Clay Gaspar: Yes. I would say it’s a little too early to talk 2025, but certainly, as I mentioned in a prior question, we model, we have good models. We have internal looks for ’25, ’26, and then we always reserve the right to get smarter. So I would expect our ’25 internal expectations, which we haven’t talked about publicly — to continue to migrate up as they do in prior years. But I don’t think it materially moves our expectations of what we’re doing now. In my mind, this is something that is kind of standard operating procedure on what we’re doing. We always expect our D&C teams to move more efficiently. We’re always expecting our production teams to be a little bit more operationally savvy and efficient. And then for the subsurface folks, building in that creative magic to extract just a little bit more of the resource and be a little bit smarter on how we do this overall.
And I think that’s the part I’m excited about and what I continue to see as we roll into ’25.
Kevin MacCurdy: Great. And as a follow-up, you guys have made a number of successful midstream investments over the years, including Matterhorn. What would be the catalyst for you to start to realize the value of those assets in any near-term monetization plans?
Rick Muncrief: We’ll always look at what we think is the right time when midstream multiples are clearly differential, if you will, to where we’re at. And how that butts up to our strategy and making sure that we continue to deliver our commodity, and we get the — we have the influence that we need. And so it will probably come in due time, but it’s something we’ll continue to monitor, and we try to keep a pretty close pulse on that. Jeff, anything else you want to add there?
Jeff Ritenour: No, I think you said it well, Rick, which is it really is a function of the evolution of the kind of the life cycle of the asset and where we are on that. And as Rick mentioned, we’ve tried to be opportunistic with those investments, certainly want to support projects as needed and where we can put some equity to work as well, we’re not adverse to doing that. And as Rick mentioned, from a governance standpoint, there are some situations where we want to have a little bit more control, but usually, as those assets mature that tends to dissipate, and that likely becomes a time where we’ll look at the market dynamics and consider some sort of exit or monetization. But I feel good about where we sit today with the investments that we have in hand, and they’ve served us well as we’re working to move our molecules.
Kevin MacCurdy: Great. Thank you guys.
Operator: Our next question comes from Charles Meade with Johnson Rice. Your line is open. Please go ahead.
Charles Meade: Good morning, Rick, Clay, and Jeff and to the rest of the Devon team there. Clay, I know you feel there’s a number of questions this morning along the lines of you guys had this bang up quarter to what extent should we expect that to continue. And I understand you’re reluctant — you should be reluctant to commit to that publicly. You’re probably reluctant to commit to it internally. But I’m going to try to trick you when you’re talking about it in a different way. And here’s the question. It was really helpful the way you guys allocated the — be it 6% well performance within the balance between cycle times and easing infrastructure constraints. But the question is, to what extent is that — is there interaction between that well performance and the easing infrastructure constraints.
So my understanding is that there’s a lot of new well pads in the Delaware that could be producing higher, but for these above bound constraints. And so — is that easing above your street that enabled you to deliver those — the rates that you’ve highlighted on those three Delaware pads?
Clay Gaspar: I think that’s a great question, and I’ll take a little bit of that, I’ll take some of that bate and pursue it. And by the way, we’re always happy to talk about operations, beats the heck out of something else that’s more asymmetric to our objectives. Referring back to Slide 9, we talk about two things: the well productivity and the completions efficiencies. And then in our — both Rick and my prepared remarks, we talked about really three components and adding on that base. That base outperformance was really critical as well. As I think about overall proportionate, about 60% of the outperformance really was the well productivity, maybe 20 or so was bringing forward those projects more days online, and about 20% was just uptime really associated with less constraints than we saw in ’23 and really historically.
Now that does not say that we didn’t have any constraints. There’s advantages and there’s disadvantages of working in the hottest basin around the world. And that’s really the Permian and more specifically, what we’re seeing in the Delaware. Jeff’s gotten questions on the midstream buildout. We’re very highly tuned in on that. But it’s not just gas. We watch water, we watch oil build-out, processing, the electrification, all of those categories, we have to juggle in a four or five dimensional kind of just way to develop this incredibly prolific resource. The other complication specific to the Delaware is the number of landing zones, and that continues to evolve. We highlighted the Wolfcamp B as something that will probably play a larger differential role.
So as we roll that in, we also need to think about the changes to that infrastructure and the needs. One of the questions you asked along the way was, do our wells have anything kind of held back because of infrastructure constraints. And I would say, categorically, yes, there’s always something. We’re not going to push volumes into a system that just doesn’t want those systems. We’re not going to pay — we try and minimize paying basically disposal fees for gas. And then we also are very thoughtful about our flaring percentages. We’ve incredibly drawn that down. We made really good progress over the last few years. we certainly don’t want to reverse course on some of those gains. So there’s a lot going on. Really, really pleased with the team’s performance and happy to be here to represent the team on such a successful quarter.
Charles Meade: And then just one quick clarification for a follow-up. When you say 60% well performance, is that new wells brought online, the performance of new wells? Or is that the new wells plus the base?
Clay Gaspar: It is the new wells. I’m separating 60% for the new wells, that 20% that I talked about in the base is the existing wells kind of the other base activities that are also performing — outperforming what we had baked into the forecast.
Charles Meade: Got it. Thanks for the detail.
Clay Gaspar: You bet, Charles.
Operator: We now turn to Scott Hanold with RBC. Your line is open. Please go ahead.
Scott Hanold: Yes, thanks. Hey, Clay, a lot of talk on the Permian, but it sounds like the Bakken really pivoted quite a bit this quarter too. And I’d be interesting to hear any kind of color on the high grading. And what can we expect from that through the course of the rest of this year in terms of like when the next completions are coming in? And is it very similarly targeted in the same areas in spacing?
