And then, as you alluded to with things like Trimulfrac, we’re seeing the potential for some capital efficiencies to assist on that go-forward. So we’ll, again, take that into account as we prepare detailed guidance for ‘24. But we’re excited about the momentum that the team is creating and I think seeing the potential for a little bit of deflation, which I think no surprise has been led by OCTG prices as the category that’s created the most deflation potential that we’ve seen over the last few months.
Doug Leggate: I appreciate that. Can I go for a clarification just on one point? The fact that you’ve not changed the base when you and I traveled earlier this year, you suggested that you don’t feel ready yet to declare if you’ve improved recovery or just accelerated production. Are you at a point now where you think you’ve got the answer?
Brendan McCracken: I think that’s an answer that will come with time. I don’t think there’s a magical light switch moment where all of a sudden you’ve got precisely 90 days or 180 days of data. I think this is going to be a place we evolve into and derisk as we get more wells that are performing at that level. And as those wells have more data that convinces us on that. So yes, no light bulb moment to announce today, but I think, like I said, the results that we’re seeing year-to-date are piling up and giving us confidence as we go forward.
Operator: The next question comes from Scott Gruber from Citigroup. Please go ahead.
Scott Gruber: I want to continue on that line of inquiry. I realize the 200,000 plateau next year may move higher as you incorporate learnings from your second half program, hopefully, it does. But if your inputs kind of still indicate that the 200,000 is reasonable, which is a decent decline from your exit rate here in ‘23. Would you look at raising the well count to raise that plateau? Is that something you consider? I just think about backward dated oil curve and decent inventory in the play. I would think the NPV mass suggests that something higher is better. So just some additional thoughts there.
Brendan McCracken: I think for us, that decision will be driven by returns and free cash maximization. And you alluded to — today, we don’t see the world calling for additional barrels of growth. There’s enough cross currents out there that I think it makes sense to be patient and wait for those signals. But I think we continue to unlock efficiencies and that creates optionality for us. And if you look at one small example, I think it’s a little bit in the rounding, but we did elect to complete those four drilled and uncompleted wells in the Anadarko this quarter. Combination of the earlier well performance that we’re seeing from neighboring locations with an improved NGL and gas environment, relative to what we were expecting this summer and then the ability to get really competitively priced frac crews on it this quarter.
So I think we’ll manage those decisions as they come and make the right call from a return on invested capital and free cash maximization lens.
Operator: The next question comes from Umang Choudhary from Goldman Sachs. Please go ahead.
Umang Choudhary: The strong operational results is obviously notable. Can you walk us through the evolution of Simulfrac to Trimulfrac? And can you also help us understand what is critical for its success and how Ovintiv unique in its ability to deploy this technology?
Brendan McCracken: Yes. I appreciate it, Umang. And what I would — I’ll get Greg to chime in here, but what I’d sort of set him up for is, there’s no trade secrets or intellectual property in our industry of any real meaningful node. And so, a lot of how we create value through innovation is with culture and expertise. And what we’ve seen over a long period of years here is that there’s a real path dependency to that learning and the ability to execute on things like Trimulfrac. But I’ll turn that over to Greg to chime in.
Greg Givens: Yes. Thanks, Brendan. And thanks for your question. Our teams have had a really great track record of always finding these new innovations and implementing them in a way to help improve returns in the Permian and across the portfolio. But in the Permian specifically, if you go back in time, we’ve been doing cube development here for a long time. Initially, it was through SIMOPS. We had multiple rigs and multiple frac spreads on each location. And we really focused on logistics to make sure we kept everything running smoothly and we were able to execute on those larger developments. And we saw the opportunity with Simulfrac that if we could start fracing two wells at the same time, that would really speed up the process and help us reduce cost and improve returns.
And then, that kind of evolved into us pumping larger and larger amounts of sand. And so, as we put more sand, we realize we need to have a cheaper way to get that proppant. And that led us to get local sand mines to use wet sand and bring it to location. And then, as we continue to execute and pump faster, we said, well, gosh, we don’t need to have supply chain be a limitation on our ability to continue to frac wells faster. And that led us to the sand pile. And that allows us to keep inventory on location to make sure that sand doesn’t keep us from executing. As you see all these innovations, they kind of build on each other. You can’t just immediately jump to the last step in the process. You’ve got to build as you go. And really, the latest step in that process is Trimulfrac for us.
And a little bit about how Trimulfrac works, it’s really simple. It’s the same process as Simulfrac. It’s the same equipment. We’re using one frac spread, to be clear. It’s just one spread with one blender. The only thing that’s different from a Simulfrac spread is we add a few more pumps so we can get some more rate and then we adjust the plumbing, so that we’ve got pipe running to three wells. So we can pump down all three wells at the same time, stimulate three wells at the same time. And by doing that, we’re able to actually trim 3 to 4 days off of the time for each well, which saves us about $125,000 a well. And it’s been working really well for us. To be clear, this is not just an idea. This is something we’ve been executing on for some time now.
We’ve done five pads already this year, executed really well. And that’s what gives us the confidence to start incorporating that into our future plans. So, as I said before, this is not just a new onetime thing for us. This is an evolution over time of all of these innovations building on each other. And that’s what I think gives us a unique advantage in the basin. It’s just where we’ve been is allowing us to go where we’re going today.
Brendan McCracken: And I’d just add, Umang, like the whole point of all of this innovation is to create a more capital efficient business and have higher return on invested capital. And that’s the standard that we hold ourselves to. And we spend a lot of time looking at how we compete in that space and pretty consistently rank at the top of capital efficiency amongst a pretty high-quality peer group. And I think as Greg outlined, this isn’t a secret, but it’s really hard to imitate. And that’s where the value is for our business.
Umang Choudhary: And maybe I’ll ask another longer term question, I guess. You had a spotlight event on the Montney assets last year, and you indicated the potential to unlock value through the build-out of midstream infrastructure. Can you give us an update on this? And as we head into this up-cycle in ‘25, ‘26, potentially on natural gas, how should we think about the capital allocation from a long-term perspective between Permian and Montney. It’s a little bit more of a long-term question, but would help your response here.
Brendan McCracken: Yes. No, I’d love it. We’re obviously very excited about our Montney asset, and it’s really two assets in one. We’ve been trying to make sure the market understands that that we have a Montney oil asset with a deep premium oil inventory, and then we have a Montney gas asset with an extremely deep premium inventory on the gas side. And in 2024, I think we’ll see around 20% of our capital deployed in the Montney, and that’s all going to be deployed into the oil window. So, we make a lot of gas in the Montney because of the legacy base production but where our capital has been focused go-forward in ‘24 is going to be in the oil window. But definitely, down the road, we see the opportunity for the Montney gas to create a lot of value for our shareholders.
