Sean Woolverton: Yes. No, great question. Our reserve report at year-end, as we were starting to already pivot towards more oil does reflect the activity that’s lined out in ’23, but that report then shifts back to a 50-50 split on capital. So one rig in oil and one rig and gas starting in ’24. So it’s more back to our traditional mix of capital allocation. Now where is there upside? It still would be driven by price, but it would be probably in ’24 as a lot of people are forecasting potential strong moves in gas north of 5, 6 and probably oil coming down a little bit. That reserve report could have even more upside if we convert it to 2 rigs of gas going into a higher gas price curve. So again, as we’ve thought through it, under — we feel the stock is very undervalued and that it’s very just near term looking by investors.
We’re really trying to help investors understand that the upside potential here is higher gas prices, which just a pretty consistent view across a lot of forecasters that said it’s only 24 months out. And we really, to your point, feel like ’22 reserve report demonstrates the underlying value of the company quite well.
Donovan Schafer: Okay. That’s helpful. And then kind of related, and I don’t know there’s potential upside or whether there’s potential upside here, but kind of getting at the question of decline rates. So what is your current corporate average or blended decline rates with sort of if you hit the pause button and weren’t doing any more drilling? I know that can be sensitive to wells that have recently come online, but also, like you guys said in the prepared remarks, some of the Austin Chalk wells are starting out with lower-than-expected decline rates. I mean the production level itself is great, but they’re declining actually slower. So you’re getting a more mature kind of base over time. So just kind of curious to where that puts us at kind of current decline rate and maybe where that would be in like 2024. And if that’s reflected, if it’s a trend towards a lower decline rate at all, if that’s reflected in the reserve report or not.
Sean Woolverton: Yes, yes. The reserve report reflects our best estimates — our reserve engineers best estimates as well as our auditor on what wells are declining off at. But in general, we’re seeing coming out of ’22 into ’23 about a 30% decline on our base PDP assets. That will remain a little flat over ’23 because we have curtailment occurring down in our high-rate gas areas. And so we’ve been choking back some of our large Austin Chalk wells, which, to your point, exhibit a different decline rate than the Eagle Ford. We’re seeing initial declines out of the Austin Chalk in that 55% to 65% range, where Eagle Ford is more 75% to 85% range. So yes, that shift to Austin Chalk, we’re seeing some benefits to that on the base decline.
Now counter to that, going from 1 rig to 2 rigs in ’22 and then maintaining that 2 rigs, we are shifting more of our production to more recent wells. So as more of our production comes from newer wells, we’ll be fighting an increasing decline rate. So probably seeing more of a move up in decline over the next year or 2, but that’s being driven by the large capital program.
