Q3 2023 Civitas Resources Inc Earnings Call
Okay.
Speaker 1: Ladies and gentlemen, thank you for standing by. My name is Bhavesh and I will be your conference operator.
Ladies and gentlemen, thank you for standing by my name is Bob and I'll be your conference hopefully that state at this time I would like to welcome everyone to the Civitas resources third quarter 2023 earnings Conference call.
Speaker 1: At this time, I would like to welcome everyone to the Cilites Resources Third Quarter 2023 Earnings Conference Call.
Speaker 1: At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question.
At this time all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and session.
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Speaker 1: Thank you. I will now hand the call over to John Rand, Director of Investor Relations. He may begin your conference. Thanks, operator.
Thank you I will now hand, the call over to John rent Alright, with Investor Relations you May begin your conference.
Thanks, operator, and good morning, everyone and thanks for joining us I'm joined today by our CEO, Chris Doyle CFO, Mary Ellen Coe ski and CFO Hodge Walker I Hope you have reviewed our earnings release 10-Q, and slide deck, all of which are available on our website. We will make forward looking statements, which are subject to risks and.
Speaker 2: I'm joined today by our CEO , Chris Doyle, CFO , Mary Nellipowski, and COO Hot Walker. I hope you've reviewed our earnings release 10Q and slide deck, all of which are available on our website. We will make forward-looking statements which are subject to risks and uncertainties that could cause actual results.
That could cause actual results to differ materially from our projections. Please read our full disclosures regarding forward looking statements in our 10-Q and other SEC filings. We may also refer to certain non-GAAP financial metrics reconciliations of certain non-GAAP metrics can be found in yesterday's release and our SEC filings. After Christmas brief prepared remarks, we will.
Speaker 2: to differ materially from our projections. Please read our full disclosures regarding forward looking statements in our 10Q and other SEC filings. We may also refer to certain non-GAF financial metrics, reconciliations to certain non-GAF metrics can be found in yesterday's release in our SEC filing.
Speaker 2: After Chris's brief prepared remarks will all be available to take your questions. As always please limit your time to one question and one follow-up as this allows to get to more of your questions this morning. Now I'll turn the call over to Chris.
Ill be available to take your questions as always please limit your time to one question and one follow up does this allow us to get some more of your questions. This morning, and now I'll turn the call over to Chris.
Speaker 2: Thanks, John morning everyone team once again delivered strong results this quarter in our new Permian and legacy. D. J. businesses are performing well against our expectations.
Thanks, John and good morning, everyone team once again delivered strong results this quarter on our new Permian and legacy DJ businesses are performing well against our expectations are.
Speaker 2: Our results continue to prove that an EMP company with high quality assets can return significant cash to shareholders while building scale through discipline a creative transaction.
Our results continue to prove that an E&P company with high quality assets can returned significant cash to shareholders, while building scale through disciplined accretive transactions.
Speaker 2: are recently announced Venser acquisition which should close as expected in January . Further strengthens our ability to generate free cash and return it to shareholders.
Our recently announced <unk> acquisition, which should close as expected in January further strengthens our ability to generate free cash and return it to shareholders. This deal was part of several recent steps to transform our company, adding high quality scale and further diversifying our portfolio simply put we're more competitive and more durable enterprise today.
Speaker 2: The steel was part of several recent steps to transform our company, adding high-quality scale and further diversifying our portfolio. Simply put, we're more competitive and more durable enterprise today.
Speaker 2: We recently celebrated our two year anniversary, which gave us an opportunity to reflect on what we've accomplished as a company and what we've delivered for our shareholders. In 2022, we paid $6.29 per share in dividends. In 2023, that number will grow to $7.60.
We recently celebrated our two year anniversary, which gave us an opportunity to reflect on what we've accomplished as a company and what we've delivered for our shareholders. In 2022, we paid $6 29 per share and dividends in 2023 that number will grow to $7 60.
Speaker 2: Add an additional $320 million of five acts that have already been completed and will return nearly a billion dollars to shareholders in 2023 alone. That's 15% of our current market cap in one year.
Add an additional $320 million of buybacks that have already been completed and we will have returned nearly $1 billion to shareholders in 2023 alone.
15% of our current market cap in one year or.
Speaker 2: Our strong stakeholder return program will continue to grow in 2024. That strip we expect the dividend will increase roughly 10%. Furthering our track record to delivering one of the most reliable and significant dividends in our industry.
