Chris Mathews, Hart Energy’s senior editor of shale/A&D: This is Chris Mathews, senior editor of shale and A&D at Hart Energy and Oil and Gas Investor, and I am joined by Travis Thompson, CEO of FireBird Energy II. Travis, thanks so much for being here at SUPER DUG.
Travis Thompson, CEO of FireBird Energy II: Chris, thanks for having me.
CM: Of course. Travis, if you could give us maybe some high level details about what Firebird II has been putting together since launching last year and since making the [$1.75 billion] sale of FireBird Energy I to Diamondback in 2022.
TT: Absolutely, Chris. So we started up FireBird II in April of 2023. We partnered with Quantum to get that started and we hit the ground running. We were in search of oily properties in the Midland Basin, and we have found that there is just generally higher oil content as you move west across the basin, and that's where we're most comfortable, I would say. So we've made about 13 acquisitions since inception. We've got two rigs currently running. We've been as high as three. Two is comfortable right at this second pending any additional acquisitions, which we are also looking at and evaluating on a daily basis. So we're sitting at about 20,000 acres currently and about 30,000 boe a day.
CM: It sounds like landmen are scouring the basin right now looking for deals. How is deal flow right now? The Midland Basin has seen a lot of M&A, maybe more corporate large scale M&A. Are you finding the pieces that you're looking for out there?
TT: Yeah, I mean, we have a great network of companies and individuals who are scouring the basin to use your words. We also have a lot of personal relationships that we've been growing over the last 15 years, and so we are always looking and we're always evaluating, and I think that we try to be good people to deal with. So if you've got something in the basin and you want someone to look at it, you want a fair shake, you want it developed, I think that FireBird is a great spot to turn.
CM: Have you seen deals come together? We saw the bid-ask spread, get kind of wide, when oil prices got really high in 2022, maybe people were asking for more than buyers were necessarily willing to pay. Have you seen some easing in the bid ask spread where terms are more reasonable coming to the table? I hear that the Midland is just expensive in general. Maybe you can attest to that.
TT: Yeah, it seems expensive to me, too. I think the bid-ask spread is something that is always there. It never goes away. I think when you've got volatile commodity prices, it's harder to find common ground. But when you have a period of time where commodity prices are relatively smooth, I think you're going to have a lot of deals get done. And I think that's kind of what we've seen over the past 12 months, and hopefully that continues. And if it doesn't continue, hopefully that's because old prices are going up.
CM: So, it sounds like you plan to run between another two to three rig cadence this year, exit 2024 at around 45,000 boe/d. Any thoughts about getting to that point? Wells you're going to drill? I know that you're targeting the main intervals right now, but maybe talk about some of the upside you see from less developed zones like the Wolfcamp D, Barnett Shale, Woodford plays.
TT: What I can tell you is this, we don't have the volumes that are forecast at 45,000 boe a day, [they] do not include Barnett or Woodford volumes. That does include some incremental Wolfcamp D. But again, it's somewhat of an exploratory zone, and so we could be off in our forecast, although we try to be very conservative when we're making these forecasts. So feel good about getting there because the majority of that is our Spraberry and Wolfcamp development.
CM: Awesome. Any thoughts about moving forward from here? You've got a full year under your belt of FireBird II. Any thoughts for year two and moving on from here?
TT: We've scaled our team. We've got two rigs up and running. We've got a full-time frac crew at this point in time. And so we've built in some of the efficiencies that we lost in selling. So starting from scratch is tough, but I feel like we've gotten to a point, kind of an inflection point now where we can scale and we can do so even more quickly. And that's really what we're looking to do in 2024 and beyond, is just to continue to grow. And Quantum has been a great partner to us and we've got a team that's young, that is ambitious, and I think that some of the best in the industry, and I mean, they're just hardworking guys. I see. If you think of FireBird, I think of gritty, I think of smart, I think of hardworking, persistent, and I think all of those things come together to create value for all of our stakeholders, and that's our goal.
CM: Well, we look forward to checking in again and seeing where you guys are maybe a year from now and starting year three. So Travis, thanks so much for your time today
TT: Chris, thanks for having me.
CM: For more head to hartenergy.com.