Q4 2023 Devon Energy Corp Earnings Call

Operator: Hello, everyone, and welcome to Devon Energy's fourth quarter and full year 2023 conference call. At this time, all participants are in a listen-only mode.

Hello, everyone and welcome to Devon energy fourth quarter, and full year 2023 conference call at.

At this time all participants are in a listen only mode.

Operator: During this presentation, you can register to ask a question by pressing the star followed by one. This call is being recorded. I'd now like to turn the call over to Scott Coady, Vice President of Investor Relations. Good morning, and thank you for joining us on the call today. Last night, we issued an earnings release and presentation that covered Devon's results for the past year and our outlook for 2024. Throughout the call today, we will make references to the earnings presentation to support prepared remarks, and these slides can be found on our website. Also joining me on the call today are Rick Muncrief, our President and CEO, and Clay Gaspar, our Chief Operating Officer. Jeff Ritenour, our Chief Financial Officer, and a few other members of our senior management. Comments today will include plans, forecasts, and estimates that are forward-looking statements under U.S. These comments are subject to assumptions, risks, and uncertainties that could cause our actual results to differ materially from our forward-looking results.

During this presentation you can register to ask a question by pressing star followed by one on your telephone keypad.

This call is being recorded.

I would now like to turn the call over to Scott Coody, Vice President of Investor Relations. Sir you may begin.

Scott Coody: Good morning, and thank you for joining us on the call today last night, we issued an earnings release and presentation that cover devins results for the past year and our outlook for 2024 throughout the call today, we will make references to the earnings presentation to support prepared remarks, and these slides can be found on our website also joining me on the call today are Rick <unk>.

Speaker Change: <unk>, our president and CEO Clay Gaspar, our Chief operating Officer, Jeff Ritenour, Our Chief Financial Officer, and a few other members of our senior management team comments. Today will include plans forecasts and estimates that are forward looking statements under U S Securities law.

These comments are subject to assumptions risks and uncertainties that could cause our actual results to differ materially from our forward looking statements.

Scott Coody: Please take note of the cautionary language and risk factors provided in our SEC filings and earnings reports. With that, I'll turn the call over to, Hey, Scott, and I appreciate everyone taking the time to join us this morning. For today, my comments will be centered on four key themes: Devon's accomplishments in 2023, the catalyst of our improved outlook for 2024, the depth of the resources we possess in our portfolio, and the strategic priorities that will drive our free cash flow allocation going forward. Now beginning with the fourth quarter, we exited the year with a solid quarter of execution highlighted by production that exceeded the top end of guidance, meeting consistency across all products. Discipline and reinvestment resulted in our 14th consecutive quarter of free cash flow, and we took steps to increase cash returns by stepping up the pace of our stock buyback. These positive results rounded out another successful year for Devon, where we achieved several key milestones that I am extremely proud of.

Scott Coody: Please take note of the cautionary language and risk factors provided in our SEC filings and earnings materials with that I'll turn the call over to Rick.

Rick: Hey, Thank you Scott and I appreciate everyone, taking time to join US. This morning for today My comments will be centered on four key themes everyone's accomplishments in 2023, the catalyst of our improved outlook for 2020 for the depth of the resource we possess in our portfolio and the strategic priorities that will drive our free.

Rick: Cash flow allocation going forward.

Now beginning with the fourth quarter, we exited the year with a solid quarter of execution highlighted by production that exceeded the top end of guidance meeting consistence across all products.

Rick: Disciplined reinvestment resulted in our 14th consecutive quarter of free cash flow and we took steps to increase cash returns by stepping up the pace of our stock buyback.

Rick: These positive results rounded out another successful year for Devon, where we achieved several key milestones and I am extremely proud of.

Richard E. Muncrief: Slide seven, you can see we delivered a production growth rate of 8% in 2023, resulting in new highs and all-time production records. This healthy growth rate was also paired with returns on capital employed that outpaced the S&P 500 by a substantial margin for the third straight year. With the free cash flow our business produced, we rewarded shareholders with an impressive cash return yield of around 10 percent that was balanced between buybacks and dividends. As I touched on during the last call, our team has done a great job of designing a plan to deliver improved capital efficiency in 2023. With the current industry conditions, we still believe it is prudent to deploy a steady capital program designed to optimize returns while maintaining volumes around levels where we exited 2023. Importantly, we expect to deliver this production for 10% less capital versus last year, funded at a WTI break-even price of around $40.

Rick: On slide seven you can see we delivered production growth rate of 8% in 2023, resulting in new hi.

Rick: All time production for oil.

Rick: This healthy growth rate was also paired with returns on capital employed has outpaced the S&P 500 by a substantial margin for the third straight year.

Rick: With the free cash flow our business produce we rewarded shareholders with an impressive cash return cash return yield of around 10% it was balanced between buybacks and dividends.

Rick: As I touched on during the last call. Our team has done a great job of designing a plan to delivering improved capital efficiency in 2023.

Rick: Excuse me 2024 with the current industry conditions, we still believe it is prudent to deploy a steady capital program designed to optimize returns while maintaining volumes around levels, where we exited 2023 <unk>.

Rick: Importantly.

Rick: We expect to deliver this production for 10% less capital versus last year funded at a <unk> breakeven price of around $40.

Richard E. Muncrief: In conjunction with this outlook and given the confidence that we have in the underlying health of our business, the board has approved a 10% increase to our fixed dividend payout. Now, looking briefly at the trajectory of our capital and production profile in 2024, on slide nine. We plan for spending to be slightly elevated in the first half of the year due to the addition of a fourth completion crew in the Delaware Basin. Due to the timing of completions and recent curtailments from extreme winter weather, we expect first quarter production to be the lowest quarter of the year.

Rick: In conjunction with this outlook and given the confidence we have in the underlying health of our business. The board has approved a 10% increase or fixed dividend payout.

Now looking briefly at the trajectory of our capital and production.

Rick: Production profile in 2024 on slide nine.

Rick: We plan to be spending.

Rick: To be slightly elevated in the first half of the year due to the addition of a fourth completion crew in the Delaware Basin.

Due to timing of completions and recent curtailments from extreme winter weather, we expect first quarter production to be the lowest quarter of the year.

Richard E. Muncrief: However, we expect volumes and capital efficiency to move higher over the remainder of the year. In 2024, a key contributor to our improved capital efficiency will be the well productivity improvements we expect to achieve in the Delaware Basin. Turning to slide 12, and with the easing of constraints across the basin, we plan to concentrate roughly 70% of Delaware's capital in New Mexico while optimizing the remaining activity across our acreage in Texas.

Rick: However, we expect volumes and capital efficiency to move higher over the remainder of the year in.

Rick: In 2024 key contributor to our improved capital efficiency will be the well productivity improvements, we expect to achieve in the Delaware basin.

Rick: Turning to slide 12, and with the easing of constraints across the basin, we plan to concentrate roughly 70% of the Delaware capital in new Mexico, while optimizing Romanian activity across our acreage in Texas.

Richard E. Muncrief: This allocation to New Mexico is meaningfully higher than what we were able to deploy during 2023 and is more in line with our historic activity in the basin. Overall, this refined capital allocation is expected to increase well productivity in the Delaware by up to 10% on a year-over-year basis. Given the two-thirds of our Delaware Basin inventories in New Mexico, we anticipate being able to sustain our pace of activity on both sides of the state line for the foreseeable future with its advantaged acreage footprint.

Rick: Allocation to new Mexico is meaningfully higher than what we were able to deploy during 2023 and is more in line with our historic activity in the basin.

Rick: Overall this refined capital allocation are expected to increase well productivity in the Delaware by up to 10% on a year over year basis.

Rick: Given the two thirds of our Delaware basin inventories in new Mexico, we anticipate being able to sustain our pace of activity on both sides of the state line for the foreseeable future with US advantaged acreage footprint you can see on slide 14 that we have one of the largest inventories among operators in the basin providing us.

Richard E. Muncrief: You can see on slide 14 that we have one of the largest inventories among operators in the base, providing us with a multi-decade resource that will drive our enterprise-wide performance for many years to come. The quality of our Delaware-weighted resource base, combined with our disciplined strategy, positions us to generate a differentiated amount of free cash flow for many years to come, as you can see on slides 15 and 16. Our business is set to deliver a free cash flow yield that is up to three times that offered by the broader market. With this free cash flow, we are targeting a cash return payout of around 70%, while earmarking the remainder to further strengthen our balance sheet. With our flexible cash return framework, we will judiciously allocate our free cash flow toward the best opportunities, whether that be buybacks or dividends.

Rick: With a multi decade resource that will drive our enterprise wide performance for many years to come.

Rick: The quality of our Delaware weighted resource base combined with our disciplined strategy positions us to generate a differentiated amount of free cash flow for many years to come.

Rick: As you can see on slides 15 and 16.

Rick: Our business is set to deliver a free cash flow yield that is up to three times that offered by the broader markets with this free cash flow. We are targeting a cash return payout of around 70%, while earmarking the remainder to further and further strengthen our balance sheet.

Rick: With our flexible cash return framework, we will judiciously allocate our free cash flow towards the best opportunity whether that be buybacks or dividends gives.

Richard E. Muncrief: Given that the equity market is heavily discounting valuations in the energy sector, it's an easy decision to prioritize a buyback over the variable dividend to capture the incredible value that Devon offers at these historically low valuations. Slide 19 helps better visualize this compelling value proposition. On the right, you can see energy represents less than 4% of the S&P 500 while contributing more than 10% of EBITDA in 2023. This is noteworthy, given that energy's S&P weighting historically tracks its earnings contribution over time. I believe this gap exists due to extreme valuations in tech, combined with a pervasive misunderstanding of hydrocarbon demand over time. With global energy demand forecasted to increase 50% by 2050, the world is going to need growth from all sources of energy, including oil and natural gas.

Rick: Given that the equity market is heavily discounting valuations in any in the energy sector. It's an easy decision to prioritize the buyback over the variable dividend to capture the incredible value that Devin.

Rick: Offers at these historically low valuations.

Rick: The slide 19 helps better visualize this compelling value proposition on the right you can see energy represents less than 4% of the S&P 500, while contributing more than 10% of the EBITDA in 2023.

Rick: This is noteworthy given the energy as S&P waiting historically tracks its earnings contribution over time I believe this gap exists due to extreme valuations in tech combined with a pervasive misunderstanding of hydrocarbon demand over time.

Rick: With global energy demand forecasted increased 50% by 2050.

Rick: The world is going to need growth from all sources of energy, including oil and natural gas.

Richard E. Muncrief: With the world's power needs continuing to grow, it is evident that peak oil demand is nowhere in sight, and our industry will be an important contributor to energy growth for the foreseeable future. Furthermore, high-quality names like Devon provide significant equity upside over time as you collect outsized cash for Thrones. And as I said earlier, this is why we're putting our money to work actively repurchasing shares all over the place.

Rick: With a world power needs continuing to grow it is evident that peak oil demand is nowhere in sight and our industry will be an important contributor of energy growth for the foreseeable future.

Rick: Are there more high quality named Black Devon.

Rick: Provide significant equity upside over time as you collect outside outsized.

Rick: Cash returns.

Rick: And as I've said earlier. This is why we're putting our money to work actively repurchasing shares and with that I'll turn the call over to clay.

Clay M. Gaspar: Thank you Rick and good morning everyone. The Devon team did a really good job of rounding out 2023 by exceeding our operational targets for the fourth quarter. These positive results were driven by three key factors. Number one was improved uptime, driving base production. Number two, increased efficiencies through faster cycle times, resulting in lower capital per well, and number three, better new well productivity, improving our wedge production volume. Slide 5 provides a good visual of these favorable operating trends. The chart on the left highlights the efficiencies we've delivered in our drilling and completions operations.

Clay: Thank you Rick and good morning, everyone. The Devon team did a really good job of rounding out 2023 by exceeding our operational targets for the fourth quarter.

Clay: These positive results were driven by three key factors number one.

Clay M. Gaspar: Proved uptime driving base production.

Clay M. Gaspar: Number two increased efficiencies through faster cycle times, resulting in lower capital per well.

Clay: And number three better new well productivity, improving improving our wedge production volume.

