Charles Meade: Thank you for that elaboration Rick. And Clay I was going to say I came up – I consider using that term whack-a-mole, but I came up with the term cycling bottlenecks instead.
Rick Muncrief: You’re reliant than I am.
Charles Meade: A follow-up the question – feel free to use that one. A follow-up question perhaps for Jeff. Jeff, I think you clearly sent the message that you guys are tilting towards buybacks in the current circumstances that you see. But I wonder if you could elaborate a bit more on the framework that you guys have used to come to that conclusion. And with an eye with an eye towards if we do have the happy evolution where your stock price does go up at what point does it flip back towards the – more towards a variable dividend?
Jeff Ritenour: Yes. I appreciate that, Charles. And I think your last comment is important because that’s why we want to maintain flexibility and we believe the framework that we have today allows for that as we kind of navigate the different market conditions and whether that’s specific to Devon or on a more macro basis. As it relates to how we evaluate the share repurchase, I think I’ve talked about this in the past, but just like you all, we have our own internal models, obviously, around intrinsic value, but we also watch closely how our peers are trading, how we’re trading relative to them. And I think without question, you’ve seen compression of our multiple over the last 12 months. And so we sit today, it feels pretty clear to us.
Given what we know and how we feel about the go-forward business, which I thought Clay did a great job of articulating our game plan here over the next 12 months. We feel like it’s a right time to jump in and be more aggressive on the share repo than we’ve been in the past. And so you’ll see us execute that over the coming quarters. And it’s always a little bit challenging with the earnings blackouts that we have as it relates to the timing of how that plays out. But we’ve got a game plan to go execute on that and be pretty consistent as we move forward over the next several quarters.
Charles Meade: Jeff, thanks for the detail.
Operator: Our next question comes from Matthew Portillo from TPH. Matthew, your line is now open. Please go ahead.
Matthew Portillo: Good morning, all. Maybe starting out a question for Clay. I was just curious if you could speak to some of the learnings from the down spacing tests and the Eagle Ford, maybe as it relates to the type curve performance on those titer space wells. And how many of your tills in 2023 were impacted by these tests versus kind of the high grading plan heading into 2024 that might improve that capital efficiency?
Clay Gaspar: Yes. Thanks for the question, Matt. I’d say it’s all a very much a work in progress. Definitely the South Texas Eagle Ford area is a maturing basin, similar to Williston, but very different in many ways. The rock is incredibly forgiving in the sense of down spacing refracs. We continue to find and uncover new ways to extract more and more of that oil in place. So we’re very encouraged with that. Now that said, it doesn’t always come out exactly as planned. I would say it was less about the learnings around down spacing more, a little bit about regional. And so as we moved into specific areas, we found that one, the recipe from what we call the Black Hawk area kind of our legacy business, isn’t exactly the same recipe as we reply to our Falcon, the new assets.
And so some of those learnings certainly have accounted in for the results in 2023. We have a little bit less activity during this quarter. So you saw the oil production rollover second quarter, third, I’ll caution to look back, make sure you look back at the first quarter because we had about a 10% improvement or increase in production quarter-over-quarter from one to two, and then a down from two to three. So that’s more related to activity, less about individual well results. But as we continue to explore refracs down spacing combinations of how we do this co-development, I would say we’re very encouraged about what we’re seeing there. And this rock continues to be the rock that keeps on giving.
Matthew Portillo: Perfect. And then as a follow-up question, maybe for Rick or for Clay like the shift here and further improvement on the capital efficiency into 2024, I guess one of the questions that continues to come up, and Rick, you highlighted in your prepared remarks that we’re kind of in an uncertain time with spare capacity within OPEC and kind of the volatility in the crude markets as well as what might be a challenged 2024 gas market. Just curious, as you guys think through your capital allocation plans for 2024, where do things stand at the moment in the Powder River Basin and the Anadarko, just thinking through the return profile there versus areas like the Delaware and is there further optimization that could occur if we end up in a bit of a lower commodity price environment?
Rick Muncrief: Yes. It’s a really good question, Matt. I think I’m going to start the Anadarko there. So we actually were running four rigs. We dropped a rig as you probably recall mid-year. The Dow partnership we have is going really well. Even though the strip is supportive for gas, the outlook we think is really good. One of the things that we were faced with or we made the decision to do is just scale back at capital just a little bit and going from four to three rigs. We think that’s the right thing to do. Obviously, the promote keeps those returns in a pretty good spot. So that’s how we’re looking at that. I think, as we go into 2024, we plan to keep a three-rig program is our plan. Now up in the Powder, we – our original plan contemplated running two rigs, possibly even considering a third rig up there just because some of the encouraging results.
But the fact of the matter is that we are still challenged somewhat on the well cost a little bit. And that some of that’s just a function of your activity level being somewhat depressed quite honestly, or slower than you need to drive those costs down. We’ve made a decision to be just returns focused and make sure that we get that capital efficiency increase that we referred to. And the best way for us to do that is drop that back to one rig versus the plan two or three. It’s a – I think it’s the right thing to do short term. Now, longer term, we know that you need to put additional capital in there. So we’re working with service providers. See if we can see some creative ways to do that. But that’s probably something we’d need to contemplate more into 2025.
But we are seeing some, right, some really encouraging results. So real pleased with that asset at that point in time.
Matthew Portillo: Thank you.
Operator: Our next question comes from Kevin MacCurdy from Pickering Energy Partners. Kevin, your line is now open.
Kevin MacCurdy: Hey, good morning guys. And we appreciate all the details on 2024. You’ve talked about oil production taking a little bit before bouncing back up to what it looks like to maybe close to current levels at year-end 2024. And my question is, given that lumpiness, do you see the 2024 CapEx range is a good proxy for maintenance CapEx? And would that production level and the maintenance scenario would be kind of at the current production levels?
Clay Gaspar: Yes. I’ve always struggled with the maintenance capital question because there’s always a way to kind of game the system. If you just want to focus on oil or gas or whatever, I would say this is a maintenance capital with a longer-term mindset in mind because we are still doing work to really prove up future value. We’re doing things to always kind of enhance our portfolio. At the same time, maintenance capital of essentially roughly the same production 2024, excuse me, 2023 to 2024. And then as we look out to 2025, we’re at least that level, maybe a little bit of growth in 2025 based on this investment. So yes, rough numbers, I would call that a maintenance capital, but a healthy maintenance capital.
