Leo Mariani : Yeah, thanks. I just wanted to follow up a little bit on Karnes activity here. I mean kind of looking at production, Karnes has fallen for the last couple of quarters. Just wanted to kind of get your thoughts on how do you expect that to kind of trend the rest of the year? And it seems like that’s really maybe what’s driven the oil cut reduction here between 1Q and 2Q was that Karnes was down a fair bit and Giddings was up substantially, so that obviously is a different mix [indiscernible]. So maybe just can you talk about kind of directionality on Karnes? And just trying to get a sense, you don’t have a very large acreage position there. It’s obviously pretty mature there in the Eagle Ford. Can you give us a sense of kind of how much inventory you think you might have left there? Is it kind of a handful of years? Or where do you stand on Karnes?
Chris Stavros : Yeah. We have things that we can drill. And I said, because of timing, scheduling, planning, permitting other factors, we haven’t done a lot of that this year. The other thing is that there hasn’t really been much or any real non-op activity that’s shown up. So that’s certainly a portion of it. I expect that given the generally higher rate of decline in Karnes that it will continue to see a little bit of that. But again, it may be lumpy. There may be some activity that we’re morphing in or blending in into the back half of the year. There may be some more into next year. We’ll sort of see — we’ll see how it goes. But we have things that we can do there. We’ve just skewed our focus, as I said, more so to Giddings because overtime, the returns are higher. So that’s been the plan.
Leo Mariani : Okay. That’s helpful. And then just on Giddings. Obviously, you made an acquisition here in July and also kind of made one in the fourth quarter, which correct me if I’m wrong, was also more kind of in and around Giddings in some of these appraisal areas. I know you don’t want to give away specific well locations, which totally makes sense, still competitive business. But can you maybe give us a sense of like how many appraisal wells have you drilled? I know you’ve been appraising outside of the core area for the last couple of years again. 10 wells in, 15 wells in? I mean, any sense you can give us? I mean, have you kind of tested a fair bit of stuff outside the core. And as a result, these two deals are sort of the culmination of that?
Chris Stavros : Yeah. I mean, look, we’ve tested — we’ve drilled a handful of appraisal wells. There’s a lot of work that goes into it prior to drilling these appraisal wells. We’re not just sort of sort of wandering around the field necessarily. These are very well studied and there’s a lot of work, subsurface work and other work that goes into it prior to that. So and we have some sense of what we believe may be the outcome, but sometimes we’re surprised well, and sometimes we’re surprised in the other direction. And what we’ve done directly to your point led us to the smallish acquisition that we did back in the fourth quarter that we closed. That — I’m very — that’s an area that our subsurface team and tech folks like a lot and will turn out to be, I think, very good.
This area as I said is also very interesting. And this may be the start of something. So we’ll see. And I think there could be other things. And the 400,000 sort of net acres for us is kind of pretty vast. And as you trot around, you may find other things to find on the fringes that you’d like to fill in over time, and that’s sort of what we’ve been doing.
Leo Mariani : Yes. Okay. That’s helpful. And then just on the cost side here. Your LOE was down like $1 a barrel here in the second quarter. Obviously, it sounds like there’s been a big company focus to reduce costs, both capital and operating. Can you kind of give us a little better sense of — was maybe a lot of this just less workovers or was a big chunk of this, actually ability to kind of reduce some of those costs, whether it’s chemicals, electricity, labor, et cetera? Just trying to get a sense of where we think kind of LOE costs are going to go in the second half of the year. I’m trying to figure out how much of these savings are kind of recurring?
Chris Stavros : Yeah. I mean, certainly, there was some lower workover activity that helped us along that way. It was certainly less than half of the benefit. The majority of the savings, I believe, are sustainable moving forward. The workover stuff can vary a little quarter-to-quarter depending on the movement in product prices, but the majority of it should be sustainable and was directly result of reduction in oil field service costs, to your point, around chemicals and other things, a litany of things. So the labor component is a little bit sticky as you probably heard from others, all that is true. But I think things are generally — I would expect it to be sustainable through the remainder of the year, it feels to me.
Leo Mariani : Okay, thank you.
Chris Stavros : Sure.
Operator: And our next question comes from Oliver Huang from TPH & Co. Oliver, please go ahead.
Oliver Huang : Good morning, Chris, Brian and team. Just had a question on the CapEx side when kind of looking at the budget for the rest of the year. It seems to imply that $100 million, give or take, per quarter. Just trying to understand if there is anything within that number, whether higher non-op, higher working interest and operated wells, increased activity levels or faster cycle times relative to the Q2 print run rate.
Chris Stavros : Yeah. I think a lot of it is timing, Oliver. And I think we — as I said, as things get better aligned between the costs and our desire to generate returns and improve our efficiency as a result of the actions, we’ve taken we may sneak in some additional things. We will sort of see how it’s going. We may have baked in some other items, whether it’s an appraisal well or whatever that may be in there. So we’ll see. On a run rate basis, I don’t think that level that we talked about $100 million roughly or so is reasonable, I think, for the time being. I think that’s about how the business is right now. So we’ll see.
Oliver Huang : Okay. That makes sense. And for second question, just on the topic of LOE one were kind of thinking about that lower print for Q2 being driven by low workovers and service costs flow through that you all kind of highlighted, how much of a factor is the increased Giddings contribution to driving that lower? In other words, should we be thinking about the LOE cost structure being lower on the Giddings side relative to Karnes as it becomes a more significant contributor with each subsequent quarter?
Chris Stavros : Well, we continue to focus on this in a relentless way in terms of trying to drive down the costs. As I said, there’s labor things and contract workers that tend to be a little bit sticky. Generally, on a BOE run rate basis as we add volumes, things should look similar, if not, hopefully, better with time as we try to drive efficiencies through the field as well. So we’ll continue to work at this. And I think certainly Giddings should be a positive contributor over time.
Oliver Huang : Awesome. Appreciate the color.
Operator: We now have a question from Zach Parham from JPMorgan. Zach, please go ahead.