Clay: Slide five provides a good visual of these favorable operating trends the chart on the left highlights the efficiencies we have delivered in our drilling and completions operations on the right. You can see this track record of efficiency gains is also paired with some of the best well productivity of any producer in the U S.

Clay M. Gaspar: On the right, you can see this track record of efficiency gains is also paired with some of the best well productivity of any producer in the U.S. While these results can certainly vary from quarter to quarter, our consistency over time demonstrates the quality of our assets and execution capabilities. The most significant contributor to this advantaged capital efficiency was our franchise asset in the Delaware Basin. In the fourth quarter, roughly 60% of our capital was deployed to this prolific basin, allowing us to run a consistent program of 16 rigs. With this activity, we brought online 62 new wells, grew productivity 6% year-over-year, and expanded our duck inventory, allowing us to add a fourth completion crew earlier this year, while we had strong results across our acreage position.

Clay: While these results can certainly vary from quarter to quarter, our consistency over time demonstrates the quality of our assets and execution capabilities.

Clay: The most significant contributor to disadvantaged capital efficiency with our franchise asset in the Delaware Basin.

Clay: In the fourth quarter, roughly 60% of our capital was deployed to this prolific basin, allowing us to run a consistent program of 16 rigs.

Clay: This activity with this activity, we brought online 62, new wells grew productivity, 6% year over year and expanded our DUC inventory, allowing us to add a fourth completion crew earlier this year.

Clay: While we had strong results across our acreage position.

Clay M. Gaspar: In the quarter, the top contributors to our performance were several large pads within our cotton draw and state lawn areas. At Cotton Draw, in the core of the basin, we brought on 11 three-mile laterals that showcased the stacked pay potential and prolific rates this area can deliver. These extended-reach wells were diversified across five different producing intervals in the Avalon, Bonespring, and Wolf Camp formations.

Clay: In the quarter the top contributors to our performance were several large pads within our cotton draw and stateline areas.

Clay: Cotton draw in the core of the basin. We brought on 11 three mile laterals that showcased the stacked pay potential and prolific rates. This area can deliver.

Clay: These extended reach wells were diversified across five different producing intervals in the Avalon bone spring and Wolfcamp formations.

Clay M. Gaspar: In aggregate, the oil-weighted production from these wells achieved a 30-day rate of 4,400 BOE per day, with impressive per-well recoveries trending as high as 4 million BOE. In addition to the high rates at Cotton Draw, we also delivered record steady drilling and completion times. This performance included a record completion pace of 3,100 feet per day, and drilling times for these three-mile laterals came in as low as 19 days, with the final mile drilled in a record time of just over 24 hours. Another standout performance during the quarter and possibly my favorite in terms of naming convention was our claw hammer project in the state line area. Clawhammer was named by a geologist after the style of playing the beat banjo that his dad used in their family jam session.

Clay: In aggregate the oil weighted production from these wells achieved a 30 day rates of 4400 Boe per day with impressive per well recoveries trending as high as 4 million Boe.

Clay: In addition to the high rates of cotton draw. We also delivered record set a drilling and completion times.

Clay: This performance included a record completion pace of 3100 feet per day and drilling times for these three mile laterals came in as low as 19 days.

Clay: With the final mile drilled in a record time of just over 24 hours.

Clay: Another standout performance during the quarter and possibly my favorite in terms of naming convention was our call Hammer project in the Stateline area.

Clay: <unk> Hammer was named by geologist after the style of playing the banjo that his dad used in their family Jam sessions. The good news for him and his family is that these wells are fantastic.

Clay M. Gaspar: The good news for him and his family is that these wells are fantastic. This 8-well pad consists of 2-mile laterals co-developed in multiple intervals in Wolf Camp A. With production rates averaging 3,900 BOE per day, this package of wells delivers the highest well productivity per lateral foot of any project during the quarter. Thank you. Thank you. Thank you.

Clay: This eight well pad consists of two mile laterals co developed in multiple intervals in the Wolfcamp a with production rates, averaging 3900 Boe per day. This package of wells delivered the highest well productivity per lateral foot of any project during the quarter.

Clay M. Gaspar: If I look ahead to 2024, I expect another big year for the Delaware Basin, as we have a great slate of projects lined up. We plan to bring online around 215 wells for the year, with most of the capital deployed towards the best parts of our acreage in southern Lee and Eddy counties and the state line area of Texas. This plan is designed to deliver improved capital efficiency and better well productivity through the full column of development of the Upper Wolf Camp along with select landing zones in Wolf Camp B where applicable.

Clay: As I look ahead to 2024 I expect another big year for the Delaware Basin as we have a great slate of projects lined up we plan to bring online around 215 wells for the year with most of the capital employed deployed towards the best parts of our acreage in southern Lea and Eddy counties.

Clay: On the Stateline area of Texas.

Clay: This plan is designed to deliver improved capital efficiency and better well productivity through the full column of development of the upper Wolfcamp, along with select landing zones in the Wolfcamp B where applicable.

Clay M. Gaspar: The de-risking of multiple targets in Wolf Camp B over the past year has allowed us to pursue more extensive multi-zone developments in 2024, bolstering our high quality inventory, delivering higher net present value per project and still delivering exceptional rates of return. Turn to slide 13 to build upon Rick's comments from earlier; we're confident in our ability to deploy more capital to the core of Delaware because of a long list of improvements in infrastructure. These improvements include 2 BCF a day of processing additions, gas processing additions, expansions to the downstream gas takeaway, enhanced water handling capabilities with our WaterBridge joint venture, build out of gathering and compression, and investment in self-generated power and microgrids to increase the reliability of the electrical infrastructure.

Clay: The de risking of multiple targets in the Wolfcamp b over the past year has allowed us to pursue more extensive multi zone developments in 2020 for bolstering our high quality inventory.

Clay: Delivering higher net present value for project and still delivering exceptional rates of return.

Clay: Turning to slide 13 to build upon Rick's comments from earlier were confident in our ability to deploy more capital to the core of the Delaware because of a long list of improvements in infrastructure. These improvements include two Bcf a day of processing additions gas processing additions expansions.

Clay: To the downstream gas takeaway.

Clay: Enhanced water handling capabilities with our water bridge joint venture buildup.

Clay: Build out of gathering and compression and investment and self generated power and micro grids to increase the reliability of the electrical infrastructure.

Clay M. Gaspar: With these improvements, we are very well positioned to execute on our 2024 plan. In fact, year to date, we're delivering at a pace ahead of schedule, allowing us to fully offset the winter weather downtime we experienced in January across the field. Shifting to Eagleford, the successful integration of our Validus acquisition was one of the key drivers of the production increase of 56% during 2023. With our enhanced scale in the basin, the team did a great job of capturing synergies by driving improvements across each phase of our operations. This progress can be seen through several indicators, including a year-over-year 15% decrease in production costs, a 30% plus improvement in completion cycle times over the course of the year, and we set a company record spud to rig release of only five days.

Clay: With these improvements we are very well positioned to execute on our 2024 plan in fact year to date, we're delivering at pace ahead of schedule, allowing us to fully offset the winter weather downtime, we experienced in January across field.

Clay: Shifting to the Eagle Ford the successful integration of our Validus acquisition.

Clay: It was one of the key drivers of the production increase of 56% during 2023 with our enhanced scale in the basin. The team did a great job of capturing synergies by driving improvements across each phase of our operations.

Clay: This progress can be seen through several indicators, including year over year, a 15% decrease in production costs.

Clay: <unk>, 30% plus improvement in completion cycle times over the course of the year and we set a company record spud to rig release of only five days.

Clay M. Gaspar: Our activity during the year continued to demonstrate that Eagleford provides one of the most promising opportunities for resource upside in the U.S. shale. Through tighter redevelopment spacing and refracts, our capital program not only replenished but expanded our risk resource in the play to an inventory runway of around 10 years at today's pace of activity. Looking to 2024, our key focus for the Eagle Four team is to sharpen capital efficiency by incorporating appraisal learnings from the past year, along with more balanced activity across DeWitt and Carnes County. This plan is expected to deliver single-digit production growth for roughly $75 million less capital than last year.

Clay: Our activity during the year continued to demonstrate that the Eagle Ford provides one of the most promising opportunities for resource upside in the U S shale.

Clay: Through tighter redevelopment spacing and re Fracs are capital program, not only replenished, but expanded our risked resource in the play to an inventory runway of around 10 years at today's pace of activity.

Clay: Looking to 2024, our key focus for the Eagle Ford team is to sharpen capital efficiency by incorporating appraisal learnings from the past year, along with a more balanced activity across the width and Karnes counties.

Clay: This plan is expected to deliver single digit production growth for roughly $75 million less capital over last year.

Clay M. Gaspar: In the Rockies, we possess a unique combination of assets that can provide both growth and free cash flow. Specifically, in the Powder River Basin, we're building upon the well productivity improvements achieved over the past couple of years, where the average six-month Q's increased nearly 20% from historic levels. A recent highlight was the SHU Iberland 3X well, which reached peak rates in Q4. This three-mile Nyer-Barrow well achieved initial production rates greater than 1,500 BOE per day with an 85% oil cut and then hung in at that rate for quite some time. In addition to the strong oil productivity, the Iberland attained a record drilling performance of 1,350 feet per day, a 45% improvement compared to the average in our barrel well.

Clay: In the Rockies, we possess a unique combination of assets that can provide both growth and free cash flow specifically in the powder River basin. We are building upon the well productivity improvements achieved over the past couple of years.

Clay: Where the average six months <unk> increased nearly 20% from historic levels.

Clay: A recent highlight was the S H U <unk>, well, which reached peak rates in Q4.

Clay: This three mile Niobrara, well achieved initial production rates greater than 500 Boe per day with an 85% oil cut and then hung in at that rate for quite a while.

Clay: In addition to the strong oil productivity, the Ireland attained a record drilling performance of <unk> thousand 550 feet per day.

Clay: 45% improvement compared to the average Niobrara well.

Clay M. Gaspar: In 2024, our efforts will be focused on refining spacing, reducing costs, and continuing to ready this asset for full development in the later part of this decade. At Wilson, I want to thank the team for safely working through the incredibly severe winter storm weather that we experienced in January and rapidly restoring affected production. As I look into 2024, our focus for this asset will be to optimize base production, deploy selective investments to high-confidence projects, and harvest $300 million of field-level cash flow. So far this year, our capital program is off to a great start with our Bull Moose project maxing out our production facilities at over 15,000 barrels of oil per day, with several of the wells flowing 3,000 barrels per day or more during their flowback. Lastly, I'd like to briefly cover our activity in the Anadarko Basin, where we delivered an 8% production growth rate during 2023. The three-rig drilling program, funded by our Dow joint venture, delivered very impressive well production.

Clay: In 2024, our efforts will be focused on refining spacing, reducing costs and continue to ready this asset for full development. In later part of this decade.

Clay: In the Williston I want to thank the team for safely working through the incredibly severe winter storm weather that we experienced in January and rapidly restoring affected production.

Clay: As I look into 2024, our focus for this assay will be optimize base production deploy selective investments to high confidence projects and.

Clay: And harvest $300 million of field level cash flow.

Clay: So far this year, our capital program is off to a great start with our bold moves project maxing out our production facilities facilities at over 15000 barrels of oil per day with several of the wells flowing 3000 barrels per day or more during their flowback.

Clay: Lastly, I'd like to briefly cover our activity in the Anadarko Basin, where we delivered an 8% production growth rate during 2023.

Clay: The three rig drilling program funded by our Dow joint venture delivered very impressive well production.

Jeffrey L. Ritenour: The value of this production was also enhanced by our ability to route volumes into the premium Southeast gas markets and by the team driving operational costs 10% lower. In 2024, we plan to maintain a similar pace of drilling activity in Anadarko with a keen focus on developing the liquids-rich window of the play, where returns from our joint venture activity will benefit from higher compensated cuts. And with that, I'll turn the call over to Jeff for financial review. Thanks, Clay.

Clay: The value of this production was also enhanced by our ability to route volumes into the premium southeast gas markets.

Clay: And by the team driving operational costs, 10% lower.

Clay: In 2024, we plan to maintain a similar pace of drilling activity in the Anadarko with a keen focus on development developing the liquids rich window of the play.

Clay: Where returns from our joint venture activity will benefit from higher condensate cuts.

