Rick Muncrief: Yes, I’m pulling the number now. It’s about 400, yes; it’s about 400 wells, relatively flat. It looks like we kind of peak a little bit more towards the middle two quarters, but relatively flat during the year.
Scott Gruber: Okay. I appreciate it. Thank you.
Rick Muncrief: Thanks, sir.
Operator: Our next question comes from Neal Dingmann from Truist. Neal, your line is now open. Please go ahead.
Neal Dingmann: Good morning, guys. My first question is just on the Permian infrastructure. I’m just wondering Rick and Clay have highlighted and I think been out there about the lack of infrastructure in recent quarters. I’m just wondering, was some that – did that come as surprise or was it you were thinking that some was going to be built out? I’m just wondering if you could speak to maybe what had changed and then maybe speak to the build out you’re seeing now and then what you anticipate next year.
Rick Muncrief: Yes, I think you try and plan this stuff years in advance because many of these big projects are multi-year projects and sometimes those projects slip. Ultimately, funding decisions are outside of your control. So some of those things can be typically accounted for and baked in. What we’re really focused on in 2023 is making sure that we’re honoring our flaring percentages. We’ve done an amazing job of driving that down. We’re really thoughtful about these outlets and making sure that we have the ability to flow these wells back. And so we want to make sure that we’re staying ahead of any bumps and disruptions. As you know, in the New Mexico side, it’s a lot more federal land. You’re relying a lot more on the BLM, even small things like right away, which are pretty standard course take a little bit longer these days.
And so during that transition, when we’re accounting for that and our third-party partners are accounting for that, there can be a little bit of an extended drag. I think we’ve gotten a lot of really good important progress during the course of 2023 that we will benefit from. But we will continue to see constraints all the way around the Permian Basin as this is a materially growing basin that’s so incredibly prolific.
Neal Dingmann: Yeah. Well said. And then my second question is just on your comment over high grading the upcoming multi-zone Wolfcamp wells in New Mexico. I’m just wondering, was it the infrastructure or what was the limitations to not high grade this Delaware sooner? And I’m just wondering what kind of runway do you all anticipate you’ll have in this core area?
Clay Gaspar: Yes. Neal, I would say it was a combination of – we did some assessment work. I highlighted on the last call, specifically the B zone. Really understanding, how does this work as we co-develop? How does this work independently? What’s the right business decision? And that takes time to evaluate. So that’s some of the things that we did dozens of other tests as well. But some of the work that we invested in during the course of 2023. Some of the things that we’re learning, obviously, we’re applying to 2024. And then parallel to that was the infrastructure comments that that I just went through. So I think there’s a parallel as we think about what this concentration of activity means. Again, I’ll go back to the kind of two-thirds, one third of our inventory is in the New Mexico side.
So we’re not overly leveraging New Mexico versus Texas. Now, we’re certainly high-grading. We’re always trying to drill our best stuff first, but that’s no different than what we’re doing in other basins. And obviously, other operators are doing as well.
Neal Dingmann: Thanks, Clay. Looking forward to the results.
Clay Gaspar: Me too, Neil.
Operator: Our next question comes from Charles Meade from Johnson Rice. Charles, your line is now open. Please go ahead.
Charles Meade: Good morning, Rick, Clay and Jeff. Clay, I want to take one more run at the Delaware Basin infrastructure question. As you were making your prepared remarks or earlier Q&A, I wrote down there’s electricity build-out, compression, processing, takeaway and then also you added water. And so as you look at – if those are the right categories, as you look at those, could you tell us what’s your best guess for 2024? Or is it going to be your top one or top two concerns? And I’m less thinking about where you have work to do, but more in the framing of what’s – which of those is most likely to emerge as a bottleneck in 2024?
Clay Gaspar: Yes, Charles, it’s a bit of a whack-a-mole kind of opportunity. You bring on these big pads, and you’re really focused on gas takeaway or gas compression or processing. But as you bring these wells on, you’re also testing water. What we’re seeing is with everyone – the incredible electrical demand, some of the electricity providers are struggling to keep up with that growth. So we’re moving forward with some things to take a little bit more self-control on some of those projects and behind-the-meter opportunities to control our own destiny even a little bit more. But I can tell you as soon as we get one issue resolved, there’s other issues that pop up, and that’s just part of working in a very hot dynamic play.
Now, what I will add to that, and I think is very important, we also see these as not just constraints, but opportunities. And we truly believe if we can identify them early, then we have options. We can wire around the issue. We can figure out how to work with third parties and develop and make sure that, that is built in time for our needs. We can certainly choose to drill alternate wells, reshuffle the portfolio or number four, we can lean in and be aggressive about capturing that value and leveraging that. And you’ve seen us do that a number of times. So I think the most important thing is being opportunistic, make sure we’re really thinking far out ahead and making sure we’re acting on that.
Rick Muncrief: Charles, this is Rick. I’d like to – I’d like to add. Yes, sorry. One thing I’d like to add is, we are really pleased with how the midstream providers are building out their capacity. So we think that some here in the next six quarters to eight quarters, you’re going to see another 2 Bcf a day, plus or minus, in the Permian Basin of processing. So when you step back and you look at the capital investment on the midstream, you look at the long-haul getting pipe built in the ground, getting those getting out of the gas to the Gulf Coast area and then over into Louisiana and there are areas like that for the LNG facilities. We just think the – the right amount of focus is being placed on it, and I feel very confident in future.
And the other thing I’d say, I’ve got is a pretty good time to interject this, but we continue to see growth into Mexico. That is a market that has grown from 2 Bcf a day up 6 Bcf, 7 Bcf a day, and there’s no basin more well suited for that, I think, than the Permian when you start looking at Western margins of the Permian Basin. So whether you’re on the Delaware side, the Midland side, you’re going to benefit I think, from that Mexican growth over the next decade or two.
