Good day, ladies and gentlemen. And welcome to the Diamondback Energy Second Quarter 2019 Earnings Conference Call. As a reminder, this conference is being recorded.I would now like to introduce your host for today's conference, Adam Lawlis, Vice President of Investor Relations. Sir, you may begin.

Thank you, Josh. Good morning. And welcome to Diamondback Energy Second Quarter 2019 Conference Call. During our call today, we will reference an updated investor presentation, which can be found on Diamondback's Web site. Representing Diamondback today are Travis Stice, CEO; Mike Hollis, President and COO; Kaes Van’t Hof, CFO.During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.I'll now turn the call over to Travis Stice.

Thank you, Adam. Welcome everyone. And thank you for listening to Diamondback second quarter 2019 conference call. Diamondback continued to execute in the second quarter of 2019. We produced record EBITDA per share from 7% quarter-over-quarter production growth, while lowering the midpoint of our capital cost guidance and increasing the midpoints of both our full year production guidance and estimated completed well count for the year. Diamondback has now grown earnings per share at 11% quarterly CAGR and EBITDA per share by 9% quarterly, since our IPO in late 2012.Based on second quarter numbers, Diamondback now generates more annualized EBITDA per share than our IPO price seven years ago. Diamondback continues to focus on per share metrics with shareholders now owning more production, cash flow and earnings per share than prior to our acquisition of Energen a year ago even in the face of a lower commodity price environment. Diamondback's per lateral foot well costs, which include every dollar in bringing our operated wells to production and the first six months of production related costs thereafter, are down 7% year-over-year in the Midland Basin and 16% year-over-year in the Delaware Basin. As a result, we are narrowing the midpoint of our 2019 capital budget and increasing the midpoint of our operated completions, which implies over $110 of improved capital efficiency per completed lateral foot versus our initial budget presented in December. Our operations organization continues to drive material costs out of the business with expectations for continued tailwind due to improved efficiencies and service cost deflation.With respect to the Energen acquisition and subsequent integration, Diamondback has now completed every major strategic objective and exceeded our stated synergies presented one year ago when we announced the deal. In the second quarter, we completed the IPO of our midstream business Rattler, raising…

Thank you [Operator Instructions]. Our first question comes from Mike Kelly with Seaport Global. You may proceed with your question.

Thanks. Good morning, guys. Travis, I flipped through the slide deck here, it's pretty apparent that guys have really checked the box, and a whole bunch of aggressive objectives over the last year. Really just kind of wanted to get the thoughts on what's on your mind now and kind of what's your refreshed strategic to-do list look like as we sit here today? Thanks.

Thanks Mike. Yes, our strategic objective there is not really any new ones. We're going to maintain our commitment to execution and capital efficiency, that's part of our core business practices as just about anything. We're continued at the board level to grow the dividends and we've committed to this free cash flow return to shareholders in the form of share repurchases. So while we clicked off some pretty significant objectives, those were onetime events in the first seven months of this year. We're committed long-term to this shareholder return program and we're pretty confident we'll be able to deliver on it.

Okay, thanks. And maybe the follow up on that, you just mentioned to that $750 million of free cash flow in 2020 with industry leading growth still in the works. What would get you to maybe dial down that growth a little bit and to up the ante on free cash flow? Just kind of curious just to hear maybe your philosophical thoughts on that growth versus the free cash flow balance. Thank you.

It's not an exact science, the way that we look at the future. If commodity prices roll over further, we're certain we're going to look at our forward model and make adjustments accordingly, probably in the form of dropping one or two rigs. But our future is really bright, Mike. With the way that we continue to execute with our overall cash costs in the mid-8s right now, we're profitable significantly, every barrel that produce for long life from this current oil price. So we're pretty confident. We've got a lot of still exciting things to deliver in the future. And I think the future at Diamondback is really bright.

Thank you. And our next question comes from Neal Dingmann with SunTrust. You may proceed with your question.

Travis, going through the release about your low capital cost continued to be notable. And so I guess my question is around those. How do these factor in when allocating capital between thinking about production growth versus buyback or other shareholder initiatives?

Neal, it's not really an either or, I think it's an and. And I think we can -- we're one of the few companies that can do both. We can still grow and we can repurchase shares and further returns to our shareholder. So we don't pivot on that. We actually look at a way to combine, both growth and returns for our shareholders.