Clay: And with that I'll turn the call to Jeff for financial review, Jeff. Thanks, Clay I'll spend my time today discussing the highlights of our financial performance in 2023, and the priorities for our free cash flow as we head into 2024.

Jeffrey L. Ritenour: I'll spend my time today discussing the highlights of our financial performance in 2023 and the priorities for our free cash flow as we head into 2024. Beginning with our fourth quarter financial performance, Devon's operating cash flow totaled $1.7 billion, exceeding consensus estimates and represents the highest quarterly total of the year. This cash flow comfortably funded our capital spending and resulted in $827 million of free cash flow, driving full-year free cash flow to $2.7 billion.

Jeffrey L. Ritenour: Beginning with our fourth quarter financial performance Devins operating cash flow totaled $1 $7 billion exceeding consensus estimates and represents the highest quarterly total of the year. This cash flow comfortably funded our capital spending and resulted in an $827 million of free cash flow driving full year free cash flow.

Clay: So the $2 7 billion.

Jeffrey L. Ritenour: Even in the face of headwinds from lower commodity prices, this level of free cash flow ranks as one of the highest in Devon's 50-year-plus history, another powerful example of the consistent financial results our disciplined strategy can deliver. As Rick touched on earlier, with this free cash flow, we're targeting a cash return payout of 70 percent, with the remainder reserved for balance sheet improvement. Slide 23 in the appendix is a good exhibit representing how we allocated our cash returns in the most recent quarter. Given the compelling valuation of our equity, we prioritized share repurchases over the variable dividend. This resulted in us repurchasing 5.2 million shares in the fourth quarter at a total cost of $234 million.

Clay: Even in the face of headwinds from lower commodity prices. This level of free cash flow ranks as one of the highest in Devon 50 year plus history. Another powerful example of the consistent financial results our disciplined strategy can deliver.

Clay: As Rick touched on earlier with this free cash flow, we're targeting a cash return payout of 70% with the remainder of reserve for balance sheet improvement Slide 23 in the appendix is a good exhibit representing how we allocated our cash returns in the most recent quarter.

Clay: Given the compelling valuation of our equity, we prioritize share repurchase repurchases over the variable dividend.

Clay: This resulted in US repurchasing five 2 million shares in the fourth quarter at a total cost of $234 million.

Jeffrey L. Ritenour: In 2024, we've continued to actively acquire shares through our 10B51 program, and we plan to supplement this with systematic buying through open market purchases during the year. With plenty of runway remaining on our $3 billion buyback authorization, we see Devon's current valuation as a great opportunity to compound the per share growth for our investors. In addition to our buyback activity, we delivered investors an attractive stream of income through our fixed plus variable dividend framework. For the fourth quarter, we declared a dividend payout of $0.44 per share that is payable at the end of March.

Clay: In 2024, we've continued to actively acquire shares through our <unk> One program and we plan to supplement this with systematic buying with open market purchases during the year.

Clay: With plenty of runway remaining on our $3 billion.

Clay: Buyback authorization, we see devins current valuation as a great opportunity to compound the per share growth for our investors.

Clay: In addition to our buyback activity, we delivered investors an attractive stream of income through our fixed plus variable dividend framework in the fourth quarter, we declared a dividend payout at <unk> 44 per share that is payable at the end of March. This dividend consist consist of the board's approval to increase the fixed dividend by 10% to 20.

Jeffrey L. Ritenour: This dividend consists of the board's approval to increase the fixed dividend by 10 percent to $0.22 per share and declare a variable distribution of $0.22 per share. We continue to believe dividends are a great way to reward shareholders and are a critical contributor to total returns over time. We also believe that the flexibility designed into our dividend framework allows us to return meaningful and appropriate amounts of cash to shareholders across a variety of market conditions through the cycle. Moving to the balance sheet, Devon's investment-grade financial position continued to strengthen in the fourth quarter, with cash balances increasing by $144 million to a total of $875 million. In addition to our strong liquidity, we exited the year with low leverage, marked by a net debt to EBITDA ratio of only 0.7 times.

Clay: <unk> per share and declare a variable distribution of <unk> 22 per share. We continue to believe dividends are a great way to reward shareholders and are a critical critical contributor to total returns over time.

Clay: We also believe that the flexibility designed into our dividend framework allows us to return meaningful and appropriate amounts of cash to shareholders across a variety of market conditions through the cycle.

Clay: Moving to the balance sheet Devins investment grade financial position continued to strengthen in the fourth quarter with cash balances increasing by $144 million to a total of $875 million.

Clay: In addition to our strong liquidity, we exited the year with lower low leverage marked by a net debt to EBITDA ratio of only 0.7 times.

Richard E. Muncrief: Looking ahead, with the excess free cash flow that accrues to our balance sheet, we plan to build liquidity and retire maturing debt. Our next debt maturity comes due in September of this year, totaling $472 million, and we will have the opportunity to retire another $485 million of notes in 2025. So, in summary, our financial strategy is working well. We have successfully scaled our business to consistently generate free cash flow. We are boosting per share results by opportunistically repurchasing our shares. We offer a dividend yield that far exceeds that of the broader markets, and the balance sheet is in great shape with a clear pathway of continued improvement over the next few years. With that, I'll turn the call back to Rick for some closing comments. Thank you, Jeff.

Clay: Looking ahead with the excess free cash flow that accrues to our balance sheet, we plan to build liquidity and retire maturing debt.

Clay: Our next debt maturity comes due in September of this year totaling $472 million and we will have the opportunity to retire another $485 million of notes in 2025. So in summary, our financial strategy is working well we have successfully scaled our business to consistently generate free cash flow.

Clay: We are boosting per share results by Opportunistically repurchasing our shares we offer a dividend yield that far exceeds that of the broader markets and the balance sheet is in great shape with a clear pathway of continued improvement over the next few years with that I'll turn the call back to Rick for some closing comments.

Rick: Thank you Jeff.

Richard E. Muncrief: So to wrap up our prepared remarks, I want to reinforce a few key messages. Number one, Devon is a great company that has created a tremendous amount of value for shareholders since we unveiled our industry-first cash return strategy, announced in 2020. Since that time, we've deployed $13 billion in dividends, buybacks, debt reduction, and accretive acquisitions. I'm extremely proud of this accomplishment, but we're just getting started. 2024 is setting up to be another wonderful year for Devon.

Rick: So to wrap up our prepared remarks, I want to reinforce a few key messages.

Rick: Number one <unk> is a great company that has created a tremendous amount of value for shareholders. Since we unveiled our industry first cash return strategy.

Rick: Announced in 2020 since that time, we've deployed 13 billion to dividends buybacks debt reduction and accretive acquisitions I am extremely proud of this accomplishment.

Rick: We're just getting started.

Rick: 2024 is setting up to be another wonderful year for Devon by incorporating learnings from the past year and refining our capital allocation, we expect to deliver a step change improvement in capital efficiency. This year.

Richard E. Muncrief: By incorporating learnings from the past year and refining our capital allocation, we expect to deliver a step change improvement in capital efficiency this year. This improved capital efficiency is anchored by our assets in the Delaware Basin, where we expect to deliver the powerful combination of improved well productivity for much lower capital costs. Our long-duration resource base, underpinned by the Delaware, is one of the deepest of any company out there.

Rick: This improved capital efficiency is anchored by our assets in the Delaware Basin, where we expect to deliver the powerful combination of improved well productivity.

Rick: We're much lower capital cost.

Rick: Our long duration resource base underpinned by the Delaware is one of the deepest of any company out there. The resource quality provides us an advantaged platform to drive attractive per share growth and outsized cash returns for many years to come.

Scott Coody: The resource quality provides us with an advantaged platform to drive attractive per share growth in outsized cash... for many years. And with that, I'll turn the call back over to Scott, and let's have some Q&A. Thanks, Rick. We'll now open the call to questions. Please limit yourself to one question and a follow-up.

Rick: And with that I'll turn the call back over to Scott and let's have some Q&A.

Scott Coody: Thanks, Rick we'll now open the call to Q&A. Please limit yourself to one question and a follow up this allows us to get to more of your questions on the call today with that operator, we'll take our first question.

Operator: This allows us to get to more of your questions on the call today. With that, operator, we'll take our first question. Ladies and gentlemen, if you'd like to ask a question, please press star 1 on your telephone keypad. To withdraw the question, press star followed by two, and please also remember to unmute your microphone.

Operator: Perfect. Thank you, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Thats Star one on your telephone keypad.

Speaker Change: To withdraw your question Star followed by two I'm pleased to also remember too and mutual microphone when you sit there and to speak.

Richard E. Muncrief: We do have our first question registered, and it comes from Neil Mehta from. Thank you. Yeah, thank you very much Rick and team. Rick, I know over the last year you've talked about some of your frustration around execution on the oil volume side. That is going to be important here for that operational inflection. It does seem like we're seeing some evidence of that with capital efficiency and holding the 315 oil guide. So maybe you could just give us your perspective on whether we're at that inflection point from an, You know, Neil, that's a good question, have expressed our frustration. I think in the market really, you know, we really traded down on some of our variances we saw last year in our, in the month of March. I am really bullish about our performance. The team has done a wonderful job getting us through some tough weather. We've seen some increased productivity. I think Clay went through the assets really well.

Speaker Change: We do have our first question, which comes from Neil Mehta from Goldman Sachs. Neil Your line is now open.

Neil Singhvi Mehta: Yes, Thank you very much Rick.

Neil Mehta: Rick.

Neil Singhvi Mehta: Last year, you've talked about having scare frustration around execution on the oil volume side.

Neil Singhvi Mehta: That is going to be important year for for that operational inflection. It does seem like we're seeing some evidence of that with capital efficiency and holding the 2015 oil guide. So maybe you could just give us your perspective on whether we're at that inflection point from an ops perspective.

Neil Singhvi Mehta: Neal that's a good question.

Neil Singhvi Mehta: <unk>.

Have expressed our frustration I think in the market really we really traded down on some of our.

Neal: Variances, we saw last year.

Neal: And our production volumes, but even though they were minor.

Neal: From a volumetric standpoint, they werent from a from a stock performance standpoint. So I think the setup is is really good for investors as we look we look forward. So it is going to be I believe.

Richard E. Muncrief: And we're seeing nice growth on the oil side coming out of this first quarter as we enter the second, third, fourth quarters of this year. And I'll also say, Neil, I feel really good about the next several years on our ability to keep crude volumes where they're at. I think that we're still early.

Neal: A point of inflection for us as we as we've mentioned.

Neal: Really bullish about our performance.

The team has done a wonderful job getting this through some tough weather we've seen some increased productivity I think clay went through the assets really well and we're seeing.

Richard E. Muncrief: We still are not getting what I think is a strong, strong signal for demand, but when that call comes, I think we'll be ready to step up, and really feel good about the transition. www. FEMA.gov And maybe to build on this, this might be a question for Clay, but just can you talk about what you're seeing in terms of well productivity that gives you confidence in your ability to hit or exceed that? Yeah, thanks for the question, Neil. You know, this is one of the frustrating things about a publicly traded company.

Neal: Nice.

<unk> growth on the oil side coming out of the out of this first quarter as we enter <unk>.

Third and fourth quarters of this year and I'll also say Neil I feel really good about the next several years on our ability.

Neal: To keep.

Neal: Crude volumes, where they're at.

Speaker Change: Thank you.

Speaker Change: Still early we still are not getting what I think is a strong strong signal for demand, but when that call comes I think we'll be we'll be ready to step up for it but we really feel good about the trends we're seeing.

Speaker Change: Yes.

And just maybe to build on this it might be a question for clay, but can you talk about what youre seeing in terms of well productivity.

Speaker Change: That gives you confidence in your ability to hit or exceed that 2015 oil number this year.

Clay M. Gaspar: Yeah. Thanks for the question Neil.

Speaker Change: This is.

Clay M. Gaspar: One of the frustrating things about a publicly traded company, we get to see what's coming we could see what's happening well before the market does and so where I can see.

Clay M. Gaspar: We get to see what's coming; we get to see what's happening well before the market does. And so where I can see the improvement internally in well productivity from the first half of last year to the second half of last year, those numbers are just starting to hit the public markets and public sources. And so I think that's, you know, pretty evident for those that are paying attention that this is not the first quarter 24 we decided to turn on production. This is an evolution.