Our strong shareholder return program will continue to grow in 2024 extra if we expect the dividend will increase roughly 10% furthering our track record of delivering one of the most reliable and significant dividends in our industry.
Speaker 2: We've accomplished all of this while maintaining an unwavering commitment to our strong balance sheet. Our plan to sell about $300 million in non-core assets is progressing well and we're on track to meet our mid-2024 target. Proceeds will help us reduce debt while also high-grating our portfolio.
We've accomplished all of this while maintaining an unwavering commitment to a strong balance sheet.
To sell about $300 million of noncore assets is progressing well and we're on track to meet our mid 2024 target.
Proceeds will help us reduce debt, while also high grading our portfolio.
Speaker 2: We continue to target three quarters of eternal leverage longer term at mid-cycle prices and plan to be able to one turn by the end of 2024, assuming $80 a will. We firmly believe that maintaining a strong capital structure is key to building a sustainable business that can deliver top shareholder return.
We continue to target three quarters of a turn of leverage longer term at mid cycle prices and plan to be below one turn by the end of 2024, assuming $80 oil we firmly believe that maintaining a strong capital structure is key to building a sustainable business that can deliver top shareholder returns.
Speaker 2: Let's talk about integration. Since the summer, our focus has been on integrating the new Permian assets in the Sybotos and standing up a new team.
Let's talk about integration since this summer our focus has been on integrating the new Permian assets and the sabotage and standing up a new team.
We built a proven Permian leadership team with decades of experience, leading capital efficient development programs across the basin. In addition, I continue to be impressed by the talented members of the tap rock and Hibernia teams, many of whom are joining civitas.
Speaker 2: In addition, I continue to be impressed by the talented members of the Tap Rock and Hibernia teams, many of whom are joining Sybotas. Their dedication to maintaining safe, continuous, and efficient operations has allowed us to accelerate operational handover in the Midland Basin to the end of this month. That's over two months earlier than our original plan. Similarly, in the Delaware, we're on track to accelerate the operational handover by over a month.
Our dedication to maintaining safe continuous and efficient operations has allowed us to accelerate operational handover in the Midland basin to the end of this month, that's over two months earlier than our original plan.
Early in the Delaware, we're on track to accelerate the operational handover by over a month Bottomline come January one tap rock and Hibernia operations will be fully integrated into <unk>. Our teams now finalizing plans for the Vince or integration and optimizing our 2020 for development program.
Speaker 2: Bottom line come January 1st, tap rock and hibernate operations will be fully integrated and to sevetop.
Speaker 2: Our team is now finalizing plans for the VINSA integration and optimizing our 2024 development program.
Speaker 2: As always, we will be guided by a proven business model, which focuses on maximizing free cash flow and improving cash on cash returns. Now let me quickly...
As always we will be guided by our proven business model, which focuses on maximizing free cash flow and improving cash on cash returns.
Now, let me quickly summarize our third quarter results.
Speaker 2: Total company production was in line with the expectations of the third quarter, averaging 235,000 BLE per day and 114,000 barrels of oil per day.
Total company production was in line with expectations in the third quarter, averaging 235000 Boe per day, and 114000 barrels of oil per day.
Speaker 2: And the DJ volumes were 168,000 BOE per day and the upper half of our original guidance range. We continue to push the limits of operational efficiency here in the DJ recently drilling six four mile laterals in an average spud to spud of nine days.
In the DJ volumes were 168000 Boe per day in the upper half of our original guidance range. We continue to push the limits of operational efficiency here in the DJ recently drilling six four mile laterals and an average spud to spud of nine days.
Speaker 2: to new company record. Importantly, the Wells came in at approximately 10% below pre-drill cost-ess.
A new company record importantly, the wells came in at approximately 10% below pre drill cost estimates.
Speaker 2: In the Permian, we produce 67,000 BLE per day for the quarter, which I'd note only reflects volumes after the transaction closed on August 2nd. Focusing in on August and September , Permian production average is 101,000 BLE per day. We close the quarter strong averaging approximately 111,000 BLE per day and 56,000 barrels of oil per day. Importantly, remain on track to exit this year within our original Permian 5 month guidance range.
In the Permian, we produced 67000 Boe per day for the quarter, which I would note only reflects volumes after the transaction closed on August 2nd.