And then my follow up just as we're on Slide 10 on your -- looking at the spacing, it appears to me, and I was looking at this versus some prior presentations even going back to years. And it appears to me like your assumptions haven't changed for quite some time. And I'm just wondering could there be, potentially looking at this, some down-spacing opportunities, or you sort of content with this? I just wondering, obviously, there is a lot of scrutiny these days on that. So maybe anything you could say around your assumptions and how this has or hasn't and maybe will change?

Neal, I went back into the same thing. I want to see how long this slide deck have been in our, or this slide had been in our slide deck. And I think it goes back like four years. And I think I've said a thousand times it's easier strategically to add locations than it is takeaway locations. And we've always been conservative in our spacing assumptions, and we don't really have any plans right now, especially as commodity price continues to decline, to look at any reasons to increase well spacing. This is one of those things where we've been pretty steadfast in our strategic development objectives on spacing. It's been underpinned by our annual reserve reports. And we would pay attention to other spacing results that go on in the Permian basin. And we try to learn from those as well too without exposing our shareholders to down spacing risks. So, I'm very comfortable with our spacing assumptions.

Thank you. And our next question comes from Derrick Whitfield with Stifel. You may proceed with your question.

Good morning all, and congrats on strong update.

Thank you, Derrick.

Perhaps for Travis, your capital efficiency and now disclosure standard, there's last night's release, are peer leading. What in your view makes your organization so successful at cost control?

Derrick, we get that question coming from a lot of different angles over different quarters, and I'll tell you it's not just one thing. It's really a combination of a thousand things. I mean we just finished an operational review getting ready for this quarter several weeks ago and the drilling organization certainly and an analysis of the connection time, how fast you screw pipe together, where they cut not quite a minute, I think 0.7 of a minute per connection for every well that we drilled with 20 rigs in the second quarter. And that translate -- you say, well, that's not -- so what will -- that's a dollar a foot per well, 5 times 20 rigs. And it's that level of scrutiny across our costs spend that I think truly differentiates our operations organization.I mean we say around here, you got to inspect what you expect that's one of our operating mantras. And really our business is not that complicated. It's converting rock into cash flow. And you've got to measure every facet of that conversion process to ensure you're most efficient. And I think we've got a great machine. I mean, if we didn't have the machine that we have, we couldn't have delivered on the results, the cost results after doing $10 billion worth of acquisitions at the end of last year. I mean it's hard for me to believe that today our D, C and E full well costs are lower on a combined basis with Energen, than they were on the Diamondback standalone basis a year ago.And that to me represent seamless integration of an acquisition. And we did so while accomplishing all of these corporate objectives that I laid out in my prepared remarks. And most importantly, we did it while adding over 300 people to our organization. So I think it's a remarkable feat for our organization to have accomplished what we did in this earnings release and in this quarter.Our economics are better than they've ever been. We're more profitable. We've got more operational capability. I mean, just across the board, we're firing on all cylinders. And it's unfortunate in this market backdrop. But we're going to be okay, because our cost structure and because our execution prowess, our capital efficiency. We're going to continue for few more development plan and we got a great organization to do that.

I agree, Travis, quite an impressive feat. As my follow up, perhaps for you Mike, as you think about and compare your D&C costs between the Midland and Delaware Basins. Where do you see the greatest room for improvement in your Delaware costs?

Yes, Derrick, you nailed it. The Delaware is where we're kind of the baseball reference. We're probably in inning three to four. Midland, we're probably inning five and getting six. So Midland, we're picking up dimes in quarters. Delaware, as you saw, we had 16% reduction in our dollar per foot. So that's where we're seeing the biggest change and optimization rate. But going forward, the organization is not going to -- and the great thing is everything that we're learning, and doing, and changing in Midland, is applicable in Delaware and vice versa. So those two teams are fully integrated as well.So again, across the board, we'll continue to see efficiencies get worked into the system. And as Travis said, there is also some tailwinds with commodity -- where the commodity price sits, where activity sits. We're seeing some softening on the service side as well. So all of those things together, I think you're going to have some good things coming in next couple of quarters.

Thank you. And our next question comes from Gail Nicholson with Stephens. Your may proceed with your question.

I really had a housekeeping question. Can you talk about the next step for you guys to achieve investment grade status and the potential timing of that?

Gail, we're having active dialogue with the rating agencies. I think with us being over 280,000 barrels a day this business qualifies as an investment grade company. Our debt certainly trades like its investment grade company. We just need an upgrade from, either S&P and Moody's so upgraded us both. After the acquisition, we've executed on everything we said we're going to do post acquisition. And I think this business is on its way to becoming investment grade company whether or not the ratings get there or not.

