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HighPoint's Q1 Drilling Up, Completions Down 40% YOY; Touts Wattenberg Results

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   |    Friday,June 07,2019

HighPoint Resources reported its Q1 2019 results. Here are the highlights.

Q1 Summary

- Well Activity (gross): Drilled 28 wells / TIL 12 wells in Q1 - up +40% and down -45% YOY, respectively

  • Hereford Field: Drilled 13 wells / Completed 5 wells - up +100% YOY as HighPoint did not have D&C activity in Hereford during Q1 2018
  • NE Wattenberg: Drilled 15 wells / Completed 7 wells  - down -25% and -53% YOY, respectively

- Rigs: 3 total rigs running - up +50% YOY

- Q1 D&C Spending: $98 million - up +14% YOY

- Q1 Production: Daily production of 31.1 MBOEPD - up +46% from Q1 2018

The company has reiterated its 2019 guidance.

  • Capital expenditures of approximately $350-$380 million, unchanged
  • Production of 12.5-13.0 MMBoe, unchanged

Ops Update

Wattenberg Niobrara - Improved Well Costs with High Fluid Intensity

HighPoint noted strong performance from Northeast Wattenberg high-fluid intensity completions as initial wells are tracking more than 20% above the base type-curve after 205 days of production.

For the first quarter of 2019, 15 gross wells were spud and 7 gross wells were placed on flowback. The Company continues to see improved well performance through high-fluid intensity completions. The initial 11 well pilot program has reached average cumulative production of approximately 77,000 barrels of oil (80% of equivalent volumes) per well after approximately 205 days of production and are tracking more than 20% above the base NE Wattenberg type-curve. The Company remains highly encouraged by the results of the program and this completion design has been implemented as the new standard for future development.

Drilling operations are currently focused on the central portion of NE Wattenberg in DSU 5-61-34 (7 XRL wells) and DSU 5-61-35 (7 XRL wells). The wells are anticipated to be completed during the second quarter of 2019. In addition, completion activity continues on the western portion of the field in DSU 4-63-3 (4 standard reach lateral wells) and DSU 4-63-5 (7 XRL wells). The wells are expected to be placed on flowback beginning in the third quarter of 2019.

Hereford Field

Production sales volumes for the first quarter of 2019 in Hereford averaged 6,447 Boe/d (72% oil). During the first quarter of 2019, 13 gross wells were spud and 5 gross wells were placed on flowback in February on the eastern portion of drilling and spacing unit ("DSU") 11-63-15. The wells were completed during the fourth quarter of 2018 using the previous standard completion design of approximately 18 barrels of fluid per lateral foot, approximately 1,500 pounds of sand per lateral foot, and controlled flowback. The wells were placed on flowback in February 2019 and have achieved average cumulative production of approximately 20,000 barrels of oil (87% of equivalent volumes) per well after 60 days. The remaining five XRL wells in this section were placed on flowback in April.

An extensive reservoir and geologic technical study of well performance was recently initiated within DSU 11-63-16 and DSU 11-63-17. This entails utilizing microseismic and fiber optic technology to determine the optimal stimulation design and well spacing to be utilized for full scale DSU development. This technology advancement allows for real-time collection of data and performance monitoring that provides immediate feedback with respect to future completions, facilitates the application of completion technology and validates well spacing assumptions. In addition, a methodical sequencing of drilling and completion operations is being implemented to create a buffer zone around active completions to mitigate interference from offset activity and increase stimulation intensity.

The technical study area consists of 23 XRL wells within the two DSUs, incorporates fiber optic monitoring on three wells, well spacing assumptions of 10 to 16 XRL wells per DSU and microseismic monitoring across the area. To date, all 23 XRL wells have been drilled, including the three wells equipped with fiber optic monitoring and completion operations have commenced on the initial pad in DSU 11-63-16. Early drilling and completion data is being processed and real-time integration of the data has commenced. The initial completions will utilize approximately 30 barrels of fluid per lateral foot, which is approximately 70% greater than the previous completion design. It is anticipated that the wells will be placed on initial flowback beginning in second quarter of 2019. Completed well costs for the high-fluid intensity wells are expected to average approximately $4.9 million in 2019, which is approximately 5% lower than wells drilled in the 2018.

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