So, I think our disciplined approach explains why we’re moving at the pace we’re moving. And when we do enter into a deal, you’ll know that we will have the tools to evaluate the risk and manage it.
Operator: Our next question today comes from Doug Leggate with Bank of America. Please go ahead.
Doug Leggate: I hope I’ve got a couple of questions. One of them, I’ll ask in as delicate a manner as a possible. But Clay, maybe I can go to you first. The reduction in capital in the Haynesville, 15% drop in well costs, $1,800 per foot, a big step down. Obviously, you’ve signaled to us that that could be on the cards. But I’m curious if there is — if this is a deflationary move? Is it a well-designed change? What was the moving parts and how much further do you think you can get it done?
Clay Carrell: So it’s a combination of efficiency gains that we’ve achieved, and we expect to continue to achieve on the drilling and completion side of the business, it is reduced inflation and it is longer laterals. And so, the kind of the same recipe we’ve always used and that we used in Appalachia is what we’re using here. And we think that we’re going to continue to drive those efficiency gains. I think overall, we have room to move the lateral lengths in the play. It’s not going to be equal to the averages in Appalachia, but room to keep benefiting from that to where, over time, I think we can keep bringing those well costs down. The only wildcard in there will be commodity prices were to jump. And if we got back into the ultra high inflation arena, then that would put some pressure against those efficiency gains. But I think we’re going to continue to keep gaining on execution and the longer laterals.
Doug Leggate: I appreciate the answer, Clay. We’ll watch with interest. Bill, I don’t think I’m betraying any confidences by suggesting that you’ve made no secret of your desire for Southwestern to get bigger over time. And I watched you steer your share price to outside of the book last year, the highest level in six years and M&A is topical. So I’m just curious if you could frame in whatever method you think is appropriate, how you see Southwestern role in M&A and especially in light of, for example, the [indiscernible] news this morning.
Bill Way: Thanks, Doug, for that question. I think as I’ve said before, well-timed, well-executed, well-integrated M&A that adds sustainable value to shareholders should be evaluated against the framework for creating shareholder value long term. And what we’ve also demonstrated is the fact that our three well-timed, well-executed, well-integrated acquisitions in Haynesville and Appalachia met those objectives. Certainly, that raises the bar for quality. It’s not just about getting bigger as your question. It’s about adding real tangible, sustainable value and capturing the benefits of the scale you create by doing that in a very-disciplined way. So, given our assets, our capabilities, our people, we’ve got great confidence in the Company’s value proposition.
We’ve demonstrated that we know how to execute on M&A activity and do so in a strategic and real value-creation manner. So, any particular deal that’s out there or conversation out there, as you also know me, we don’t comment on those, but that’s our thinking.
Doug Leggate: Fair to say you see the logic in consolidation?
Bill Way: Under the circumstances that I spoke of, yes.
Operator: We’ll move to the next question, which is from Scott Hanold RBC. Please go ahead.
Scott Hanold: Clay, you had mentioned getting those longer laterals in the Haynesville. And can you give us some context on a couple of things. One, just your acreage configuration, what does it allow for in terms of those longer laterals? And number two, when you look at the Haynesville, is there anything that we should consider giving the depth and pressures where there is a limit to — the benefits of lateral lengths in terms of getting recoveries out of the toe of a long — say versus something like the Marcellus?
Clay Carrell: Definitely. So, I’ll start with your second question. I mean in the NFZ area, there are going to be limits on lateral length due to the high temperature. Remember, that’s the highest producing area in the Haynesville, best returns. And so, that’s an area where I think we will live in the 7,500 to 9,500 foot range, and that one probably can’t go with current technology much longer than that. When we look at the different areas of our Haynesville acreage position, which benefits from both of the acquisitions that we did where GeoSouthern was a nice puzzle piece fit into the Indigo acquisition, which allowed for configurations where we could do some longer laterals. And then our team has done a great job of doing trades that also fill in acreage so that we can go to these longer laterals.
As I mentioned in the script, we drilled 2 to right around 15,000 feet. Those were in the Northwest part of our average position Northwest DeSoto Parish, those areas are conducive to drill 15,000-foot laterals. And so I think across the field, that’s the range is anywhere from 7,500 to 15,000 foot. And as we continue to progress on our execution in the Haynesville, I think you’re going to continue to see those lateral lengths growth. But it will be a methodical approach, just like we did in Appalachia, well thought out and making sure that we understand all the parameters when we’re going longer.
Scott Hanold: Understood. And my follow-up question is, kind of going back to some of the — where you started Bill in the macro. You talked about the Haynesville declining into early ’24, but see a pickup in LNG exports by the end of 2024. But then call that in talking about the strip, not high enough to incentivize any kind of growth. When you step back and kind of think about big picture macro, do you — are you generally constructive in the macro backdrop, you think just the forward price is not reflecting that potential at this point in time. So, if you can give us a kind of a little bit of color around some of the depth of that conversation.
