We have a platform rig. We have one deepwater rig commitment, another deep water rig option. So I think we’re in a good spot there. Look, I think the rigs are at a pretty high price relative to where we are from a commodity perspective. I think that relationship when the rig inflation was happening and when you had commodity markets being fairly constructive, and they’re still fairly constructive, but are they constructive enough to where rig rates are. It’s one of the reasons we haven’t entered into any long-term contracts, and we’re still committed to not doing that for a company our size. We’ve talked about that, Michael, in detail. And what I think it’s important for companies in the Gulf of Mexico that are our size even as we aspire to be a bigger company, making sure we understand how we think about obligations.
And so, a big two-year rig obligation doesn’t make sense for us. So we’re playing in different types of windows, but I think I’m happy with the windows we’ve created to execute the program this year.
Michael Scialla: That sounds good. You talked about Sunspear and Katmai contributing to production next year. Are there any other of these prospects that could contribute, realize, Daenerys, it looks like Helm’s Deep are probably fairly long dated. I’m not sure about Ewing 953 or any of those potentially going to contribute next year.
Tim Duncan: So Helm’s Deep and Ewing Bank are those classic. Think about those like Venice, Lime Rock and Sunspear. Good exploitation similar to field pays [ph] in the area broadly, and it’s going to require new subsea infrastructure. So those won’t contribute next year. This Lobster Waterflood is an interesting one. So that’s born out of the dump flood success that we had in the Phoenix Area as we owned the Lobster assets now for a year. And the team really examined every pay zone. There is a big producer in the field that’s got a large wet sand right in the column that we think we can utilize to do another one of these “dump flood” type of water flood projects. You don’t get response from that in the first kind of two, three months.
You start to get response from that as you get into the nine month, 12-month, 15-month marker. I think we can see increased production from the Lobster field in 2024, excuse me, 2025 as well because of the project that we’re initiating this year.
Michael Scialla: Great. Appreciate that. All right. Got it.
Operator: The next question comes from Jeff Robertson with Water Tower Research. Please go ahead.
Jeff Robertson: Thanks. Good morning, Tim. With the types of acreage trades that Talos was able to accomplish in 2023, does that tell you anything about the investment environment in the Gulf of Mexico as you look at 2024 and potentially even 2025 with the type of free cash flow you anticipate?
Tim Duncan: Well, I’ll make sure I understand the question. I’ll try to answer. I think I heard Jeff, and I didn’t make sure you ask it again. But I think what you see in some of these trades is a better job, I think, of the operator group in the Gulf of Mexico trying to make sure they’re maximizing the value of your acreage. And there’s no doubt the pace of lease sales has slowed down. There was a lease sale in the fourth quarter. We were an active participant in that. As they slow down and as we all try to develop inventory for the outer years, you have to think more broadly about how do we do more business development to make sure we’re all pulling our best inventory forward. And so there’s still capital that wants to work in the Gulf of Mexico, and there’s even new capital that’s come into the Gulf of Mexico, interesting from a drilling program perspective.
How can that capital go to work? And how can we make sure we’re all being efficient? And so I think these three announcements we made in the fourth quarter and I think into the first quarter are reflective of operators trying to do a better job, really making sure they’ve got depth in inventory as they think about 25 through 30 if you will. And these trades will all help build that depth. And so just a straight prospect swap. An acreage swap is pretty interesting with BP and Chevron and Hess, they’re all different. The Repsol one is really focused on new seismic and new reprocessing around our Neptune facility and then the lease sales that normal activity. And I think we had a map in that press release. And a lot of those leases are right by a couple of our facilities and reflective of our strategy of utilizing our infrastructure.
So I think it’s really about inventory enhancement and inventory development in a situation where you don’t have the pace of lease sales that we used to do. We’ve got a huge acreage position. We’ve got to figure out how to monetize that the best way possible.
Jeff Robertson: Has the – maybe the promote cost or the cost of doing these types of trades or the cost of getting into prospects. Has that changed much in the last year with the absence of lease sales?
Tim Duncan: No, it hasn’t. Typically. it’s gone down. I mean, for us, just because of the level of competition has gone down. The cost of entry on a lot of these leases has gone down. So I think it’s not reflective of cost. I don’t think these trades are really about kind of swapping opportunities and making sure everyone’s got a depth of opportunities. And there’s some urgency around that. But there’s not as large of a promote market as there was when there was simply more activity and more participants – more competition for these ideas. I think we’ve narrowed the basin down to a group of players that are here for the long haul that are focused on inventory development or figuring out how to try to benefit from each other’s inventory more than they are trying to figure out how to benefit on the trade specifically.
Jeff Robertson: Thanks. Just a question on the guidance, Sergio, the planned downtime with HP-1, is that, I presume that’s going to be mostly a second quarter of 2024 impact?
Sergio Maiworm: That’s right, Jeff. It starts in March. So there’s going to be an impact in the first quarter as well, but it’s mostly going to impact second quarter.
