Q1 2024 Devon Energy Corp Earnings Call

Welcome to Devon Energy's first quarter 2024 conference call.

Operator: Welcome to Devon Energy's first quarter 2024 conference call. At this time, all participants are in listen-only mode. This call is being recorded. I'd now like to turn the call over to Mr. Scott Coody, Vice President of Investor Relations. Mr. Coody, you may begin.

Operator: At this time, all participants are in less than 90 minutes.

Operator: This call is being recorded.

Operator: I would now like to turn the call over to Mr. 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 first quarter and our outlook for the remainder of 2024.

Scott Coody: 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 first quarter and our outlook for the remainder of 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; Clay Gaspar, our Chief Operating Officer; Jeff Ritenour, our Chief Financial Officer; and a few other members of our Senior Management Team.

Scott Coody: 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 Moncrieff, 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 comp.

Scott Coody: My 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 actual results to differ materially from our forward-looking statements. 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 Rick. Thank you, Scott.

Scott Coody: Today, we 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 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 materials with that I'll turn the call over to Rick.

Richard E. Muncrief: Thank you, Scott. It's a pleasure to be here this morning. We appreciate everyone taking the time to join us. By all measures, Devon delivered an outstanding set of results in the first quarter that surpassed the operational and financial targets we had set by a wide margin. This start to 2024 demonstrates the impressive momentum that we've quickly established, setting the stage for our business to continue to strengthen. At this time, I want to personally thank our employees, our service providers, and our infrastructure partners for helping us get 2024 off to a great start.

Rick: Thank you Scott it's pleasure to be here. This morning, we appreciate everyone, taking the time to join us.

Richard E. Muncrief: By all measures Devon delivered an outstanding set of results in the first quarter that surpassed the operational and financial targets, we had set by wide margin.

Richard E. Muncrief: The start to 2024 demonstrates the impressive momentum that we've quickly established setting the stage for our business to continue to strengthen.

Richard E. Muncrief: At this time I want to personally thank our employees, our service providers and our infrastructure partners in helping us get 2024 off to a great start.

Richard E. Muncrief: For the remainder of my comments today, I will focus on the drivers of our first quarter outperformance and the factors underpinning our improved outlook for the remainder of the year. So to start off on slide 6, let's do a quick review of our first quarter results, where we had several noteworthy highlights. Starting with production, our delivered volumes came in about 4% higher than planned for the first quarter, averaging 664,000 BOE per day. This production beat was across all products and driven by three key factors.

Richard E. Muncrief: For the remainder of my comments for today I will focus on the drivers of our first quarter outperformance and the factors underpinning our improved outlook for the remainder of the year.

Richard E. Muncrief: So to start off on slide six let's do a quick review of our first quarter results, where we had several noteworthy highlights starting with production our delivered volumes came in about 4% higher than planned for the first quarter, averaging 664000 Boe per day.

Richard E. Muncrief: This production beat was across all products and driven by three key factors.

Richard E. Muncrief: First, and the most significant contributor to this performance, was the excellent well productivity we achieved from the 100 plus wells we placed online during the quarter. On average, these high-impact wells exceeded our top-curve expectations with strong well productivity in the Delaware Basin, once again driving our results. Overall, this activity achieved initial production rates that were more than 20% higher than those that we placed online last year. I anticipate that these strong recoveries will continue.

Richard E. Muncrief: First and the most significant contributor to this performance was the excellent well productivity, we achieved from the 100 plus wells, we placed online during the quarter.

Richard E. Muncrief: On average these high impact wells exceeded our type curve expectations with strong well productivity in the Delaware basin. Once again driving our results. Overall this activity achieved initial production rates that were more than 20% higher than those that we placed online last year as.

Richard E. Muncrief: As we progress through this year.

Richard E. Muncrief: Anticipate that these strong recoveries will continue.

Richard E. Muncrief: Secondly, another key factor that drove production higher in the quarter was the improved cycle times we delivered across our drilling and completion operations. Clay will go into much more detail a little later, but simply put, these efficiency gains allowed us to bring forward activity in the quarter and capture more days online than we had planned. A factor that positively contributed to our performance during the quarter was the easing of infrastructure constraints across our Delaware-based NASSETs.

Richard E. Muncrief: Secondly, another key factor that drove production higher in the quarter was the improved cycle times, we delivered across our drilling and completion operations.

Richard E. Muncrief: Clay will go into much more detail a little later, but simply put these efficiency gains allowed us to bring forward activity in the quarter and captured more days online than we had planned.

Richard E. Muncrief: And third.

Richard E. Muncrief: That was a factor that positively contribute to our performance during the quarter was the easing of infrastructure constraints across our Delaware Basin assets. This improvement was directly related to the steps we've taken along with our third party partners to invest in the build out of incremental gas processing compress.

Richard E. Muncrief: This improvement is directly related to the steps we've taken, along with our third-party partners, to invest in the build-out of incremental gas processing, compression, water handling, and electrification. These crucial capacity additions have positioned us to achieve better run times for our base production and allow us to deploy more activity to the core of this world-class base system.

Richard E. Muncrief: <unk> water handling and electrification. These crucial capacity additions have positioned us to achieve better run times for our base production and allow us to deploy more activity to the core of this world class Basin.

Richard E. Muncrief: Another notable achievement from the quarter was this team's, This was demonstrated by delivering operating costs that were 3% lower than guidance and capital expenditures that were in line with expectations, even with an accelerated pace of activity. This positive start to the year puts us in a great position to deliver better cost efficiencies in 2024, especially if we realize incremental savings from deflation as we go through the year. Cutting to the bottom line, the team's comprehensive execution across all aspects of the plan resulted in our 15th consecutive quarter of free cash flow, showcasing the durability of our plan to consistently create value through the cycle. With this free cash flow, we continue to reward shareholders through our cash return framework, which was led by stock buybacks and supplemented by another attractive dividend payout. Now moving ahead to slide 12.

Richard E. Muncrief: Another notable achievement from the quarter was this team's effective cost management. This was demonstrated by delivering operating cost that were 3% lower than guidance and capital expenditures that were in line with expectations, even with an accelerated pace of activity is positive start to the year puts us in a great position to deliver better.

Richard E. Muncrief: Cost efficiencies in 2024, especially if we realize incremental savings from deflation as we go through the year.

Richard E. Muncrief: Cutting to the bottom line the team's comprehensive comprehensive execution across all aspects of the plan, resulting in our 15th consecutive quarter of free cash flow showcasing the durability of our plan to consistently create value through the cycle.

Richard E. Muncrief: With this free cash flow, we continue to reward shareholders through our cash return framework, which was led by stock buybacks and supplemented by another attractive dividend payout.

Richard E. Muncrief: Now moving ahead to slide 12.

Richard E. Muncrief: And with a strong operational performance achieved year to date, we are raising guidance expectations for the full year of 2024. As you can see on the left, a key contributor to this improved outlook is our 2024 production target increasing by 15,000 BOE per day, or 2%, to a range of 655,000 to 675,000 BOE per day. To reiterate what I touched on earlier, these higher volume expectations are due to the better than expected well performance achieved year to date and our confidence in the quality slate of projects that we have lined up over the course of this year.

Richard E. Muncrief: And with a strong operational performance achieved year to date, we are raising guidance expectations for the full year of 2024.

Richard E. Muncrief: As you can see on the top left a key contributor to this improved outlook is our 2024 production target.

Richard E. Muncrief: <unk> by 15000 Boe per day, or 2% to a range of 655000 to 675000 Boe per day.

Richard E. Muncrief: To iterate reiterate what I touched on earlier these higher volume expectations are due to the better than expected well performance achieved year to date and our confidence in the quality slate of projects that we have lined up over the course of this year.

Richard E. Muncrief: Importantly, we are delivering this incremental production within the confines of our original capital budget of three three to $3 6 billion.

Richard E. Muncrief: Importantly, we are delivering this incremental production within the confines of our original capital budget of $3.3 to $3.6 billion. This level of investment is expected to maintain a steady production profile for about 10% less capital compared to last year. This program is fully funded at an ultra-low break-even of around $40 per barrel, which equates to one of the lowest break-even levels of any company in the industry.

Richard E. Muncrief: This level of investment is expected to maintain a steady production profile of about for about 10% less capital compared to last year.

Richard E. Muncrief: This program is fully funded at ultra low breakeven of around $40 per barrel, which equates to one of the lowest breakeven levels of any company in the industry.

Richard E. Muncrief: With our approved four-year outlook, we are now positioned to generate greater than 15% more free cash flow in 2024 versus last year at today's pricing level. This translates into an attractive free cash flow yield of 9%, which is nearly three times higher than what the broader market can offer. With this growing stream of free cash flow, we remain unwavering in our commitment to capital discipline and will seek to reward shareholders with higher cash returns.

Richard E. Muncrief: With our improved full year outlook, we are now positioned to generate greater than 15% more free cash flow in 2024 versus last year at today's pricing levels.

Richard E. Muncrief: This translates into attractive free cash flow yield of 9%, which is nearly three times higher than what the broader market can offer with this growing stream of free cash flow, we remain unwavering in our commitment to capital discipline, and we will seek to reward shareholders with higher cash returns.

Richard E. Muncrief: With our flexible cash return framework, we will allocate our free cash flow toward the best opportunity, whether that be buybacks or dividends. Given that the equity market is still heavily discounting valuations of the energy sector, we plan to continue to prioritize share buybacks over the variable dividend to capture the incredible value that Devon offers at these historically low valuations. So, in summary, 2024 is off to an excellent start. We delivered on exactly what we said we would do and much more in the first quarter.

Richard E. Muncrief: With our flexible cash return framework, we will allocate our free cash flow towards the best opportunity, whether that'd be buybacks or dividends.

Richard E. Muncrief: Given that the equity market is still heavily discounting valuations in the energy sector. We plan to continue to prioritize share buybacks over the variable dividend to capture the incredible value that Devin offers at these historically low valuations.

Richard E. Muncrief: So in summary, 2024 is off to an excellent start we delivered on exactly what we said we would do and much more in the first quarter. Our business continues to get better and build momentum and this is reflected in our improved outlook for the year.

Richard E. Muncrief: Our business continues to get better and build momentum, and this is reflected in our improved outlook for the year. And with the current valuations in this space, the best thing we can do is buy back our stock to capture this value.

Richard E. Muncrief: And with the current valuations in this space. The best thing we could do is buy back our stock to capture this value.

Richard E. Muncrief: It's going to be a great year for Devon, and the team is energized to build upon this strong start. And with that, I'll now turn the call over to Clay.

Richard E. Muncrief: It's going to be a great year for Devon and the team is energized to build upon a strong start and with that I'll now turn the call over to clay.

Clay M. Gaspar: Thank you, Rick, and good morning, everyone. Devon's first quarter outperformance was the result of strong operational execution across the board, where each asset team delivered results that exceeded targets for production and capital efficiency. As Rick touched on, the great start to the year was underpinned by three key factors, excellent well productivity, improved cycle times, and outstanding base production results. For the remainder of my prepared remarks, I plan to cover asset-specific highlights that are driving this positive business momentum and provide insights and observations that drive Devon's improved outlook for 2024.

Clay: Thank you Rick and good morning, everyone. Devin first quarter outperformance was the result of strong operational execution across the board, where each asset team delivered results that exceeded targets for production and capital efficiency.

Clay M. Gaspar: As Rick touched on the Great started the year was underpinned by three key factors excellent well productivity improved cycle times and outstanding base production results for.

Clay M. Gaspar: For the remainder of my prepared remarks, I plan to cover asset specific highlights that are driving this positive business momentum and provide insights and observations that drive devins improved outlook for 2024.

Clay M. Gaspar: Let's begin on slide 7 with an overview of our Delaware Basin activity, which accounted for 65% of our capital investment for the quarter. We operated a program of 16 rigs and 4 completion crews across our 400,000 net acre position in the play, resulting in production growth of 5% compared to the same period last year. This volume growth was driven by 59 new wells brought online that predominantly targeted the Wolf Camp Formation. In aggregate, these wells had an impact; these high-impact wells achieved average initial flow rates of more than 3,200 BOE per day.

