Doug Leggate: Appreciate the answers. Thanks so much.
Operator: Your next question comes from the line of Scott Gruber with Citigroup. Scott, your line is open.
Scott Gruber: Yes. Thank you and good morning. So I want to touch on the strategy with the row development. It does differ a bit from peers, in that you’re generally focused on single zone development and not developing multiple benches. Can you just provide some more detail on what differs from a geologic perspective on the eastern side of the acreage? You mentioned on the Eastern side, co-development, is it necessary? Do you just see far less communication on the eastern side? What is the strategy, mainly a call on, really being able to leverage prior surface spending when you do develop these Tier 2 zones down the road, to offset the lower productivity. Just some more color on the strategy.
Tom Jorden: Yes. Well, I’m going to just say, first and foremost, as much as we talk about the Permian Basin, it’s highly variable and a lot of things change. depth, pressure, product type. It’s really not one single basin, but you have tremendous variation in stratigraphy and geomechanics and how rocks respond. For much, not all, but for much of our assets, we have come to the informed conclusion that co-development of vertical benches is not necessary, we can develop a particular bench and come back and develop benches above and below. Now that’s a function of frac barriers. It’s a function of reservoir performance. It’s a function of timing. But the fact that others see it differently, they’re playing in different areas of the basin.
It’s like me telling you that Mexico has the wrong word for beer. I mean, you get different answers depending on where you are. And even within the Windham Row, you’re going to see that the interference changes from east to west. So we are very confident in our approach. I’ll just leave you with that. That’s not to disagree or contradict anybody else’s, but we have a lot of data that makes us firm in the statement, that we can develop this single bench in the Wolfcamp without leaving behind resource above or below us. It’s also highly efficient to our infrastructure. But that’s a benefit, not a driver.
Blake Sirgo: Yes, I’ll just add to that, the row development does lay the groundwork for all future benches that we might develop. The infrastructure is in place. The tank batteries are in place. Our team has already modeled all those zones and how they can come on later and it will just drive down the dollar per foot on future projects. But as Tom said, that’s an outcome. That’s not the driver of why we’re developing and the way we are.
Scott Gruber: Yes. Do you have like a rough estimate in terms of savings on the subsequent developments when all the infrastructure and service spend has already sunk?
Blake Sirgo: No, I’d be nervous to quote a percentage on that one because it’s not in the immediate drill schedule, but it’s significant. It will move the needle.
Scott Gruber: Okay. Appreciate it. Thank you.
Blake Sirgo: Thank you.
Operator: Your next question comes from the line of David Deckelbaum with TD Cowen. David, your line is open.
David Deckelbaum: Thanks, Tom and team. Appreciate you guys taking my questions this morning.
Tom Jorden: Hi, David.
David Deckelbaum: Just curious, you all have demonstrated some pretty impressive well productivity gains, certainly over your base cases. I’m curious, as we progress into the back half or the end of ‘23 into ‘24, ‘25. How would you contextualize midstream constraints? I know, obviously, you have large-scale developments like Windham Row coming online. But we’ve heard by and large from many of the peers in the area, that midstream is creating a pretty big overhang around some near-term productivity. Could you contextualize, I guess, what you’re seeing and how you feel about the midstream setup going into ‘24 and ‘25 relative to your productivity?
Blake Sirgo: Yes, David, this is Blake. I’ll take that one. In relation to the Windham Row, but also all of our development in Culberson and Reeves County, we own and operate our own midstream systems. Actually, about 70% of our operated gas and our operated water goes through our Coterra midstream assets. So we have tremendous control. These are systems we have developed over years. Triple Crown, for example, in Culberson County, is tied into over five different processors that we can shift gas around to, which gives us a ton of reliability. In addition, we have multiple natural gas residue outlets. And that just gives us a ton of flexibility and confidence in being ready for these big projects. In New Mexico, we are a third party on the majority of our assets.
That requires a lot of planning for all the reasons you alluded to earlier. But we have some pretty good service partners, and we have found as long as we stay far ahead of our projects, they’ll be ready for us.
David Deckelbaum: Appreciate that. And then maybe just – so I better understand the comments around the Marcellus spend this next year. It seems like it’s being phrased as though it’s an option to spend $200 million less, but I guess, is that the correct way to think about it? Or is there really a $100 million plus of efficiency gains in there or just program changes just from designing better plans into next year?
Tom Jorden: Well, Dave, what I said in my opening remarks is as we throttle into the year, we’re currently in a cadence where we would – if we didn’t change, we would hold production flat and be able to realize those savings. But we also have on-ramps and off-ramps. I talked about planning. And one of the things that I’m most pleased about with our current program is, whether we’re talking about the Permian, the Anadarko or the Marcellus, each one of those plans has places where we can accelerate or decelerate if conditions change. We thought ahead, we pre-planned the way to react. And so right now, as we enter into 2024, we are going to be on a flattish-Marcellus cadence. And I would say you would probably see us increase rather than decrease from that if conditions warranted.
