But the managements or the Boards of the companies have maybe been convinced by investment bankers that this is the best thing to do. This can obviously be riskier. With this, you either need to time the commodity price right or somehow acquire a lot of upside of the asset that wasn’t factored into the purchase price. So basically buying optionality for free or at very low cost. And I think to some extent, that’s what the acquirers recently with the large acquisitions feel they’ve done. And that’s fine. And then there’s M&A that might seek out some sort of diversification, meaning I’ve either run out of stuff to do where I currently operate or simply want to get bigger or the best way to do this is by moving into a different area that hopefully is less expensive in terms of the entry cost.
The risk here is that hopefully your skills are transferable to this new area and then it’s compatible with your workforce and they can figure out how to do it. As I said, Magnolia prefers to engage in the smaller bolt-on variety of M&A and mainly because we’re currently not in a situation that requires us to pursue the other big and bolder types of M&A. So I believe we currently have a competitive advantage in Giddings, and we seek ways through this smaller M&A to expand that advantage. So that’s sort of my longer-winded version of how to respond to the question.
Charles Meade: Well, thank you for not just giving a one-word answer to my simple question. And then my follow-up, I think, is maybe take another run at the mix question that you got earlier. Absent this most recent acquisition, which is a little earlier, you guys had been actually getting a little — slowly getting — the oil percentage was ticking down and natural gas and really more NGLs was ticking up. If that’s — if you’re going to hold — if you are going to grow each of those product categories more or less equally in ’24, does that mean that you guys are shifting or looking to shift activity towards more oily areas? And does that, to an extent, if that’s true, does that — is that a reflection of this oilier asset that you’re bringing into the portfolio?
Chris Stavros: Not necessarily, Charles. I wouldn’t read it that way exactly. I mean, some of what’s happened with us in oil, as we’ve talked about before, I’ve mentioned this several times already, is that there’s been a shift purposefully in activity and capital away from Karnes and Giddings because the well results in Giddings are better and the full cycle returns in Giddings are better. And so that’s how we prefer to allocate the money. And so we occasionally do go back to Karnes or we’ll see some non-op activity in Karnes that might bump up our oil volumes for a little bit. But broadly, the effort on our part from an operating basis level has been to spend more of the money proportionately on Giddings, and you’ve seen that.
So that’s been really what’s occurred. What’s going to occur here, I mean, yes, the asset, the acquisition does bring in a little bit more of oil injected into the business immediately. And the drilling plan will provide us with a little bit more oil. The goal for us is to drill the best wells and the goal for any good operator is to drill the best wells at the lowest cost and at the highest return. So I think broadly, our program is going to continue to focus on that. It will be a mix of some oil, some natural gas and timing is on the commodity necessarily is sort of a bit of a full there. So I’m not going to sort of play that game. We consistently look to drill the best wells.
Charles Meade: Got it. Thank you.
Chris Stavros: Thanks.
Operator: Our next question comes from Zach Parham from JPMorgan. Zach, you may proceed.
Zach Parham: Hey guys.
Chris Stavros: Hi, Zach.
Zach Parham: Thanks for taking my question. In the release, you mentioned strong well productivity in Giddings is a driver of the higher volume guidance. Just looking at the state data, which has its own issues, but it seems like productivity, particularly oil productivity has trended lower year-over-year in Giddings and it’s down versus prior years as well. Can you just give us your thoughts on how well productivity and oil productivity in Giddings will trend going forward?
Chris Stavros: I don’t expect it to change very much. I mean, one way or the other, materially compared to what we’ve done this year. It could be a little bit better. But I don’t think it will be very different or worse going forward. I don’t anticipate that. There may have been some nuances or one-offs in our program this year that drove some of that. But I would think it would be similar, if not a bit better into next year and going forward.
Zach Parham: Got it. Thanks for that. And then I had one follow-up on OpEx. LOE specifically, it was down for the second consecutive quarter, and it’s down over $1 per BOE versus 1Q. Any color on how LOE should trend in 4Q and into 2024?
Chris Stavros: Yeah. Look, I think at current product prices, it should be sort of similar. There’s a workover element to it that would vary if oil prices rise further relative to where they’ve been here very recently, that could make a difference. But this is sort of a relentless effort on our part to continue to push costs lower. I think this is sort of a good place for us to be generally. Again, there might be an occasional sort of lumpiness. But generally, I see sort of things similar at the current product price area that we’re in.
Zach Parham: Got it. Thanks for the color.
Chris Stavros: Sure. Thanks.
Operator: Now we have a question from Oliver Huang from Tudor, Pickering, Holt. Oliver, please go ahead.
Oliver Huang: Good morning, Chris, Brian, and team, and thanks for taking my questions. As we kind of look into next year, beyond some, I guess, activity on the new acreage, anything that we should be keeping an eye on that might be different from what we’ve seen in the last couple of years, whether it’s with respect to well design or spacing tweaks, any increased step-out or appraisal projects that we might want to keep an eye out for?
Chris Stavros: Not much. I mean, we — the development program at Giddings, we’ll continue that, that’s delivered a lot of good growth for the company and we’re producing in excess of 60,000 BOE per day now in Giddings. It’s very capital efficient. It provides a lot of free cash flow. We’ve developed a very thorough understanding of the asset. This larger 150,000 acre development area continues to be the focus for now. And I think we sort of cited the smaller development area, and I think people got aboard with it. So it’s bigger now. And I believe it will get bigger still over time through some appraisal efforts that we have that will extend into next year. And that program has already produced very positive results, and we have a large expanse to sort of go over with time, and we’ll continue to get at it.
In terms of completion changes or nuances around that, not a whole lot, really. I mean we continue to learn more. And what I hope is that there may be some upside to some of the new areas that we’ll tackle into 2024, and we’ll learn an additional or get some additional data to focus on. So maybe that provides us with some upside in terms of learning and how to approach things.
Oliver Huang: Okay. That’s helpful color. And maybe just kind of switching over to the Eagle Ford. I know activity levels there have been a bit tough to pin down. But any sort of update with respect to how we should be thinking about the non-op side of things on that asset? And on the last call, you all previously spoke towards the flattish [cadence with] (ph) half of the quarter. But just kind of given the lumpy nature of a half rig, give or take, program, how should we be thinking about the volume trajectory out of that asset for next year? Is there any reason for us to kind of not expect this asset to continue declining given the current capital allocation split and drawn capital from Giddings in the near term whether respect to any sort of MVCs or anything else like that?