Clay M. Gaspar: The improvement internally in the well productivity from the first half of last year to the second half of last year. Those numbers are just starting to hit the public markets and through the public sources and so I think thats pretty evident for those that are paying attention that this is not a first quarter 'twenty four we decided to turn on the production.

Clay M. Gaspar: We wanted to make some really thoughtful investments in the future of the company, and we did that. The market, I believe, responded pretty vigorously to that. We've since made some changes in the planning, the well delivery, and the well performance has really significantly taken an uptick. As I mentioned, even late last year, you see some of that coming through public sources. It's really going to manifest in 2024. And as Rick mentioned, we're just off to a really good start, even recovering from a pretty severe storm that had somewhere 1 to 2% impact. You know, we always bake in winter weather, but an event like that was pretty out of the norm.

This is an evolution, we wanted to make some really thoughtful investments in the future of the company. We did that the market I believe responded pretty vigorously to that.

Clay M. Gaspar: Since made some changes in the planning the well delivery the well performance is really significantly taken an uptick as I mentioned, even late last year, you see some of that coming through the public sources were.

Clay M. Gaspar: We're going to it's really going to manifest in 2024 and as Rick mentioned, we're just off to a really good start even recovering from a pretty severe storm that we saw somewhere 1% to 2% impact.

Clay M. Gaspar: We always bake in winter weather, but in an event like that was pretty out of the norm the productivity of the wells. The performance, we've been able to overcome that and we feel really good about delivering being able to deliver the 24 fold full year numbers.

Clay M. Gaspar: The productivity of the wells, the performance, we've been able to overcome that. And we feel really good about delivering, being able to deliver the 24-fold whole year numbers. Thanks, Clay.

Speaker Change: Alright, thanks clay Thanks, Rick.

Clay M. Gaspar: Thanks, Rick. Thanks, Neil. Our next question comes from Arun Jayaram from J.P. Morgan. Arun, your line's not open.

Speaker Change: Thanks Neil.

Speaker Change: Our next question comes from Aaron <unk> from Jpmorgan your.

Aaron: Your line is now open.

Clay M. Gaspar: Yeah, good morning, gentlemen. Rick and Clay, you've highlighted your expectations to deliver up to 10% well productivity gains in the Delaware Basin. I was wondering if you could maybe help us provide more details on what is driving that. It sounds like there's going to be some high grading for monument draw to southeast New Mexico, but I was wondering if you could talk a little bit about what's driving that and if completion optimization is also a driver of a better year for your productivity. Thanks for the question, Arun. I think both things come into play.

Aaron: Yes, good morning, gentlemen.

Aaron: Rick and clay, you've highlighted your expectations to deliver up to 10% well productivity gains of the Delaware Basin. I was wondering if you could maybe help us.

Aaron: Provide more details on what is driving that it sounds like there's going to be some heightened rating from.

Aaron: Monument draw the southeast New Mexico, but was wondering if you could talk a little bit about what's driving that and if completion optimization is also a driver of better year over year productivity.

Speaker Change: Thanks for the question Arun I think both things come into play.

Clay M. Gaspar: You know, the big headline thing is just a refocus to more where we've historically allocated our capital, kind of in the core of the basin, predominantly where our inventory, our portfolio, lays out between New Mexico and Texas. I would say 23, especially the first half of 23, was a little bit of an anomaly in where we were allocating that capital, and we needed to do some work from the infrastructure standpoint, but also really understanding where all these fit together. We're benefiting tremendously from that work, from that infrastructure build out, and that's where we're seeing the improvement really late 23 to what we're showing today. On the completions questions, I wouldn't point to it's a big knob that we've changed on, excuse me, like sand concentration or how we're doing, but the team is working every single day to think about how we do it better, how we touch a little bit more rock, and how we do it more cost-effectively, and I can tell you we're winning on all fronts. These are small wins at this point.

Speaker Change: Big headline thing is just a refocus to more where we've historically allocated our capital kind of in the core of the basin predominantly where our inventory on our portfolio lays out between new Mexico and Texas.

Speaker Change: I would say 23, especially first half of 'twenty three was a little bit of an abdominal.

Speaker Change: Nominally on where we were allocating that capital and we needed to do some work from the infrastructure standpoint, but also really understanding where all these fit together, we're benefiting tremendously from that work from that infrastructure build out and Thats where were seeing the improvement really late 'twenty three to what we're showing.

Speaker Change: Today on the completions questions I wouldn't point to it.

Speaker Change: Big Knob that we've changed on.

Speaker Change: Excuse me like sand.

Speaker Change: Sand concentration or how we're doing what we're doing but the team is working every single day to think about how do we do it better how do we touch a little bit more rock and how do we do it more cost effectively and I can tell you. We're winning on all fronts. These are small wins at this point some relatively mature way of thinking about these assets, but really really pleased.

Richard E. Muncrief: It's a relatively mature way of thinking about these assets, but I'm really, really pleased with the continued improvement there, and that shows up in the numbers as well. Great follow-up, Rick. You know, Devon, as you know, has been linked to a few M&A deals in the financial press. I was wondering if you could just comment on where you sit today in terms of your A&D strategy and how you gained some of the inorganic opportunities versus, as Jeff mentioned, the ability to buy back your stock at a 9% kind of free cash flow yield. Very good question.

Speaker Change: With the continued improvement there and that shows up in the numbers as well.

Speaker Change: Great follow up Rick.

Rick: Devin as you know has been linked to a few M&A deals in the financial press.

Rick: I was wondering if you could just comment on where we sit today in terms of your A&D strategy and how you gave some of the inorganic opportunities.

Speaker Change: As Jeff mentioned.

Speaker Change: The ability to buy back your stock at a 9% kind of free cash flow year to date.

Devin: Yeah very good question.

Richard E. Muncrief: You know, Arun, our answer has really not changed that much over the last several years. We're going to continue to evaluate opportunities. You know, when you're in five basins, you have some great opportunities in all five of those, and we watch that. We stay attuned to those opportunities as they, you know, become available, or it's the right time for us to think about them. I think we're going to continue to see the high bar. It has to have some accretion.

Speaker Change: Our answer is really not changed that much over the last several years, we're going to continue to.

Speaker Change: Evaluate.

Speaker Change: <unk> when you are in five basins you have some great opportunities in all five of those in and we watch that we say, we stay attuned to those opportunities as.

Speaker Change: As a.

Speaker Change: Come available or it's right time for us to think about that.

Speaker Change: So I think we're going to continue to see the high bar, we're going to it's got to be it has to have some accretion. It has to have the industrial logic that we have always talked about and it just has to make us a better company and if it's if it fits in that.

Richard E. Muncrief: It has to have the industrial logic that we have always talked about. It just has to make us a better company. If it fits in that framework, man, I think that's our job to create value for shareholders. We're going to do that.

In that framework.

Speaker Change: <unk>.

Speaker Change: And I think that's our job is to create value for shareholders and so we're going to do that we also have been advocates for consolidation I think some of the transaction that's been announced that I think that I think they are positive for our industry and it just shows that we are we are a depleting industry and so you always have to replenish that.

Richard E. Muncrief: We also have been advocates for consolidation. I think some of the transactions that have been announced are positive for the industry. It just shows that we are a depleting industry. You always have to replenish your portfolio. That's not changed.

Speaker Change: Portfolio, that's not changed has not changed since the beginning of this industry and so we'll always be active we got a great team we've got a great.

Richard E. Muncrief: It's not changed since the beginning of this industry, and we'll always be active. We've got a great team. We have great analytics capabilities in-house. We do our own internal analytics, uh... compare that with what you see on the public market, and adjust. But uh... once again, we're going to be very, very measured, very disciplined, and we will make some, I think, the right decisions, and that does include buying our stock back, because I can tell you that at these levels, we are very, very attractive.

Speaker Change: Analytics capabilities in house, and we do our own internal analytics.

Speaker Change: Compare that with what you see on the public market and adjust but once again, we're going to be very very measured.

Speaker Change: Very disciplined and we will make we will make some are I think the right decisions and that does include our binders Dalton stock back because I can tell you that at these levels, we are very very attractive.

Speaker Change: Great question.

Speaker Change: Thanks, guys.

Speaker Change: Thanks, Ron.

Jeffrey L. Ritenour: Thanks, guys. Thanks Arun. Great. Thanks, guys. Good morning, and thanks for taking my questions.

Speaker Change: Our next question comes from Nittany Kumar from Mizuho.

Nittany Kumar: Your line is now open.

Nittany Kumar: Great. Thanks, guys. Good morning, and thanks for taking my questions.

Jeffrey L. Ritenour: Rick, I've heard you say and just say multiple times today that buybacks are very attractive, especially at these levels. But as I look at the fourth quarter, the mix actually favored dividends, including the variable payout, a bit. Not to nitpick or anything like that, but just want to understand what drove the decision. We applaud the 10 percent increase in the base dividend. What drove the decision for the variable dividend, and how should we see that evolve in 2024? This is Jeff.

Nittany Kumar: Rick I've heard you say in USA.

Nittany Kumar: People times today that buybacks are very attractive, especially at these levels, but as I look at fourth quarter.

Nittany Kumar: The mix actually.

Nittany Kumar: <unk> favor dividends, including the variable payout.

Nittany Kumar: A bit.

Speaker Change: Not to nitpick or anything like that but just wanted to understand.

What what drove the decision we applaud the 10% increase of the basically what drove the decision for the variable dividend and how should we see that evolve in 2024.

Jeffrey L. Ritenour: Keep in mind that there is some variance in the timing of the variable dividend payout, right? So when we announce it, it actually gets paid in the subsequent quarter. So maybe that's what you're alluding to as it relates to the mix.

Speaker Change: Hey, Nick this is Jeff keep in mind that there is a there is some variance in the timing of the variable dividend payout right. So when we announced it it actually gets paid in the subsequent quarters. So maybe thats, what youre alluding to as it relates to the mix but.

Jeffrey L. Ritenour: But with our framework going forward, we're going to simply, each quarter, focus on delivering about 70 percent of our free cash flow back to shareholders in the form of that fixed dividend, which obviously we grew at 10 percent here on a year-over-year basis. That's the first and foremost going to be a priority for us. And we're going to look to continue to grow that on an annual basis going forward. Then, beyond that, we're absolutely biased towards leaning in on the share repo here in the near term. And frankly, the variable dividend will fall out of the back of that based on that 70 percent threshold that I hit on earlier.

Jeffrey L. Ritenour: With our with our frame framework going forward, we're going to simply each quarter, our focus on delivering about 70% of our free cash flow back to shareholders in the form of that fixed dividend, which obviously, we grew at 10% here on a year over year basis.

Jeffrey L. Ritenour: The first and foremost we're going to be a priority for us and we're going to look to continue to grow that on an annual basis going forward then beyond that we're absolutely bias towards leaning in on the share repo here in the near term and frankly, the variable dividend will fall out of the back of that based on that 70% threshold.

Jeffrey L. Ritenour: Then I hit on earlier, so we're going to continue to expect to have a higher mix of buyback going forward.

Jeffrey L. Ritenour: So we're going to continue to expect to have a higher mix of buyback going forward, and that's going to be our priority as we walk it through this year. Great, thanks, Jeff. And then my next question is really for Clay, I think.

Jeffrey L. Ritenour: And thats going to be our priority as we walk it we walk it through this year.

Speaker Change: Okay. Thanks, Jeff.

Speaker Change: And then my next question that is really for clay probably impressive.

Clay M. Gaspar: Clay, impressive improvements in operating efficiencies, you know, days drilled, days completed. Just curious, are there any specific technologies that you would point to that have helped you achieve those? And I just, you know, never say never, but where are we in terms of those efficiencies? Are we getting to some sort of baseline, or do you think we can continue to deliver those types of improvements? Ned, it really goes back to just the core operating team. These are highly talented, highly motivated individuals that are absolutely trying to do the right thing, ultimately for the shareholders they work for. Now, I will remind you, this is the same team working just as hard with just as much creativity this year as they were last year. What we found is that we really needed to focus. We underestimated what a slight change in capital efficiency during the first half of 23 meant to investors.

Improvements in operating efficiencies data joke Dean's completed.

Speaker Change: Just curious is there any specific technologies that you would point to that have helped you achieve those.

Speaker Change: And I guess.

