Phillips Johnston : Just thinking directionally about first quarter volumes in the Permian. Obviously, you guys gave guidance, but presumably the exit rate of 120 day that was pretty flush. I guess if we ignore the effects of Vencer deal, would you expect your first quarter Permian volumes to be directionally down versus that exit rate? Or do you think you can sort of maintain that level?
Chris Doyle: So if you look at our full year guide of right at about 170,000 BOE per day, we anticipate a little bit of downtime, obviously, for weather in the first quarter. What we saw for Permian specifically, however, it was above our expectations for the quarter. We think as we go Q1 through to the end of the year, we’ll see some increase, fairly modest and that’s based on the assets outperforming coming off that strong exit into January and now February.
Phillips Johnston : And then wondering if you can share the next 12-month PDP decline rate that Ryder Scott assumed in your ’23 reserve report? And would you expect that decline rate to move materially lower between now and the end of this year?
Marianella Foschi : Yes, absolutely. So for year-end, it’s probably low to mid-30s on a BOE basis, we call it, 33%, 34% going forward. And it’s going to depend on shape and cadence of activity, right, like if you — if we have a lot of completions and bring online later in the year, we’re early the year but other than that cadence throughout the year, I don’t expect a material change in that decline on a go-forward basis for a level-loaded normalized activity plan.
Operator: We’ll move next to Kevin MacCurdy at Pickering Energy Partners.
Kevin MacCurdy : Congratulations on the well-received capital number. In regards to that $150 million reduction compared to your prior number, can you help us break down that number a little bit more on the savings from well cost reduction, faster cycle times and lower well costs — sorry, lower well count? And how much of that savings is coming from the DJ versus the Permian compared to the prior plan?
Chris Doyle : Sure. I’ll kick this off here. Three primary drivers to the $150 million. The first is the early wins in terms of cycle times that we’ve seen across our business. That’s making for a much more efficient capital program in 2024. The second is the enhanced well productivity that we saw in the DJ, that’s making for a much more capital-efficient program in 2024. And the combination of those two has allowed us to tweak and to pull out a little bit of activity and yet deliver the same amount of production for less capital. The split between those three is probably fairly even, I’d say. I think there’s likely more upside on the cycle time enhancements. We’ve not baked in anything into the Delaware or into the Vencer assets.
Now let us get our hands squarely on the wheel with those assets, and we’ll see how we progress through the year. And I think the other thing that Hodge touched on is we’ll look for ways to accelerate TILs, and it will cause a little bit of lumpiness. That’s why you see us 60% of our capital in the first half of the year because we think we can bring wells on a lot faster, and that’s going to be a better return for our shareholders. But it will create a little bit of lumpiness. I’d say of the $150 million, the split between the Permian and the DJ is likely heavier weighted to the DJ, just because it’s a known commodity. And I’d like to be here next quarter or a couple of quarters from now saying, hey, we’re uncovering additional ways to optimize the Permian.
We just haven’t rolled that into the ’24 plan yet.
Kevin MacCurdy : And turning to the DJ, you’ve laid out your plan for most of your DJ capital to be spent on the southern acreage this year. That looks like your highest return area. Do you expect that area to continue to receive the majority of the DJ capital in the coming years? And can you talk about how permitting fits into that decision?
Chris Doyle : Sure. And the short answer is yes. Those are some of our best returns in the DJ. I think it’s also setting up because of the permitting situation, the Box Elder CAP approved, the Lowry CAP set to get approved this year, the Arapa CAP maybe late this year, early next that you then have really strong confidence in being able to allocate capital in that area. I would say that we’re going to be — as we allocate capital between the DJ and the Permian this stuff is going to compete. And I’d say we’re 70% this year, probably 75% next year of our capital going into the Watkins area. So we’re excited about it. It is a fantastic area, and we’ve got line of sight, clear line of sight on the permitting with the CAPs working through the system. And so yes, you’ll see us really pull capital into this area over the next few years.
Hodge Walker : Yes. I’d add, if you take a look at what the remaining inventory in that Watkins area looks like, it’s over 300 wells and about 80% of those are going to be covered by the CAPs that Chris is referencing.
Operator: And that does conclude our question-and-answer session. I would like to turn the conference back over to Brad Whitmarsh for closing remarks.
Brad Whitmarsh: Yes. Thanks, Audra, and certainly appreciate all the interest in Civitas today. We look forward to connecting with many of you in the following weeks as we’re going to hit the road for roadshows and conferences upcoming. I hope you have a great rest of your day. Please be safe. Thanks again for joining us.
Operator: That does conclude today’s conference call. Again, thank you for your participation. You may now disconnect.
