So it will be interesting to see as producers drop rigs, do they attempt to maintain their cycle times and turn those wells in line in other words, reducing that DUC count or do they hold back on completion crews and allow those DUCs to sit for a little bit longer. It will be a mix. It’s our assumption. And so we expect that DUC count to come a little bit lower through the year. You can think about it as producers choosing to bring those wells online or you can think about it as not adding new DUCs as the DUCs that are there continue to just get warm down. I would say that in the full cycle economics of the Haynesville, we certainly see that it’s prudent to pull back capital, and we think we’re seeing others do the same thing. We’re making money on the capital that we are investing but the margins are not nearly on a full cycle basis what they were historically and they do rely on some of that contango in the strip playing out.
Obviously, if prices were to stay where they are this morning and all that contango were to roll down to the prompt, you would have a very different economic outlook for the Haynesville, and I think a lot of activity was shut in. But I don’t expect that to happen. I think the contango is there for a reason. And so I expect there will be some conversion of those DUCs. I just don’t expect that there will be as much activation of new wells to maintain that same cadence.
Umang Choudhary: That’s great. Very helpful. Thank you.
Operator: The next question comes from Doug Leggate with Bank of America. Please go ahead.
Doug Leggate: Thank you. Good morning, everyone. Hey, Nick. Nick, can you walk us through the thoughts on the remaining sale in the Eagle Ford line of sight, if you can, to the extent you can. And the implications of what you showed is what looked like some pretty strong wells out of the Cotton Valley, what does that say about your thinking on the value of that asset relative to the sales that you have achieved so far?
Nick Dell’Osso: Yes. Hey, Doug, I will chime in here and the others may have some things to say as well. First, just to make sure it’s clear it’s the Upper Austin Chalk, not the Cotton Valley.
Doug Leggate: Sorry, my apologies that’s right. My apologies.
Nick Dell’Osso: No worries. So we have drilled some good wells there. And we knew last year as we engaged with buyers that, that would be a pretty interesting component of how people thought about valuation and thought about the value of the PDP relative to the value of the upside available. I think the Chalk wells that we have drilled are pretty attractive and confirmatory of the upside value associated with the asset. We are still in an A&D market overall that doesn’t end up putting a ton of value on undrilled locations. And so we have been willing to be a little bit patient here and let those wells come online. We have really just released these well results to the public now. And so we’ll be staying engaged with the interested parties.
And there are quite a few interested in this asset to understand what those chalk wells look like and understand if it fits for them as an investment. But we don’t need to be in a rush. We have got plenty of proceeds coming in. We are making progress on the exit strategically and we will be thoughtful about achieving a good result here. But we are actively engaged still with several interested parties and getting great feedback on what this asset looks like and what these incremental results mean.