Speaker Change: Let's begin on slide seven with an overview of our Delaware basin activity, which accounted for 65% of our capital investment for the quarter.

Clay M. Gaspar: We operated a program of 16 rigs and four completion crews across our 400000 net acre position in the play resulting in a production growth of 5% compared to the same period last year.

Clay M. Gaspar: This volume growth was driven by 59, new wells brought online that predominantly targeted the wolfcamp formation.

Clay M. Gaspar: In aggregate these wells impact.

Clay M. Gaspar: These high impact wells achieved average initial flow rates of more than 3200 Boe per day.

Clay M. Gaspar: This performance results in the best well productivity from our Delaware Basin assets in more than two years, on slide eight, while we delivered high economic results across the basin. I'd like to drill down on three impressive projects that were the biggest drivers of our outperformance for the quarter. On the far left side of the slide, Devon's largest development area in the quarter was the 13-well Van Duda project in our Cotton Draw area of Lee County. With thoughtful up-front planning and improved efficiencies from our SimulFrac operations, the team brought Van Duda online nearly two weeks ahead of schedule.

Clay M. Gaspar: This performance results in the best well productivity from our Delaware basin assets and more than two years.

Clay M. Gaspar: On slide eight.

Clay M. Gaspar: While we delivered high economic results across the basin.

Clay M. Gaspar: I'd like to drill down on three impressive projects that were the biggest drivers of our outperformance for the quarter.

Clay M. Gaspar: On the far left side of the slide Devin largest development area in the quarter was the 13 wells and <unk> project and our cotton draw area of Lea County.

Clay M. Gaspar: With the thoughtful upfront planning and improved efficiencies from our simultaneous operations the team broadband due to online nearly two weeks ahead of plan. The massive scale of this project with showcase by the peak flow rates that reached nearly 30000 gross barrels of oil per day.

Clay M. Gaspar: The massive scale of this project was showcased by the peak flow rates that reached nearly 30,000 gross barrels of oil per day. This success further reinforces why I believe the stack pay potential in cotton draw to be one of the best tranches of acreage in all of North America. Another noteworthy project that achieved the highest initial rates of any project in the quarter was a CBR 1510 in our state lawn area.

Clay M. Gaspar: This successful further this success further reinforces why I believed the stacked pay potential in cotton draw to be one of the best tranches of acreage and all of North America.

Clay M. Gaspar: Another noteworthy project that achieve the highest initial rates of any project in the quarter was a CVR <unk> 10 in our Stateline area.

Clay M. Gaspar: This three-mile Upper Wolf Camp development, which was made possible by an acreage trade, recorded average 30-day production rates of 5,600 BOE per day. Very few projects in the history of the Delaware Basin have reached this level of productivity, and the expected recovery from this project is also extraordinary, projected to exceed two million BOE per well. And lastly, I would like to cover a key appraisal success that we had in the quarter in the Wolf Camp B interval of our thistle area.

Clay M. Gaspar: This three mile Upper Wolfcamp development was made possible by the acreage trade.

Clay M. Gaspar: Recorded average 30 day production rates of 5600 Boe per day.

Clay M. Gaspar: Very few projects in the history of the Delaware Basin have reached this level of productivity and the expected recovery from this project are also extraordinary projected to exceed 2 million Boe per well.

Clay M. Gaspar: And lastly, I would like to cover our key appraisal success that we had in the quarter and the Wolfcamp b interval of our Thistle area.

Clay M. Gaspar: This proof-of-concept well came in significantly above our pre-drill expectations, with peak rates for this single appraisal well exceeding 5,000 BOE per day. This positive result adds to our resource depth in Delaware by de-risking approximately 50 locations in the area. While the hydrocarbon stream and the deeper Wolf Camp intervals generally shift towards higher gas rates, the oil cuts are strong enough for this opportunity to compete very effectively for capital in our portfolio. Given this, we expect to incorporate more Wolf Camp B-wells into our future multi-zone developments as we plan for our 25 program and beyond.

Clay M. Gaspar: This proof of concept well came in significantly above our pre drill expectations with peak rates for the single appraisal well exceeding 5000 Boe per day.

Clay M. Gaspar: This positive result adds to our resource depth in the Delaware by Derisking approximately 50 locations in the area.

Clay M. Gaspar: While the hydrocarbon stream in the deeper wolfcamp intervals generally shift towards a higher gas rates. The oil cuts are strong enough for this opportunity to compete very effectively for capital in our portfolio.

Clay M. Gaspar: Given this we expect to incorporate more wolfcamp b wells into our future multi zone developments as we plan for our 25 program and beyond.

Clay M. Gaspar: Turning to slide 9, we are clearly off to a great start with our 2024 plan in Delaware. As you can see on the left, our well productivity is on track to materially improve year over year. As a reminder, this improvement is driven by returning to a higher allegation of capital in New Mexico, where our inventory depth is the greatest. It is important to note that we have not changed spacing or lateral length to achieve these improvements.

Clay M. Gaspar: Turning to slide nine we are clearly off to a great start with our 2024 plan in the Delaware as you can see on the left our well productivity is on track to materially improve year over year.

Clay M. Gaspar: As a reminder, this improvement is driven by returning to a higher allocation of capital to new Mexico, where our inventory depth is the greatest.

Clay M. Gaspar: It is important to note that we have not changed spacing or lateral linked to achieve these improvements.

Clay M. Gaspar: Importantly, as you can see to the right of this slide we're also pairing this with improved well productivity in the Delaware basin with efficiency gains.

Clay M. Gaspar: Importantly, as you can see on the right of this slide, we're also pairing this with improved well productivity in the Delaware Basin and efficiency gains. The adoption of SimulFrac across the board, across the broader segment of our activity, has been a key driver of compressed cycle times, but the high grading of rig fleets to also drive down overall well cost is contributing. I want to congratulate the teams for this success and expect this momentum in Delaware to continue as we work our way through the year.

Clay M. Gaspar: The adoption of simultaneously across the board.

Clay M. Gaspar: Segment across the broader segment of our activity has been a key driver of compress cycle times, but the high grading of rig fleets to also drive down overall well cost is contributing.

Clay M. Gaspar: I want to congratulate the teams for this success and expect this momentum in the Delaware, Delaware to continue as we work our way through the year.

Clay M. Gaspar: We included slide 10 to remind everyone of the recent infrastructure build-out that we either led, participated in, or just are benefiting from. Our patience in giving this highly prolific area some breathing room for this infrastructure to mature was the right decision from an economic perspective as well as an environmental standpoint. Slide 11 is an updated view of Inveress' remaining inventory of the top Delaware Basin producers, as you can see from this credible third party's perspective.

Clay M. Gaspar: We included slide tend to remind everyone of the recent infrastructure Buildout that we either led participated in or just are benefiting from our.

Clay M. Gaspar: Our patients and giving this highly prolific area some breathing room for this infrastructure to mature was the right decision from an economics perspective, as well as an environmental standpoint.

Clay M. Gaspar: Slide 11 is an updated view of.

Clay M. Gaspar: <unk> remaining inventory of the top Delaware basin producers.

Clay M. Gaspar: As you can see from this credible third parties perspective.

Clay M. Gaspar: We have one of the largest inventories among operators in the basin, providing us with a multi-decade resource that will drive enterprise-wide performance for many years to come. While the Delaware Basin is the driving force behind our performance, we do value a diversified portfolio across the very best oil and liquids-rich basins in the United States. I would also like to briefly highlight a few items from those basins.

Clay M. Gaspar: We have one of the largest inventories among operators in the basin, providing us with a multi decade resource that will drive enterprise.

Clay M. Gaspar: <unk> performance for many years to come.

Clay M. Gaspar: While the Delaware Basin is the driving force behind our performance, we do value a diversified portfolio across the very best oil and liquids rich basins in the United States.

Clay M. Gaspar: I would also like to briefly highlight a few items from those basis.

Clay M. Gaspar: In Eagleford, the steps we have taken to tighten our capital efficiency are yielding results. In the first quarter, we brought 26 infill wells online and a handful of highly successful refracts that resulted in an oil growth rate of 7% year over year. Importantly, we're able to deliver this growth while spending 13% less capital versus the average run rate of 2023. This improved capital efficiency is driven by fewer appraisal requirements to tactically advance our redevelopment of the field, along with the benefits of a more balanced program across our assets in DeWitt and Carnes County.

Clay M. Gaspar: In the Eagle Ford the steps, we've taken to tighten our capital efficiency are yielding results in the first quarter. We brought online 26 infill wells and a handful of highly successful re fracs that resulted in oil growth rate of 7% year over year importantly.

Clay M. Gaspar: Importantly, we're able to deliver this growth while spending 13% less capital versus the average run rate of 2023.

Clay M. Gaspar: This improved capital efficiency is driven by less appraisal requirements to tactically advance our redevelopment of the field along with the benefits of a more balanced program across our assets and to wit and Karnes counties.

Clay M. Gaspar: In the Williston Basin, production increased 9% in the quarter. This performance exceeded our internal expectations due to excellent well productivity in the core of the play from our Bull Moose and North John Elk projects and Better Uptimes from our base production. For the full year, the oil-weighted production stream for this asset is on track to generate up to $500 million of cash flow for the company. Moving to the Powder River Basin, our activity in 2024 is designed to build upon the well productivity gains we achieved last year, where our nine Niobrara wells increased flow rates by 20 percent from historic levels.

Clay M. Gaspar: In the Williston basin production increased 9% in the quarter.

Clay M. Gaspar: This performance exceeded our internal expectations due to excellent well productivity in the core of the play from our Bull Moose and North John <unk> projects and better uptime from our base productions.

Clay M. Gaspar: For the full year the oil weighted production stream for this asset is on track to generate up to $500 million of cash flow for the company.

Clay M. Gaspar: Moving to the powder River basin, our activity in 2024 is designed to build upon the well productivity gains we achieved last year, where our nine Niobrara wells increased flow rates by 20% from historic levels.

Clay M. Gaspar: For the rest of 2024, we plan to bring online around 10 Niobrara wells across our acreage in Converse County. The objective of this activity is to refine our view on spacing and optimize completions designs to drive down costs as we advance this area towards full field development. Lastly, in the Anadarko Basin, with the recent weakness in gas prices, our capital activity was limited to one project placed online in the first quarter, but the flow rates were very impressive.

Clay M. Gaspar: For the rest of 2024, we plan to bring online around.

Clay M. Gaspar: 10, Niobrara wells across our acreage in converse County.

Clay M. Gaspar: The objective of this activity is to refine our view on spacing and optimized completions designs to drive down costs as we advance this area towards full field development.

Clay M. Gaspar: Lastly, in the Anadarko basin with the recent weakness in gas price our capital activity was limited to one project placed online in the first quarter, but the flow rates were very impressive.

Clay M. Gaspar: The Allen Pad, which co-developed both the Merrimack and Woodford formations, achieved peak cumulative rates for this pad of 5 wells exceeding 20,000 BOE per day, with liquids comprising nearly 40% of the production mix. As we look to the rest of 2024, we're reducing activity to two rigs in our Dow JV area and intend to bring online the majority of the activity in the second half of the year to capture the higher gas price expected in the winter months.

Clay M. Gaspar: The Allen pad the co developed both the Meramec and Woodford formations achieved peak cumulative rates for this pad of five wells exceeding 20000 Boe per day with liquids, comprising nearly 40% of the production mix.

Clay M. Gaspar: As we look to the rest of 2024, while reducing activity to two rigs in our Dow JV area and intend to bring online the majority of the activity in the second half of the year to capture the higher gas price expected in the winter months.

Clay M. Gaspar: In summary, I'm proud of the capital-efficient results that our team delivered this quarter and the strong momentum that we have built as we look to execute on our plan over the remainder of the year and beyond. And with that, I'll turn the call over to Jeff for a financial review.