Speaker Change: Never say never but where are we in terms of those efficiencies that we're getting to some sort of baseline or you think we can continue to deliver those type of improvements.

Speaker Change: Net net it really goes down it goes back to just the core operating team. These are highly talented and highly motivated individuals that are absolutely trying to do the right thing ultimately for the shareholders. They work for now I will remind you. This is the same team working just as hard.

Speaker Change: With just as much creativity.

Speaker Change: This year as they were last year.

Speaker Change: What we've found is we really needed to focus we underestimated what a slight.

Speaker Change: Change in capital efficiency during the first half of 'twenty three meant to investors I think that was way over extrapolated into us running out of inventory not being able to do this anymore. We lost our minds all that good fun.

Clay M. Gaspar: I think that was way over extrapolated into us running out of inventory, not being able to do this anymore. We lost our minds, all that good fun. And what we showed is like, hang on one second. We still have the capabilities. We've got some really impressive inventories, some great quality. And importantly, these are hardworking, impressive people that continue to find a way to do it better each quarter.

Speaker Change: And what we showed is like hang on a second we still have the capabilities. We've got some really impressive inventory some great quality and importantly, these are hard working impressive people that continue to find a way to do it better each quarter and this is so many things below the radar that don't always show up.

Clay M. Gaspar: And there are so many things below the radar that don't always show up in the Inveris data or don't show up in the financials. I can tell you we're winning on lots and lots of fronts, and there's more of that to come. So really excited about the go forward. I think we've got some good transparency in our slides on the quantity of resources and quality of resources. I expect in 24 that we'll regain a little bit of public mojo, but that, to me, is just, it's a little overdue. So I'm looking forward to sharing that win with the team.

Speaker Change: In the in various data don't show up in the financials I can tell you, we're winning on lots and lots of fronts and there's more of that to come. So really excited about the go forward I think we've got some good transparency in our slides on quantity of resource quality of resource.

Speaker Change: I expect in 'twenty, four that will regain a little bit of public Mojo, but that that to me is just it's a little overdue so looking.

Speaker Change: Looking forward to sharing that win with the team.

Clay M. Gaspar: Hey, thanks guys. Our next question comes from Doug Leggate from Bank of America. Doug, your line is now open. Hey, good morning, guys. This is actually Colleen on behalf of Doug.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Thanks, Ed.

Speaker Change: Our next question comes from Doug Leggate from Bank of America. Your line is now open.

Doug Leggate: Hey, Good morning, guys. This is actually calling in for Doug. Thanks for getting me on.

Jeffrey L. Ritenour: So thanks for getting me on. For my first question, I want to go back to the buyback just to follow up. I want to understand the motivation behind the strategy for 24. Shipping capital back to Delaware on the margin is obviously an efficiency shift, and that makes sense. But in tandem, you're also leading back into the buyback. And that looks rather intentional.

Doug Leggate: For my first question I wanted to go back to the buyback just a follow up.

Speaker Change: I want to understand the motivations behind the strategy for 'twenty for shifting capital back to the Delaware and the margin.

Speaker Change: Obviously, an efficiency ship and that makes sense, but in tandem also leaning back into the buyback and that looks rather intense malls can you talk about why you see the buyback.

Jeffrey L. Ritenour: So can you talk about why you see the buyback? as the preferred allocation today, and why has that changed over the past several months? Yeah, you bet. So, again, on the buyback front, you know, what's pretty clear to us as we kind of walk through our framework for evaluating share repo versus the other capital allocation opportunities that we have, whether it be organic investment, inorganic investment that Rick spoke to earlier, whether it's M&A or otherwise. And then when we step back and look at the valuation, you know, we look at the multiples, we look at our, you know, our intrinsic value model that we keep in-house, and we run multiple sensitivities on that. Every way we turn, what we keep coming back to is that our shares look undervalued, you know, relative to the broader market, relative to the sector, and certainly relative to the results that we expect to post as we walk our way through this year.

Preferred allocation today, and why has that changed over the past several months.

Speaker Change: Yes, you bet, so again on the on the buyback front.

Speaker Change: It's pretty clear to us as we kind of walk through our framework for evaluating share repo.

Speaker Change: Versus the other capital.

Capital allocation opportunities that we have whether it be organic investment inorganic.

Speaker Change: Investment that Rick spoke to earlier, whether it's M&A or otherwise.

Speaker Change: And then when we step back and look at the valuation we look at the multiples we look at our.

Speaker Change: Our intrinsic value model that we keep in house and run multiple sensitivities on that every which way we turn what we keep coming back to is the.

Our shares look undervalued relative to the to the broader market relative to the sector and certainly relative to the results that we expect to post as we work our way through this year. So.

Jeffrey L. Ritenour: So, that really has been the driver and our focus, you know, going back to the back half of last year and as we walk into 2024. And it's why we're biased towards having the lion's share of our cash returns be focused on the share repurchase going forward. And if I could, I just wanted to add one comment on that prior question. I think it's a common misconception, the way we lay the numbers out, that we are leaning in or that we're increasing capital to Delaware, somehow accelerating. That's not really the case, though.

Speaker Change: That really has been the driver and our focus going back to the back half of last year and as we walk into 2024 and its why were bias towards having the lion's share of our cash returns.

<unk> focused on the share repurchase going forward.

Speaker Change: And if I could I just wanted to I wanted to add one.

Speaker Change: Okay.

Speaker Change: Im sorry, I just wanted to add one comment on that on that prior question.

Speaker Change: I think it's a common misconception in the way we laid the numbers out that we are leaning in or that we're increasing capital to the Delaware somehow accelerating that's not really the case where are the same rig count same level of activity. The capital is actually coming down not just in the total company been in Delaware, but where we're seeing the 10% inflection from the company is.

Jeffrey L. Ritenour: We have the same rig count, same level of activity. The capital is actually coming down, not just in the total company but in Delaware. But where we're seeing the 10% inflection from the company is really a reduction in some of the other areas. So proportionately, Delaware is moving up. But on an absolute basis, we're not consuming that inventory any faster than we had in 23 years before.

Speaker Change: Really a reduction in some of the other areas. So proportionately Devon, Delaware is moving up but on an absolute basis, we're not consuming that inventory any faster than we had in 2003 or years before.

Speaker Change: Got it I appreciate that.

Jeffrey L. Ritenour: I appreciate that. That's where my follow-up will go. So I'm wondering what kind of permanence does that have? Is it sort of a stopgap until you figure out what's going on in the Bakken, or is this now the direction of the program? Was the question permanent?

Speaker Change: So I'm wondering if the reduction in the capital in these other areas what kind of permitting that half.

Speaker Change: Is it sort of a stop gap do you figure out what's going on in the Bakken or the direction of the program.

Speaker Change: Was the question permanence.

Speaker Change: Yes.

Jeffrey L. Ritenour: Yes, the President of the Capital Allocation... prominence, meaning how long, yeah. Can we do it for multiple years? I'm just making sure I understand the question. Yes, how many years can you run this kind of capital program? Okay. All right. Thank you for that.

Speaker Change: The capital allocation.

Speaker Change: Permanent is meaning how long.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Can we do it multiple years I'm just to make sure I understand the question.

Speaker Change: Yes, how many years can you run that kind of capital program. Okay.

Speaker Change: Alright, thank you for that sorry.

Clay M. Gaspar: The acoustics in here weren't quite right, so sorry about that. Yeah, you know, I think pulling back the activity, for example, in the Williston Basin, that prolongs that basin's opportunity to continue to deliver free cash flow and offset some of that fall in production with some really healthy wells. What we found is we were pushing a little too quickly, a little too much capital into that asset. By having the multiple basins that we do, having our franchise asset in the Delaware Basin, it allows us to take a little bit of pressure off that team, allows them to really make sure that all the ducks are in a row, ready for that next pad, and then selectively, we're going to fund those. And as you saw with the Thanks for... You bet.

Speaker Change: The acoustic sitting here if weren't quite right. So sorry about that yeah, I think and pulling back the activity for example in the Williston basin that prolongs that basins opportunity to continue to deliver free cash flow and offset some of that fall in production with some really healthy wells what we've found is.

Speaker Change: We were pushing a little too quickly a little too much capital to that asset by having the multiple basins that we do having our franchise asset in the Delaware basin. It allows us to take a little bit of pressure off that team allows them to really make sure that all the ducks are in a row ready for that next pad and then selectively we're going to fund those in.

Speaker Change: As you saw with the Bull Moose.

Speaker Change: I talked about on the call. These are phenomenal. These are awesome returns and we've got more of that to come.

Speaker Change: Thanks for the comments.

Speaker Change: You bet.

Clay M. Gaspar: Our next question comes from Neil Denkman from Truist. Neil, your line is now open. Good morning, guys. Thanks for your time.

Speaker Change: Our next question comes from Neal Dingmann from Truest, Neil Your line is now open.

Neal Dingmann: Good morning, guys. Thanks for the time quite but first let's try it for you its on your Delaware infrastructure and takeaway I am just wondering after adding so much I saw the slide where you talked about adding so much processing gathering compression water. Just wanted to know are you all able to handle the continued notable upside that can come with a development plan there will be a continued buildup.

Clay M. Gaspar: Clay, the first question is probably for you. It's about your delivery infrastructure and takeaway. I'm just wondering, after adding so much, I saw the slide where you talked about adding so much processing, gathering, compression, and water. I'm just wondering now, are you all able to handle the continued notable upside that's going to come with the development plan, or will there be a continued build out? You know, we feel really good about being able to effectively produce. Remember, we are really watching our flaring. We don't want to have unnecessary shut-ins. We are reliant on so many third parties.

Speaker Change: We feel really good about being able to.

Speaker Change: Effectively produce remember we are really watching our flaring, we don't want to have unnecessary shut ins we are.

Speaker Change: Reliant on so many third parties, we wanted to make sure that we have that runway ahead of these very prolific pads coming online.

Clay M. Gaspar: We wanted to make sure that we had that runway ahead of these very prolific pads coming online. We want to make sure we have that. We do feel very confident in that today.

Speaker Change: We want to make sure we have that we do feel very confident in that today and remember it's not just our immediate wells. We've got some really high quality offset operators that know what they're doing as wells are phenomenal basin and we have to make sure that.

Clay M. Gaspar: And remember, it's not just our immediate wells. We've got some really high-quality offset operators that know what they're doing as well. It's a phenomenal basin, and we have to make sure that all of that plays together very nicely so that we have the reliability in the infrastructure to bring these wells online and make sure we ultimately get them to market. It makes sense. And then my second is just on the Eagleford specifically.

Speaker Change: The all of that plays together very nicely and so that we have the reliability in the infrastructure to bring these wells online and make sure we ultimately get them to market.

Speaker Change: Yes. It makes sense and then my second is just on the Eagle Ford specifically can you give the details, but I think you've talked to about 85% to 95, well plan I'm just wondering what the focus.

Clay M. Gaspar: Can you give details of the, I think you talked about 85 to 95 well plan. I'm just wondering, will the focus here be on existing key areas like you're doing in Dell, or maybe talk about any improvements we should think about in this area. Thanks for that question.

Speaker Change: Here beyond an existing key areas like Youre doing in the Dell and just maybe talk about any improvements we should think about particularly in this area.

Speaker Change: Thanks for that question I.

Clay M. Gaspar: I'm really excited about the Eagleford. You know, one of the things, unlike a lot of other areas, we've continued to test downspacing, tighter wells, and subsequent wells. After the initial development has been done, bringing additional wells in, which is really not very favorable in most basins, it tends to work and continue to provide upside in the Eagleford. Now, when you pair that with some of the reef rack activity, we can actually feather in new wells, reef rack some of the existing wells, and we're seeing phenomenal results. As I mentioned in my prepared remarks, we are continuing to expand the runway there without any M&A dollars, without, you know, just from the existing footprint. The opportunity set continues to expand, and these are very prolific, very accretive to the bottom line kind of numbers that we're really excited about. It's great to hear from you. Thank you all. The next question comes from Kevin MacCurdy from PICC. Kevin

Speaker Change: I'm really excited about the Eagle Ford.

Speaker Change: One of the things. Unlike a lot of other areas. We've continued to test down spacing tighter wells subsequent wells. After the the initial development has been done bringing additional wells in which is really not very favorable in most basins. It tends to work and continue to provide upside in the Eagle Ford.