Thank you...

Gail, we also added the fall away provisions to our credit facility in the early spring, and that results in our credit facility becoming unsecured once one other agency upgrades us, including our Fitch rating today.

Thank you. And our next question comes from Drew Venker with Morgan Stanley. Your may proceed with your question.

Travis, in the past you talked about using some of your free cash flow to replenish inventory. I think you've really talked down corporate M&A a lot obviously since the market over the last few months. But just interested to hear if the asset market is open, if maybe bid/ask is too wide here. But if you can pick up acreage at attractive prices?

Well, I think you've always heard us say that we'll do accretive deals. But there is a reason in my prepared remarks I said that I think the best M&A opportunity for us right now is repurchasing Diamondback share. And so that's really the corporate focus. But we do have an obligation to look for deals, but they've got to be massively accretive. And like I said just to reiterate, our focus is on repurchasing our own shares right now.

Thank you. And our next question comes from Tim Rezvan with Oppenheimer. You may proceed with your question.

I had a question on unit expenses in 2Q. We saw gathering and transportation LOE, both reverse course after some pretty big declines. Can you talk about anything one-off that happened maybe in 2Q, or how we should thinking about more normalized trend going forward on those cash OpEx items?

So in the quarter, we have the full effect of the Central Basin platform. That acreage was closed on July 1st. So our LOE should trend down here in Q3 and Q4. We've been hinting towards the upper half of our 4.25 to 4.75 guidance for the rest of the year on LOE. Gathering, processing and transportation, that moves around a little bit quarter-to-quarter. I still think the midpoint is a good number there.

And then if I could ask a question related to Slide 15 on your CapEx to cash flow reconciliation, just want to make sure I understand this correctly. It appears that your updated guidance implies, or on track with your first half of '19, cost level of 890 per foot. And I'm just wondering is it fair to say that your updated guide is not reflecting any incremental efficiencies in the back half of the year?

Tim, I mean, we don't make promises on service costs. Efficiency wise the business is running as efficiently as possible. Certainly, there's some tailwinds on the service sector. But we certainly felt that this quarter was not the quarter to go, too aggressive on the guidance change. And we have expectations to continue to drive capital costs out of the business and meet or exceed these numbers there.

Thank you. And our next question comes from Ryan Todd with Simmons Energy. You may proceed with your question.

Maybe a follow up on a couple of earlier things, the $750 million in free cash flow in 2020 that you've talked about. What CapEx -- rough CapEx budget does that assume? And does it imply a modest acceleration from second half '19 levels, or a continuation of current activity?

If anything, it would a very, very moderate increase versus current activity levels. We're running 8 frac spreads today. We will run 8 frac spreads all year. And we're going to exit year running 8 frac spreads. We don't anticipate having any frac holidays at the end of the year. We're going to have 2019 running 8 spreads and probably enter 2020 running those 8 spreads. So I think for us now the questions are at the margin, right? We are completing 300 and 320 wells this year. I don't expect a material change from that number to the upside or the downside pending a major commodity price change.

And then you reduced debt a little bit in the quarter and obviously, you are in a strong financial position. But at a high level, what do you think is the right level of debt for your company? Is it a conservative leverage metric at $750 a barrel oil price? Should we expect further debt reduction going forward? Or do you feel like you're in a pretty good place?

Ryan, I feel really good about how much debt we've reduced over the last couple of quarters. I really, on an absolute basis but also on a leverage metric basis, I feel like we're in really good shape. Right now, with the amount of cash proceeds that we have and the free cash flow profile of business, buying back our stock at these depressed levels is probably a better level use of capital for us, while still maintaining a fortress balance sheet.

Thank you. And our next question comes from Asit Sen with Bank of America. You may proceed with your question.

Thanks, good morning guys. So on Slide12, you mentioned additional potential savings from infrastructure efficiency attributable to Rattler Midstream. Can you elaborate on that specifically?

So these numbers that you see, the 735 in the Midland Basin and the 1,131 in the Delaware Basin are gross numbers. The benefit that we have of Rattler is that we do capitalize the first six months of water production in both basins, that's part of our [equip], the EPs of our [indiscernible] DC&E. Rattler's margins we're saving probably an extra $30 a foot on the Midland side and close to $75 or $80 a foot on the Delaware side.

And Mike, in the operational update, it was mentioned that you completed a pair of Jo Mill wells this quarter. Can you provide more details on the zone across your footprint, and how that you intent to layer in these completions, going forward?