Clay M. Gaspar: In summary, I'm proud of the capital efficient results that our team has delivered this quarter and the strong momentum that we have built as we look to execute on our plan over the remainder of the year and beyond and.

Clay M. Gaspar: And with that I'll turn the call over to Jeff for a financial review Jeff.

Jeffrey L. Ritenour: Thanks, Clay. I'll spend my time today covering the key drivers of our first quarter financial results and provide some insights into our outlook for the rest of the year. Beginning with production, we had very strong results across the board in the first quarter driving our improved full year outlook. Looking specifically at the second quarter, we expect this production momentum to continue, with volumes increasing to a range of 670,000 to 690,000 BOE per year.

Jeff: Thanks Clay.

Jeffrey L. Ritenour: This expected growth is driven by higher completion activity in the Delaware Basin, resulting from the four frack crews we put to work at the beginning of the year in the core of southeast New Mexico. On the capital front, we remain confident in our guidance range for the full year. Spending will be slightly skewed to the first half of the year, roughly 55% of our budget, due primarily to the cadence of Delaware completion activity. This spending will begin to moderate as we move from four to three frac crews in Delaware, resulting in a lower capital spending profile in the second half of the year.

Jeffrey L. Ritenour: In my time today, covering the key drivers of our first quarter financial results and provide some insights into our outlook for the rest of the year.

Jeffrey L. Ritenour: Gaining with production, we had very strong results across the board in the first quarter driving our improved full year outlook.

Jeffrey L. Ritenour: Looking specifically at the second quarter, we expect this production momentum to continue with volumes increasing to a range of 670000 to 690000 Boe per day.

Jeffrey L. Ritenour: This expected growth is driven by higher completion activity in the Delaware basin, resulting from the fourth Frac crews, we put to work at the beginning of the year and the core of southeast New Mexico.

Jeffrey L. Ritenour: On the capital front, we remain confident in our guidance range for the full year spending will be slightly skewed to the first half of the year roughly 55% of our budget due primarily to the cadence of Delaware completion activity. This spending will begin to moderate as we move from four to three frac crews in the Delaware, resulting in a lower.

Jeffrey L. Ritenour: Capital spending profile in the second half of the year.

Jeffrey L. Ritenour: With regard to pricing the recent strength in price of oil has provided a meaningful impact to our returns and cash flow generation capabilities.

Jeffrey L. Ritenour: With regard to pricing, the recent strength in the price of oil has provided a meaningful impact on our returns and cash flow generation capabilities. For every dollar uplift in WTI, we generate around $100 million of incremental annual cash flow. On the gas side, we are experiencing weakness in Waha prices within the Permian, but as a reminder, our exposure is limited given our firm takeaway and basis hedging. Looking ahead, we expect this situation to improve with the Matterhorn pipeline scheduled to come online later this year.

Jeffrey L. Ritenour: For every dollar uplift and Debbie Ti, we generate around $100 million of incremental annual cash flow on.

Jeffrey L. Ritenour: On the gas side, we are experiencing weakness in wahhab pricing within the Permian, but as a reminder, our exposure is limited given our firm takeaway and basis hedging looking.

Jeffrey L. Ritenour: Looking ahead, we expect this situation to improve with the Matterhorn pipeline scheduled to come online later this year.

Jeffrey L. Ritenour: Moving to expenses, we did a good job controlling field level costs during the quarter, our lease operating and GP in T cost totaled $9 27 per Boe in the quarter coming in below the bottom end of our guidance range looking ahead to the rest of the year, we expect our field level cost to remain relatively stable and we feel very comfortable.

Jeffrey L. Ritenour: Moving to expenses, we did a good job controlling field-level costs during the quarter. Our lease operating and GP&T costs totaled $9.27 per BOE in the quarter, coming in below the bottom end of our guidance range. Looking ahead to the rest of the year, we expect our field-level costs to remain relatively stable, and we feel very comfortable with our full-year guidance ranges. Moving to the bottom line, we generated $1.7 billion of operating cash flow during the quarter.

Jeffrey L. Ritenour: With our full year guidance ranges.

Jeffrey L. Ritenour: Moving to the bottom line, we generated $1 7 billion of operating cash flow during the quarter. This level of cash flow funded all capital requirements and resulted in $844 million of free cash flow for the quarter with this free cash flow, we continued to prioritize share repurchases in the first quarter, we repurchased 205.

Jeffrey L. Ritenour: This level of cash flow funded all capital requirements and resulted in $844 million of free cash flow for the quarter. With this free cash flow, we continued to prioritize share repurchases in the first quarter. We repurchased $205 million of stock in the quarter, bringing our total activity to $2.5 billion since the program's inception in late 2021. With the $3 billion authorization in place, we have plenty of runway to compound our per share growth as we work our way through the year.

Jeffrey L. Ritenour: In dollars of stock in the quarter, bringing our total activity to $2 5 billion since the program's inception in late 2021 with a $3 billion authorization in place we have plenty of runway to compound our per share growth as we work our way through the year.

Jeffrey L. Ritenour: In addition to our buyback program and other key use of our excess cash in the quarter was the funding of our fixed plus variable dividend with the board declaring a payout of <unk> 35 per share. This distribution will be paid at the end of June.

Jeffrey L. Ritenour: In addition to our buyback program, another key use of our excess cash in the quarter was the funding of our fixed plus variable dividend, with the board declaring a payout of $0.35 per share. This distribution will be paid at the end of June.

Richard E. Muncrief: And to round out my prepared remarks this morning, I'd like to give a brief update on our investment-grade financial position. In the first quarter, our cash balance increased by $274 million to a total of $1.1 billion. With this increased liquidity, Devon exited the quarter with a very healthy net debt-to-EBITDA ratio of 0.7 times. Looking ahead, with the excess free cash flow that accrues to our balance sheet, we plan to build liquidity and retire maturing debt.

Jeffrey L. Ritenour: And to round out my prepared remarks. This morning, I'd like to give a brief update on our investment grade financial position in the first quarter, our cash balances increased by $274 million to a total of $1 1 billion.

Richard E. Muncrief: With this increased liquidity, Devin and exited the quarter with a very healthy net debt to EBITDA ratio of <unk> seven times 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.

Richard E. Muncrief: Our next debt maturity comes due in September of this year, totaling $472 million, and we'll have the opportunity to retire another $485 million of notes in late 2025. And with that, I'll now turn the call back over to Rick for some closing comments.

Richard E. Muncrief: And we will have the opportunity to retire another $485 million of notes in late 2025, and with that I'll now turn the call back over to Rick for some closing comments.

Richard E. Muncrief: Thank you, Jeff. To wrap up our prepared remarks this morning, I want to reinforce a few key messages. Number one, we're delivering on exactly what we promised to do, and then some, in the first quarter. Our disciplined execution and outperformance of the plan demonstrates the momentum that we've established, setting the stage for our business to strengthen as we go through the year. Secondly, with this great start to the year, we're raising our 2024 production guide.

Rick: Thank you Jeff to wrap up our prepared remarks. This morning, I want to reinforce a few key messages number one we're delivering on exactly what we promised to do and then some in the first quarter, our disciplined execution and outperformance of the plan demonstrates the momentum that we've established setting the stage for our business to strengthen us.

Richard E. Muncrief: We go through the year.

Richard E. Muncrief: Secondly, with this great start to the year, we're raising our 2024 production guidance. This improved outlook is underpinned by efficiency gains from excellent well productivity faster cycle times and better base production results anchored.

Richard E. Muncrief: This improved outlook is underpinned by efficiency gains from excellent well productivity, faster cycle times, and better base production results, anchored by our franchise asset in Delaware. Number three, furthermore, this improved outlook is also manifesting in higher free cash flow that will translate into higher cash returns for our shareholders. Given the value proposition that we offer, the best thing we can do is prioritize repurchasing our shares. And lastly, our long-duration resource base is one of the deepest of any company out there.

Richard E. Muncrief: Anchored by our franchise asset in the Delaware.

Richard E. Muncrief: Number three. Furthermore, this improved outlook is also manifest in higher free cash flow that will translate into higher cash returns for our shareholders.

Richard E. Muncrief: Given the value proposition that we offer the best thing we can do is prioritize repurchasing our shares.

Richard E. Muncrief: And lastly, our long duration the resource base is one of the deepest of any company out there. We continue to find ways to add resource you heard some of that this morning. This was evidenced by our continued success in Wolfcamp B positive redevelopment results in Eagle Ford and productivity breakthroughs in the powder River basin and with.

Richard E. Muncrief: We continue to find ways to add resources. You heard some of that this morning. This was evidenced by our continued success in Wolf Camp B, positive redevelopment results in Eagleford, and productivity breakthroughs in Powder River Basin. And with that, I'll now turn the call back over to Scott for Q&A.

Richard E. Muncrief: I'll now turn the call back over to Scott for 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 will allow us to get to more of your questions on the call today. With that, operator, we'll take our first question.

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

Scott Coody: Thank you. Our first question comes from Iron JA around with Jpmorgan. Your line is open. Please go ahead.

Operator: Thank you. Our first question comes from Arun Jayaram with J.P. Morgan. Your line is open. Please go ahead.

Arun Jayaram: Yes, good morning.

Arun Jayaram: Yeah, good morning, team. I was wondering if you could elaborate on the improvement in the midstream situation in the Delaware Basin and just talk about, you know, and one of the questions coming in is just, is there any caution built in to the second half guide, given the fact that you outperformed in one cue despite some of the weather issues?

Arun Jayaram: <unk> I was wondering if you could elaborate on the improvement in the midstream situation in the Delaware Basin.

Arun Jayaram: And just talk about it.

Arun Jayaram: And one of the questions coming in is just is there any conservative built in to the second half guide given the fact that you outperformed in <unk>. Despite some of the weather issues.

Speaker Change: Yeah, Arun I think you are alluding to the infrastructure spend that we had last year, which has cleared up a lot of the gas processing bottlenecks in some of the other challenges that we had around water movement in and electricity. The team has done a great job of getting ahead of that we're spending call. It 101 hundred $15 million a year in the Delaware.

Richard E. Muncrief: Yeah, Arun, I think you're alluding to the infrastructure spin that we had last year which has cleared up a lot of the gas processing bottlenecks and some of the other challenges that we had around water movement and electricity. The team's done a great job of getting ahead of that. We're spending, call it, $100 and $115 million a year in Delaware to build out that compression in the gathering.

Richard E. Muncrief: To build out that compression in the gathering and.

Richard E. Muncrief: And as Clay mentioned in his prepared remarks, that served us really well as we walked in here to 2024 and has freed up a lot of capacity and availability for us to move the molecules. As it relates to the back half of our guide, we still feel really comfortable with the guide that we've laid out. We've made good progress, obviously, here in the first quarter. We'll continue to monitor things as we progress and provide you guys with updates as we move ahead. But needless to say, we feel really good about how things are working operationally in the basin and, frankly, across all of our core areas.

Richard E. Muncrief: And as Clay mentioned in his prepared remarks that served us really well as we walked in here to 2024 and is freed up.

Operator: Great. And maybe one for Clay, too.

Operator: Lot of capacity and availability for us to move the molecules.

Operator: As it relates to the back half of our guide we still feel really comfortable with the guide that we've laid out we've gotten good progress obviously here in the first quarter. We will continue to monitor things is as we progress and provide you guys updates as we move ahead, but needless to say, we feel really good about how things are working operationally in the basin and.

Operator: And frankly across all of our all of our core areas.

Operator: Great.

Clay M. Gaspar: Clay, you highlighted how you're seeing good performance from the REFRAC program in the Eagle Ford. I was wondering if you could shed some more light on, you know, what types of returns that you're seeing from the REFRAC program, maybe relative to primary development, and do you see an opportunity here in the Eagle Ford as well as in the Bakken for more of this type of activity? Yeah, thanks for the question.

Operator: Maybe one for clay Clay you highlighted how youre seeing good performance from the re Frac program.

Clay M. Gaspar: In the Eagle Ford I was wondering if you could shed some more light.

Clay M. Gaspar: What types of returns.