Speaker Change: Now when you pair that with some of the re frac activity, we can actually feather in new wells re frac some of the existing wells and we're seeing phenomenal results as I mentioned in my prepared remarks, we are continuing to expand the runway there without it.

Speaker Change: Any M&A dollars without it.

Speaker Change: Just from the existing footprint the opportunity set continues to expand and these are very prolific vary.

Speaker Change: Accretive to the bottom line.

Speaker Change: The numbers that we're really excited about.

Speaker Change: Great. Thank you all.

Speaker Change: Thanks Neil.

Kevin Mccarthy: Our next question comes from Kevin Mccarthy from Pickering Energy Partners. Kevin Your line is now open.

Operator: Hey, good morning. My first question is about the capital budget. We appreciate that the $3.3 to $3.6 billion range is a significant decrease year over year. But if we look back at last year's budget, we notice that the range is wider both on absolute dollars and a percentage basis this year. I was wondering if you could provide any color on what might put you at the low end of that range versus the high end of the capital range.

Kevin Mccarthy: Hey, Good morning. My first question is on the capital budget. We appreciate that the $3 30 to $3 $6 billion range is a significant decrease year over year, but if we look back at last year's budget. We noticed that the range is wider both on absolute dollars on a percentage basis. This year I was wondering if you could provide any color.

Or on what what might put you at the low end of that range versus the high end of the capital range is that driven more by deflation turning lines or midstream spend.

Clay M. Gaspar: Is that driven more by deflation, turning lines, or midstream spend? Yeah, it's interesting, Kevin. You know, one of the first things that comes to mind for me is the efficiency that I talked about on a couple of my slides. You guys know this very well.

Yes, it's interesting Kevin one of the first thing that comes to mind for me is the efficiency that I talked about on a couple of my slides you guys know this very well we've been at this game for quite a while sometimes that efficiency can pull more activity into the calendar year.

Clay M. Gaspar: We've been at this game for quite a while, and sometimes that efficiency can pull more activity into the calendar year. Look, this is not our first rodeo. This is February. We're already looking at this for the full year.

Kevin Mccarthy: Look this is not our first rodeo. This is February we're already watching that for the full year. We're committed to this range, but if I had to think of what could cause us to.

Clay M. Gaspar: We're committed to this range, but if I had to think of what could cause us to kind of float to the upside, it's probably that kind of work, where you're seeing more opportunities to bring some of that activity from 25 into 24. I think on the downside, we're early in the year. I think the supply chain deflation opportunities are still, you know, we've got a 5% year over year kind of baked in. I feel good about that.

Kevin Mccarthy: Kind of float to the upside, it's probably that kind of work, where you are seeing more opportunities bring.

Kevin Mccarthy: Bring some of that activity from 25% to 24 I think on the downside.

Kevin Mccarthy: Early in the year I think the supply chain deflation opportunities are still we've got a 5% year over year kind of baked in I feel good about that I feel very confident we're going to be able to deliver that as the year plays out we really need to see where that changes over time.

Clay M. Gaspar: I feel very confident we're going to be able to deliver that. As the year plays out, you know, we really need to see where that changes over time. My current crystal ball doesn't see a lot of inflation, but there are certainly deflation opportunities in that number, and that potentially could allow us to float or float down to the lower end of that range.

Kevin Mccarthy: My current Crystal ball doesn't see a lot of inflation.

Kevin Mccarthy: But theres certainly deflation opportunities in a number and that potentially could allow us to floater slowed down to the lower end of that range.

Clay M. Gaspar: I appreciate the detail on that and, as a follow-up, the Eagleford had a strong production quarter, and it looks like the CapEx guidance for that asset is fairly consistent year over year. Can you talk about the production and capital efficiency outlook for the Eagleford and if there's any major changes between 2023 and 2024? Hey Kevin, it's Rick.

Speaker Change: I appreciate the detail on that and as a follow up the Eagle Ford had a strong production quarter and it looks like the capex guidance for that asset is fairly consistent year over year.

Speaker Change: Can you talk about the production and capital efficiency outlook on in the Eagle Ford and if Theres any major changes between 2023 and 2024.

Speaker Change: Hey, Kevin This is Rick one of the things that I've been really proud of over the last 12 to 18 months is coming on the heels of the Validus acquisition, what we have been able to learn a solid acreage.

Richard E. Muncrief: One of the things that I've been really proud of over the last 12-18 months is coming on the heels of the Validus acquisition. What we have been able to learn, it's a solid acreage. I would say it is second, certainly, to our Blackhawk acreage. But the thing about it that we need to remind investors of and analysts of is that on the Blackhawk acreage, it's a 50-50 joint venture with BPX. BPX operates the drilling and completion of that well.

Rick: I would say it it is.

Rick: Second certainly tour Blackhawk acreage, but the thing about it that we need to remind investors of an analyst is that on the Blackhawk acreage. It's a 50 50 joint venture with <unk> <unk> operates the drilling and the completion of that and what we felt it was really from a from a.

Richard E. Muncrief: And what we felt, it was really from not only a productivity increase but also just a strategic perspective, we thought it was imperative that we had an asset that we owned, that we did the drilling, that we did the completions on. The five-day well that Clay referenced a while ago, I can tell you that absolutely exceeded anything that we had in our Validus development plan. So when I look at that, now we're having some very, very meaningful discussions with our joint venture partner there, and they're very constructive, and I think it's going to lead to even better performance over time at Eagleford. I'm really pleased with what we're seeing with the Refract program. It's going to continue to drive some long-term sustainability down there that a lot of people, I think, are underestimating. I'll turn it over to Clay to add any additional color, but the Eagle Bird is an area I can tell you that we're very excited about.

Rick: Not only are productivity inquiries, but also just a strategic perspective, we thought it was imperative that we had an asset that we owned that we did the drilling that we did the completions on the five day well.

Rick: <unk>.

Rick: The clay referenced a while ago I can tell you that absolutely exceeded anything that we had in our inner validus.

Rick: Development plan, so when I look at that I look now we're having some very very meaningful discussions with our joint venture partner, there and Theyre very constructive and I think it's going to lead to even even better performance over time in the Eagle Ford I'm really pleased with what we're seeing with the re Frac program, it's going to continue to.

Rick: Drive some some I think some long term sustainability down there there are a lot of people I think are underestimating. So.

Rick: I'll turn it over to clay to add.

Clay M. Gaspar: Add any additional color, but the Eagle Ford is area I can tell you that we're very excited about.

Clay M. Gaspar: Yeah, thanks for those comments, Rick. I think that's spot on. Kevin, the only thing I wanted to add is I do show a relatively meaningful drop, probably about a 10% or so drop in capital, about $75 million, the rough number I had, from 23 to 24. And again, that's with single-digit production growth on top of that. Now there is some well mix in there.

Clay M. Gaspar: Yes, thanks for those comments, Rick I think thats spot on Kevin only thing I wanted to add is I do show a relatively meaningful dropped probably about 10% or so drop in capital.

Speaker Change: About $75 million of rough number I heard from 'twenty three to 'twenty four.

Speaker Change: So and again, that's with single digit production growth on top of that now there is some well mixed in there we have a joint venture partner and part of the assets we own the rest we operate kind of a normal fashion. So there is some <unk>.

Clay M. Gaspar: We have a joint venture partner on part of the assets. We own the rest. We operate in kind of a normal fashion. So there is some change in mix, but from a capital efficiency standpoint, things are moving in the right direction, and we continue to see upside potential on this particular asset. Our next question comes from Scott Grober of GE. Yes, good morning.

Speaker Change: <unk> and mix, but from a capital efficiency standpoint things are moving in the right direction and we continue to see upside potential on this particular asset.

Speaker Change: Our next question comes from Scott Gruber from Citigroup Scott. Your line is now open.

Scott Gruber: Yes, good morning.

Operator: The 10% improvement in productivity that you forecast in the Permian is normalized on a 10,000 foot lateral. Is there going to be a step up in lateral length in the play as you refocus on the quarter? Or is that going to be rather consistent? Scott, it's pretty consistent year over year. We're always trying to drill longer laterals. It's kind of the opportunity set in front of us. We're always, we feel very confident in our ability to deliver three-mile laterals from a productivity and operational standpoint. However, the land mix doesn't always allow for that. So we're gonna be north of two miles, but not too much north, and it'll be fairly consistent year over year. Got it.

Scott Gruber: 10%.

And productivity than forecast in the Permian has normalized on a 10000 foot lateral is it going to be a step up in lateral lengths in the play as you refocus on the quarter that can be rather consistent.

Scott Gruber: Scott, it's pretty consistent year over year, we're always trying to drill longer laterals, it's kind of the the opportunity set in front of us.

Scott Gruber: We're always we feel very confident in our ability to deliver three mile laterals from a productivity from an operational standpoint.

Scott Gruber: Land mix doesn't always allow for that so we're going to be north of two miles, but not too much north and it will be fairly consistent year over year.

Speaker Change: Got it and then just a nuance one on on the <unk> Guide.

Clay M. Gaspar: And then just a nuanced one on the 1Q guide, you know, last quarter, you provided that 305 barrels of oil per day. Today, you're guiding for 640 with a 2% weather impact, but 640 at, you know, a 48%-ish oil cut, you're kind of still around, maybe even slightly better than that 305 figure in the last quarter. So, the question is, is the underlying trend in oil production slightly better, and it's just being offset by a bigger weather impact, or is the weather risk, you know, that was incorporated in that original 305 guide kind of similar to what actually transpired? Scott, I think it's really the well mix.

Speaker Change: Last quarter you provided that.

Speaker Change: <unk> hundred five.

Speaker Change: Of oil per day today, Youre guiding for 642% weather impact.

Speaker Change: At 648, 48% ish oil cut you kind of still around.

Speaker Change: Slightly better than that 305 figure.

Speaker Change: Last quarter.

Speaker Change: So the question is the underlying trend in oil production slightly better that's just being offset by.

Speaker Change: A bigger weather impact or as the weather risk.

Speaker Change: Was incorporated in that original 305 guide kind of similar to what actually transpired.

Speaker Change: So I don't think its really the well mix.

Clay M. Gaspar: We've got some wells coming on. The Wilson wells are exceptionally high in oil content. We'll continue to bring those in. I think that's just working in our favor in that regard. Okay, I appreciate it. Thank you. Thank you, sir. Our next question comes from Scott Hanold from RBC. Scott, your lines now.

Speaker Change: We've got some wells coming on the Williston wells are exceptionally high oil cut.

Speaker Change: Changes to bring those in.

Speaker Change: I think thats just working in our favor in that regard.

Speaker Change: Okay.

Speaker Change: I appreciate it thank you.

Speaker Change: Thank you Sir.

Speaker Change: Our next question comes from Scott Hanold from RBC Scot.

Scott Hanold: Your line is now open.

Clay M. Gaspar: Yeah, thanks. If I can delve into the infrastructure a little bit more, you know, on page 13, you obviously break down, you know, three areas that you're focused on in terms of, you know, building support for the 2024 plan. You know, as you think about, you know, the Permian development over, you know, the next two, three, four years, like, which area really are you focused most primarily on to make sure you're, you know, executing on the plan? Like, where do you see the risk of the biggest constraint? I guess that's the question. Scott, is all of the above an option? Seriously, any one of these things gets constrained, and you're dead in the water, or at least constrained.

Scott Hanold: Yes, thanks, if I can delve into the infrastructure a little bit more on page 13, you, obviously bucket three areas that you're focused on in terms of building support for the 2024 plan.

Scott Hanold: As you think about the <unk>.

Scott Hanold: Permian development over the next two to three or four years, which area really are you focus most primarily on to make sure you're executing on the plan like where do you see the risk of the biggest constraint I guess is the question.

Scott Hanold: Scott is all of the above an option.

Scott Hanold: Yeah.

Scott Hanold: No.

Scott Hanold: Seriously.

Scott: Any one of these things gets constrained and Youre dead in the water or at least constrained and so we work really hard to not just build what is the best rate of return opportunity set in our portfolio, but we're very thoughtful about modeling our own infrastructure, even modeling third party infrastructure, if we don't feel that.

