Kyle Coldiron: This is Kyle again. So I think you’re right. It’s just ultimately, the completion crews lag the drilling rigs. And so when you look at the back half of ’24 you have almost 100% of our drilling activity is allocated to the Delaware Basin. But then ultimately, as you move into ‘25, you’ll be bringing those wells online, and you’ll see a heavy allocation of completions activity there in the Delaware side. So I think you hit it on the head that it’s ultimately just a lag of the completion crews and the turn in lines following those drilling rates.
Tim Rezvan: Okay. Thank you.
Operator: Next question comes from the line of Paul Diamond with Citi. Your line is open.
Paul Diamond: Thank you. Good morning, all. Thanks for taking my call. Just a quick question on your hedging structure. As you guys progress more towards your kind of your debt targets and increasing scale, how do you anticipate that evolving over time? Are you guys holding at a kind of currently high level or is that something you expect to trail down and what time frame?
Jason Pigott: Paul, good question. I don’t think that our hedging strategy will be too much different than the past. [Technical Difficulty] we see ’25 moving up into that $75 range. I think we would continue to layer on some additional hedges there. If you were to model our company at $75 flat versus the strip, those outcomes are very different. At $75, we pay down debt more quickly. We improve the economics of our capital investments. So I think you would see us as $75 creeps into ’25, starting to put on some hedges. We tend to be 75%-ish hedged out a year in the future. So we’re in good shape for right now, and we can kind of watch prices. But for us, we think of $75 and higher, this company is very different than we are today, and we would start to put some of those on.
You see that we’ve got some already in place for 1Q ’25 first half of ’25 already. So that’s a good number for us that again accelerates our return of cash to shareholder program and improves the economics of our wells.
Paul Diamond: Understood. Thank you. And then, just a quick follow-up on, so in guidance, you guys talked about 1.7 crews through the year, and a lot of that seems to kind of turn on that optionality in Q4. I guess, just trying to dig into that a little bit. What do you guys see as really driving that decision? Is it purely on just timing of cadence or could they — could well outperformance really drive that to be held back and just how do you guys think about the ultimate decision on that cadence?
Jason Pigott: Yeah. This is the activity level we’ve had in place for a while. A lot of that is driven by a desire to use free cash flow to pay down debt. What I would say is, it also is one of the reasons we put bans on the capital range. We prefer to [indiscernible] operations steady, but it’s February, and we got a lot of time left in the year. So if you see outperformance on production or higher prices or we continue to reduce capital to fund that program. Those are all factors that would play into us, maybe keeping that second crew going for the final quarter of the year. But we’re just kind of, it’s early in the year, and we’ll kind of give updates as the year progresses.
Paul Diamond: Understood. Thanks for your time. I’ll leave it there.
Jason Pigott: Thank you.
Operator: Our next question comes from the line of Gregg Brody with Bank of America. Your line is open.
Gregg Brody: Good morning, guys. Just two questions for you. The first one, could you talk a little bit about operating costs sort of LOE have been trending up, as you gave quarterly guidance for 1Q. Should we expect that to stay around there or should we expect that to change in any direction?
Katie Hill: Good morning, Gregg. This is Katie. We expect right now that LOE in Q1 to stay roughly flat to where we exited the year. I think that’s a fair representation of the first half of the year. Overall, as we bring on some of these new wells in Q2 and Q3, we see a lot of water volume coming on, the high productivity and outperformance in is bringing high water volumes and then disposal costs with us. So expect that our operating cost to be fairly flat here through the beginning of the year with where we are today.
Gregg Brody: And then, so that implies the additional water implies in the second half, it will be a little higher?
Katie Hill: I think we’ll be fairly flat to where we are today through Q2, Q3.
Gregg Brody: Got it. And then after that, potentially trending down or is it — how should we think about that?
Katie Hill: Sure. So I think we have opportunity as we’re continuing to onboard and optimize these assets. I think we found some really good cost savings already from where we were in mid-2023 on the newly closed Delaware assets. I think we would expect to stay relatively flat for the full year ’24 average and are continuing to try to work those costs down as we get assets fully onboarded.