Focusing in on August and September Permian production averaged 101000 Boe per day, we closed the quarter strong averaging approximately 111000 Boe per day, and 56000 barrels of oil per day.
Accordingly, we remain on track to exit this year with our original Permian five month guidance range.
Speaker 2: Companywide, we continue to target a year and exit rate of about 280,000 B a week per day and have raised the midpoint of our full year production guidance.
Company wide, we continue to target a year end exit rate of about 280000 Boe per day and have raised the midpoint of our full year production guidance.
Speaker 2: Capital investments in the third quarter will approximately $430 million consistent with expectations. We ran two rags in the DJ seven in the Permian during the quarter. At ads plan, we've dropped two rags in the Permian in October and will drop to four rags by year end before closing Ben.
Capital investments in the third quarter were approximately $430 million consistent with expectations.
Ran two rigs in the DJ <unk> in the Permian during the quarter and as planned we've dropped two rigs in the Permian in October and will drop to four rigs by year end before closing venture.
Speaker 2: And the DJ will maintain our two-rig program and have reduced completion activity in the fourth quarter as planned.
In the DJ we'll maintain a two rig program and have reduced completion activity in the fourth quarter as planned.
Speaker 2: As we look toward the remainder of the year, we successfully increased our working interests in a few high return pads.
As we look toward the remainder of the year, we successfully increased our working interest in a few high return pads.
Speaker 2: and elected to participate in additional non-offactivity in the core of the DJ basin. As a result of these investments, combined with improved drilling cycle times, we're electing to increase our capital investments by about $60 million, midpoint to midpoint, bringing the new midpoint to $1.34 billion. These are a high return investments that set us up well heading into 2024.
And elected to participate in additional non op activity in the core of the DJ Basin. As a result of these investments combined with improved drilling cycle times.
We're electing to increase our capital investments by about $60 million midpoint to midpoint, bringing the new midpoint to $1 $34 billion.
These are high return investments that set us up well heading into 2024.
Speaker 2: In closing, let me reiterate today's key takeaways. First, our legacy DJ and new Permian businesses are both performing well. Our integration is ahead of schedule, and we have the flexibility to invest capital across a portfolio of very high return assets in multiple bases.
In closing, let me reiterate today's key takeaways first our legacy DJ and new Permian businesses are both performing well. Our integration is ahead of schedule and we have the flexibility to invest capital across a portfolio of very high return assets in multiple basins.
Speaker 2: Second, our recent acquisitions have created a stronger, more balanced stibitose, significant duration and appear leading shareholder return growth.
Second our recent acquisitions have created a stronger more balanced civitas with significant duration and a peer leading shareholder return program as I've said before scale matters, but so does depth and quality of inventory and efficient execution.
Speaker 2: As I said before, scale matters, but so does depth and quality of inventory and efficient execution.
Speaker 2: Scale, affect quality and operational excellence are the key ingredients to sustaining and growing shareholder returns.
Scale asset quality and operational excellence are the key ingredients to sustaining and growing shareholder returns.
Speaker 2: Lastly, we know the importance of a premier balance sheet. We're advancing our non-core asset sales as planned. Have a very strong outlook for free cash flow with current prices. We expect to return to our optimal level leverage ratio of less than one turn by the end of 2024, assuming $80 at well.
Lastly, we know the importance of a premier balance sheet, we're advancing our noncore asset sales as planned and have a very strong outlook for free cash flow at current prices, we expect to return to our optimal level leverage ratio of less than one turn by the end of 2024, assuming $80 oil.
Speaker 2: Thank you for your interest from Syvathas and Operator. We're now happy to take questions.
Thank you for your interest in Civitas and operator, we're now happy to take questions.
Speaker 1: Thank you. At this time, I would like to remind our teleconference participants in order to ask a teleconference question, please press the star full about the number one on the telephone keypad. We'll pause for just a moment.
Thank you at this time I would like to remind our teleconference participants in order to ask a teleconference question. Please press the star followed by the number one on your telephone keypad.
We'll pause for just a moment composite Q&A roster.
Okay.
Speaker 1: Our first question comes from the line of Neil Bingham on truest securities. Please go ahead with your question.
Our first question comes from the London Neal Dingmann onshore Securities. Please go ahead with your question.
Speaker 3: Morning, Chris and team and a nice job on the salary results. Mike, Chris, my first question is on the Permian. Could you mind me, you're assumed 2024 step up on the Permian DNC as part of that reiterated guide you mentioned in the release? And I'm just wondering, does this include any step up in projects?
