REPX(US:REPX)2021-12-14 19:12Financial Data and Key Metrics Changes - For the fourth quarter, the company reported a net income of $15.7 million and an operating income of approximately $60 million for the fiscal year, with an overall net loss of $65.7 million primarily due to derivatives loss of nearly $90 million [24] - Adjusted EBITDAX for the quarter was $24.5 million and approximately $90 million for the year, closely resembling cash flow from operations [25] - Free cash flow generated was $7.2 million for the quarter and $26 million for the year, representing 30% of operating cash flow [26] Business Line Data and Key Metrics Changes - The company increased net production by 22% to 8.6 MBoe per day for the full year, with 74% being crude oil [15] - In the fourth quarter, total net equivalent production increased by 35% to 9.6 MBoe per day compared to the same period in 2020 [18] - Lease operating costs were reduced by 11% to $6.97 per Boe for the full year and by 20% to $6.45 per Boe in the fourth quarter [16][19] Market Data and Key Metrics Changes - The realized oil price for the fiscal year was up 60% year-over-year, with a realized price of $52 per barrel for the recent quarter [27] - The company anticipates a drop in hedge volumes for the first and second quarters of 2022 to about 65% of forecasted volumes [29] Company Strategy and Development Direction - The company aims to reinvest for growth to improve scale, cost structure, and cash flow while also returning significant cash flow to shareholders in the form of dividends [8] - The company is optimistic about initiating its first carbon capture, utilization, and storage (CCUS) project during 2022 [9] - The company plans to drill 18 gross and 12.5 net wells during fiscal year 2022, with a capital expenditure forecast of approximately $85 million to $95 million [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving operational guidance metrics and highlighted strong investor support for continued growth [6][7] - The company is optimistic about the EOR pilot program and expects to initiate water injection during the second quarter of 2022 [20] - Management noted that the current market conditions are favorable for continued growth, with a forecasted production growth of approximately 11% to 15% over fiscal year 2021 levels [44] Other Important Information - The company raised its dividend by 11% to $0.31 per share, totaling about $6 million [39] - The company has $65 million drawn and $110 million of availability on its credit facility following a 30% increase in its borrowing base [39] Q&A Session Summary Question: Progress on the EOR project - Management confirmed that the drilling phase of six initial injection wells is complete and water injection is expected to start in Q1 or Q2 of fiscal year 2022, with overall progress on schedule [50][52] Question: Timeline for carbon capture and sequestration initiatives - Management is working with various parties to optimize project costs and structure, but specific guidance on timing was not provided [55][61] Question: Frac market conditions and drilling costs - The frac market is tightening, but the company has secured most of its service providers for 2022, with slight increases in drilling and completion costs expected [69][71] Question: Details on lease operating expenses (LOE) - The primary driver for reduced LOE was less workover activity during the quarter, which may fluctuate in the future [82] Question: CO2 purchase and sale agreement with Kinder Morgan - The agreement is tied to oil prices with a floor, and the pricing is approximately 2% of WTI for a three-year term [89][90]