Clay M. Gaspar: You are seeing from the Refract program, maybe relative to primary development and do you see an opportunity here in the Eagle Ford as well as in the Bakken for more of this type of activity.

Clay: Yes. Thanks for the question it is becoming a more core piece of what we do I think this is on the back of years of trying to figure out whats working whats not when you post appraise and kind of look at industry performance I would say, we've got a lot of mixed results. When you start fine tuning a little bit and look at more recent.

Clay M. Gaspar: Yeah, thanks for the question. It is becoming a more core piece of what we do. I think this is on the back of years of trying to figure out, you know, what's working, and what's not. When you post praise and kind of look at industry performance, I would say we've got a lot of mixed results. When you start fine-tuning a little bit and look at more recent performance, some of the work that we're doing, you see some really encouraging results.

Clay M. Gaspar: Thats some of the work that we're doing you see some really encouraging results and that's on the back of making sure that we understand the well construction the opportunity from a geology standpoint that initial completion design and really focusing on the best opportunities and then also obviously refining our our techniques that we're using to do some of these operations.

Clay M. Gaspar: And that's on the back of making sure that we understand the well construction, the opportunity from the geology standpoint, that initial completion design, and really focusing on the best opportunities. And then also, obviously, refining our techniques that we're using to do some of these operations. I would say the wells that we are putting online this year, approximately 25 refracts, compete very favorably with the wells that we're drilling on a heads-up basis, new well construction.

Clay M. Gaspar: I would say the wells that we are putting online this year approximately 25 refracts compete very favorably with the wells that we're drilling on a heads up basis, new well construction. So very encouraged about what we're seeing and I think there's more runway to go on the Williston Basin I would characterize the Williston is a little earlier in the process.

Clay M. Gaspar: So, very encouraged about what we're seeing, and I think there's more runway to go. For the Williston Basin, I would characterize the Williston Basin as a little earlier in the process. Again, you draw a big circle around the Williston, you post praise for what the refracts look like. I think it's a little bit more of a mixed bag. But I'm still highly, highly encouraged. I mean, in every one of these very prolific basins, we're still recovering a very small amount of the total resource in place, and I'm very encouraged about where we sit as a multi-basin resource play company in some very high-quality opportunities to continue to get smarter on how we create value from these amazing opportunities. And so more to come on that.

Clay M. Gaspar: When you draw a big circle around the Williston you post appraise what the Refracts looked like I think it is a little bit more of a mixed bag.

Clay M. Gaspar: Im still highly highly encouraged I mean and every one of these very prolific basins. It's still we're still recovering a very small amount of the total resource in place and I am very encouraged about where we sit in a multi basin resource play company and some very high quality opportunities to continue to get smarter on how.

Clay M. Gaspar: Do we.

Clay M. Gaspar: Create value from these amazing opportunities and so more to come on that.

Speaker Change: Great. Thanks, a lot.

Clay M. Gaspar: Wait outside Neil Mehta with Goldman Sachs. Your line is open. Please go ahead.

Operator: We now turn to Neal Mehta with Goldman Sachs. Your line is open, please go ahead.

Neil Singhvi Mehta: Yeah, good morning team, and good to see that inflection in Delaware this quarter. I'd love you guys to spend a little bit of time talking about return of capital, and while in the past you have leaned towards the variable dividend, there's been a noticeable, shift towards the share buyback program. Why do you think that's the right decision, and how should we think about the magnitude of the return of capital over the next few years?

Neil Singhvi Mehta: Yes, good morning team and good to see that inflection in the Delaware This quarter.

Neil Singhvi Mehta: I'd Love for you guys to spend a little bit of time talking about return of capital in.

Neil Singhvi Mehta: In the past you have leaned towards the variable dividend. There's a notable noticeable shift towards the share buyback program why do you think thats. The right decision how should we think about the magnitude of return of capital over the course of the year.

Speaker Change: Yes, Thanks, Neil as you know a couple of quarters ago, we rolled out but rolled out a slight change to our framework and we.

Jeffrey L. Ritenour: Yeah, thanks, Neal. As you know, a couple quarters ago, we rolled out a slight change to our framework and, you know, leaned in on 70 percent of our free cash flow is going to go back to shareholders via our fixed dividend share repo and then the variable. And also, we made a commitment to building some cash on the balance sheet to manage the maturities that are referenced in my opening comment.

Jeffrey L. Ritenour: Leaned in on 70% of our of our free cash flow is going to go back to shareholders via our fixed dividend share repo and then the variable.

Jeffrey L. Ritenour: And then also we made a commitment to building some cash to the balance sheet to manage the maturities that I referenced in my opening comments. So that continues to be our game plan and our expectations specific to the share buyback without question with that with the underperformance, we saw on a relative and absolute basis last year.

Jeffrey L. Ritenour: So that continues to be our game plan and our expectation specific to the share buyback, you know, without question with the underperformance we saw on a relative and absolute basis last year in the equity market for our shares. And, you know, based on all the work that we do internally, all the modeling work that we do around intrinsic value, it's pretty clear to us that the best thing that we can be doing with that free cash flow is leaning in on the share buyback.

Jeffrey L. Ritenour: The equity market for our shares.

Jeffrey L. Ritenour: And based on all the work that we do internally all the modeling work, we do around intrinsic value, it's pretty clear to us that the best thing that we can be doing with the <unk>.

Jeffrey L. Ritenour: With that free cash flow is leaning in on the share buyback and so that's what you've seen us do the last couple of quarters and.

Jeffrey L. Ritenour: And so that's what you've seen us do in the last couple quarters, and we would expect that to continue as we walk forward into 2024. You know, this pace of call it 200, $275 million a quarter currently feels about right. You know, obviously, as we work our way through this year and our capital spending will moderate, as we talked about in our opening comments, I think there's even the potential for, you know, a little incremental lean in on that as well. But we feel really good about the share repurchase program, the results that we've been delivering there, and we would expect that pace to continue.

Jeffrey L. Ritenour: And we would expect that to continue as we walk forward and into 2024. This pace of call. It 200 $275 million a quarter currently that feels about right. Obviously as we as we work our way through this year.

Jeffrey L. Ritenour: And our capital spending will moderate as we as we talked about in our opening comments I think there's even the potential for a little incremental.

Jeffrey L. Ritenour: Lean in on that as well, but we feel really good about the share repurchase program. The results that we've been delivering there and would expect that pace to continue.

Speaker Change: That's helpful. And then the follow up is just on.

Jeffrey L. Ritenour: That's helpful. And the follow-up is just on local gas prices. Obviously, they're under a lot of pressure as we wait for Matterhorn to come online in the Permian. So, any thoughts on timing for that pipeline? And as you look out, big picture over the next couple of years, how long before we need the next pipe, but do we have visibility yet?

Jeffrey L. Ritenour: On local gas prices, obviously, they're under a lot of pressure as we wait for Matterhorn too.

Jeffrey L. Ritenour: To come online in the Permian, So just any thoughts on timing of.

Jeffrey L. Ritenour: That pipeline and as you look out big picture over the next couple of years, how long before we need the next pipe, but do we have visibility into it.

Jeffrey L. Ritenour: Yes, you bet Neal this is Jeff again.

Jeffrey L. Ritenour: Yeah, you bet, Neal. This is Jeff again.

Jeff: Great question, and certainly something we've been talking a lot about internally and externally first of all I'll just say.

Jeffrey L. Ritenour: Great question and certainly something we've been talking a lot about internally and externally. First of all, I'll just say, you know, Matterhorn, we expected to come on at the end of the third quarter to answer your question directly. I want to highlight that we haven't had any issues moving our molecules despite the volatility that you've seen in Waha pricing and the kind of downward trajectory of pricing here over the last month and a half. We feel like we're in a pretty good position.

Jeff: Matterhorn, we expect it to come on at the end of the third quarter to answer your question directly I want to highlight that we haven't had any issues moving all of our molecules. Despite the volatility that you've seen in <unk> pricing.

Jeffrey L. Ritenour: And that kind of the downward trajectory of pricing here over the last call it month or month and a half.

Jeffrey L. Ritenour: We feel like we're in a pretty good position Matterhorn, obviously going to help that when we get to the back half of the third quarter, but just as a reminder, we move about two thirds of our gas out of basin to the Gulf Coast via the firm transport that we have in place and then another 15% of our Delaware gas is protected via the the hedge program that we.

Jeffrey L. Ritenour: Matterhorn's obviously going to help that when we get to the back half of the third quarter. But just as a reminder, we move about two-thirds of our gas out of Basin to the Gulf Coast via the firm transport that we have in place. And then another 15 percent of our Delaware gas is protected via the hedge program that we execute each quarter. So that's helping as well. That remaining gas that is exposed to Waha, one thing to keep in mind is that about 75 percent of that gas is first of the month.

Jeffrey L. Ritenour: We execute each quarter, so that's helping as well that remaining gas that is exposed to wahoo one thing to keep in mind is about 75% of that gas is first demand. So we don't see all the volatility that you are looking at on the screen as it relates to the day to day when maintenance issues happening.

Jeffrey L. Ritenour: So we don't see all the volatility that you are looking at on the screen as it relates to the day-to-day when maintenance issues happen and other challenges out in the Basin. So we feel like we're protected pretty well from the bit of exposure that we do have and certainly expect that Matterhorn's going to help, you know, relieve some of that pressure when we get into the third quarter. As it relates to other projects, there are a handful of other projects that our teams are engaged in discussions with third-party pipeline providers.

Jeffrey L. Ritenour: Other challenges out in the basin. So we feel like we're protected pretty well from the bit of exposure that we do have and certainly expect that matterhorn is going to help relieve some of that pressure when we get into the third quarter as it relates to other projects. There is a handful of other projects that our teams are.

Jeffrey L. Ritenour: Engaged in discussions with third party pipeline providers.

Jeffrey L. Ritenour: You know, as it relates to timing, I can't give you a specific answer, but I do think within the next, you know, six to 12 months, we'll see another FID in the pipe. And certainly, as you know, Devin, historically, we've got a track record of leaning in to help those projects get off the ground, whether it be volume commitments or, in the case of Matterhorn, we actually made an equity investment as well. So we're certainly going to be supportive of those projects. And like most others in the industry, we think that you're going to need another pipeline here within another 18, 24 months.

Jeffrey L. Ritenour: As it relates to timing I can't give you a.

Jeffrey L. Ritenour: A specific answer but I do think within the next.

Jeffrey L. Ritenour: Six to 12 months.

Jeffrey L. Ritenour: See another I'd and a pipe and certainly as you know Devin historically, we've got a track record of leading in to help those projects get off the ground, whether it be volume commitments or in the case of Matterhorn, we actually made an equity investment as well. So we're certainly going to be supportive of all of those projects and like.

Jeffrey L. Ritenour: Like most others in the industry, we think that youre going to need another pipeline here with another 18 24 months.

Operator: Thanks, Sam. Thanks, Jeff.

Devin: Thanks, Jeff.

Speaker Change: Our next question comes from <unk> Kumar with Mizuho. Your line is open. Please go ahead.

Operator: Our next question comes from Nitin Kumar with Mizuho. Your line is open, please go ahead.

Nitin Kumar: Hi, good morning, Rick and team and good to see the Delaware is back on.

Nitin Kumar: Hi, good morning, Rick and team, and good to see the Delawares back on the track. I kind of want to peel the onion a little bit here on slide nine. It sounds like, based on what Clay was saying, that you expected a production and productivity improvement as you went back into New Mexico, and it's really the drilling and completion efficiencies and infrastructure that's driving the improvement. But could you perhaps help us quantify, you know, what was the contribution of the two things and how sustainable that is going forward?

Nitin Kumar: Correct.

Nitin Kumar: Sure.

Nitin Kumar: Peel the onion, a little bit here on the slide nine.

Nitin Kumar: It sounds like based on what clay was saying that you.

Nitin Kumar: You'd expected the production productivity improvement as you went back into new Mexico, and it's really the drilling and completion efficiencies and infrastructure.

Nitin Kumar: That's driving the improvement.

