I think it’s the same approach that we’ve delivered in terms of the Midland Basin with the success we’ve had in the Barnett, what we’re doing in the Delaware Basin, whether it’s Upper Bone Springs or deeper Wolf Camp. I think as we think about the Rockies, the same sort of approach there. In terms of the Rockies, they’ve had great performance over the last year plus. A lot of that started with this subsurface approach where we really spent time thinking about how do we approach lateral length, spacing, stimulation intensity. I think a lot of the early gains we were seeing there, I think what we’re seeing today is a lot more operational. We talk about how do we draw these wells down, so early time flow back and then longer term. What we’re seeing is really improvements in both.
In the early time performance, it’s really having the facilities and the emissions handling to do that, not only at a correct rate, but to handle the emissions. Then long-term, we’ve talked about the base recovery with things like our plunger lift assist AI. These type of things are really what delivered the over performance. I wish I could say it was conservative. I just think they’ve improved so much. When you’re improving better than 20% year-on-year, that’s sometimes tough to outlook. I think they’ve gotten more mature in terms of some of these advancements over the last year. I think we’ve done a lot better job sort of narrowing the uncertainty of those outlooks. All the teams are still on the hook to outperform this year. We’re optimistic, like I answered earlier, in terms of what we’re doing in the Permian as well.
I appreciate the question. Hopefully, that helps.
Operator: The next question comes from Neil Mehta with Goldman Sachs. Please go ahead.
Neil Mehta: Thank you, team. Thanks for the call so far. My first question is just around non-core asset sales, recognizing we still have some time before the deal closes. I would imagine you continue to have conversations around the divestments. I’m just curious what your perspective is on the market right now and your confidence in the achievability of up to the $6 billion of non-core asset sales that many have anchored to.
Vicki Hollub: There’s a lot of incoming interest. Once we announced that we were going to divest between $4.5 billion and $6 billion, Sunil started getting a lot of phone calls and letters. The interest is there, and it’s very high interest. What we’re hoping and expecting is that that high level of interest translates into appropriate levels of offers for the things that we might consider selling. It all comes down to valuation, and that’s going to make the difference for us because we do have options. As you know, lots of acreage. We’re going to make the best value decision that we can, but we don’t see that there would be any impediments, barring something that we haven’t foreseen that would cause us to have issues with our divestitures.
Neil Mehta: Thanks, Vicki. The follow-up is just your perspective. Oh, sorry. Please, Sunil.
Vicki Hollub: What we were going to do is just, for those that haven’t heard, Sunil is going to go through what we think about with respect to divestitures, just to give those who might be listening an idea of what we’re looking at.
Sunil Mathew: Hi, Neil. As we have said previously, we are evaluating our portfolio, the high-graded portfolio, and identifying what are the assets that does not fit in our development plan, near-term development plan, but that could be attractive to other companies. What is the strategic fit of that asset in this high-graded portfolio? Like Vicki mentioned, what is the value that we can get? Can we potentially accelerate the value by monetizing this asset? Like Vicki said, we’re getting a lot of inbounds, even before the announcement and a lot more after the announcement, but this is a criteria that we’re using to evaluate, is this an asset that we want to potentially monetize? Going back to your question about $4.5 billion to $6 billion, yes, we are fully committed to achieving the target within 18 months of closing. Between the proceeds from asset sales and organic cash flow, we want to get to the $15 billion of principal debt that we have outlined.
Neil Mehta: That’s great perspective. Thank you, Sunil. The follow-up is just on Battleground. I just love your perspective on both the chlorine and caustic soda markets, and how do you think about the outlook there? Once the expansion comes online, do you think that changes the supply-demand dynamics for any of these products?
Vicki Hollub: Just to go back and look at what OxyChem has been able to do the last few years, when we think about pricing of PVC and caustic soda, we’ve just come out of an incredible super cycle where in 2022 we achieved our highest annual earnings ever, our second-best earnings in 2021, and our third-best in 2023. Now that we’re into 2024, prices don’t seem to be quite at the bottom. As we were going through the first quarter, we started to see some strengthening in both caustic soda and PVC a little bit. But the reality is that inflation in the United States, along with very weak demand out of China, because they’re basically overbuilt right now in both commercial and residential housing and buildings, we don’t see China demand getting better anytime soon.
But we do believe that beyond this year, getting past our inflationary environment, that once there’s some certainty around some reduction in inflation, we think the housing market is already primed for growth again. And so if we can get to an inflation level that is conducive for that, we’ll certainly start seeing recovery in prices here in the United States. The international market, and we do export, so the international market impacts us, and so we’ll continue to see some pricing challenges in that market. But ultimately, getting beyond this year and the next 18 months, I do believe that, driven by India and other places, that we’ll see growth in demand again, and that we’ll start seeing prices going back up. So we’re feeling like we’re probably at a bottom right now.
Operator: The next question comes from John Royall with JPMorgan. Please go ahead.
John Royall: Good afternoon. Thanks for taking my question. So just thinking about the $400 million from midstream contract roll offs, how much of the better terms baked into those numbers are you modeling that’s locked in today versus what you’re just kind of expecting? And to the extent it isn’t locked in, what’s your level of confidence that the terms will move the other way as we get closer to the roll offs?
Vicki Hollub: I’m sorry, could you repeat that question a little bit? We had some disturbance.
Operator: Mr. Royall, could you pick up, if you’re on a speakerphone, pick up a handset by any chance?
John Royall: Is this better? Can you hear me now?
Operator: I think that is better. Go ahead, sir. Please repeat your question.
John Royall: Okay, apologies for that, Vicki. So just thinking about the $400 million from midstream contract roll offs, how much of the better terms baked into those numbers is locked in today versus kind of what you’re expecting? And what’s your level of confidence that to the extent it’s not locked in, that it might not go the other way before you have to renegotiate?
