Jordan Blum, editorial director, Hart Energy: I'm Jordan Blum, editorial director with Hart Energy, and I'm joined by Joe DeDominic, the CEO of Anschutz Exploration. We're here at the SUPER DUG conference in Fort Worth. And we're talking about growth in the Powder River Basin (PRB). Can you kind of talk about how Anschutz has been pivoting and is continuing to grow and focus more from gas to crude oil?

Joe DeDominic, CEO, Anschutz Exploration: Yeah, we've had a strategy really since the kind of mid-2014, [20]15 standpoint focusing on the Power River Basin. We like it because it's a very, very oil rich basin. A lot of oil production. We did some testing. We acquired our acreage and positions we really liked. And then we're moving forward now with full development of our assets to grow our production. We like the returns on our investment from that effort, and we're continuing to keep that ramp going and go from there.

JB: Very good. I think you have five drilling rigs operating all in the PRB. Do you feel good about the runway, the inventory y'all have?

JD: We do. Very much so. That's actually, I think, one of our big advantages given our large footprint, contiguous acreage in the basin. We have a lot of runway depending on the rig count. We're currently, you know, at…five rigs in the basin. We'll be at four briefly, because we're going to take one rig out to go test some other things. So it ends up being about four and a half for this year. And our plan for next year is somewhat similar. But going forward, you know, we see a decade-plus of drilling depending on the activity level, if it's four rigs, five rigs, two rigs, those type of things. So we have a lot of inventory. We're very pleased with that.

JB: So no rush for M&A then?

JD: No, no, no. We're real happy with the asset we've had. We've been able to accumulate it really from a greenfield standpoint. Acquiring, you know, leasing minerals, you know, leasing as part of the program when states and the federal government leases, and putting together trades and acquiring some assets just through M&A. But we're very happy with our position.

JB: Very good. Well with that continuous acreage, the inventory, I mean, can you talk about just what y'all are planning to do with longer laterals and kind of following up on, you know, industry trends we're seeing in the Permian and elsewhere almost?

JD: Yeah, no, we've been following what's been happening at other basins with the longer laterals. Devon's been going through a testing phase with longer laterals, three mile laterals in the Powder River Basin doing Niobrara wells. Again, more of an appraisal program. They're not in development mode. They're doing a couple paths and been after that for a while. Their results and the results we see in other basins show the economics are better because you have your surface piece all done, you've done your intermediate, and then it's just that extra 5,000 feet or more of lateral depending on how far you want to drill. So we've looked at the numbers, the numbers economically improve your return on your investment. We like that obviously like everyone else does.

We are planning this year to start a program. We're going to start with the first step. We're going to [do] two and a half mile laterals. We have a nice block in Campbell County. We're going to develop multiple horizons on that at two and a half miles. Ensure that everything works from a drilling, completions, drill-out standpoint, production standpoint. And then we can expand that as we move north, which are more of our immature assets to lay out a program that could include tow, two and a half or three-mile laterals depending on what makes the best sense for the asset.

JB: Great. I mean, based on everything you were saying, y'all are showing great efficiency numbers. There's a lot of talk about the PRB, but there's still only so many operators. I mean, do you see that starting to change or, you know hoping they stay out and focus on the Permian?

JD: Yeah, in some aspects, it'd be nice if no one came in. We could have it to ourselves. I know that's probably not realistic. It does have a large inventory you know, potential, right? You can see it. The larger publics—and Continental used to be public—they’re in that phase. They're early development, doing some testing, doing some appraisals, spacing tests, those type of things. I think you'll see those companies earlier than most follow our lead and move into development mode once they figure out where their water infrastructure needs to be, where their pipeline takeaway capacity is best, where their tier one acreage is ideally located and what zones they want to target. And I think that'll happen over the next couple years. You'll see the basin continue to mature. As far as a lot of the smaller private equity or private companies, I think they're—I don't want to say it this way because it’s a little blunt—but, they're almost in no man's land. You [have to] spend enough money to actually grow or your kind of not doing much at all. You're maybe staying flat at best. They're going to have to decide to put some money into it or figure out some way to get some more wells drilled if they really want to mature their assets.

JB: Very good. Maybe eventually y'all could pick up some pieces that way.

JD: If it makes sense. Again, being an early entrant, and doing it all from the greenfield standpoint, we lack our cost basis. And that's actually one of our advantages to get in early. We’ve always been a geologic focus company, so we did a lot of work for many years studying the different basins, studying where we wanted to be. Came up with some models, which today are proven to be accurate, or fairly accurate. And then we're able to project that to our advantage.

JB: Very good. Well like we said, all your drilling activities [are] in the PRB, but y'all are also in Piceance and Uinta Basins. Can you talk about your plans there as well?

JD: We can a little bit. We have some legacy production in both those assets. So we have some HBP acreage along with some other new leases. We have some deeper targets that we will be testing when it makes sense. We have a couple planned for this year. They're really slow developing because we're not really focused on those today. There's some good inventory there, potential inventory there, there's some good longer term assets. We've done a lot of the work that we did in the Powder River Basin. We did spread that across the entire Rockies [play] position to identify areas we liked. So we've been fortunate to put those together. We will be taking one rig out of the Powder for four or five months, testing a few things, and then bringing it back to the Powder. So that's how we do it. So, there is some advantage to being focused in one broad area of the United States. You can share some services, move things around as need be, those type of stuff.

JB: Very good. Thanks so much for joining us here at SUPER DUG, really appreciate it. For more information, please read and watch online at hartenergy.com.

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