Clay Gaspar: Scott, we’ve loved the Williston Basin for a long time. In ’23, we probably pushed a little harder than the infrastructure and the well productivity was ready for. And so we’ve slowed that down. And again, just a great move improve that capital efficiency, we have the benefit of a franchise asset in the Delaware Basin that gives us that latitude to not over accelerate into wells or infrastructure that’s not quite ready. And so what you see on the [indiscernible] and the North John Elk are some core of the basin opportunities that we needed to wait until all the stars aligned to be able to bring online. We’ve actually got another rig back out there drilling some more core basin wells, about 10 of them. That will come on either very late in the year or first of next year.
Again, it’s all baked into the plan. But that’s probably the consistency, the approach that we’re going to take rather than being forced into consistently running a rig and probably pushing some wells in that weren’t quite ready for prime time. We’re going to take the opportunity to drill what’s available, release that rig, bring it back in when the next opportunity presents, and you’ll see incredible results from it. Again, the Williston Basin continues to prove the quality of that asset, the oil cut. As Rick pointed out, the incredible amount of cash flow that comes from that basin is very valuable to our bottom line and the core of what we believe is the right business approach for our organization.
Scott Hanold: So just to clarify on that then, should we expect quarter-to-quarter some gyrations in production, but like year-on-year, should it be relatively flat in terms of production?
Clay Gaspar: Yes, I would say roughly, that’s correct. But certainly, as we’re bringing on a pad and then it’s absent for a while, you will have some peaks and valley in the Williston. I hope that doesn’t disrupt the visuals, it should kind of flow into everything else we’re doing. But yes, as we are a little bit more selective, again, I believe it’s the right approach in this asset, you will have some growth, some quarters and some rollover in others.
Scott Hanold: Got it. And then turning back to the Permian, the Wolfcamp B. How extensive is that in terms of what you think is upside to identify the inventory beyond that 50 locations? And are there other zones that you’re looking at that would add to the focus locations as well?
Clay Gaspar: Well, it’s interesting. We talked about the Wolfcamp B a couple of quarters ago, kind of highlighting success there as well. It was just in a different part of the basin. The B obviously extends all the way across the Delaware Basin. This was an area that we really haven’t drilled. It’s a little bit more Northeast on our position in the Thistle area. And it’s a little less mature, certainly from the B. I think there’s three wells that have produced the B, the first two were just kind of so-so, and so our expectations were pretty moderate. But again, as we’re thinking about developing these areas, we wanted to really put a modern completion on and give our best kind of try and see what it looks like. It’s significantly outperformed.
And so with the approach that we’re taking today, we’re really excited about that differential uplift. The 50 wells is really just [indiscernible] area. We have other B wells that we will be bringing on in other wells — excuse me, other areas of the basin as well, those are above and beyond the 50, we’ll continue to hunt for and more opportunity. The reason we highlighted this Thistle is this is not reflected in our inventory. This is more of that upside that we’re bringing forward that now competes very favorably for the capital investment today.
Scott Hanold: Thank you.
Clay Gaspar: You bet, Scott.
Operator: Our final question comes from Matthew Portillo with TPH. Your line is open. Please go ahead.
Matthew Portillo: Good morning all. Maybe a question for Clay to start. On the Anadarko, good to see a slowdown in the drill bit capital here. It sounds like dropping down to two rigs given the commodity price environment. I was curious if you have any updated thoughts on the 60 to 70 [indiscernible] for the year? And then, I guess, looking ahead to a more constructive environment beyond kind of 2024, what’s the opportunity set to potentially accelerate this asset in a more constructive gas price environment?
Clay Gaspar: Thanks for the question. We’ve got a great partner with Dow. And so this is something that we want to make sure that we’re being good partner, and we’re working in coordination with them. So I certainly don’t want to get ahead of myself. What I can tell you is we’ve been very aligned, continue to appreciate not just the value creation from the partnership, but the nature of the partnership. I would say if the right opportunity presented, my belief is that we would be aligned in accelerating. Now what I have to tell you is I’m looking at the forward gas curve — and it’s just — it continues to be pretty challenging. Again, with the balanced portfolio that we have, our ability for the Delaware Basin to really carry the company, we just don’t see the need to push dollars into an area that’s not being fully rewarded.
Now that said, with the Dow Carry and with the work that our midstream team has done to really extract the most value we can for these this commodity, we are doing actually pretty well on these returns. Not Wolfcamp A well, but really know that we’re still creating value. So we’ll continue to run two rigs in the Dow JV area, continue to look for those opportunities above and beyond and then even extend potentially the Dow JV beyond where we’re at today. Again, great partnership, enjoy working with that team, and I think we both benefited very well from it.
Matthew Portillo: Perfect. And then maybe just a longer-term question on the gas front. Curious if you might be able to provide us an update on — is how you’re thinking about your LNG strategy and kind of the marketing of gas molecules on a global perspective? And any updated thoughts on the Delfin [ph]?
Jeff Ritenour: Yes, Matt, this is Jeff. Yes, we continue to have interest in getting some exposure to the water as it relates to both on the oil and the gas — on the gas front. Specific to LNG, we’re having active conversations with different folks, including Delfin, as you mentioned. That continues to progress. No new updates beyond what you’ve heard from us in the past. But without question, we want to get some exposure to the LNG market as it relates to our gas molecules. And as I mentioned earlier, with the Delaware gas, we’re in a significant portion of that to the Gulf Coast. Some of that goes into the Katy market. We’ve got incremental capacity that takes us away from Katy into the Louisiana kind of the hub where a lot of that LNG demand resides today and will get built out into the future. And so we feel like we’re well positioned to take advantage of that incremental demand and again, having active conversations with multiple parties.
