Scott Gruber: I got you. So the inventory count is under normal conditions is just going up. I got it.
Kaes Van’t Hof: Yeah. This feels like a good inventory number. Again going back, we’re not these aren’t the days of two well pads where something bad happens, you can pull out the pad and go somewhere else. These are long cycle mini, Daniel like to call mini offshore projects given the amount of dollars that go into a project before [first oil] (ph) comes online.
Scott Gruber: That makes sense. And in good detail on, all the cost trends across the various, buckets on slide 10. If you think about, going through RFP season for various services, I know you have some longer term contracts in place, but do you think you’ll see any continued deflation across any of the major buckets as you go into 2024? Are those starting to stabilize now?
Kaes Van’t Hof: Yeah. I think we think, it’s kind of stabilizing right now. And then for us, there really is no RFP season, right? RFP seasons every day coming back. If something’s cheaper and we can do something cheaper or replace something with something cheaper, it’s going to happen right away. It’s not going to wait for next season or for the summer. It’s going to happen now. So it’s a constant RFP season here. And these are all real time costs that the team has to present to Travis on a line by line basis every quarter. And this is a real time look at where we are and where things are headed. As you noticed, we put a Q4 2023 number in there. Just to kind of show where, even we’ve moved from Q3 to Q4.
Scott Gruber: Got it. Appreciate the color. Thank you.
Kaes Van’t Hof: Thanks, Scott.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Leo Mariani of ROTH MKM. Your line is now open.
Leo Mariani : Hey, just wanted to follow-up a little bit on 2024. If I’m kind of reading this right, it looks like you guys are talking about a rough budget next year of just a hair over $2.5 billion. Sounds like that’s kind of flat activity. Just wanted to get a sense of kind of what’s assumed in there for inflation or deflation? Are you just kind of assuming sort of current well costs in that number?
Travis D. Stice: Yeah. I mean, we’re always kind of a little conservative here, Leo. So, I would say we’re kind of in the range of where we think we are today. Again, we think generally service costs have kind of modelled or flattened out. And, I’ve seen a major change in rig count. This feels like a pretty good range for next year.
Leo Mariani : Okay. And then just to follow-up quickly on the M&A topic here. Think you guys have made it pretty clear that you want to continue to be a consolidator over time with your cost advantage. I guess at the same time, just kind of, you guys talk about kind of a $60 type of budgeting case, for oil, obviously, been above there. Is there any scenario where FANG thinks about potentially going the other way, and actually selling at the end of the day?
Travis D. Stice: You know, Leo, I tried to address that a little bit in my opening comments as one of the first questions and also in my letter. Look, we’ll always do the right thing for our shareholders we’ve been — I feel like we’ve done that for 12 years now. But again, what our focus is on delivering our business plan, and we believe in our business model, we believe that there’s a meaningful spot in our investment community for a company like Diamondback, and we continue to execute flawlessly. And I think I’m really confident about what our forward plan looks like.
Leo Mariani : Okay. Thanks.
Travis D. Stice: Thanks, Leo.
Operator: Alright. Thank you. And one moment for our next question. Next question comes from the line of Paul Cheng of Scotiabank. Your line is now open.
Paul Cheng: Thank you. Good morning. Two questions. One, one of the way that to reduce costs, I think the industry is moving for the electrification. And shot at that, wondering if you can give us some idea that how far along on your process in doing so? And secondly, that with the Deep Blue, I think in the past that, you guys are very proud of your water infrastructure and all that. So is that signaling that now you have a change of view of, what kind of infrastructure need to be on by or need to be controlled by Diamondback going forward. So should we just assume that this means that you really don’t think that’s necessary for you to have control or to own those infrastructure. Thank you.
Travis D. Stice: Yeah. Good questions, Paul. I’ll take the second one first, on the midstream infrastructure. We spent a lot of money building those systems to the specs that we needed. And so, I think we’re not turning over a blank canvas. Right? This is a painting that’s already been, it’s finished finishing touches. And so we feel confident, particularly with a lot of our field team members going over to Deep Blue to run the asset, that will be well, well served as its largest customer and also a large equity holder. So think if we were early in our development plan, might be a different story. But in this case, it’s a very well built out system that is kind of readymade to turn over to them to, in our minds, do some more things commercially that we couldn’t do as a standalone, water enterprise.
And then your other question on electrification, know, certainly a hot topic in the Permian I think, generally electrification means both lower cost and lower environmental footprint. And that’s a great thing for us in the basin. And we’ve done a lot of work ourselves I think the state of Texas and the utilities need to kind of do their part to get, more power out to the Permian to connect to all of us so that we can run off of line power versus different forms of generation in the field. So I think that’s going to be a constant battle that we’re intently focused on. And, again, it saves us money and improves environmental performance that that feels like a win.
Paul Cheng: Just curious that, I mean, what percent of your operation now here has already been electric buy in, that way you think is the biggest opportunity over the next one or two years.
Kaes Van’t Hof: Yeah. We’ve got about 90% to 95% of our current production operations, electrified, we’ve been the biggest opportunities we’ve been working on to-date, in the production operations world or been electrification of our compression fleet. And I think we’re probably 70-ish percent electrified there. So we’ll continue to work on getting rid of our gas, gas receipt compressors and putting electric packages, in their place. And then on the DMC side, we’ve got two SimulFRAC fleets that are, Haliburton, what they call their zoos fleets, are there electric fleets and we’ve really enjoyed the benefits of those and look forward to continuing to try and electrify the completion world. And then on the drilling side we’ve got, I think, five or six rigs running right now on line power, and we’re continuing to put in the infrastructure that we need to run those rigs off line power, as the supply chain kind of frees up, on the back of COVID and we can get the electrical equipment we need to convert those rigs.