Nitin Kumar: But could you perhaps help us quantify.

Nitin Kumar: What was the contribution of the two things and how sustainable that is going forward.

Nitin Kumar: Yes.

Clay M. Gaspar: Yeah, thanks for the question, Nitin, and for the clarification. Both Rick and I covered this in our previous...

Speaker Change: Then the clarification.

Clay M. Gaspar: Yes.

Clay M. Gaspar: Sure.

Clay M. Gaspar: One.

Operator: I'm sorry about that. I'm sorry.

Speaker Change: I'm, sorry about that sorry.

Speaker Change: Thanks for asking the question and allowing us to clarify this we both Rick and I covered this in our prepared remarks, but there is three big contributions to the outperformance number one on the list probably 60% 60% of the outperformance was well productivity.

Clay M. Gaspar: Thanks for asking the question and allowing us to clarify this. We both covered this in our prepared remarks, but there were three big contributions to the outperformance. Number one on the list, probably 60 percent of the outperformance, was productivity. That really drove the outperformance. Second was the efficiency at which we're bringing them in. We had a couple of more days online here and there. Cumulatively, that adds up.

Clay M. Gaspar: And that really drove the outperformance second was the efficiency at which we're bringing them in we had a couple of more days online here and there cumulatively that adds up and then third very importantly from a base standpoint, both from a midstream standpoint from a weather standpoint, just how we're operating our wells we really.

Clay M. Gaspar: And then third, very importantly, from the base standpoint, both from a midstream standpoint, from a weather standpoint, just how we're operating our wells, we really outperformed historical performance there. So thanks for the opportunity to clarify that. Maybe we weren't clear on that.

Clay M. Gaspar: Outperformed historical performance there so.

Clay M. Gaspar: Thanks for the opportunity to clarify that maybe we weren't clear on that.

Nitin Kumar: No, great. I just wanted to make sure.

Speaker Change: Great I just wanted to make sure.

Speaker Change: And I guess my second question is.

Nitin Kumar: Correct.

Speaker Change: A lot of M&A.

Speaker Change: In the industry.

Speaker Change: And I know that you've talked about the importance of scale in the.

Speaker Change: And the new shale business.

Speaker Change: As you look at the remaining landscape how are you.

Speaker Change: Comfortable with your current portfolio are there areas, where you feel that you could optimize it further.

Richard E. Muncrief: I guess my second question is, for Rick, you know, we've seen a lot of M&A in the industry. And I know that you've talked about the importance of scale in the new shale business. As you look at the remaining landscape, are you comfortable with your current portfolio? Or are there areas where you feel like you could optimize it further?

Speaker Change: Number one.

Speaker Change: We are very comfortable with our portfolio.

Rick: I think it's got one we have one of the highest quality portfolios in.

Rick: Multiple multiple basins would really I think plays to our advantage.

Speaker Change: We will always look at things.

Richard E. Muncrief: You know, number one, Nitin, we are very comfortable with our portfolio. We think it's got one, we have one of the highest quality portfolios and, you know, we're in multiple basins, which really, I think, plays to our advantage. You know, we'll always look at things, but our bottom line is we have a very, very high bar, and we're very comfortable with where we are. Can we find something that makes us stronger?

Rick: Our bottom line is we have a very very high bar and we were very comfortable with where we're at can we find something that makes us stronger.

Speaker Change: We would consider that without a doubt but at the end of the day.

Richard E. Muncrief: We would consider that without a doubt. But, you know, at the end of the day, our game plan has not changed. High bar, we recognize the quality of our portfolio. You're seeing the results coming from this portfolio. We feel very good about sustainability. And that's not just our view.

Richard E. Muncrief: Our game plan has not changed.

Richard E. Muncrief: We recognize the quality of our portfolio Youre seeing the results coming from this portfolio, we feel very good about sustainability.

Richard E. Muncrief: Not just our view.

Richard E. Muncrief: That's, you know, you can look at, as a matter of fact, we left, we put a slide in your own slide deck just showing the quality of our portfolio versus many of our peers. And so, at the end of the day, our game plan is, year after year, we want to be right at the top of the leaderboard on capital efficiency, and we'll continue to get that free cash flow we generate back to our shareholders.

Richard E. Muncrief: You can look at.

Richard E. Muncrief: Matter of fact, we left we put a slide in your slide deck, just showing our quality of our portfolio.

Richard E. Muncrief: Versus many of our peers and so at the end of the day. Our game plan is year after year, we want to be right at the top of the leader Board on capital efficiency capital efficiency.

Richard E. Muncrief: And we will continue to get that.

Richard E. Muncrief: Free cash flow, we generate vectra shareholders, so but as far as the question around the consolidation I think our game plan has been solid for several years now we had participated we help kicked a lot of the consolidation all quite honestly and work really well and that's how that's how we've developed is a great portfolio that we have.

Richard E. Muncrief: But as far as the question around consolidation, I think our game plan has been solid for several years now. We have participated, and we helped kick a lot of the consolidation off, quite honestly. It worked really well, and that's how we've developed this great portfolio.

Speaker Change: Okay. Thanks for the color guys.

Operator: Hey, thanks for the color guys.

Operator: We now have answers Scott Gruber with Citi. Your line is open. Please go ahead.

Operator: We now turn to Scott Gruber with Citi. Your line is open, please go ahead.

Scott Andrew Gruber: Yes, thanks for taking my question. I'm just curious, you know, with the improved productivity, you know, both on the surface and in the wells in the Permian, do you feel like the production profile for the full year could be a bit smoother, a bit more stable in the second half?

Scott Andrew Gruber: Yes, thanks for taking my question.

Scott Andrew Gruber: I'm just curious.

Scott Andrew Gruber: Crew productivity.

Scott Andrew Gruber: Hey, both on the surface.

Scott Andrew Gruber: And.

Scott Andrew Gruber: And on the wells in the Permian.

Scott Andrew Gruber: You feel like the production profile for the full year could be.

Scott Andrew Gruber: Yes.

Scott Andrew Gruber: <unk> been more stable in the second half.

Speaker Change: Yes. Thanks for the question Scott as we have done in years past, we are frontloaded on capital about 55% in the front half of the year, 45% in the bag and that's really driven by that fourth Frac crew, obviously that comes with more wells online in the front half of the year more growth and so think about it when we're running those.

Clay M. Gaspar: Yeah, thanks for this question, Scott. You know, as we have done in years past, we are front-loaded on capital, about 55% in the front half of the year, 45% in the back, and that's really driven by that fourth frac crew. Obviously, that comes with more wells online in the front half of the year, more growth, and so think about it when we're running those four frac crews that we are consuming some of the bent-up, tent-up ducks, and then we're running three frac crews.

Clay M. Gaspar: Four frac crews that we are consuming some of them tend to up Ducks and then we're running three frac crews are production rolling over a bit but we're also building a little bit of a DUC inventory and so as I expect and we've guided to first quarters in the bag second quarter, we've guided to it a little bit of additional growth.

Clay M. Gaspar: Our production's rolling over a bit, but we're also building a little bit of a duck inventory. And so, as I expect, and we've got the first quarter in the bag, second quarter we've got it with a little bit of additional growth, third and fourth, we'll see a little bit of a rollover on the back of lower completions activity, and then building those ducks, we'll be ready to get back to work with a fourth frac crew either late in the year or, more likely, early in 2025.

Clay M. Gaspar: Fourth we will see a little bit of a rollover on the back of lower completions activity and then building those ducks will be ready to get back to work with a fourth frac crew either late in the year or probably more likely early in 'twenty five.

Speaker Change: Got it and then in the prepared remarks, you mentioned.

Scott Andrew Gruber: Got it. And then in the prepared remarks, you mentioned the potential to see some additional DNC deflation. Are you starting to see more equipment from, particularly, Hainesville migrate into Texas into the Eagleford and the Permian and start to loosen the rigging of the frack markets up?

Scott Andrew Gruber: Central to see some additional D&C deflation are you starting to see more equipment from particularly the haynesville.

Scott Andrew Gruber: Right into Texas into the Eagle Ford and the Permian start to loosen the break in the Frac market is up.

Scott Andrew Gruber: Scott we are we've baked in about 5% deflation from 'twenty three to 'twenty. Four we've continued with that mindset I think thats feels like its materializing pretty well there.

Clay M. Gaspar: Scott, we've baked in about 5% deflation from 23 to 24. And we've continued with that mindset.

Clay M. Gaspar: I think that feels like it's materializing pretty well. There is the potential, as we continue to run at this rig rate, that we could see a little bit more deflation, but what I would really caution you on, specifically regarding our guidance and why we reiterated our capital range, is that we're also seeing a little bit of an acceleration of opportunities. More efficient drilling and more efficient completions, which can put a little bit of positive pressure on that near-year capital number.

Clay M. Gaspar: There is a potential as we continue to run at this at this rig rate that we could see a little bit more deflation, but what I would really caution you on specifically to our guidance and why we reiterated our capital range is that we're also seeing a little bit of an acceleration of opportunities more efficient drilling more efficient completions, which you know.

Clay M. Gaspar: Can put a little bit of positive pressure on that near year capital number now the good news and I want to make sure. We're all clear on this both deflation and the efficiency gains are accretive to the bottom line of each of these drilling opportunity. So we're winning on both sides I just want to reiterate that we are.

Clay M. Gaspar: Now, the good news, and I wanna make sure we're all clear on this, both deflation and the efficiency gains are accretive to the bottom line of each of these drilling opportunities. So we're winning on both sides. I just wanna reiterate that we are reiterating our capital range and still feel good about where we're at there.

Clay M. Gaspar: We're reiterating our capital range and still feel good about where we're at there.

Speaker Change: I appreciate the color. Thank you. Thank you.

Operator: I appreciate the call. Thank you. Thank you.

Operator: Yes.

Operator: Our next question comes from Neal Dingmann with <unk> your.

Operator: Our next question comes from Neal Dingmann with Truist. Your line is open. Please go ahead.

Neal David Dingmann: Your line is open. Please go ahead.

Neal David Dingmann: Morning, guys. Thanks for taking my call. Quick, I'm just wondering, for you and Clay, I guess, looking at slide 7 on that Delaware plan, it looks like it's going quite well. I'm just wondering, if we looked at that plan, I mean, maybe it's too far, you know, to start talking about 25, but when we look at the plan for 2025, how different, you know, Clay, when we start seeing those areas that are laid out, might the 25 plan look versus 24?

Neal David Dingmann: Good morning, guys. Thanks for taking my call.

Speaker Change: And just one for you or clay I guess.

Neal David Dingmann: Looking at slide seven on that Delaware plan. It looks like it's gone quite good I'm. Just wondering we looked at that plant I mean, maybe it's two part.

Neal David Dingmann: Get to start talking about 25%.

Neal David Dingmann: The plan for 2025, how different.

Neal David Dingmann: Clay when we start seeing those areas that are laid out like the 25 plan look versus 24.

Neal David Dingmann: Neil.

Clay M. Gaspar: Neal, thanks for asking the question. We have a, you know, we are reverting back to about the same proportions that we were pre-23, that we are in 24 now. And so that's commensurate with the approximate portfolio ratio that we have, New Mexico to Texas, overall Delaware Basin to the balance of the rest of the company, and so think of 24 as a little bit more the norm. 23 was a little bit of an anomaly.

Clay: Thanks for asking the question. We have we are reverting back to about the same proportions that we were pre 2003.

Clay M. Gaspar: We are in 24, now and so that's commensurate with the approximate.

Clay M. Gaspar: Portfolio ratio that we have new Mexico to Texas.

Clay M. Gaspar: Overall, Delaware basin to the balance of the rest of the company and so think of <unk> 24 is a little bit more of the norm 23 was a little bit of an anomaly. We moved from about 70% in new Mexico to roughly about 60% in new Mexico and that little bit of inflection with visual was able to be seen in the overall average well productivity.