Hey, good morning, Chris and team have done a nice job on the solid results Mike Chris. My first question is on your Permian could you remind me your assumed 2024 step up on the Permian D&C is part of that reiterated guide you mentioned.
In the release and I'm just wondering does this include.
Any step up in the project size.
Speaker 2: Yeah, thanks, Dale. So you look at our midpoint in 2024, $2.1 billion. That split between the Permian and the DJ is roughly 55, 45, when you include Venser.
Yes, thanks Neil.
You look at our midpoint in 2024 or $2 $1 billion that split between the Permian and the DJ is roughly $55 45.
Do you include denser and so it will be we'll be allocating slightly more than half of our capital to the Permian in 2020 for your second question was really interesting one.
Speaker 2: So we'll be allocating slightly more than half of our capital to the Permian in 2024.
Speaker 2: Your second question is really interesting, one is, and it's what the team is currently working on and just overall project size.
It's what the team is currently working on and just overall project size as we looked at these transactions all three of them. We had an underwriting case and then we have a case that that indicates there is additional resource that could be allocated capital and so one of the projects that team is working on is looking at overall project size and how do we most.
Speaker 2: As we looked at these transactions, all three of them, we had an underwriting case, and then we have a case that indicates there's additional resource that could be allocated capital. And so one of the projects that teams working on is looking at overall project size, and how do we most efficiently?
Speaker 2: allocate capital to zones that have very strong returns, but may not have been part of the underwriting case, whether they're shallower zones or zones such as the Wolf Camp D. So I would say that's still in progress, but we're very excited with how 2024 we're setting up and excited to continue.
Efficiently allocate capital to zones that have very strong returns, but may not have been part of the underwriting case, whether theyre shallower zones or zones, such as the Wolfcamp D. So I would say that is.
Its still in progress, but we're very excited with how 2020 for setting up.
And excited to continue to execute.
Speaker 3: Yeah, it looks like a great runaway ahead. And then my second question just on the DJ appears. The walk in the area just continues to notably outperform. I think that's even an understatement. I'm just learning based on results you see now for a few quarters. Have you changed future expectations here? And was just wondering, is it the extended reach well? Is what continues to drive this out performance? Thank you.
Yes, it looks like a great runway ahead and then my second question just on the DJ appears.
Watson's area, just continues to notably outperform I think thats, even an understatement I'm just wondering based on results you have seen now for a few quarters have you changed future expectations here and.
It was just wondering is it the extended reach wells or what continues to drive this outperformance. Thank you.
Speaker 2: Yeah, I think our outperform is an understatement. You know, it's considered as I am. I even see that. The Lockins area has emerged as a core part of our portfolio and a core part of the DJ base.
Yes, I think underpins our outperform as is an understatement.
Conservatives and why am I, even I haven't see that Watkins areas is has emerged as a core part of our portfolio and a core part of the DJ Basin I would say the outperformance is really attributed to a couple of things. One is as we stepped in and stepped into full development. In this area. We were we were <unk>.
Speaker 2: I say that the outperformance is really attributed to a couple of things. One is as we stepped in and stepped into full development in this area, we were conservative in our expectations rightfully so.
<unk> and our expectations rightfully so.
Speaker 2: The team has done a fantastic job of executing, continuing to deliver it out to perform our investment case and our type curves in that area. And that's where I call it to model well. When you add the extended reach wells and we brought on a bunch of three-milers, you know, I note the four-milers, I'll be interested to see how they perform. But the three-milers in this area, we were likewise very conservative on the degradation that we could see in that third mile. Last quarter, we noted that...
The team has done a fantastic job of executing and continuing to deliver an outdoor to outperform our investment case in our type curves in that area and Thats, where our call. It two mile well when you add the extended reach wells when we brought on a bunch of three Milers I note the form hours I'll be interested to see how they perform.
But the three milers in this area, we were likewise very conservative on the.
The degradation that we could see in that third mile.
Last quarter, we noted the outperformance.
Speaker 2: Some of those pads have started to turn over. They continue to outperform our expectations and they're performing currently in line with two mile expectations.
Some of those pads have started to turnover they continue to outperform our expectations and they are performing currently in line with with two mile expectations I'm not going to say there is no degradation in the third mile I don't think Thats. The case I would say that early results have been really really positive.