Northern and Midland Basin is the area that we're focusing on right now. So, we'll typically stagger Middle Spraberry with Jo Mill, the two that we did this quarter, we're drilling more this quarter as we're going forward. So as we do our -- keep development across the entire Northern Midland Basin, we're adding Middle Spraberry Jo Mill into those tubes. And so as far as that going forward that's what we're planning to do, the wells are performing and competing for capital with all of our other zones as we have today and look forward to doing that more, going forward.

Thank you. And our next question comes from Jeff Grampp with Northland Capital Markets. You may proceed with your question.

I was curious at just -- it seemed like this quarter there was a little bit larger discrepancy and some pass in terms of drill versus complete. So I was just wondering if that was the expected plan for the quarter, if that's just a timing issue. Or how we should think about drill versus complete in the back half of the year?

Jeff, you'll see that we drilled about 170 wells year-to-date and we completed 150. We're planning on completing somewhere around the midpoint of our guide at 300 to 320 wells. So our rig count has got a little bit ahead of our completion count, our completion cadence. So we probably -- you'd probably see us drop a couple of rigs into the back half of the year. But there'll be no change to the completion cadence with us running eight spreads consistently for the rest of the year.

And for my follow up, Travis, you mentioned buybacks being most interesting use of free cash flow right now. So just wondering as we look into 2020, you guys starting to build a track record of building the dividend that's having some growth there. So just wondering should we still assume that growing that annual dividend is still going to take precedence over accelerating buybacks, or how you guys look to balance the two while understanding that both of those are goals for your guys?

Again, it's not an either or and I think you've heard us say consistently that the board feels that the dividend is the primary form of shareholder return.

Thank you. And our next question comes from David Deckelbaum with Cowen. You may proceed with your question.

Just wanted to ask couple of questions on as we go in the 2020, you basically hit all the goals that you wanted to in '19, and this is a pretty busy year for you guys on the corporate side with the Rattler IPO, but then on the dropdown. As we go into '20, should we be thinking that this is start being, for lack of a better word, a more boring execution model? Or should we still be looking for things like drill-cos and other things that you've endeavored in the past to pull some value forward? I guess how do you square those with some of your ambitions of being this free cash growth engine?

David, if 2020 is going to a boring year for Diamondback that would be the first boring year in our company's history. So if the past is a prediction of the future, I expect a lot of exciting things to happen for Diamondback on that. I don't know what those are yet. But I know as we continue to demonstrate the free cash flow, and we've seen that we built and our execution and capital efficiency, the better need -- by us out here in the Permian, I think there's going to be opportunities. I don't know what those are going to be. But we know as long as we execute and this organization continues to deliver, we're going to have opportunities and it's up to us and management and Board to assess those opportunities and determine which one creates the most values for the shareholders who own the company. So don't know what those are going to be, but I suspect there will be something.

I guess like just on the completion side, and you highlighted costs perhaps coming down in the service side in the back half. Are you looking at other applications like some of the e-fracsand things that we see maybe more headline oriented these days. But are you looking at those with any sincerity at this point going into next year?

David, absolutely. So the answer is going to be, yes. Every new technology or application that we can vet and make sure that we're going to save money on the dollar per foot, and not hurt any efficiency and the production of the well. So e-frac, we have an e-frac crew coming in the latter half of this year. We will utilize dual field capability on several of our frac fleets and drilling rigs. Again, we are always looking at what's out there. We're watching what everyone else is doing well. So we will be typically a very, very fast follower, a lot of times we won't be on the exact leading edge. But there's again, we don't want to put our shareholders at risk for that.But at the end of the day, yes, that dollar per foot and the efficiency and capital efficiency is what we're looking for. So the great thing is, as we are slowing down as an industry, a lot of these things are coming available that have been working for other folks and now they are available and we'll take them up. So we're getting some of these crews that are coming in hot, and probably doing the same thing with rigs. We have got to complete the different rig fleet today than we had a year ago. And I think you are seeing some of the capital efficiency metrics same because of what we are doing now.

Thank you. And our next question comes from Richard Tullis with Capital One Securities. You may proceed with your question.

Travis or Mike, it seems like the rigs have been split fairly evenly between the Midland and Delaware Basins the past couple of quarters. Do you see that split holding fairly evenly into 2020? Or how do you look at the allocation of capital as we get a little bit closer to next year?

We take a look at that almost on every well decision. But I think just for planning purposes, I think jsut assuming that you're going to have an acreage split with rigs on either side of the basin is a good planning assumption.

