Hart Energy:

Let’s start off by talking about the growth strategy for Camino Natural Resources LLC and the asset evolution?

Seth Urruty:

When we started the business, we had acquired some PDP but, relative to our asset size, [it] was pretty small. Our strategy was that we wanted to build a team of technical experts to develop and build a production and cash flow base ourselves. So, our growth strategy really happened pretty quick in terms of acreage to get scale. Now, we are in the process with a three-rig program over the last couple years growing our production and cash flow base to closing on 400,00 boe (barrels of oil equivalent) per day. What that affords us is now a good stream of production, a good stream of cash flow and we can be more thoughtful going forward. We're not really out trying to achieve a certain growth strategy from a production perspective. It's really how do we delineate and test and understand our return profile and maximizing value. Our production growth isn't really an objective. It sort of is an output of all the things that we think are creative to our business and how we create value through the drillbit.

Hart Energy:

How do you remain attractive to investors when times can be uncertain?

Seth Urruty:

It’s a time where a lot of peers took a more aggressive stance in terms of their hedging or their FT portfolio—really were betting too much on EURs with their capital spend. We’ve really taken the approach that we want to cautiously move to pad development. When you look at our play, in particular, wells that are $8- to $12 million individually. When you talk about drilling a 6, 8 or 10 well full scale DSU development, that’s a tremendous amount of capital. We wanted to build a balance sheet and maintain that balance sheet through those pad development processes. That’s part of drilling more individual single parent wells, building a production and cash flow stream and having a conservative debt-to-EBITDA metric. So, that when we look forward to that pad development, we can do so systematically and thoughtfully. And, we can make sure that if we were surprised to the downside, it's not something that's going to impact our ability to be a viable company going forward.

Hart Energy:

Speaking of being a viable company, you mentioned treating every asset like it will be lifelong. Can you share your thoughts on maintaining that thought or approach?

Seth Urruty:

It's really ingrained in our DNA: make decisions that are the best decision for the asset from a long-term perspective. What that means is we're not focused on just accumulation of acreage. We're not focused on 300% production growth rate. We’re focused on really being capital disciplined, getting consistent return on the capital that we have employed and looking at how do we then build a cash flow stream that we can either be attractive to an acquirer, attractive to a public market place or continue to create that value through the drillbit and make distributions to our sponsor and think about what's the right decision. And, if we continue to have the success that we've had—even in a low commodity price environment—we will continue to build that cash flow stream, which will allow us to add rigs going forward and then continue to grow that production base maintaining a conservative focus on capital discipline but allow us to think a little bit longer term. It's hard when you’re a private equity funded company because they clearly have an objective over a short period of time if you can to return that capital to their funds and move on to a new fund and look for those investors to come back. But we’re very fortunate with NGP as a sponsor. Their confidence in us as a team really affords us the ability—at least through their fund life, which has many, many years left—that we can be thinking that longer-term but be more diligent and are creating value even in a marketplace that’s really not that functional from an A&D perspective.

Hart Energy:

What about technology? What kind of role is that playing for Camino these days?

Seth Urruty:

We have been extremely focused on how do we manage data, how do we capture data, how do we use it to really increase our understanding from a technical perspective. But, also how do we communicate that data and information to all the people across our organization. We have a really robust focus on GIS and leveraging how you can use GIS and how many people in your organization. We've got folks out in the field today that can pull up lots of data and lots of information. It's a great place to share operational, land, even technical data that we can communicate much more efficiently. We’ve also partnered with several different groups that help us manage digital land files and digital production data. They’ve been great partners in building out new processes that allow us to really advance even the technology that they originally brought to us. Finding service providers that are great partners and that are aligned and how do we continue to improve. How do we do more with fewer people is a piece of that, but it's also how do we get people within our organization access to the information they need to make good business decisions. That has been a huge focus of ours. I think sometimes it's a balance. A lot of times you can see companies that get so much dependent on data that they lose a little bit of the focus of the subsurface geology, reservoir engineering and the fundamentals of the resource that are critically important. That’s one of the things we try to make sure of, is that we really have robust technical approach. We utilize data and data analytics as a way, as a tool for us to make decisions. But, it’s one of the tools vs. the sole tool that you're making business decisions on.