Will Hickey: Yes. I mean, I think our hedging strategy will be pretty clear how we think about it. But no, you’re right. I’d say we’d be biased to hedge more and grow more at higher commodity prices. I think that’s just good basic business sense. But as we see higher commodity prices, I think we’ve always said we’re going to be opportunistic and would look to layer in incremental hedges, both on the crude side and the gas side. I’d say — and then I think as I think about growth, it’s really how good is the reinvestment widget. And I’d say that’s a combination of really equal parts that drive the answer is what are the commodity prices we expect to realize next year and probably the following. And then what does the service cost environment look like?
I mean we’ve seen over the past two years, a wide range of service costs and kind of input costs that ultimately impact the rate of return and the payout of our projects and our development plan. So I’d say lower services costs, higher commodity prices is a better reinvestment environment going to push us to the high end of that range. And if you have the opposite, it pushes us lower.
Operator: Your next question comes from Derrick Whitfield from Stifel.
Derrick Whitfield: Congrats on another solid quarter. Starting with a bigger picture longer-term outlook question on your pro forma asset base. And in recent quarters, there’s been a heightened investor focus on asset productivity and durability. With the benefit of the Earthstone transaction, is it reasonable to assume your reinvestment one year out assessment looks very similar to your two- and five-year out assessments?
Will Hickey: Yes, I think that’s a fair assumption. We’d agree with that.
Derrick Whitfield: Terrific. And then maybe staying on operations. Long lateral development has been a growing theme over the last couple of quarters. As you look out over the next couple of years, what are your thoughts on the risk reward — really metrics associated with integrating more 3-mile lateral development into your operations?
Will Hickey: Look, we’re watching this closely. We’ve seen what others have done in other basins and then some in the Delaware. I’d say our position kind of has the benefit of its set up extremely well for 2-mile development across the whole position. We worked kind of very hard over the last 5 to 10 years to set it up accordingly. So I think as you kind of scan both ours and Earthstone positions pro forma, just from a map perspective, you’ll see that it’s set up really well for 2-mile development, which I think makes it just less likely and there’s less opportunity to go ahead and extend to 3 miles. I also think it is our belief still today that 2-mile lateral is the optimal kind of most capital efficient or risk-adjusted return lateral link in the Delaware.
I do think as technology continues to get better and we get better — continue to get better at drilling wells that, that may shift to 2.5 or 3 over the near term. So Look, we’re going to stay — we’re going to keep watching it. We’ll be fast followers. I think that there’s probably some small places where we could do things to incorporate longer laterals if we chose to do so, but that’s not a big part of the near-term business plan for us.
James Walter: And Derrick, I think a lot of where you’ve seen the most important push to the extra-long 3-mile plus laterals has been in place where people are really pushing the margins of the basin, and they’re into well into the kind of next tier of inventory. And we’re in the fortunate position we’re still drilling our core of the core acreage, that’s extremely high quality and will be for the long time. So I think for us, we’re in the fortunate position of we don’t need to do that and really like the value proposition of the 2 milers we have set up for today.
Derrick Whitfield: That’s a fair point. Congrats again on the quarter guys.
Operator: Your next question comes from Phillips Johnston from Capital One.
Phillips Johnston: I realize you guys won’t have detailed ’24 guidance until February. But now that the Earthstone deal is closed, can you maybe just frame up Q4 a bit and give us a sense for either what volumes might look like today or what kind of year-end exit rate we should be steering towards especially considering, I guess, the improvement in efficiencies that led to higher activity and volumes in Q3.
Will Hickey: Yes. I can give you kind of a few points, I think, will be helpful. Starting with just PR stand-alone, as you think about it, so we hit — we kind of hit the Q4 target in Q3. So I think it would be safe to assume we were kind of trending towards on a standalone basis, kind of a slight beat for Q4 oil productivity or production. CapEx, I think, similar story. We accelerated some wells from Q4 into Q3, so you’re probably trending towards a slight beat on the CapEx side as well for PR stand-alone. And then as you think about Earthstone what will be in that Q4 will be two months of Earthstone, so kind of the last two months of the year of the Earthstone assets. And Earthstone had a guide out there alongside their Novo acquisition that I think is still the right guide to use. So kind of taking those pieces, you can do kind of PR plus 2/3 Earthstone to get to what I think is a decent kind of round number for where we’ll be in Q4.
Phillips Johnston: Okay. So this might be too granular, but it looks like leading edge estimates for the quarter are sort of in the 260 to 270 day range for oil equivalent and 125 to 130 day for oil. Do those seem reasonable? Or is that a little bit too granular for you?
Will Hickey: I think that’s too granular for me, but I’m sure you can have a follow up with Hays or somebody if you — make sure that you’re not missing something.
Phillips Johnston: Yes. Okay. Sounds good. And then maybe just a modeling housekeeping question. Your natural gas differential stepped down in Q3 versus kind of where it was in the prior two quarters. Is that kind of a trend we should extrapolate going forward? Or were there some one-off factors in the quarter that sort of drove that?