Speaker 2: I'm not gonna say that there is no degradation in the third mile. I will think that's the case.
Speaker 2: I would say that early results have been really, really positive.
Speaker 2: And so as we looked at, this really leads into deciding to deploy $60 million of additional capital, some of that is directed at these high quality, high return pads in the Watkins area. And so we're excited about what we're seeing there, excited about the team continuing to execute. And I would say that while we've reflected that outperformance, we are still being effective for staging or shaping.
Live and so as we looked at and this really leads into.
Deciding to deploy $60 million of additional capital.
Some of that is directed at these high quality high return pads and the Watkins area and so we're excited about what we're seeing there excited about the team continuing to execute.
And I would say that while we have reflected that outperformance.
We are still being.
Speaker 2: somewhat cautious in how we think about 2024, but the team will continue to dial that in as we see more and more performance and we're excited to share that with you guys. Thanks Chris.
Somewhat cautious in how we think about 2024, but the team will continue to dial that in.
As we see more and more performance and we're excited to share that with with.
What are you guys.
Thanks, Chris Thanks, Jeff.
Thanks Neil.
Okay.
Speaker 1: Thank you. Our next question comes from the line of Leo Mariani from Roth MKM. Please go ahead with your question.
Thank you. Our next question comes from line of Leo Mariani from <unk>. Please go ahead with your question.
Speaker 4: Yeah, hi, I wanted to, thought up a little bit on kind of your thoughts around M&A. I know you're kind of working on selling some assets, but obviously you've been a aggressive consolidator and the Permian after being an aggressive consolidator of the DJ, you know, in past years. So as you're sort of thinking about the strategy going forward, are you still kind of looking to go out there and kind of consolidate, you know, DJ or sort of Permian assets, you know, at this point in time?
Yes, Hi, I wanted to follow up a little bit on kind of your thoughts around M&A I know you're kind of working on selling some assets, but obviously been aggressive consolidator in the Permian and have to be an aggressive consolidator of the DJ.
Past year, so as you sort of thinking about the strategy going forward are you still kind of looking to go out there and kind of consolidate.
D J Im sorry, Permian assets at this point in time.
Okay.
Speaker 2: Yeah, thanks Leo. We have been fairly busy, I would say, looking for ways to scale, diversify, and extend our business model. The hurdle.
Yeah. Thanks Leo.
We have been fairly busy I would say looking for ways to scale diversify and extend our business model.
The hurdle.
Speaker 2: For us to go after an acquisition is very high. We always go back to the four pillars of our strategy, which is
For us to go after an acquisition is very high.
We always go back to the four pillars of our strategy.
Speaker 2: These assets have to be able to generate free cash flow that is a credit to asset quality.
Which is these assets have to be able to generate free cash flow.
That is that is a credit to asset quality.
Speaker 2: We have to be able to maintain a premier balance sheet where in the midst of, as you mentioned, the non-core asset sales to help preserve our balance sheet strength. And these assets have to extend the duration of the leading shareholder return framework in our industry. When we look back at...
We have to be able to maintain our premier balance sheet. We are in the midst of as you mentioned the noncore asset sales to to help preserve our balance sheet strength.
And these assets have to extend the duration of the leading shareholder return framework and in our industry.
When we look back at the.
Speaker 2: the three acquisitions that we've made in the Permian, each of those progress.
The three acquisitions that we've made in the Permian each of those progressed.
Speaker 2: All of those all of those pillars, and so I'd say the hurdle for us to be interested is pretty high We're not just looking at getting bigger. It's how do we improve? Shareholder returns, and how do we extend the duration of shareholder return?
All of those all of those pillars, and so I'd say the hurdle for us to be interested it's pretty high.
We're not just looking at getting bigger it's how do we improve shareholder returns and how do we extend the duration of shareholder returns.
Speaker 2: I would say even with Vincer, we mentioned this on the previous call, we weren't necessarily aggressively looking to do the next transaction, but when we saw a transaction of that quality, that scale, that fits with our existing position in the Midland Basin and Permian more broadly, we did take the opportunity to pull that in.
I would say, even with Vince or we mentioned this on the previous call, we werent necessarily aggressively looking to do the next transaction, but when we saw a transaction of that quality that scale that fits with our existing position in the Midland Basin and Permian more broadly.
We did take the opportunity to pull that in.
