to grow a little bit, but we sort of add all that together you think you'll see some sequential oil production growth in 2Q or we'll have to kind of wait till 3Q?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, I think the jury is still out on the second quarter. We would like to have the continued growth quarter over quarter over quarter. As you know this business can be a little bit bumpy. So we don't have a precise number for you on the second quarter. But certainly when you look at the impact of third and fourth, we're really comfortable reiterating our full-year number. And so I would ask you to keep your eye on a little bit larger price, timing shift of 30 days for a couple of pads especially winter weather, that's no negative indication of our geology, our inventory or the quality of the work that we're doing, we made a call on the back of safety and making sure that we're doing the right thing, stand by that every day and they probably will be some, obviously, some negative impacts to Williston quarter over quarter. We'll take that. Let's fight another day and look forward to the third quarter.

Leo Mariani -- KeyBanc -- Analyst

Okay. That makes perfect sense for sure. And just wanted to follow up on your comments around sort of the improved efficiencies in cycle times in the Delaware. Just trying to get a sense of whether not kind of translate that into sort of what the current well costs are in Delaware versus where they may have been say 6 months ago to try to kind of quantify some of the benefit there.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Yeah, I think we continue to make really good improvements we had indicated our expectations for 2019. We are hoping to approach for $1 mile, $1.5, $2 mile, $7, $8.5 and $10 million per well for those individual components, for those individual types of wells. I tell you today -- there. We probably have additional room going forward. And so we are ahead of schedule on some of those cost improvements that we had identified from last year. Material improvements, we've already achieved kind of the tail end of the first quarter. We'll benefit from that really for the balance of the year and I know my team, I know we're going to make continued improvements even beyond that.

Leo Mariani -- KeyBanc -- Analyst

Okay, thank you.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

And I should note that does include drilling completions, the facilities, artificial lift. If you're comparing apples to apples, make sure that's all included.

Leo Mariani -- KeyBanc -- Analyst

That's great, thanks.

Clay M. Gaspar -- President and Chief Operating Officer

Thank you.

Operator

Our next question comes from the line of Kevin McCurdy from Heikkinen Energy Advisors. Your line is open.

Kevin McCurdy -- Heikkinen Energy -- Analyst

Hey, guys. My questions are already asked. Thank you.

Clay M. Gaspar -- President and Chief Operating Officer

Okay. Thanks Kelvin.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Thanks, Kevin.

Operator

Our next question comes from the line of Brian Singer from Goldman Sachs. Your line is open.

Brian Singer -- Goldman Sachs -- Analyst

Thank you. Good morning.

Clay M. Gaspar -- President and Chief Operating Officer

Hey, Brian.

Brian Singer -- Goldman Sachs -- Analyst

Couple of follow-ups, I joined a little late, apologies if some of this was already touched on. First on the Bakken, you highlight and as we've talked about a couple of questions ago the continued improvement you're seeing in the type curve. Can you provide a little bit more color on the drivers of this, particularly this year at the lateral length versus quality of location selection versus other drivers and really trying to get down to the sustainability of the continued potential for improvement here

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, Brian, it's certainly not lateral length. We've been drilling right up to 10,000 feet per well, pretty consistently for several years, it's not a geology difference obviously we've had the same relative footprint for several years. When it comes down to is, just very -- what I would call minor tweaks that an accumulative effect, they continue to improve, how we are placed in the sand, how we're pumping the jobs, how we are flowing the wells back, how we're thinking about all the small inputs that come in. It's dozens and dozens of things that we continually tweak, perforation design, perforation size, perforation clustering, some of the techniques that we're using to getting the efficient work done.

All those kind of -- remember Williston is pretty far in the maturity spectrum and so you're not going to see us have a breakthrough 180 to return on the lot of the work we're doing there, we're not searching for the landing zones were not searching for kind of Incremental big pieces of of gains, I think but this what we're finding is continuing to be thoughtful and smart we're transferring knowledge, not just from the Delaware Basin, but from other basins around the country and continuing to just to chip away in and continuing to make improvements.