Clay M. Gaspar: We moved from about 70% in New Mexico to roughly about 60% in New Mexico, and that little bit of inflection was visual, was able to be seen in the overall average well productivity. So moving back to 2024, what we're doing now is a little bit more, I would say kind of steady state for what we expect rolling forward for 2025 and really beyond.

Clay M. Gaspar: <unk> so moving back to 2024 is what were doing now is a little bit more I would say kind of steady state for what we expect rolling forward for 25, it really and beyond.

Speaker Change: Now I would love to hear that and then secondly, just quickly on the Anadarko in Eagle Ford I mean, both.

Neal David Dingmann: Now, we'd love to hear that. And then, secondly, just quickly on Anadarko and Eagleford, I mean, both are producing about the same. You know, again, when you think about maybe the exit, or again, even 25 on either of those, should we think about those as remaining relatively flat? I just haven't heard you say too much about those. We're wondering anything you might add to either of those plays.

Neal David Dingmann: And about the same again when you think about maybe the exit or again, even 25 odd on either of those should we think about those as remaining relatively flattish havent heard you say too much on those wondering if anything you might add.

Neal David Dingmann: For either one of those places.

Speaker Change: Yes, I would say roughly.

Clay M. Gaspar: Yeah, I would say roughly, you know, we will continue to evaluate near-term opportunities there. We continue to be excited about the depth of inventory. We continue to find new things ahead of us that aren't even reflected in our current inventory models, so that continues to keep us excited. We're always evaluating what kind of screens should be at the front of the list, and I think this kind is really an answer to both of your questions.

Clay M. Gaspar: We will.

Clay M. Gaspar: We continue to evaluate near term opportunities. There we continue to be excited about the depth of inventory. We continue to find new things out ahead of us that really arent even reflected in our current inventory models. So that continues to keep US excited we're always evaluating what kind of screens to the front of the list.

Clay M. Gaspar: And I think this kind of.

Clay M. Gaspar: <unk> is really an answer to both of your questions remember the wells that we're bringing online specifically in the Delaware because it's just it's leading our performance a couple of years ago. These didn't screen nearly where we're seeing the results today. So our optimism about a couple of years from now what's really coming up in the portfolio and all of our basins remain very high.

Clay M. Gaspar: Remember, the wells that we're bringing online, specifically in Delaware, because it's leading our performance, a couple of years ago, these didn't screen nearly as well as we're seeing the results today. So our optimism about a couple of years from now about what's really coming up in the portfolio in all of our basins remains very high based on the fact that we've got a lot of smart people chipping away at really good ideas on how to always improve those recoveries a little bit more and, operationally, just do it a little bit more efficiently.

Operator: Makes sense. Thanks, Clay.

Operator: Based on the fact that we've got a lot of smart people chipping away at really good ideas on how to always improve those recoveries recoveries, a little bit more and operationally just do it a little bit more efficiently.

Speaker Change: Makes sense thanks clay.

Clay: You bet.

Roger David Read: Our next question comes from Roger read with Wells Fargo. Your line is open. Please go ahead.

Operator: Our next question comes from Roger Read with Wells Fargo. Your line is open, please go ahead.

Roger David Read: Yes. Thank you good morning.

Roger David Read: Yeah, thank you. Good morning. Congratulations on the quarter here. I'd just like to come back a little bit on comments from the opening about, you know, potentially repaying debt and trying to think about the uses of cash. In terms of, does it make sense to pay down debt given your balance sheets are already strong? Is that, you know, is there another use of cash we should think about here in terms of either more back to shareholders or, as has been asked a little bit earlier, something on the acquisition front, like, you know, build a little cash in front of needs?

Speaker Change: Congrats on the quarter here.

Roger David Read: Just like to come back a little bit on comments from my opening about.

Roger David Read: Essentially repaying debt and trying to think about the uses of cash.

Roger David Read: In terms of does it make sense to pay down debt given your balance sheet is already strong is that.

Roger David Read: Is there another use of cash we should think about here in terms of either more back to shareholders or.

Roger David Read: Has been asked a little bit earlier, something on the acquisition front.

Roger David Read: <unk> build a little cash.

Roger David Read: In front of need.

Roger David Read: Yes, Roger this is Jeff.

Jeffrey L. Ritenour: Yeah, Roger. This is Jeff. Again, we remain committed to the upcoming debt maturities that we have this year and next year. We continue to believe that, you know, in this business, with the volatility that we have, the wide swings that we can have in Kamai prices from, frankly, day-to-day, week-to-week, certainly quarter-to-quarter, it's important for us to maintain that strength in our balance sheet and that stability. And, frankly, it just provides us with a lot of optionality to do, you know, whether it be incremental share repurchases or, should we find the right opportunity, as Rick described, on the acquisition front, that'll be an option for us given the capacity that we'll have within the balance sheet.

Jeffrey L. Ritenour: We remain committed to the upcoming debt maturities that we have this year and next year. We continue to believe that in this business with the volatility that we have.

Jeffrey L. Ritenour: The wide swings that we can have in commodity prices from frankly day to day week to week certainly quarter to quarter. It is important for us to maintain that strengthen our balance sheet and that stability and frankly, it just provides us a lot of optionality to go do.

Jeffrey L. Ritenour: Whether it be incremental share repurchases or should we find the right opportunity as Rick described on the acquisition front that will be an option for us given the capacity that we will have within the balance sheet, but at this point in time, we're going to continue to focus on.

Jeffrey L. Ritenour: But at this point in time, we're going to continue to focus on building a little bit of cash on the balance sheet to handle those upcoming maturities, and then we'll see where things go from there.

Jeffrey L. Ritenour: Building, a little bit of cash to the balance sheet to handle those upcoming maturities.

Jeffrey L. Ritenour: And then we will see where things go from there.

Speaker Change: Fair enough.

Roger David Read: Fair enough. The other question is just to come back on what's called broadly the efficiencies, capital efficiencies, and completion efficiencies that are on slide nine. If you had to think about it from a, you know, kind of a place of credit, let's say, within the overall deflationary environment, the difference between, you know, lower rig rates or lower frack cost, relative to the improvement, what would you say is the more important one?

Speaker Change: The other question just to come back on the let's call. It broadly the efficiencies capital efficiencies completion efficiencies that are on slide nine if you add to think about it from.

Roger David Read: Couple of placing our credit lets say within the overall deflationary environment that the difference between.

Roger David Read: Rig rates or lower frac costs.

Roger David Read: Relative to the improvement.

Roger David Read: What would you say is the more important.

Roger David Read: Yes.

Roger David Read: Okay.

Clay M. Gaspar: You know, between those two, I would probably push a little bit more on the completions because you're, it's just a bigger ticket, but I would put ahead of that, you know, some deflation we're actually seeing in pipe. We, in the steel costs in 23, was by far the highest category. We've seen that rollover pretty materially. Hopefully, there's more to come there, but we're pretty objective about overall well cost. We feel good about our guide, where we are now. As I mentioned earlier, I'm hoping for a little bit more inflation, but I'm also very realistic that the efficiency gains that we have will make me hold the line on our capital guide.

Speaker Change: Between those two I would probably pushed a little bit more to the completions because it's just a bigger ticket.

Clay M. Gaspar: But I would put ahead of that some deflation we're actually seeing in pipe.

Clay M. Gaspar: In the steel costs in 2003 was by far the highest category, we've seen that rollover pretty materially hopefully there is more to come there, but we're pretty objective about overall well cost we feel good about our guide where we're at now as I mentioned earlier I'm, hoping for a little bit more inflation, but I'm also very realistic that the ifs.

Clay M. Gaspar: <unk> gains that we have made me hold the line on our capital guidance.

Speaker Change: If I could I just kind of wanted to clarify the question. So if I'm thinking about the efficiency gains like for example.

Roger David Read: If I could, I just kind of wanted to clarify the question. So if I'm thinking about the efficiency gains, like, you know, for example, more footage per day relative to a lower cost, just the flat cost of services, kind of, which one do you think you could lean into more aggressively here? Is it continued efficiencies on a footage per day basis, or lower costs just directly from the service? I think we continue to make great progress.

Roger David Read: More footage per day.

Roger David Read: Relative to a lower cost just flat cost services.

Roger David Read: Which one do you think.

Roger David Read: You could lean into more aggressively here or is it continued efficiencies on our footage per day basis or lower cost just directly from the service company.

Clay M. Gaspar: I think we continue to make great ground on the efficiencies, the days foot per day, and days spud to TD. I see those numbers continuing to head the right direction.

Roger David Read: I think we continue to make great ground on the efficiencies of the days foot per day days spud to TD I see those numbers continuing to head the right direction.

Clay M. Gaspar: The inflation, deflation, and actual rig cost itself, that's somewhat, you know; we run with the market there. We're always pressing for the best opportunity, and we always evaluate service providers, you know, based on their own capabilities and what that cost is. So we're not beholding to one particular company or one particular category. You know, we're pretty objective about taking the best opportunity to create the most value for our bottom line.

Clay M. Gaspar: Inflation deflation actual rig cost itself, that's somewhat we run with the market. There were always pressing for the best opportunity and we always evaluate service providers based on there.

Clay M. Gaspar: Their own capabilities and what that cost is so.

Clay M. Gaspar: We're not beholding to one particular company or one particular <unk>.

Clay M. Gaspar: <unk>, we're pretty objective about taking the best opportunity to create the most value for our bottom line.

Speaker Change: Okay. Thank you.

Speaker Change: You bet.

Kevin Moreland MacCurdy: We now turn to Kevin Mccarthy with Pickering Energy partners.

Operator: We now turn to Kevin MacCurdy with Peck Pickering Energy Partners. Your line is open. Please go ahead.

Kevin Moreland MacCurdy: Line is open. Please go ahead.

Kevin Moreland MacCurdy: Hey, good morning, and congratulations on a good quarter.

Kevin Moreland MacCurdy: Hey, good morning, and congratulations on a good quarter. As a follow-up to the question on production trajectory, I know it's still early in 2024, but what kind of optionality does your x-ray give you for 2025? You were initially targeting flat oil this year, but better results are resulting in small growth. Is this new full-year guide kind of the new maintenance level heading forward?

Kevin Moreland MacCurdy: As a follow up to the question on production trajectory I know, it's still early in 2024, but what kind of Optionality does your exit rate, giving you for 2025.

Kevin Moreland MacCurdy: We're initially targeting flat oil this year, but better results are resulting in small growth.

Kevin Moreland MacCurdy: This new full year guide kind of the new <unk>.

Kevin Moreland MacCurdy: Maintenance level heading forward.

Speaker Change: Yes, I would say, it's a little too early to talk 2025, but certainly as I mentioned in a prior question. We model. We have good models, we have internal looks for 'twenty five 'twenty six and then we always reserve the right to get smarter. So I would expect our R 25, internal expectations, which we haven't talked about publicly to.

Clay M. Gaspar: Yeah, I would say it's a little too early to talk 2025, but certainly, you know, as I mentioned in a prior question, we model, we have good models, we have internal looks for 25, 26, and then we always reserve the right to get smarter. So, I would expect our 25 internal expectations, which we haven't talked about publicly, to continue to migrate upward as they have in prior years. But I don't think it materially changes our expectations of what we're doing now.

Clay M. Gaspar: Continue to migrate up as they do in prior years.

Clay M. Gaspar: But I don't think it materially moves our expectations of what we're doing now in my mind. This is something that is kind of.

Clay M. Gaspar: In my mind, this is something that is kind of standard operating procedure for what we're doing. We always expect our DNC teams to move more efficiently. We're always expecting our production teams to be a little bit more operationally savvy and efficient, and then for the subsurface folks, you know, building in that creative magic to extract just a little bit more of the resource and be a little bit smarter on how we do this overall. And I think that's the part I'm excited about and what I can continue to see as we roll into 2025.

Clay M. Gaspar: Standard operating procedure on what we're doing we always expect our D&C teams to move more efficiently. We're always expecting our production teams to be a little bit more operationally savvy inefficient and then for the sub surface folks building in that creative magic to extract just a little bit more of the resource and be a little.

Clay M. Gaspar: Smarter on how we do this overall and I think that that's the part I'm excited about and what I can see continue to see as we roll into 'twenty five.

