Sean Woolverton: Yes. No. Just like we think about drilling capital, right, in getting the best returns on our drilling capital, same on as we look at debt and credit. So always try to assess, hey, what’s the best cost of capital that we can get, but keep risk mitigated. I would tell you, our view would probably lean more towards fixed so that we know what that is and where it’s going forward. Right now, our debt, with that said, is variable, and it’s moved up on us. So both the revolver and our second lien have a variable component to it. So we’ve experienced that and think that, hey, if we found a fixed rate that works for us and we could term out some of that variable debt, that’s something we would do.
Operator: Your next question is from the line of Tim Rezvan with KeyBanc Capital Markets.
Slate DeMuth: This is Slate on for Tim today. Just a couple of questions. For one, I was wondering if you could talk specifically about the cost deflation you’re seeing with the rigs. And are you seeing anything similar on the pressure pumping side?
Sean Woolverton: Yes. Maybe I’ll let Steve kind of briefly touch on that high level off at the stage that we are seeing cost pressures peak and now are even starting to see a little relief. So encouragement on that front.
Steven Adam: Thank you, Sean. Yes, Slate, we are in a situation right now where the market on the rigs in the Eagle Ford, and I’ll just stay specific to that. At least on the gas side, there’s rigs that are coming down. And on the oil side, there’s even some rigs that are kind of either changing shape or coming down. That said, the market price is such that we’re seeing softening on the rig contracting side for rigs, both in the near term and also some conversation in the longer term. That said, it’s even further supported by the backdrop of term on contracts. So we’re seeing shorter term on contracts and, in some cases, pad-to-pad with quality equipment. So that’s kind of the near-term outlook on rigs, and we’re kind of expecting that deflation to continue into the second half of this year, and then we’ll see where ’24 takes us.
On the frac spread side, we’re seeing a lot of those costs just basically plateau and level out with some softening in certain areas, especially, say, for example, on things like water transfer and support and service and to some degree on sand. Sand has been kind of bimodal with a higher and a lower cost structure. We’re entering into that lower mode right now as we see some of these volumes tick down in the aggregate Eagle Ford area.
Slate DeMuth: Got it. That’s very helpful. And then for my follow-up, maybe just a bit bigger picture. I believe you all have highlighted kind of a longer-term 50-50 gas to liquids mix for your portfolio. I was wondering maybe just kind of a time line on that. Do you expect that to be over the next 2 years, 2 to 3 years? Or is that kind of maybe a bit longer-term view, 2025, 2026, that comes with this LNG build-out?
Sean Woolverton: As we look at getting to the end of this year, we’re starting to approach the 50-50 mix. So as we stay with that 1 rig — let’s assume ’24 is 1 gas, 1 oil, we’ll probably stay in and around that 45 to 55 split year-over-year. And where we would see it start to move away from that and maybe go more gas-heavy is if we shifted — allocated the capital to 2 gas rigs. So we’re getting to that 50-50 mix almost this year, and it’ll stay that way, assuming a 1 rig oil, 1 rig gas scenario.
Operator: Your next question is from the line of Charles Meade with Johnson Rice.