Brian Singer -- Goldman Sachs -- Analyst

Great, thank you. And then with regards to the cost reductions that you've highlighted what's ticked into your CapEx budget for the year relative to what you've demonstrated and what you expect through the remainder of the year?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, what we have in the budget. -- we had planned on a reduction during the first quarter into the second quarter and then achieving that, I'll talk in terms of one mile laterals on the prior question, I talked about scaling that up. But just for simplicity, one mile laterals we talked about approaching a $7 million well cost by sometime mid year. We're a little ahead of, ahead of schedule on that. I think with our continued improvements, I see us probably going below that at some point this year. So we're a little ahead on what we projected overall well cost obviously that scales up to the two miles we had planned on approaching $10 million and I would expect that we there now and working toward going below that at some point this year.

Brian Singer -- Goldman Sachs -- Analyst

And if I could just follow up on that. If you end up below to a point where you have flexibility in your CapEx budget, would you come in under budget or would you drill more-- get more wells for the same budget?

Clay M. Gaspar -- President and Chief Operating Officer

I think we're going to come in under budget. That's the bottom line and so we're going to be. Brian, we worked really, really hard to get to this point. So we are going to be very, very disciplined on managing our cash.

Brian Singer -- Goldman Sachs -- Analyst

Great, thank you.

Clay M. Gaspar -- President and Chief Operating Officer

Thank you.

Operator

Our next question comes from the line of -- I'm sorry from the line of Jeffrey Campbell from Tuohy Brothers. Your line is open.

Jeffrey Campbell -- Tuohy Brothers -- Analyst

Good morning. I thought that the CBR pad drilling and completion time reductions are really remarkable. First, are those reductions are reflected in the 17% two-mile lateral cost reduction that's also on the slide? Second, can you add some color on the key elements that drove this dramatic improvement and how it will influence future development?

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Yeah, Jeff. I would say the part of the reductions are baked into the numbers. When we referenced obviously first quarter it's a blended average of everything we've done during the quarter. So by end of the quarter, our current state, we are seeing those-- the cost materialize, the benefits materialize, and so it's partially in the first quarter, we'll really see this even more so at the balance of the year. I'm sorry, was there a second question as well?

Jeffrey Campbell -- Tuohy Brothers -- Analyst

Yeah, I just wondered, I mean in particular and, excuse me, particularly the completions time was reduced so much. I was just wondering was there any particular variable or variables that contributed to that improvement?

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Well, that's a little bit of our secret recipe. We're not talk too much about. But we have definitely made some changes in how we pump the design, we've partner with a really good company out there. They are incented to basically have the pumps in gear as much as possible. And so, what that allows us to do is take one frac crew and it keeps up with five very efficient drilling rigs. That makes that frac crew much more profitable for that service company and it allows us to be much more profitable on a well to well basis. So it is pump design, it's also some efficiency, getting the right people out there kind of oil in all the gears and making sure everything is running really well.

And as you can imagine, as we moved prior years we're balancing rigs around different geographic area, we're trying different landing zones, we're trying different very significant early innings type changes to wells, it's hard for us to get up on the efficiency scale. Until we've turned the corner, especially in Stateline you'll continue to see these improvements. I spoke of a well that we drilled spud to rig release and under 16 days. That's certainly not the best we will ever do. I'm highly confident saying that, the team will continue to chip away at that and make steady progress to drive that efficiency up and productivity up as well.

Jeffrey Campbell -- Tuohy Brothers -- Analyst

Thank you. And I just want to ask about the Paddy, I mean hardy pad. Just wondering how large the river tracks area is and perhaps how many acres or locations or whatever you want to talk about that you feel the results are de-risked?

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Yeah, this is -- it's 3. The river tracks are three, roughly two-mile DSUs, little east of our Sand Lakes area right there on the river. Obviously, it's an area where we needed to hit the CDC, we elected to do some additional delineation work, understand that some other zones and we'll always have that in our capital budget portfolio. But it's a relatively small percentage. We just highlighted those because they're a little bit unique and they happened to fall this quarter. Don't think of it as a new focus area for us, it's a little bit more of a sweetener to kind of our core focus areas.

Jeffrey Campbell -- Tuohy Brothers -- Analyst

Okay, thank you.

Operator

Our next question comes from the line of (inaudible). Your line is open.

