Paul Cheng: Gentlemen, can we go back into Permian? It seems that you’re going to maintain 5 rigs and you’re not going to do additional well in Alpine High. Should we assume in the second half, the number of wells you’re going to bring on in the Permian is going to be higher than what you previously assumed? I think previously, based on your fourth quarter presentation, it looks like we may be talking about 22 wells in the third quarter and 10 wells in the fall. Should we assume it’s going to be higher? Also then, in the second quarter, with 21 well, we thought the production will be higher than what you saw here. Is it the timing of the well coming on stream? Is winning in the — in the quarter?
John Christmann: Yes, Paul, I’ll let Dave jump in. But it is timing. We said most of the wells came on late in the first quarter in the Permian. And then effectively, your well counts are going to be pretty similar because we’re dropping the gas-weighted drilling in the Permian, and we’re adding some oil weighting. So it shouldn’t have a big impact on the numbers, I wouldn’t believe. But Dave, I’ll let you…
David Pursell: Yes. In calendar year ’23, it won’t have a big number. The numbers we’re looking at are a little bit higher than what you have, Paul, but not materially. And I think when you look at the 21 wells in the second quarter, they’re big pads, and those pads come online. The Delaware pad, for example, is 11 wells on our Titus acquisition. And so we’ll be bringing that online. It will come on at pace, but back-end weighted towards the end of the quarter, not the beginning.
Paul Cheng: Okay. And on the second question, the gross production for Egypt, can you just remind us then what is your full year expectation now? And also over the next several years, what kind of budget and what kind of growth rate that you have in mind on the gross production for that?
David Pursell: Yes. Paul, we had talked about 10% exit to exit on gross in Egypt, and the goal would be to, in the next couple of years, think about something in that range.
Paul Cheng: And what’s the risk — what’s the biggest risk that you will not be able to achieve that for this year?
David Pursell: For this year?
Paul Cheng: Yes. certainly the first quarter second quarter is definitely, I suppose that is below what you’ve been looking at. And so you need to step up. And some of the challenge seems it’s going to totally go away. So I mean, how big is the cushion when you’re talking about 10% year-over-year exit rate?
David Pursell: Yes. I think for us, Paul, we have pretty good visibility on — we have really good visibility on the program, and that program consists of new well drilling as well as recompletions. And both of those have a significant impact on the ability to grow production. So we have — again, we still have confidence in our ability to hit that growth rate.
Paul Cheng: And do you have a budget that you can share for the next several years, we need to related to Egypt to achieve that plan?
David Pursell: We haven’t shared that yet, Paul.
Operator: Our next question comes from Neal Dingmann at Truist Securities.
Neal Dingmann: John, my first question is on capital discipline, specifically. Really just in broad strokes, wondering how you all think about managed . Is this more to insure you’re generating sort of a cash flow in a bottle tape like we’re in? Or do you think more about — maybe ensure that you do not complete any wells that won’t be high return threshold?
John Christmann: I mean you’re cutting out a little bit on the question. So I didn’t — I think I — it’s about capital discipline. I’d say, I think, in general we feel good about where we are. Most of our capital costs are under contract. So it’s about cost control and execution. We’ve made some choices to move some things around and you’re seeing the impacts of those. And that’s some of the flexibility of the portfolio. But everything is within line and really, we don’t plan to drill wells that we wouldn’t want to complete. And that’s why you see us kind of curtailing the drilling in the gas-weighted programs in the U.S.
Neal Dingmann: Great details. And then my second, just on OFS inflation. We’ve heard a number of people talk about domestic softness. Just wondering if you’ve seen the something some of your international areas.
John Christmann: I would just say it’s early, right? Everything is still under contract. I think where you’d start to see that as we start looking at, thinking about the ’24 pricing and so forth, as you start pricing that in towards the middle of the year into next year. But right now, as you know, the cost structure always lags. And so we haven’t seen any real direct softness today.
Operator: Our next question comes from Arun Jayaram at JPMorgan Securities.
Arun Jayaram: Maybe, Steve, I want to ask you a little bit about the working capital build in the quarter in Egypt in the U.S. and just thoughts on the drivers of that. And would you expect that to reverse in 2Q over the balance of the year?
Stephen Riney: Yes. Arun. Yes, as I’ve indicated earlier, there was a $500 million working capital increase. $300 million of that was because of a paydown of accrued compensation obligations that were accrued through the 2022 calendar year, and $100 million of that was due to the paydown of other payables, other accounts payable. And then there were a bunch of other small items, ups and downs, that amounted to the full $500 million. And I did indicate that buried within that was the $180 million increase in Egypt accounts receivable. I think that most of that is going to reverse during 2023. As every quarter, we accrue the incentive compensation that will be payable at the — in the first quarter of the following year. So a lot of that’s just going to reaccrue as we go through calendar year 2023.
Arun Jayaram: Great. And just my follow-up, maybe for David. David, in order to hit, call it, the midpoint of the full year oil guide, the business would have to average oil production in the upper 160s for the back half of the year. Just — it sounds like your 2Q guide is a little conservative. But maybe if you could help us walk through and give us comfort on hitting those levels because the midpoint is 159 for oil.
David Pursell: Are we — we’re talking Egypt gross?
Arun Jayaram: No, just full year oil or the component.
David Pursell: Yes. So I think there’s a — if you — without getting into the granularity of each asset, we feel confident in the ability to hit the Egypt exit to exit. The U.S. is going to grow. We have 21 wells coming online in the second quarter. We have more than that in the third quarter. A fair number of the wells that were brought online in the first quarter were 3 milers that were brought on towards the end of the quarter. So we feel good about the U.S. ability to execute. And then on the North Sea, which is kind of because of the EPL, everyone’s kind of forgot about that, but we’re actually having a pretty good operating success so far this year in the North Sea, both with platform operating efficiency. But we also brought on a really nice well at the end of the first quarter, and we have another well to store.
It’s the last subsea well that the Ocean Patriot drilled. It will be online here relatively quickly. That’s going to be a little bit higher gas mix, which in the North Sea is not a bad thing right now. So we feel really comfortable with our ability to hit the portfolio growth targets.
Operator: Our next question comes from Leo Mariani at Ross MKM.
Leo Mariani: Just a question here on Suriname. Obviously, you guys are still going through the appraisal process at Krabdagu, but perspective oil there, if you look at it in the radio and what you’ve already done appraisal wise at are kind of enough to move forward with the development of a nice pool of oil here?