Clay M. Gaspar: And so we work really hard to not just build what is the best rate of return opportunity set in our portfolio, but we're very thoughtful about modeling our own infrastructure, even modeling third-party infrastructure if we don't feel that they do an adequate job. And then there's the occasional curveball where one of the third parties, maybe even an electrification front, can't come through with their normal pace. We need to have enough flexibility, enough forethought, enough creativity to be able to solve some of those problems essentially for them. So one of the things I mentioned is building out more of our own electrical infrastructure. We already have about 700 miles of electric lines in our basin.

Scott: They do an adequate job and then there's the occasional curve ball, where one or the third parties, maybe even in electrification front can't come through with their normal pace, we need to have enough flexibility enough forethought and of creativity to be able to solve some of those problems essentially for them. So one of the things I mentioned.

Scott: <unk> is building out more of our own electrical infrastructure of about 700 miles of electrical electric.

Scott: Electric lines in our basin already with <unk>.

Clay M. Gaspar: We generate some of our own power. We have our own microgrids. And this is really taking the bull by the horns out of necessity, because otherwise, the local power providers were not going to be able to keep up. So those are the kind of proactive steps that we really leaned in, probably with double effort and 23, because some of these historical norms have really changed, and we wanted to make sure that we didn't just bring on a bunch of wells and then be abnormally constrained and have to answer questions about why So anyway, I feel really good about the work that we did in 23 and that we will continue to do in 24. But look, we're not out of the woods.

Scott: Generate some of our own power, we have our own micro grids and this is really taking the bull by the horns out of necessity because otherwise.

Scott: The local power providers, we're not going to able to keep up so those are the kind of proactive steps that we really leaned in probably with double effort in 'twenty three because some of these historical norms have really changed and we wanted to make sure that we didn't just bring on a bunch of wells and then be abnormally constrained and happy to answer questions.

Speaker Change: About why our wells are so terrible Sony.

Speaker Change: So anyway I feel really good about the work that we did in 2003 that we continue to do in 'twenty four but look we're not out of the woods. We continue to look at infrastructure needs in 'twenty six 'twenty seven and 28 were working with partners as best we can and I really think we have a great.

Clay M. Gaspar: We continue to look at infrastructure needs in 26, 27, and 28. We're working with partners as best we can, and I really think we have a great runway ahead of us, but the team is always on caution to make sure that we are prepared for those unforeseen challenges. Okay, thanks for that.

Speaker Change: Runway ahead of us, but the team is always on caution to make sure that we are prepared for those unforeseen challenges.

Speaker Change: Okay. Thanks for that and as my follow up it's going to be on M&A and I was hoping to get a deeper sense of how you think about M&A and it's really two parts. One first if you can comment on some of the recent deals that have been out there for you all participated in really what was the.

Richard E. Muncrief: And as my follow-up, it's going to be on M&A. And I was hoping to get a deeper sense of how you think about M&A. And there are really two parts.

Richard E. Muncrief: One, you know, first, if you can comment on some of the recent deals that have been out there, you know, if you all participated, and really what were the give and take of why, if you did, why Devon, you know, didn't win out. And then number two, you all mentioned that obviously you're a multi-basin player, but when you think about, you know, does Devon have the scale right now that it would like? And if you were to add, would it really be a Permian thing, or, you know, are other of those basins open to more significant M&A for Devon? Yes, Rick, I'll field that one.

Speaker Change: Gives and takes of why.

Speaker Change: Did wide Devin Didnt went out and then number two you all mentioned obviously your multi basin player, but like when you think about like Devon have the scale right now.

That it would like and if you were to add would it be really most of the Permian thing or.

Speaker Change: Our other.

Speaker Change: Based on his opened two more significant M&A for Devon.

Speaker Change: Yes, Rick I'll field that one number one really.

Richard E. Muncrief: Number one, I really, you know, I really like the scale that we currently have. We have a deep resource base across our five basins that we're in. So I feel really good about that.

Speaker Change: I really like the scale that we currently have we have we have a deep <unk>.

Speaker Change: Resource base across our five.

Rick: Five basins that we're in so I feel really good about that but we're always as I mentioned earlier, we're always going to be looking to be opportunistic to add resource to add <unk>.

Richard E. Muncrief: Now we're always, as I mentioned earlier, we're always gonna be looking to be opportunistic to add resources, to add investment opportunities, you know, at a reasonable value, at an attractive value for our shareholders. I think that's just really incumbent upon this management team to always be on the hunt there. That being said, we are gonna be very disciplined. Some of the recent transactions, I think were, that were out there, that were announced. When I look at the metrics on those, those were rich. They really were.

Speaker Change: <unk> opportunities.

Speaker Change: At a at a reasonable value at a attractive value for our shareholders I think that just really incumbent upon his management team to always always been on them.

The hunt there that being said we are going to be very disciplined.

Speaker Change: Some of the recent transactions I think we are.

Speaker Change: That were out there that were announced when I look at the at the metrics on those those rich they really were.

Richard E. Muncrief: And others, you know, there's been a couple of them that were hats off, very nice deals that we certainly weren't participating in those processes, but good for them, and that's great. Congratulations. But for us...

Speaker Change: And others.

Speaker Change: There's been a couple of them they were hats off really nice deals that we certainly weren't participating in those processes.

Speaker Change: Good for them and that's great congratulations but for us.

Richard E. Muncrief: I want to just continue to drive home the point that we're going to continue to be disciplined. And we have to balance short-term accretion with long-term, how that fits in for the long haul for Devon. You know, we're a 50-year-old company. We're not a 5-year-old company.

Speaker Change: I wanted to just continue to drive home the point, we're going to continue to be disciplined and we have to balance short term accretion with long term how that fits in for the long haul for Devon.

Speaker Change: We're a 50 year old company, we're not a five year old company.

Richard E. Muncrief: And we have to be really, really thoughtful about that. And so we'll continue to look for opportunities, but we're going to maintain that discipline. And at the end of the day, we have a deep, deep resource base.

Speaker Change: And we have to be really really thoughtful about that and so.

Speaker Change: We'll continue to look for opportunities, but we're going to we're going to maintain that discipline and at the end of the day, we have a deep deep resource base and I think thats something that that is incumbent upon this management team that we have to continue to drive home and we have to demonstrate not only how we execute hitting numbers exceeding.

Richard E. Muncrief: And I think that's something that is incumbent upon this management team that we have to continue to drive home. And we have to demonstrate not only how we execute hitting numbers, exceeding, whatever that is, but we just have to do a wonderful job of working with the outside community, outside investors, on the resources that we have in-house currently. And regionally, is there an area you focus a little bit more time on?

Speaker Change: Whatever whatever that is but we just have to do a wonderful job in working with the outside community outside investors.

Speaker Change: On the resource that we have.

Speaker Change: <unk> currently.

Speaker Change: And then regionally there are you focused a little bit more time on is it Permian Bakken and Eagle Ford are all areas of focus.

Richard E. Muncrief: Is it, you know, Permian, Bakken, Eagle, for example, all areas a focus? You know, I think for us, we're going to stick to our strategy. Just simply put, we want to stay as oily as we can for as long as we can. I think we're seeing that play out in real time with, I'm not sure we've got higher gas prices or as we sit here this morning again, but it's sub $2. That's not a good spot to be in.

Speaker Change: I think for us.

Speaker Change: We're going to stick to our strategy. This real simply put we want to stay as oily as we can for as long as we can and I think we're seeing that play out in real time with I'm not sure we got where gas prices are as we sit here. This morning again, but it's it's sub $2.

Speaker Change: Not a good spot to be in and so for US we want to stay as is.

Richard E. Muncrief: And so for us, we want to stay as oily and as liquid rich as we possibly can, because throughout the entirety of my career, that's been the place to go. Now we're all, I think we all are optimistic about what the future of natural gas could be. And, and, and, you know, we spend quite a bit of time in D.C. talking about the importance of tone, the importance of consistency with some of our public policies, those sorts of things, and in our foreign trade policies.

Speaker Change: Oily and as liquid rich as we possibly can because throughout.

Speaker Change: The entirety of my career, that's been a place to go now we're all I think we all are.

Speaker Change: Optimistic about what the future of natural gas could be and we spend quite a bit of time in D. C talking about the importance of toned.

Speaker Change: The importance of consistency with some of our public policy those sorts of things and in our foreign trade policies and so we.

Richard E. Muncrief: And so for us, I think, near term, to answer your question, we're going to be very interested in oil-prone basins. Oil is going to drive the margins for the foreseeable future. And that's kind of where we want to be. Thanks for the call.

Speaker Change: So for US I think near term to answer. Your question, we are going to be very interested in oil prone basins oil is going to drive the margins for the foreseeable future and thats kind of where we want to be.

Thanks for the color.

Operator: Our next question comes from Charles Meade from Johnson Rice. Charles, you may proceed with your question. Good morning, Rick, Clay, and Jeff.

Speaker Change: You bet.

Speaker Change: Our next question comes from Charles Meade from Johnson Rice charts. You May proceed with your question.

Charles Meade: Good morning, Rick Clay and Jeff.

Richard E. Muncrief: Rick, I want to ask a question about your Delaware base, and more specifically, if you could give us a sense of the......the composition of the......the four fleets you're running right now, whether those are all zipper fracs or whether there's any time of frac crews in their... And in the bigger sense, where I'm going with this, has there been any thought or is there any possibility of..., I'm going to let Clay answer the balance of that, but in real time, just yesterday, I was talking to one of our completion managers down there, and we're picking up the fourth crew, as we mentioned, but the three that have been out there, it's incredible, Charles, on the efficiencies and what we're doing out there, the number of stages, and it's interesting.

Charles Meade: Rick I wanted to ask a question about your your Delaware Basin completion crews and more specifically if you could give us a sense of the composition of the four fleets you're running right now whether those are all the zipper fracs or whether there is any simulcast crews in there.

Charles Meade: And we're in a bigger sense, where I'm going with this it has there been any thought or is there any possibility of <unk>.

Charles Meade: Adjusting that mix too so that more on a steady state.

Charles Meade: Program.

Clay M. Gaspar: Yes, I will let clay I'm going let clay answer the balance of that but just in real time, just yesterday was talking to our warmer completion managers down there and.

Clay M. Gaspar: We're picking up a fourth crew as we mentioned, but the three that have been out there.

Clay M. Gaspar: It's.

Clay M. Gaspar: It's incredible.

Clay M. Gaspar: On the efficiencies in what we're doing out there the number of stages.

Richard E. Muncrief: We're in, it's healthy competition, you know, between the team members and certain companies that are involved with it, and we're actively comparing and contrasting ways that we can get better and better, and at the end of the day, we want to make sure that we do this very, very safely and efficiently, and so we're constantly changing. Every pad has its unique characteristics.

<unk>.

Clay M. Gaspar: It's healthy competition.

Clay M. Gaspar: Between.

Clay M. Gaspar: The team members in certain companies that are involved with it and where we are actively comparing and contrasting ways that we can get to get better and better and at the end of the day, we want to make sure that we do this very very safely and efficiently and.

Clay M. Gaspar: And so we're constantly changing every every pad has its unique characteristics, but I can tell you that more and more we just see these efficiencies that are just just incredible things that just 12 months ago, we knew that you'd see some efficiencies but were exceeded my expectations I won't you maybe I'll follow up.

Richard E. Muncrief: But I can tell you that more and more, we just see these efficiencies that are just incredible. And things that just 12 months ago, we knew that you'd see some efficiencies, but we're exceeding some expectations. Clay, why don't you?

Clay M. Gaspar: We have more Simulfrac coming, we're completing one today, and more to come throughout the year and beyond. One of the challenges with Simulfrac, you really need to plan that 12 or 18 months ahead when you're planning the well site location, how many wells on one particular location, because that enables more ability to do some of that.

Clay M. Gaspar: Charles.

Charles Meade: We have more simultaneously coming.

Charles Meade: Completing today and more to come throughout the year and go forward one of the challenges Simon Frank you really need to plan that 12 or 18 months ahead. When you were planning the well site location, how many how many wells on one particular location because that enables more ability to do some of that so about 12 months ago, we started really.

Clay M. Gaspar: So about 12 months ago, we started really kind of leaning in, building a little bit longer number of wells per pad instead of separate pads. That allows more Simulfrac opportunities, which we're seeing great results from and we're continuing to benefit from. We're also testing some very interesting things where we artificially tie pads together with some big lines between the two.