Speaker 2: Will those opportunities continue to show themselves? We'll see, but I think we've shown the management team is shown that we will be very disciplined and also opportunistic in how we think about extending this business.
Those opportunities continue to to show themselves, we will see but I think we've shown the management team has shown that we will be very disciplined.
And also opportunistic in how we think about extending.
This business model.
Speaker 4: Okay, appreciate the response there. So I know you guys have spoken about potentially, raising more capital for Venser over time. Just wanted to get your kind of updated thoughts around that and then also just curious how the Venser deal affects your cash tax position in 2024.
Okay. I appreciate the response there. So I know you guys have spoken about potentially raising more capital for venture over time, just wanted to get your kind of updated thoughts around that and then also just curious how the venture deal affects your cash tax position in 2024.
Speaker 2: Yeah, I'll kick us off and then kick it over to Mary and Ella. So the way we structured the Venture transaction was very deliberate to provide extreme flexibility in how we finance the transaction. Because it was coming so soon off the heels of Hibernian and Taprock, we wanted the flexibility of that deferred payment, and so we negotiated that deferred payment.
Yes, I'll kick us off and then kick it over to Maryann.
The way, we structured the <unk> transaction was very deliberate to provide extreme flexibility in how we finance the transaction because it was coming so soon off the heels of Hibernia and tap Brock we wanted the flexibility of that deferred payment and so we negotiated that deferred payment.
Speaker 2: Our plan is, as we look at, our potential ways to finance the transaction is we like having that flexibility, certainly with where equity is and the volatility in the market, we're not in a huge hurry to accelerate that payment for what is a 10%.
Our plan is as we look at our potential ways to finance the transaction as we like having that flexibility certainly with where equity is and the volatility in the market. We're not in a huge hurry to accelerate that payment for what is it 10%.
Speaker 5: discount on that on that on that payment, but I'll let me kick it to Mary Nell to flesh that out and then talk about cash tax as well Terri Leal, thank you very question. So we have an inherent flexibility on capital structure right now like Chris said we Thrustured the payments such that roughly a 10% cost of capital
Discount on that on that on that payment, but I'll, let me kick it to marinol to flesh that out and then talk about cash tax as well.
Thank you for your question. So we have flexibility in our capital structure right now like Chris said, we structured the payment plus that's roughly a 10% cost of capital we see tremendous value in our equity today, we set that one we did the equity offering and the fact that down about 10%. So we are sitting on a fully financed planned for.
Speaker 5: We see tremendous value in our equity today. You know, we set that when we did the equity offering and, you know, the stock's down about 10%. So we are sitting on a fully financed plan for Ventor and the deferred option even more so now is more attractive.
<unk> and the deferred option, even more so now more attractive.
Speaker 5: in terms of the cash taxes.
In terms of the.
<unk> cash taxes cell.
Speaker 5: Look, when you think about us as a company potentially hitting AMT into 2025, our cash taxes are going to be pretty minimal until that point. A lot of it is what oil prices you assume. You know, it's $70 oil. We're never expected to be in an AMT position. At $80 oil, we are the soonest we could possibly be, which is 2025. Our 2024 taxes, to your point, are going to be
When you think about.
At the company.
Italy hitting.
We enter 2025, our cash taxes are going to be pretty minimal until about pointing a lot of it is what oil prices do you assume.
$70 oil whenever I expect it to be and in A&P possession at $80 oil. We are the soonest, we could possibly be which is 2025 or 20.
24, <unk> are going to be.
Speaker 5: lower than otherwise, given the venture transaction closing in then, so they should be in kind of a sub $100 million range for 2024, and then 2025, like I said, it depends on what oil prices you assume. If you assume 70 flat, we'll never hit that AMT position. If we do say at 80, we will in that the cash taxes at that point should be in the $300 million range.
Okay.
Sure then otherwise given the debenture transactions closing in banks that they should be in kind of that sub $100 million range for 2024, and 2025 like I said it depends on what oil prices at the assumed 75 will never hope that A&P position, if we do stay at 80 well on that.
The cash taxes at that point should be in that 300 million range.
Thank you for the detailed response.
Thank you thanks Leo.
Okay.
Thank you.
Speaker 1: As a final reminder, if you'd like to ask a question, please press the star followed by the one on your telephone keypad.
As a final reminder, if you'd like to ask a question. Please press the star followed by the one on your telephone keypad.