Speaker Change: Great and as a follow up you guys have made a number of successful midstream investments over the years, including Matterhorn.

Kevin Moreland MacCurdy: And as a follow-up, you guys have made a number of successful midstream investments over the years, including Matterhorn. What would be the catalyst for you to start to realize the value of those assets in any near-term monetization plans?

Kevin Moreland MacCurdy: What would be the catalyst for you to start to realize the value of those assets and any tier and in near term monetization plans.

Kevin Moreland MacCurdy: We will always look at what we think is the right time when.

Richard E. Muncrief: You know, we'll always look at what we think is the right time when, you know, midstream multiples are clearly, you know, differential, if you will, to where we're at, and how that butts up to our strategy and making sure that we continue to deliver our commodity and we get the, we have the influence that we need. And so, it will probably come in due time, but it's something we'll continue to monitor And, you know, we try to keep a pretty close pulse on that. Jeff, anything else you want to add there? No, I think you said it well, Rick, which is that it really is fun.

Jeff: Midstream multiples are.

Richard E. Muncrief: Clearly.

Richard E. Muncrief: Differential if you will to a rep and have that bumps up to our strategy and making sure that we continue to deliver our commodity and we get the.

Jeff: We have the influence that we need and so.

Jeff: It will probably come in due time, but it's something we will continue to monitor it.

Richard E. Muncrief: <unk>.

Richard E. Muncrief: We try to keep a pretty close pulse on that Jeff or anything else you want to add there no I think.

Jeffrey L. Ritenour: No, I think you said it well, Rick, which is it really is a function of the evolution of the kind of life cycle of the asset and where we are on that. And as Rick mentioned, we've tried to be opportunistic with those investments, certainly want to support projects as needed, and where we can put some equity to work as well. You know, we're not averse to doing that.

Jeff: You said, it well, Rick which is it really is a function of the evolution of the kind of a lifecycle of the asset and where we are on that and as Rick mentioned.

Jeffrey L. Ritenour: We've tried to be opportunistic with those investments certainly want to support projects as needed.

Jeffrey L. Ritenour: And where we can put some equity to work as well.

Operator: And as Rick mentioned, from a governance standpoint, there are some situations where we want to have a little bit more control. But usually, as those assets mature, that tends to dissipate. And that likely will become a time where we'll look at the market dynamics and consider some sort of exit or monetization, but feel good about where we sit today with the investments that we have in hand. And they've served us well as we work in a moving molecule.

Jeffrey L. Ritenour: We're not averse to doing that and.

Operator: Rick mentioned from a from a governance standpoint, there are some situations, where we want to have a little bit more control, but usually.

Operator: As those assets mature that that tends to dissipate and that likely it becomes a time, where we will look at the market dynamics and consider some sort of exit or monetization, but feel good about where we sit today with the investments that we have in hand, and they've served us well as we were going to move molecules.

Speaker Change: Great. Thank you guys.

Operator: Our next question comes from Charles Meade with Johnson Rice. Your line is open. Please go ahead.

Operator: Our next question comes from Charles Meade with Johnson Rice. Your line is open, please go ahead.

Operator: Okay.

Charles Arthur Meade: Good morning, Rick Clay and Jeff to the rest of the <unk> there.

Charles Arthur Meade: Good morning, Rick, Clay, and Jeff, and to the rest of the Devon team there. Clay, I know you fielded a number of questions this morning, you know, along the lines of you guys having this bang-up quarter and to what extent should we... I expect that to continue, and I understand, you know, you're reluctant, you should be reluctant to commit to that. Publicly, you're probably reluctant to, you know, commit to it forever. But I'm going to try to trick you into talking about it in a different way. And here's the question.

Charles Arthur Meade: Clay I know you feel there's a number of questions. This morning.

Charles Arthur Meade: Along the lines of you guys have had this bang up quarter and to what extent should we.

Charles Arthur Meade: We expect that to continue and I understand.

Charles Arthur Meade: Yeah.

Charles Arthur Meade: Youre reluctant you should be reluctant to commit to that publicly as you're probably reluctant to.

Charles Arthur Meade: Connected with internally.

Charles Arthur Meade: But I'm going to try to try to tricky when you're talking about it in a different way.

Charles Arthur Meade: And here's the question.

Charles Arthur Meade: You know, it was really helpful the way you guys allocated the 60 percent well performance and the balance between cycle times and easing infrastructure constraints. But the question is, to what extent is there interaction between that well performance and the easing of infrastructure constraints? So my understanding is that there are a lot of new well pads in Delaware that could be producing higher, but for these above-ground constraints. And so... Is that easing above your interest rate what enabled you to deliver those, you know, the rates that you highlighted on those three WRPAs?

Charles Arthur Meade: It was really helpful. The way you guys allocated the beat 6% well performance.

Charles Arthur Meade: The balance between cycle times.

Speaker Change: Yes, Mitch easing infrastructure constraints, but the question is to what extent is that is the interaction between that well performance and.

Charles Arthur Meade: Easing infrastructure constraints. So my understanding is that there is a lot of.

Charles Arthur Meade: There's a lot of new well pads in the Delaware that could be producing.

Charles Arthur Meade: Higher but for these constraints and so.

Charles Arthur Meade: Is that easing above street, what enabled you to deliver those those.

Charles Arthur Meade: The rates that you highlighted on those three Delaware pads.

Speaker Change: I think thats, a great question and I will take a little bit of that debate I'll take some of that bet and pursue it and by the way we're always happy to talk about operations beats, the heck out of something else Thats more.

Clay M. Gaspar: I think that's a great question, and I'll take a little bit of that bait and pursue it. And by the way, we're always happy to talk about operations. It beats the heck out of something else that's more asymmetric to our objectives. You know, referring back to slide nine, we talk about two things, well productivity and completions efficiencies. And then in both Rick and my prepared remarks, we talked about three components, and adding on that base outperformance was really critical as well.

Clay M. Gaspar: Asymmetric to our objectives, referring back to slide nine we talk about two things the well productivity and the completions efficiencies and then are both Rick and my prepared remarks, we talked about really three components and adding on that base.

Clay M. Gaspar: That base outperformance was really critical as well as I think about overall proportionate about 60% of the outperformance really was the well productivity may be 20, or so was bringing forward those projects more days online and about 20% was just uptime really associated with.

Clay M. Gaspar: As I think about overall proportionate, about 60% of the outperformance really was the well productivity. Maybe 20 or so was bringing forward those projects, more days online, and about 20% was just uptime really associated with less constraints than we saw in 23, and really, historically. Now, that does not say that we didn't have any constraints.

Clay M. Gaspar: Less constraints than we saw in 2003 and really historically now that does not say that we didn't have any constraints.

Clay M. Gaspar: There are advantages and disadvantages to working in the hottest basin around the world, and that's really the Permian, and more specifically, what we're seeing in the Delaware. Jeff's got questions on the midstream buildout. We're very highly tuned in on that, but it's not just gas. We watch water.

Clay M. Gaspar: There's advantages and Theres disadvantages of working in the hottest basin around the world and that's really the Permian or and more specifically, what we're seeing in the Delaware Jeff's gotten questions on the midstream build out we're very highly tuned in on that but it's not just gas we watch water, we watch oil build out process.

Clay M. Gaspar: We watch oil buildout, processing, electrification, all of those categories. We have to juggle in a four or five-dimensional kind of chess way to develop this incredibly prolific resource. The other complication specific to the Delaware is the number of landing zones, and that continues to evolve. We highlighted Wolf Camp B as something that will probably play a larger role. So, as we roll that in, we also need to think about the changes to that infrastructure and the needs. One of the questions you asked along the way was, do our wells have anything kind of held back because of infrastructure constraints? And I would say categorically, yes.

Clay M. Gaspar: Seeing the electrification all of those categories, we have to juggle.

Clay M. Gaspar: Five dimensional chess way to develop this incredibly prolific resource the other complication specific to the Delaware is the number of landing zones and that continues to evolve we highlighted the wolfcamp b is something that will probably play a larger differential role. So as we roll that and we also need to think about the changes.

Clay M. Gaspar: To that infrastructure and the needs.

Clay M. Gaspar: One of the questions you asked along the way was due our wells have anything kind of held back because of infrastructure constraints and I would say categorically, yes, theres always something we're not going to push.

Clay M. Gaspar: There's always something. We're not going to push volumes into a system that just doesn't want those systems. We're not gonna pay. We try and minimize paying uh... basically disposal fees for gas, and then we also are very thoughtful about our flaring percentages. We've incredibly drawn that down, made really good progress over the last few years, and we certainly don't want to reverse course on some of those gains. So there's a lot going on. Really, really pleased with the team's performance and happy to be here to represent the team in such a successful quarter.

Clay M. Gaspar: Volumes into our system that just doesn't want those systems, we're not going to pay we try and minimize paying.

Clay M. Gaspar: Basically disposal fees for gas and then we also are very thoughtful about our flaring percentages, we have incredibly drawing that down made really good progress over the last few years and we certainly don't want to reverse course on some of those gains. So theres a lot going on really really pleased with the team's performance and happy to be here to represent that.

Clay M. Gaspar: On such a successful quarter.

Speaker Change: Thank you for that and then just one quick clarification follow up when you say, 60% well performance is that is that new wells brought online the performance of new wells or is that the new wells plus the base.

Charles Arthur Meade: Thank you for that, Clay, and then just one quick clarification for follow-up. When you say 60% well performance, is that new wells brought online, the performance of new wells, or is that new wells plus the base?

Charles Arthur Meade: It is the new wells I'm separating 60% for the new wells that 20% that I talked about in the base is the existing wells kind of the other base activities that are also performing outperforming what we had baked into the forecast.

Clay M. Gaspar: It is the new wells. I'm separating 60% for the new wells. That 20% that I talked about in the base is the existing wells, kind of the other base activities that are also outperforming what we had baked into the forecast. Got it. Thanks.

Charles Arthur Meade: Got it. Thanks for the detail.

Speaker Change: Got it thanks for the detail.

Speaker Change: You bet Charles.

Charles Arthur Meade: We now turn to Scott Hanold with RBC. Your line is open. Please go ahead.

Operator: We now turn to Scott Hanold with RBC. Your line is open, please go ahead.

Scott Michael Hanold: Yeah, Thanks, Hey, clay a lot of talk on the Permian, but it sounds like the Bakken really pivoted quite a bit this quarter too and I'd be interested to hear any kind of color on the high grading and what can we expect from that through the course of the rest of this year in terms of like when the next completions are coming in.

Scott Michael Hanold: Yeah, thanks. Hey, Clay, a lot of talk about the Permian, but it sounds like the Bakken, you know, really shifted quite a bit this quarter, too. And it would be interesting to hear any kind of color on the high grading. And, you know, what can we expect from that through the course of the rest of this year in terms of when the next completions are coming in. And is it similarly targeted in the same areas and spaces?

Scott Michael Hanold: Is it very similarly targeted in the same areas and spacing.

Scott Michael Hanold: Scott.

Clay M. Gaspar: Scott, you know, we've loved the Williston Basin for a long time. In 23, we probably pushed a little harder than the infrastructure and the well productivity were ready for, and so we've slowed that down. And again, just a great move to improve capital efficiency.

Clay: We've loved the Williston basin for a long time in 'twenty, three we probably pushed a little harder than the infrastructure and the well productivity was ready for and so we've slowed that down and again, just a great move to improve that capital efficiency. We have the benefit of our franchise asset in the Delaware basin that gives us that latitude.

Clay M. Gaspar: We have the benefit of a franchise asset in the Delaware Basin that gives us that latitude to not over-accelerate into wells or infrastructure that's not quite ready. And so what you see on the Bull Moose and the North John Elk are some core opportunities in the basin that we needed to wait until all the stars aligned to be able to bring online. We've actually got a rig back out there drilling some more core basin wells, about 10 of them. That'll come on either very late in the year or early next year.