And just lastly, I know it's not a big part of your story, but the limelight area, looks like you're planning a rig there -- excuse me, a well there for the third quarter. With success, how active could that area become in 2020 for Diamondback?

If that area is successful, it will probably -- may just compete for capital. And the footprint we have there is good for one to two rigs probably, and we'll just -- it'd be good for Rattler as well too. So we'll just -- we'll wait until we get some data there and then make some capital decision. But it could be a nice place to partner rig for multiple years.

Thank you. And our next question comes from Jason Wangler with Imperial Capital. You may proceed with your questions.

I just had one, and Mike you kind of hit on the services side. I mean as far as the pricing of services, I mean how much more do you think there is to really get given that's been pretty beat up obviously. And also, I guess you probably switch a lot of rigs. But do you see much more on the upgrading, whether it's on push your crews or rigs left as you move forward?

Jason, again, these guys on the service side have been squeezed pretty hard. Again, it's in their wagon up to someone that's going to be very consistent in a fluid commodity price environment provides them with both an operational and a financial hedge. So we're getting some benefit there as well as the size and sales. So, us being able to stay steady is really helping those gas out as well. Don't see a whole lot of softening just because again we want our partners to be there at the end of the day, and we needed them and they're very big part of the success we've had. So we're working with those folks and they work with us on a high end of commodity price. We work with them on the low end of commodity price. But no, it is softening a little bit just because the activity levels dropping so much.

Thank you. And our next question comes from Michael Hall with Heikkinen Energy Advisors. You may proceed with your question.

I guess just quick one on my end, a lot have been addressed. As you think about the size and scale of repurchase program. Should we think about the free cash flow as the cap on that? Or given some of the asset sales and the liquidity you have. Should we anticipate seeing potentially even higher amounts of repurchases relatively to the free cash flow you're talking about?

I think through 2019, the rest of 2019, we're going to use a mix of free cash flow profile and proceeds from the asset sales to continue to buyback program. As you move into 2020, I'd say free cash flow becomes more of the big governor at that point. We've completed all these onetime proceeds, the stocks still, in our opinion, very cheap and we're continuing to use our capital to buy back shares in this market.

And then I guess just coming back a little bit on the whole growth versus free cash flow question. How the big picture approach the optimization as you think about 2020 and beyond, but the optimization of growth versus free cash flow in the capital allocation decision? I'm just curious kind of more about your process as opposed to the outcome.

I think it's a process which done at the margin for us now. I mean, we are a company that maximized growth with any cash flow for the last four years. So growing the cash flow is not a new concept to us. The big changes that we can grow and deliver free cash flow, and we have no intention of slowing that growth to maximize free cash flow or vice versa. It's going to be a symbiotic relationship for a long time. We are going to keep rolling, maybe it's at a rig or keep the same rig count as this year, doing more with the same capital and growth is the output next year with free cash flow also being the output.

Thank you. Our next question comes from Scott Hanold with RBC Capital Markets. You may proceed with your question.

Just couple quick ones. One, I first want to commend you all from obviously stepping up and buying back stock and hopefully, we'll see more by you all and the rest of the industry, especially with where some of these equities are trading. But maybe this one is for Kaes, as you all think about the buybacks here over the next quarter or two. Is there, you know, in your conversations with the rating agencies. Is there any push back from them to investment grade with the amount of buybacks you are doing?

No, I mean, I haven't seen a lot of pushback. I think a lot of the one-time proceeds that we've received already about $1 billion were the one time proceeds, they're all seem as very credit positive. So we've checked those boxes and we've also checked the production box and checked the capital efficiency box. So I haven't had a lot of pushback on that front. And for us right now, investment grade is a corporate objective but for us buying back stock at depressed values is a more significant corporate objective.

And a quick second one is on your ownership of VNOM, obviously, you guys strategically took more equity in that ownership with all recent drops. Can you give us a big picture view of your thoughts behind that investment here going forward? And where you all want to shake out with that ownership overtime?

Yes, I mean, I'm excited that Diamondback now owns pro forma for the drop back up to 60% of VNOM. I think it's a great relationship between the two, the relationship between Diamondback and Viper, certainly differentiates Viper's multiple and allows both companies to do smart deals like the deal that we announced last week. Diamondback has not sold one share of Viper over the past four years. And in fact, we've increased our ownership, so via share count. So we're happy with that ownership. We get a significant dividend at the Diamondback level from Viper on an annual basis and that relationship will continue to be very strong.