Speaker 1: Our next question comes from the line of Nicholas Pope from Seaport Research. Please go ahead with your question.
Our next question comes on the line of Nicholas Pope from Seaport Research. Please go ahead with your question.
Good morning, everyone.
Good morning.
Speaker 6: I was hoping you could talk a little bit about the balance between the two sides of kind of this new Permian position you have as you look at Delaware versus Midland.
Yeah.
Was hoping you could talk a little bit about the balance between the two sides of kind of this new Permian position you have as you look at Delaware versus Midland comparing.
Speaker 6: of the returns you're seeing on both sides and kind of what the expectation is of activity split between those two assets is your kind of incorporating
Kevin the returns Youre seeing on both sides and kind of what what the expectation is of activity split between those two assets as youre kind of incorporating these these three acquisitions.
Speaker 2: Sure, thanks for the question. So the way we rolled out initial signposts for 2024 was assuming a couple of rigs in the Delaware and a couple of rigs in the Midland Basin. Now you add Vensor, that would be four and two split between Midland and the Delaware. I think we'll be fairly close to that. A rig could move here or there, but we've got a skilled position on both sides with opportunities to deploy capital at high returns both sides of the Permian. So we're excited about that. I think.
Sure. Thanks for the question so the way we rolled out initial.
Signpost for 2024 was assuming a couple of rigs in the Delaware.
And a couple of rigs in the Midland Basin now your adventure that would be for them to split between Midland and the Delaware I think it will be fairly close to that rig could move here or there, but we've got a scale position on both sides with opportunities to deploy capital at high returns both sides of the Permian. So we're excited about that I think getting back to.
Speaker 2: Getting back to Niels' initial question around project size is where it gets really interesting as we sit back and further optimize the 2024 plan because of project size, that could direct more capital one side or the other.
Two to Neil's initial question around project size is where it gets really interesting as we sit back and further optimize the 2024 plan.
Because of project size that could that could direct more capital one side or the other but our initial look is just on an overall overall size has probably a third of it go to Delaware two thirds on the Midland, but that's TBD and we're excited to be able to share where final guidance in February of next year.
Speaker 2: But our initial look was just on overall size, have probably a third of it go to Delaware, two-thirds on the Midland. But that's TBD, and we're excited to be able to share our final guidance in February of next year.
Speaker 6: Appreciate that, and as you look at the commodity mix between these two areas, are y'all comfortable with where things stand in being able to get out the gas, get to process the NGL? How do you think, where do you think things stand, I guess, right now on being able to move all the product that you have?
I appreciate that.
And as you look at the commodity mix between these two areas.
Are you all comfortable with where things stand and then being able to get out the gasket to process the NGL.
How do you think where do you think things stand I guess right now on being able to move all the product that you have in those two areas.
Speaker 2: Yeah, I think we feel very confident with our plans on both sides of the Permian. Certainly in the Delaware takeaway is always a consideration. So you're not going to plow, you know, half of your capital program on that side. You have to be mindful of getting a product out.
I think we feel very confident with our plans on both sides of the Permian certainly in the Delaware takeaway is as always a consideration so youre not going to plough half of your capital program on that side, you have to be mindful of getting a getting product.
Speaker 2: getting product out and getting it to market. And so that'll certainly have.
Getting product out and getting it to market and so that will certainly have.
Speaker 2: be a lever in how we look to deploy capital, but we feel confident with the contracts that we have in place.
Be a lever and how we look to deploy capital, but we feel confident with the contracts that we have in place.
Speaker 2: the access to market on both sides. But that's certainly to your point, that's part of the calculus that will go into the 2024 capital plan. Got it.
The access to market on both sides, but thats certainly to your point, that's part of the calculus that will go into the 2024 capital plan.
Got it alright.
Alright I appreciate the time. Thank you. Thank you.
Thanks Douglas.
Speaker 1: There are no further questions at this time. Chris D'Auril, I'll tell the call back over here.
There are no further questions at this time Crystal I'll turn the call back over to you.
Speaker 2: Thank you, operator, and thank you for your continued interest in Civitas. We look forward to sharing our continued progress on upcoming calls. Have a great rest of your day and please be safe.
Thank you operator, and thank you for your continued interest in <unk>, we look forward to sharing our continued progress on upcoming calls have a great rest of your day and please be safe.
Speaker 7: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Good night.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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