Unidentified Participant -- -- Analyst

Thanks, good morning all. Clay, thanks for all the color on your space in terms of parent-child data that you have and you probably have more data than any of your peers there. So as I look through some of your data, it looks like the 440 foot spaced pilots that you have maybe look like those pilot, you could go even a little bit tighter, but 330 looks like maybe a little too tight. I was just wondering if you can talk about this in the Stateline area, how you were thinking about spacing in the Wolfcamp Bay?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, I wish it was just a simple as let's find what the right spacing is and then hit duplicate, duplicate. Obviously things like commodity price and well cost, I touched on them on my prepared remarks are hugely important it. Think about this, as we have this very efficient frac crew and approve well completion cost goes down now, I don't know, maybe we're a little more incentivized on a per well basis to add more wells. Can we afford to do that or we incentivized to increase the completion design, put more sand in the ground and then we're able to kind of de-space a little bit. Those are kind of things that come into play a little bit on the margins.

The other very important thing even within Stateline is very consistent. The thickness of the zone is of critical importance and so some areas as we get into this -- the 41.44 we were about 130 feet between upper and lower and I think 110 feet or 120 feet between the upper and the X, Y. as that moves out, then you can afford to tighten those wells in and you could have more oil in the ground and you can tighten those wells up a little bit and still achieve that optimal-- into achieving the optimal return there. So lot of things come into play, you're right, it's somewhere between 330 and 440. We continue to test and refine that and we're always chasing the external factors as well and trying to work those in conjunction.

Unidentified Participant -- -- Analyst

Got it. That's helpful. And-- Yeah, one of the biggest topic that come up this morning, and was sort of your Delaware Basin oil mix and it looks like it's far more than anything else, obviously higher NGLs. So I was wondering, one -- was there any lingering impact from on the-- sale of NGL sales number, the selling from inventory, from the disrupted you had back in the third quarter or is it the new client is more efficient in NGL recovery or were there any impact from some of the pilots that you're testing?

Clay M. Gaspar -- President and Chief Operating Officer

Yeah, I think it's really the latter. You may have noticed our NGL price realizations were a little low as well. What happens is as we go deeper into ethane recovery, with our plan we have that option. We are always looking at is the ethane is better of more value in the gas stream or in a liquid stream. In this case, we're pushing it toward the liquids. Now what that does, is it dilutes your NGL composite analysis, so you have more ethanes which are cheaper than obviously some of the richer liquids and that draws down your overall NGL per barrel value.

Now what it does, as you pointed out, it increases your volume of barrels. So overall, it's the right value proposition, you set to look at a little bit more holistically, but it's the latter which you're talking about. We just have a plant that's very efficient, we can dial-up that ethane recovery when it's economically beneficial to us and that's what we've done.

Unidentified Participant -- -- Analyst

Got it. Is the first quarter makes more appropriate for the remaining of the year or do you expect the oil mix to come up a bit?

Clay M. Gaspar -- President and Chief Operating Officer

It really depends. We have the ability to dial that up and back at our plant and so it depends on the NGL pricing and that's especially ethane.

Unidentified Participant -- -- Analyst

Got it. That's all, thank you.

Operator

Our next question comes from the line of Jeff Grampp from Northland Capital Markets. Your line is open.

Clay M. Gaspar -- President and Chief Operating Officer

Okay. Operator, turn the call over to Rick.

Operator

Thank you. I'm showing no further questions at this time, I would now like to turn the conference back to Mr. Rick Muncrief.

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Well, we appreciate your time and interest today, if you have any follow-up questions, feel free to reach out to David Sullivan and with our IR group. Otherwise, we'll see you out on the road at the conferences or during some investor visits. Take care and have a great day.

Operator

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day . You may all disconnect.

Duration: 66 minutes

Call participants:

David Sullivan -- Manager of Investor Relations

Richard E. Muncrief -- Chief Executive Officer and Chairman of the Board

Clay M. Gaspar -- President and Chief Operating Officer

J. Kevin Vann -- Executive Vice President and Chief Financial Offcier

Gabe Daoud -- Cowen -- Analyst

Derrick Whitfield -- Stifel -- Analyst

Greg Horne -- Vice President of Midstream and Marketing

William Thompson -- Barclays -- Analyst

Brad Heffern -- RBC Capital Markets -- Analyst

Brian Downey -- Citi Group -- Analyst

Neal Dingmann -- Suntrust -- Analyst

Kashy Harrison -- Simmons Energy -- Analyst

Leo Mariani -- KeyBanc -- Analyst

Kevin McCurdy -- Heikkinen Energy -- Analyst

Brian Singer -- Goldman Sachs -- Analyst

Jeffrey Campbell -- Tuohy Brothers -- Analyst

Unidentified Participant -- -- Analyst

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