Umang Choudhary: Sure. Hi good morning. And thanks for taking my questions. My first question was on the strong performance, which you indicated in Giddings. Can you give us some color in terms of where the wells were drilled and what is driving the performance? And just trying to understand if there’s some read across to your appraisal program, which you highlighted earlier.
Chris Stavros : Sure. I’m not going to tell you exactly where the wells were drilled. But I mean, generally, the wells — most of the wells have been drilled in our core development area that we’ve been pursuing for the last couple of years and where the results have been very strong and continue to generate good results. The appraisal program as is evidenced by the acquisition that we did, it’s sort of unearthed some opportunities here that we can pursue, and we have pursued and frankly, we will pursue. Part of the benefit of improving our capital efficiency through cost reductions that we’ve seen and all the efforts around that, including our cash operating costs. This provides us with better margins, more free cash flow as I said, and gives us some optionality with respect to doing other things in the back half of the year, into next year as we have better aligned our costs with what’s going on with certainly gas and NGLs, et cetera.
So I feel pretty good about that. And we’ll do a little bit of experimentation because we always try to do that if we can, if it sort of fits into the overall financial scheme and mix. And so we do that where we can because we think that it’s useful, helpful to improve the business over time. And as I said, it enhances our opportunity set. That may sound a little generalized, but I mean that’s sort of what we’ve been doing.
Umang Choudhary : That makes a lot of sense. Thank you. And then quick questions on operations. First on service cost environment. I mean you talked about a 15% cost savings. You’d like to run a flexible program with more spot exposure, given where we are from a rate perspective — our pricing perspective right now, any thoughts around locking it up for a period of time? And then one housekeeping question. I think last quarter, you indicated plans to defer completions. Can you remind us where we are for those wells? Have you — are you planning to bring them online this year? Or are they moved for next year?
Chris Stavros : Sure. On the cost side, we’re not really spot necessarily. And I don’t want to get too caught up in exactly all the contract-related items. But I mean, look, we — as you know, steel and OCTG really doubled, I guess, into this year, and we saw that sort of peaking early in the first quarter. Pressure pumping, stimulation, 50% higher drilling services up in that direction as well. So far this year, we’ve reduced OCTG costs by probably 30%-ish, pressure pumping cost by a quarter. I like where this is going. And frankly, I think there could be some more. So to lock in right now, I’m not really sure what — how helpful that is to us. We’ll just sort of see where things go. We kind of operate from a position of strength here.
We don’t have a lot of financial risk. And so this will be what it will be. But I think there’s some opportunity for further reductions into the back half of the year, and we’ll sort of see where things land for ’24. So I’m feeling pretty good.
Umang Choudhary : And I think just a housekeeping question on the deferred completions. I think last quarter, you had talked about deferring some completions in Q2. Just trying to understand if you plan to bring those wells in the back half of the year or is that more for next year?
Chris Stavros : We haven’t made that call yet. And again, I think we’ll try to create increased and improved alignment between our costs and commodity prices, we’ll just sort of have to see where things go. I think, Umang, we said this, I think, back in the spring when we started this effort, too, that the deferrals don’t really amount to much. Most of the reduction in costs have come through our own efforts as a result of concessions from our service providers working closely together with them, aligning ourselves with them and also our materials vendors. So this was never an effort around sort of deferrals as much as it was just to align our costs. This was sort of a little bit of deferrals or DUCs, if you will, were just a consequence of pushing things out and seeing if we could create a little bit more optionality for ourselves.
And if commodity prices improve, mainly gas and NGLs later into the year into next year, we’ll revisit that. But again, I could count these wells on sort of one hand.
Umang Choudhary : Got it. Make sense. Thank you.
Operator: And our next question is coming from Leo Mariani from ROTH. Leo, please go ahead.