Clay M. Gaspar: Not over accelerate into wells or infrastructure, that's not quite ready and so what you see on the on the bold moves in the North John Elk.

Clay M. Gaspar: Are some core of the basin.

Clay M. Gaspar: Opportunities that we needed to wait until <unk>.

Clay M. Gaspar: All the stars aligned to be able to bring online we've actually got another rig back out there drilling some some more core basin wells about 10 of them that will come on either very late in the year or first of next year.

Clay M. Gaspar: Again, it's all baked into the plan, but that's probably the consistency, the approach that we're going to take, rather than being forced into consistently running a rig and probably pushing some wells in that weren't quite ready for prime Time. We're going to take the opportunity to drill what's available, release that rig, bring it back in when the next opportunity presents, and you'll see incredible results from it. Again, the Williston Basin continues to prove the quality of that asset, the oil cut. As Rick pointed out, the incredible amount of cash flow that comes from that basin is very valuable to our bottom line and the core of what we believe is the right business approach for our organization.

Clay M. Gaspar: Again, it's all baked into the plan, but thats, probably the consistency the approach that we're going to take rather than being forced into consistently running a rig and probably pushing some wells in that werent quite ready for prime time, we're going to.

Clay M. Gaspar: The opportunity to drill what's available released that rig bring it back in when the next opportunity presents and Youll see incredible results from it again, the Williston basin continues to prove.

Clay M. Gaspar: The quality of that asset the oil cut as Rick pointed out the incredible amount of cash flow that comes from that basin is very valuable to our bottom line in the core of what we believe is the right business approach for our organization.

Speaker Change: So just to clarify that then should we expect quarter to quarter. Some gyrations in production, but like a year on year should it be relatively flat in terms of production.

Scott Michael Hanold: So just to clarify on that, should we expect, you know, quarter to quarter some gyrations in production, but like, year on year, should it be relatively flat in terms of production?

Scott Michael Hanold: Yes, I would say roughly that's correct, but certainly as we are bringing on a pad and then it's absent for a while you will have some peaks and valleys in the Williston.

Clay M. Gaspar: Yeah, I would say roughly that's correct, but certainly as we're bringing on a pad and then it's absent for a while, you will have some peaks and valleys in the Williston. I hope that doesn't disrupt the visuals. It should kind of flow into everything else we're doing. But yeah, as we are a little bit more selective, again, I believe it's the right approach for this asset. You will have some growth, some quarters, and some rollover and others.

Clay M. Gaspar: I hope that doesn't disrupt the.

Clay M. Gaspar: The visuals it should kind of flow into everything else we're doing.

Clay M. Gaspar: But yes, as we are a little bit more selective again I believe it's the right approach in this asset you will have some some growth some quarters and some rollover and others.

Clay M. Gaspar: Got it and then turn it back to the Permian the Wolfcamp B.

Scott Michael Hanold: Got it. And then turning back to the Permian, Wolf Camp B, how extensive is that in terms of what you think is the upside to identified inventory beyond that 50 locations? And are there other zones that you're looking at that would add to the focus locations as well?

Scott Michael Hanold: How extensive is that in terms of what you think is upside to identified inventory beyond the 50 locations and are there. Other zones that you are looking at that would add to the folks locations as well.

Scott Michael Hanold: Well, it's interesting we talked about the Wolfcamp b, a couple of quarters ago kind of highlighting success there as well. It was just in a different part of the basin B, obviously extends all the way across the Delaware Basin. This was an area that we really haven't drilled its a little bit more northeast on our position that this whole area and it's a little less mature certainly from the <unk> I think.

Clay M. Gaspar: Well, it's interesting. We talked about the Wolf Can't Beat It.

Clay M. Gaspar: Well, it's interesting, we talked about Wolf Camp B a couple of quarters ago, kind of highlighting success there as well, but it was just in a different part of the basin. Wolf Camp B obviously extends all the way across the Delaware Basin.

Clay M. Gaspar: This was an area that we really haven't drilled. It's a little bit more northeast of our position, the thistle area, and it's a little less mature, certainly, from the B. I think there are three wells that have produced the B. The first two were just kind of so-so.

Clay M. Gaspar: There is three wells that.

Clay M. Gaspar: Produce the be the first two were just kind of a so-so and so our expectations were pretty moderate but again as we're thinking about developing these areas. We wanted to really put a modern completion on and give it our best kind of try and see what it looks like it's significantly outperformed and so with the approach that we're taking today, we're really excited about that.

Clay M. Gaspar: And so our expectations were pretty moderate. But again, as we're thinking about developing these areas, we wanted to really put a moderate completion on it and give it our best kind of try and see what it looks like. It's significantly outperformed. And so with the approach that we're taking today, we're really excited about that differential uplift. The 50 wells are really just in our tiny area. We have other B wells that we will be bringing on and other wells, excuse me, in other areas of the basin as well.

Clay M. Gaspar: <unk> uplift the 50 wells is really just in our Thistle area.

Clay M. Gaspar: Have other b wells that we will be bringing on in other wells excuse me other areas of the basin as well those are above and beyond the 50, we will continue to hunt for and more opportunity. The reason we.

Clay M. Gaspar: Those are above and beyond the 50. We'll continue to hunt for more opportunity. The reason we highlighted this thistle is that it is not reflected in our inventory. This is more of that upside that we're bringing forward that now competes very favorably for the capital investment today.

Clay M. Gaspar: Highlighted this this'll is this is not reflected in our in our inventory. This is more of that upside that we're bringing forward that now competes very favorably for the capital investment today.

Speaker Change: Thank you.

Speaker Change: You bet Scott.

Clay M. Gaspar: Our final question comes from Matthew Portillo with J P. H. Your line is open. Please go ahead.

Operator: Our final question comes from Matthew Portillo with TPH. Your line is open. Please go ahead.

Matthew Merrel Portillo: Good morning, all.

Matthew Merrel Portillo: Good morning, all. Maybe a question for Clay would start. On Anadarko, it's good to see the slowdown in drill bit capital here. It sounds like dropping down to two rigs, given the commodity price environment. I was curious if you have any updated thoughts on the 60 to 70 tills for the year, and then, I guess, looking ahead to a more constructive environment beyond kind of 2024. What's the opportunity set to potentially accelerate this asset in a more constructive gas price environment?

Matthew Merrel Portillo: Maybe a question for you to start on the Anadarko.

Matthew Merrel Portillo: The slowdown in the drill bit capital here, it sounds like dropping down to too big given the commodity price environment. I was curious if you have any updated thoughts on that.

Matthew Merrel Portillo: Net sales for the year and then I guess looking ahead to a more constructive environment beyond.

Matthew Merrel Portillo: Kind of 2020 for whats the opportunity potentially accelerate this asset in a more constructive gas price environment.

Clay: Thanks for the question, we've got a great partner with Dow and so.

Clay M. Gaspar: Thanks for the question. We've got a great partner with Dow, and so, you know, this is something that we want to make sure that we're being a good partners and we're working in coordination with them. So I certainly don't want to get ahead of myself. What I can tell you is we've been very aligned and continue to appreciate not just the value creation from the partnership but the nature of the partnership. I would say if the right opportunity presented itself, my belief is that we would be aligned in accelerating.

Clay M. Gaspar: This is something that we want to make sure that we're being good partner and we're working in coordination with them. So I certainly don't want to get ahead of myself. What I can tell you is we've been very aligned continue to appreciate not just the value creation from the partnership but the nature of the partnership I would say if the right opportunity presented my belief is that we would.

Clay M. Gaspar: Be aligned and accelerating now what I have to tell you is I'm looking at the forward gas curve and it's just it continues to be pretty challenging.

Clay M. Gaspar: Now, what I have to tell you is I'm looking at the forward gas curve, and it just continues to be pretty challenging. We, again, with the balanced portfolio that we have, our ability for the Delaware Basin to really carry the company, we just don't see the need to push dollars into an area that's not being fully rewarded. Now, that said, with a Dow carry and with the work that our midstream team has done to really extract the most value we can for this commodity, we're doing pretty well on these returns, not Wolf Camp A well, but we really know that we're still creating value.

Clay M. Gaspar: Again with a balanced portfolio that we have our ability for the Delaware basin to really carry of the company. We just don't see the need to push dollars into an area. That's not being fully rewarded now that said with the Dow carry and with the work that our midstream.

Clay M. Gaspar: Team has done to really extract the most value we can for these.

Clay M. Gaspar: This commodity.

Clay M. Gaspar: We're doing actually pretty well on these returns not wolfcamp, a well, but really know that we're still creating value. So we'll continue to run two rigs in the Dow JV area continue to look for those opportunities above and beyond and then even extend potentially the Dow JV beyond where we're at today again, great partnership and.

Clay M. Gaspar: So we'll continue to run two rigs in the Dow JV area, continue to look for those opportunities above and beyond, and then potentially extend the Dow JV beyond where we're at today. Again, a great partnership, enjoy working with that team, and I think we've both benefited very well from it.

Clay M. Gaspar: Working with that team and I think we both benefited very well from it.

Speaker Change: Perfect and then maybe just a longer term question on the gas Brian Kerry.

Matthew Merrel Portillo: And then maybe just a longer-term question on the gas front. Curious if you might be able to provide us with an update on just how you're thinking about your L&D strategy and the kind of marketing of gas molecules on a global perspective and any updated thoughts on the Delta.

Matthew Merrel Portillo: Might be able to provide us an update on <unk>.

Matthew Merrel Portillo: Are you thinking about your LNG strategy in kind of the marketing gas molecules on a global perspective, and any updated thoughts on the delta.

Matthew Merrel Portillo: Yes, Matt This is Jeff Yes, we continue to have interest in getting some exposure to the water as it relates to <unk>.

Jeffrey L. Ritenour: Yeah, Matt, this is Jeff. Yeah, we continue to have an interest in getting some exposure to the water as it relates to, you know, both oil and gas, on the gas front. Specific to LNG, we're having active conversations with different folks, including Delfin, as you mentioned. That continues to progress.

Jeffrey L. Ritenour: Both on the oil and the gas on the gas front specific to LNG.

Jeffrey L. Ritenour: We're having active conversations with different folks, including Delta and as you mentioned that continues to progress no no new updates beyond what you've heard from us in the past, but without question, we want to get some exposure to the LNG market as it relates to our gas molecules and as I mentioned earlier.

Jeffrey L. Ritenour: No new updates beyond what you've heard from us in the past, but without question, we want to get some exposure to the LNG market as it relates to our gas molecules. And as I mentioned earlier, you know, with the Delaware gas, we're sending a significant portion of that to the Gulf Coast. You know, some of that goes into the KD market. We've got incremental capacity that takes us away from KD into Louisiana, you know, kind of the hub where a lot of that LNG demand resides today and will get built out into the future. And so we feel like we're well positioned to take advantage of that incremental demand and, again, have active conversations with multiple parties.

Jeffrey L. Ritenour: The Delaware gas worsened and a significant portion of that to the Gulf coast.

Jeffrey L. Ritenour: Some of that goes into the Kt market, we've got incremental capacity that takes us away from Kt into the Louisiana kind of the hub, where where a lot of that LNG demand resides today, and we will get built out into the future and so we feel like we're well positioned to take advantage of that incremental demand in.

Jeffrey L. Ritenour: Again, having active conversations with multiple parties.

Speaker Change: Thank you.

Jeffrey L. Ritenour: Alright.

Operator: Thank you. All right. Well, I appreciate everyone's interest.

Scott Coody: I appreciate everyone's interest in Devon today. It looks like we've made it through the queue of questions. If anything else comes up later in the day, please feel free to reach out to the investor relations team at any time. Thank you.

Speaker Change: Well I appreciate everyone's interest in Devon today, it looks like we've made it through the queue of questions. If anything else comes up later on the day. Please.

Scott Coody: Please feel free to reach out to the Investor relations team at any time.

Speaker Change: And have a good day.

Scott Coody: Yes.

Speaker Change: Ladies and gentlemen, today's call is now concluded. Thank you for your participation.

Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Operator: May now disconnect your lines.

Operator: Okay.