Operator: The next question comes from Michael Scialla with Stephens.
Michael Scialla : You talked pretty extensively about the improving well productivity, and I know a lot of companies have been talking about service costs softening here. Looks like 2024 consensus estimates right now, anticipate you’re going to spend about 4% more next year than you did this year to keep production flat with the current level. So I know it’s too early to give guidance for ’24, but just want to get your view on that outlook.
Vicki Hollub : What we’re seeing is we’re seeing some things start to plateau in terms of cost. We’re seeing labor being still a bit tight. But there’s also around labor though, we’re not seeing as many people wanting to change jobs. It’s just a matter of getting the skills that we need in the field, and that’s where the big challenge is to get truckers to drive trucks and people to do the welding and those kinds of fill jobs are so important to us. But I would think that what — we’re not — while we’re not seeing any reduction — much reduction in service company costs. We don’t expect that. But I don’t think we’ve settled on expecting any kind of increase next year.
Richard Jackson : And I can add maybe just a few. I agree with Vicki. I mean, we’re, one, really pleased with the efficiency of our operations. That’s always our focus. And so really, the rigs we’ve added over the last 1.5 years, we’ve highlighted some of the kind of individual goals, but we’re seeing productivity just from reducing non-productive time, improved kind of efficiency of the operations continue. But as we think about going into next year, OCTG, seeing some relief, but that generally lags, sand kind of similar in fuel, obviously, is a component, which has been lower for us. So we’re seeing those types of things come in a little bit lower. But we’ve got really, the opportunity to continue to work with the fleet we have.
We’re a pretty steady operational pace at this point, which is very different to where we’ve been in the last couple of years. And so for us, it’s really an opportunity to kind of utilize the resources we have and really get that optimization down. So if we look next year, that’s going to continue to be the challenge. We hope there’s some pricing that can benefit both operator and service company as we look at longer term, but we’re really anxious to keep working on the efficiency.
Neil Backhouse : And Michael, this is Neil. I just wanted to add. We’ll always encourage our coverage group not to rely too much on consensus for whatever time period. As you know, the further out it goes, the more sale data that can be in there. So just continue to have the conversations with us, and we’ll guide at the appropriate time.
Michael Scialla : Got you. I guess just summing all that up, though, I guess based on those numbers that would suggest you’d need to spend more to keep production flat. Is it fair to say that feels conservative based on what you know today?
Vicki Hollub : I would say we don’t know that because we’re continuing to get more barrels. I mean just look at the graphs where our teams are getting more production from the wells for either the same or lower cost. We’re doing both. We’re increasing efficiencies of execution while also getting more recovery out of the wells. So I don’t think I’d be prepared to say that we’d have to spend more capital just to stay flat. We’ll look at that. And again, the efficiencies that are being gained, I think we have to take all that into account. And we’ll — we’re starting to look at some of that now, but I’m a bit impressed with what we’ve been able to do with the dollar to spend because I think that we still have for our wedge production, the lowest capital intensity on a per barrel basis in the industry, I believe, at least the last time we checked it. Now we haven’t done that number in a couple of months. So we probably need to check that again to know for sure.
Michael Scialla : Appreciate the detail on that. The one to follow up on your agreement with ADNOC. Does that cover Stratos? And do you have any sense for what kind of capital the company is looking to spend with you at this point?
Vicki Hollub : It doesn’t cover Stratos, but it does cover other things, and it could cover things that we currently have today, not — probably not the first deck at the King Ranch. But what we had done is we put together a work group worked with ADNOC to talk about what the possibilities are for direct air capture and sequestration here in the United States versus Abu Dhabi. And the big focus was to try to help each of us to achieve the goals that we’ve set out. And ADNOC just set another goal for themselves to get to net zero, I think, by 2025. So they’re on a mission. They have a goal, and we also do and we — given the fact that we collaborated on making and building the what is now the largest and what was it, even at the time, the largest ultra-sour gas processing plant in the world.
There were several companies that walked away from that they didn’t want to try to attempt that. So we have a track record of working with ADNOC to do difficult things or to do things that are different. The sulfur recovery units in Al Hosn in our serial numbers 1 through 4. So that’s — that was a bold step for us. And now we’re taking this bold step to go into looking to help each other and also to help our shareholders because the way we’re doing this is in a way that it’s not going to be a cost for us over time. It’s going to be — it’s going to deliver returns and ADNOC is focused on that as well. So we have a very similar objectives around all of how we’re doing this. And so the work team now will continue and start looking at sites here in the U.S. and the UAE and pick the one that gives us the best chance to ensure that right out of the gate, we’re starting with a good project.
Operator: The next question comes from Roger Read with Wells Fargo.
Roger Read : I guess I’d like to follow up on some of the carbon capture. We saw a transaction occur, I guess, now about a month ago, on conventional sort of CO2 EOR. And I was wondering, as you look at your own operations there, anything you can look at or examining along those lines? Or have you had any inquiries from others about trying to expand the opportunity there?
Vicki Hollub : I can’t comment too much on what’s happened. But I will say that there’s probably not any carbon capture or CO2 EOR things that are happening in the U.S. or even worldwide that we don’t follow very closely, one of which we had followed probably for a few decades or at least a couple of decades. But when we look at it, we — and Richard can build on this. So we have now structured what we’re doing so that we can focus on the things that we do best. And the things, as we’ve talked about in this call, the things that we do best are: one, understanding the subsurface. And since we have used CO2 for EOR for almost 50 years, what we’re doing now is just a different way, a different kind of reservoir to put the CO2 into.