Thank you. Our next question comes from Leo Mariani with KeyBanc. You may proceed with your question.

Just a question on the marketing side here, so I think you guys said that you will be at 95% or little bit better on oil price realizations in the second half of this year versus WTI. Just trying to get a sense, is it maybe a little bit lower in the third quarter or kind of a big boost comes in the fourth quarter. Can you give us any differentiation between 3Q and 4Q on that?

Yes, I think there will be some -- I think third quarter is close to that 95% range and Q4 pops up a little bit. I'll use this as a point that we've now secured take away for all of major production across the company when we had zero takeaway a year ago, certainly got through the worst of our wide differential quarters. And on a go forward basis, we're going to be selling all of our crude either across the dock in Corpus where we have reserved dock space or to a refinery in Houston. So we're pretty excited about where our marketing position is heading on, on the oil side.

Okay, that's great. And I guess could you comment all on any initiatives on the gas, or NGL side. Obviously, it was a rough quarter in second quarter for gas price realizations. Are you guys working on anything maybe to get that gap out of basin to other markets, going forward?

Yes, we have very few taking [time rides] across our position. I think we do have some taking [time rides] from the Delaware that we're going to exercise, and get some different pricing exposure. But our Midland Basin and Northern Delaware gas production, we're going to look to hedge and protect ourselves that way. I think for us with gas being such a small percentage of our production and revenue, we're more focused on hedging that price at a decent realized price and not having to deal with the negative realizations we've had to deal with this quarter.

And I guess just on the well cost side, obviously, you guys did a tremendous job of reductions here post the Energen deal. I know it's kind of hard of course to sort of project forward. But you certainly discussed at length your relentless focus on efficiencies here. I mean would you guys potentially foresee the absence of any changes in service costs. I mean, could we be sitting here a year from today and be talking about another 5% to 10% reduction in well costs?

Leo, Mike's guys are obviously the best in the business and that's why we hammered this cost discussion so hard in this deck. I see a lot of notes out about six month fumes and IPs across the basin, no one is talking about what these wells cost to get out of the ground. I mean, the cost structure that we have differentiates us into someone that can grow and return free cash versus someone who outspend cash flow. That's how important those differences are. So I expect Mike and his team to continue to drive costs out of the business. We certainly have some service cost tailwinds hitting us right now, and those should continue into 2020.

Thank you. And our next question comes from Brian Singer with Goldman Sachs. You may proceed with your question.

Can you talk to how you see the rates of return in the Midland Basin versus the Delaware Basin I realize you kind of haven't given split in terms of activity. But just how you see those rates return comparing? And then post the cost reductions, you've highlighted how the Energen locations in the Delaware compare relative to legacy down back locations?

I'll tell you the locations in the Vermejo area, that's the best block in our portfolio, and we got -- that was the ground jewel in the Energen acquisition, and those wells are just simply spectacular. And so the rates of return there obviously are the best in any of our portfolio. I still think, Brian, that when you -- just out of the basin, it cost you more in the Delaware but you get it out faster and you got higher AUR per foot. The Midland Basin, you don't quite get as much hydrocarbon recovery, but it's lot cheaper.So as we look at it, this parts we still sort of think about it in an equal allocation in terms of rates of return. And you can see that how we spend our capital dollars there with rigs about equally on either side of the basin. So it's not precise number but we still think is roughly equivalent.

And then the follow up is with the regards to just how you're thinking about the range of options in 2020, particularly share repurchase and the extent of that relative -- and investing in that relative to investing for growth and how up cycles or down cycles in commodity prices would play a role?

Brian, I think it's somewhere around what our budget was this year, either plus the rig or minus the rig absent a very negative commodity take between now and end of the year. So we are very focused on at least hitting that $750 million of free cash at $55 WTI next year. If WTI is lower than that, we will have to look at where service costs are and where our wells cost are, and see what free cash flow comes out of the model. But like I said earlier, there is not a huge delta between our current thinking and where we are in our current pace and where we are going to be in 2020, which allows this business to grow significantly, but also buyback a lot of stock. And if the stock remains depressed, we will continue to buy back stock with free cash flow and our one time proceeds that we have executed on this last quarter.

Thank you. And I am and not showing at any further questions at this time. I would now like to turn the call back over to Travis Stice, CEO, for any further remarks.

Thanks again everyone participating in today's call. If you've got any questions, please contact us using the contact information provided.

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone, have a wonderful day.