Charles Meade: Kind of leaning in building a little bit larger.

Charles Meade: Number of wells per pad instead of separate pads that allows more time, we'll frac opportunity, which we're seeing great results and we continue to benefit from we're also testing some very interesting things, where we artificially tie pads together with some big lines between the two so there are some really creative stuff that again is a little.

Clay M. Gaspar: So there's some really creative stuff that, again, is a little below the radar of what we talk about in earnings calls, but I can tell you that the teams are doing just amazing work and really adding material value through these efficiencies to the bottom line of Devon. So I really appreciate the great work there.

Charles Meade: Below the radar of typically what we talk about on earnings calls, but I can tell you. The teams are doing just amazing work and really adding material value through these efficiencies to the bottom line of Devin So really appreciate the great work there.

Clay M. Gaspar: And then, Clay, I want to go back to your pair comments that you were talking about. I think I heard you talk about some additional landing zones and the wolf can't be. I'm not sure I kind of caught it all when you were talking about it. So I was wondering if you could elaborate a bit on that and, perhaps, including your answer, an indication of whether this is something that you're going to be, you know, that you're working into the 24 program? Or is this, is this an out year?

Speaker Change: Got it and then clay I wanted to go back to your prepared comments. You were you were talking about I think I heard you talk about.

Some additional landing zones in the Wolfcamp b.

Speaker Change: I'm not sure I kind of I call. It at all when you were talking about so I was wondering if you could elaborate a bit on that and perhaps include in your answer and indications if something that.

Speaker Change: That youre going to be that Youre working into the 'twenty four program or is this is this an out year.

Clay M. Gaspar: Yeah, I think sometime last year when we were deep in the penalty box, we talked about the highlights of some of the great work that the team did around understanding Wolf Camp B. Now, that work is manifesting in more of that B, coming to kind of the front end of the priority list, really competitive, super accretive, and we're incorporating that landing zone into some of the development that we have during the course of 24 and beyond. And so, here's how I would characterize it: This were landing zones that we knew were viable, but we needed to test, we needed to understand, we needed to try some different configurations to really find the best approach.

Speaker Change: Project.

Speaker Change: Yes, I think sometime last year, when we deepened the penalty box, we talked about the highlights of some of the great work that the team did around understanding the wolfcamp B now that work is manifesting in more of that be coming to kind of that front end of the priority list really competitive super accretive and we're incorporating that.

Speaker Change: <unk> zone into some of the development that we have.

Speaker Change: During the course of 'twenty, four and beyond and so here's I would characterize it this is landing zones that we knew.

Speaker Change: We're viable we needed to test we needed to understand we needed to try some different configurations to really find the best approach. During the course of 'twenty three 'twenty, two and 'twenty three we did that.

Clay M. Gaspar: During the course of 23, 22, and 23, we did that, we optimized a development approach, and now, in 24, we're benefiting from some of that. So, again, it probably was lost in some of the shuffle last year, but this is work that we did during the course of 23 that we're significantly benefiting from. This expands what I would consider some of our really tier one runway. It's stuff that was a little further out in the priority on a risk basis.

Speaker Change: We optimized.

A development approach and now in 'twenty four we're benefiting from some of that so again it probably was lost in some of the.

Speaker Change: Shuffle last year, but this is work that we did during the course of 'twenty three that we are significantly benefiting from this expands what I would consider some of our I really tier one runway. It's stuff that was a little further out in the priority on a risk basis as we derisked. It boy. It really has moved to the front of the pack and we're really excited about the continued good work.

Clay M. Gaspar: As we de-risked it, boy, it really has moved to the front of the pack, and we're really excited about the continued good work there. Thanks for the added detail. You bet. As a reminder, to ask questions, press star 1.

Speaker Change: There.

Speaker Change: Thanks for the added detail.

Speaker Change: You bet.

Speaker Change: Okay.

Speaker Change: As a reminder to ask questions Press Star one.

Operator: The next question comes from David Deckelbaum from Cohen. David, your line is now open. Thanks for squeezing me in, guys. I appreciate the time.

Speaker Change: Yeah.

Speaker Change: Okay and our next question comes from David <unk> from Cowen David Your line is now open.

David: Thanks for squeezing me in guys.

I appreciate the time, Rick or clay I wanted to ask just you talked about Rick obviously are clearly.

Richard E. Muncrief: Rick or Clay, I wanted to ask... You talked about Rick, obviously, or Clay, the total dollar amount for Delaware actually coming down this year. It looks like you're still obviously growing that asset. You know, you guided us obviously to a slight decline, I guess, at a corporate level. I'm wondering, you know, when you think about capital allocation, should we be consistently thinking about Delaware as a growth asset over the next several years given the visibility that you have now about where you can be allocating capital within that base? You know, I think it's, I would put it in the same category as Devon.

David: Total dollar amount for the Delaware actually coming down this year.

David: It looks like you are still obviously growing that asset.

David: You guys had guided obviously to a slight decline I guess.

David: At a corporate level I am wondering when you think about capital allocation should we be consistently thinking about the Delaware as a growth asset.

David: Over the next several years given the visibility that you have now where you can be allocating capital to within that basin.

Speaker Change: I think.

Speaker Change: I would put into the same category as Devin we are a low growth kind of zero to 5%, Delaware will play a certain role some some quarters. Some years, it's going to be a little bit of a tick up others, it's going to be relatively flat, but I wouldn't think of it as a standout growth asset.

Clay M. Gaspar: We are in a low growth, kind of zero to five percent. Delaware will play a certain role. Some quarters, some years, it's going to be a little bit of a tick up. Others, it's going to be relatively flat.

Clay M. Gaspar: But I wouldn't think of it as a standout growth asset. We're really pleased with the year over year performance. As I mentioned, it did grow. We also were able to build a few extra ducks during the course of the second half of last year that we were able to capture the benefit of in the first half of this year.

Speaker Change: We're really pleased with the year over year performance as I mentioned it did grow we also were able to build a few extra ducks. During the course of the second half of last year that we were able to capture the benefit of in the first half of this year, so theres kind of that going on in the background, but I wouldn't say, it's materially out of step with overall.

Clay M. Gaspar: So there's kind of that going on in the background, but I wouldn't say it's materially out of step with overall Devon or with the other basins. Hey David, it's Rick.

Speaker Change: Devin or with the other basins.

Speaker Change: Hey, David It's Rick I will add that when we talk about it being flat to up slightly in the Delaware. That's on the oil side and as you think about <unk>.

Richard E. Muncrief: I will add that, you know, when we talk about it being, you know, flat to slightly up in the Delaware, that's on the oil side. And as you think about an improving, structurally improving gas and NGL structure, you will see growth there. So I think you can look at it from an equivalent standpoint.

Clay M. Gaspar: Improving structurally improving.

Clay M. Gaspar: Gas and NGL structure, you will see you will see growth. There. So I think you can look at it from up from an equivalent standpoint. It is a growth basin and it's going to going to continue to be that's what drove a lot of our 8% growth is as a company last year and so I think youre going to see that continue to play out that's not only true of us.

Richard E. Muncrief: It is a growth basin, and it's going to continue to be. That's what drove a lot of our 8% growth as a company last year. And so I think you're going to see that continue to play out. That's not only true of us, that's true of the entire Permian Basin, whether it's on the Midland side or the Delaware side, you're going to continue to see gas production, and NGL production continue to grow, even in a flat oil scenario. Thanks Rick and Clay.

Clay M. Gaspar: That's true of the entire Permian basin, whether it's on the Midland side or the <unk>.

Clay M. Gaspar: The Delaware side Youre going to continue to see gas production NGL production continue to grow.

Even in a flat oil price scenario.

Speaker Change: Thanks, Rick and clay and maybe just a quick one of the.

Richard E. Muncrief: And maybe Rick, one of the other parts of the capital budget that continues to grow every year, albeit still small, is carbon capital. You know, in a world where you're trying to enhance returns of capital to shareholders, can you kind of contextualize how you see that spend generating returns for Devon as a whole? Now why that's sort of seeing a larger piece of the pie this year, albeit small.

Speaker Change: Other parts of the capital budget that continues to grow every year, albeit still small as carbon capital.

In a world, where you're trying to enhance returns of capital to shareholders could you kind of contextualize, how you see that spend.

Speaker Change: Generation returns for Devin as a whole and why that's sort of seeing a larger piece of the pie this year, albeit small.

Richard E. Muncrief: Yeah, you know, I think it's a really good question, and it's a really important topic for us. Not only is it Devon, but it's an industry, and it's something we're going to stay ahead of. You know, we have changing regulations. Devon wants to make sure that we stay, you know, stay ahead of the curve, and these regulations are coming at us quickly. What a lot of people don't understand is some of these regulations coming are so onerous that many of the low-volume wells that we have across this nation are going to end up being plugged. And so, you're going to see oil and natural gas wells that are basically stripper wells, as we always refer to them, that are such low volume, they just, quite honestly, cannot afford to spend capital on. It's going to be a fact of life. There are studies by API and some of the other trade groups that talk about that impact, but it is real.

Speaker Change: Yeah.

Speaker Change: Yes, I think it's really good question and it's a really important topic for us only Devon, but as an industry and it's something that we're going to stay ahead of.

Speaker Change: Changing regulations Devlin wants to make sure that we stay.

Speaker Change: You don't stay ahead of the curve and these regulations are coming out as quickly while a lot of people don't understand is some of these regulations coming are so onerous that many of the low volume wells that we have across this nation.

Speaker Change: We're going to end up being plugged.

Speaker Change: And so you'll see you're going to see oil and natural gas wells.

Speaker Change: Basically our stripper wells, so we've always refer them to that or such low volume. They just quite honestly cannot.

Speaker Change: Aboard.

Speaker Change: Two two.

Speaker Change: Spend capital on and it just it's going to be a fact of life and so their studies by API and some of the other trade groups to talk about that impact, but it is real so what devlin wants to do we want to make sure that we're ahead of the curve as I said.

Richard E. Muncrief: What Devon wants to do, we want to make sure that we're ahead of the curve, as I said, and it's something that I think you'll see over time is going to continue to creep up for the next two or three years. We want to be very thoughtful about that and prudent with it and strategic about it, but it is something that we all just have to deal with. It's a fact of life. And just for my own edification, is that capital being earmarked for projects that would allow you to prolong production on some of these wells, such as increasing methane capture, or is this capital associated or tied to plugging and abandoning some of those wells that would, more regulatory, David, what I would characterize most of it is, is retrofitting existing facilities with better designs to lower emissions and, by the way, keep us well ahead of this coming regulation wave.

Speaker Change: And it's something that we will I think you'll see over time is going to continue to.

Speaker Change: To creep up for the next two or three years, we won't be very thoughtful about that and prudent with it and and strategic about it but it is something that we all just have to deal with it as it's a fact of life.

And just for my Edification is that capital being earmarked for projects that would allow you to prolonged production on some of these wells such as increasing methane capture or is this capital associated with tied to plugging and abandoning some of those wells that would be more regulatory headaches.

Speaker Change: David what I would characterize most of it is is retrofitting an existing facilities with better designed to lower emissions and by the way keep US well ahead of this coming regulation waves. So you could look at this out of necessity.

Richard E. Muncrief: So you might look at this out of necessity. I think we're half a click ahead. We try and stay well ahead of just necessity, but these are regulations that we will always make sure that we are staying in front of to continue to reserve our important rights as an organization to provide energy to fuel the world.

Speaker Change: We are <unk> ahead, we try and stay well ahead of just necessity, but these are these regulations that we will always make sure that we're staying in front of to continue to reserve our.

Speaker Change: <unk> Reits as an organization to provide energy to fuel the world. So thanks again for the question David.

David Adam Deckelbaum: So thanks again for the question, David. Well, it looks like we've run a little bit past time here, so I appreciate everyone's interest in Devon today, and if you have any further questions, please don't hesitate to reach out to the Investor Relations team at any time. Have a good day, everyone. Thank you, gentlemen. Thank you. Thank you. Thank you. Thank you.

Speaker Change: Thanks, guys well it looks like.

Speaker Change: We've run a little bit past time here. So I appreciate everyone's interest in Devon day, and if you have any further questions. Please don't hesitate to reach out to an investor relations team at any time have a good day everyone.

Speaker Change: Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.