Q3 2024 Permian Resources Corp Earnings Call
A replay of the call will be accessible until November 21, 2024 by dialing 808, 395495 and entering the replay access code 26601 or by visiting the company's website at www.
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Speaker Change: At this time I will turn the call over to Hays Mabry Permian resources, Vice President of Investor Relations for some opening remarks. Please go ahead.
We do appreciate your patience and holding.
We ask that you. Please continue to standby your conference will begin momentarily.
Speaker Change: Thanks Todd.
And thank you all for joining us.
[music].
On the call today.
Speaker Change: We'll hickey and James Walter.
Speaker Change: Our Chief Executive Officer.
Speaker Change: And Guy often our chief financial Officer.
I would like to note.
Speaker Change: And many of the comments during this earnings call.
Speaker Change: <unk> looking statements.
Speaker Change: Involve risk and uncertainties.
Could affect our actual results.
Speaker Change: Plans.
Many of these risks are beyond our control.
Speaker Change: And are discussed in more detail in the risk factors.
Speaker Change: And the forward looking statements sections of.
Speaker Change: Our filings with the SEC.
Speaker Change: Although we believe the expectations expressed.
Speaker Change: Are based on reasonable assumptions, they are not guarantees of future performance.
Speaker Change: And actual results may differ materially.
Speaker Change: We may also refer to non-GAAP financial measures.
Speaker Change: That help facilitate comparisons across periods and with our peers.
Speaker Change: For any non-GAAP measure we use.
Speaker Change: Reconciliation to the nearest corresponding GAAP measure can be found in our earnings release or presentation.
Speaker Change: With that I will turn the call over to Wil Hickey co CEO.
Speaker Change: <unk>.
Speaker Change: We're excited to discuss our third quarter results. This morning during the quarter, we successfully closed our barilla draw bolt on acquisition and continued driving operational efficiencies that have led to further well cost reductions, notably we are raising our full year production guidance for the third consecutive quarter, while maintaining our capex guidance.
Speaker Change: Overall, the PR team continues to perform at a very high level across the organization, which translates into improved capital efficiency and strong free cash flow generation details of which we look forward to sharing this morning.
Speaker Change: Moving on to quarterly results Q3 production beat expectations with oil production of 161000 barrels of oil per day and total production of 347000 barrels of oil equivalent per day. Our strong performance is attributable to multiple factors, including continued D&C efficiency gains and consistent well performance there.
Speaker Change: Just on these results we are raising our full year oil guidance again this quarter amounting to 11000 barrels of oil per day increase compared to our initial guidance in February.
Speaker Change: Notably nearly 8000 barrels of oil per day.
Speaker Change: Our guidance increase this year is a direct result of the outperformance of our base business with the balance resulting from executing on highly accretive M&A.
Good morning, and welcome to Permian Resources Conference call to discuss its third quarter 2020 for earnings.
Speaker Change: Importantly, we are doing so without changing our original Capex guide, despite bringing online more wells this year than originally budgeted.
Today's call is being recorded.
A replay of the call will be accessible until November 21, 2024 by dialing 808, 395495 and entering the replay access code 26601 or by visiting the company's website at www.
Speaker Change: We were able to accomplish this due to our reduced cycle times and further cost optimization, we continue to deliver leading cash costs that support strong margins with Q3 LOE of $5 43 per BOE cash G&A of <unk> 95 per Boe and <unk> of about 57 per Boe.
Speaker Change: Strong production results paired with low cash cost and capex of $520 million in the quarter resulted in adjusted operating cash flow of $823 million and adjusted free cash flow of $303 million.
<unk> Dot Permian Red Dot com.
At this time I will turn the call over to Hays Mabry.
Permian resources, Vice President of Investor Relations for some opening remarks. Please go ahead.
Speaker Change: While we hit on this later, it's worth noting we achieved these results despite modest contributions from our gas and NGL production streams, particularly where we had another weak quarter for wawa gas. This demonstrates the strong underlying performance of the PR business model and the potential upside we see from improving natural gas realizations.
Thanks Todd.
And thank you all for joining us.
On the call today are will Hickey and James Walter.
Keith Executive officers.
And Guy often our chief financial Officer.
I would like to note.
Speaker Change: Turning to slide four this updated version of a slide we shared at Investor Conference. A couple months ago emphasizes not just the growth of the company, but how we've been able to transform our business first we have been consistent with what we believe creates value which is shown on the right hand side of the page. These value drivers are really the same as when James and I founded the predecessor company Colgate.
And many of the comments during this earnings call.
Forward looking statements that involve.
<unk> risk.
Uncertainties.
It could affect our actual results or plans.
Many of these risks are beyond our control.
And are discussed in more detail in the risk factors.
Speaker Change: In 2015.
And the forward looking statements sections.
Speaker Change: Our focus remains on the Delaware Basin, which we believe is the top oil shale play in the lower 48, the single basin focused along with our Midland headquarters has established us the most efficient cost structure in the Delaware, which in turn drive outsized returns on acquisitions. These acquisitions not only improve the quality of our business, but also provide near term midterm and long term accretion.
Of our filings with the SEC.
Although we believe the expectations expressed.
Or based on reasonable assumptions, they are not guarantees of future performance.
Actual results may differ materially.
We may also refer to non-GAAP financial measures that help facilitate comparisons across periods and.
Speaker Change: <unk>.
Speaker Change: At the core of our strategy is a relentless focus on creating long term value for our shareholders, which we measure on a per share basis. Our primary goal is to grow long term free cash flow per share with total shareholder returns expected to follow.
With our peers.
Any non-GAAP measure we use.
Reconciliation to the nearest corresponding GAAP measure can be found in our earnings release or presentation.
Speaker Change: Slide five illustrates how our base and expertise and cost leadership have continue driving efficiencies throughout this year on the drilling front, we set a record this quarter of 13 days spud to rig release to put this in perspective, we began the year expecting to till 250 wells with 12 rigs and are now on track to till 270 wells with that same rig count effectively adding an entire rigs.
With that I will turn the call over to Wil Hickey co CEO.
Thanks, guys.
We are excited to discuss our third quarter results. This morning during the quarter, we successfully closed our barilla draw bolt on acquisition and continued driving operational efficiencies that have led to further well cost reductions, notably we are raising our full year production guidance for the third consecutive quarter, while maintaining our capex guidance overall, the PR team continues to perform at.
Speaker Change: Worth of wells through efficiency gains on the completion side, we've increased pumping hours per day again this quarter to 22 hours per day, and now run all dual fuel frac fleets, which represent a material savings in the current gas price environment.
Very high level across the organization, which translates into improved capital efficiency and strong free cash flow generation details of which we look forward to sharing this morning.
Overall, the PR team continues to perform at a very high level across the organization, which translates into improved capital efficiency and strong free cash flow generation, details of which we look forward to sharing this morning.
Speaker Change: As a result, our Q3 sales are 15% cheaper than last year on a per foot basis translating to over $1 million per well savings. Given these reductions are mostly due to efficiencies. We expect they will be here to stay.
Moving on to quarterly results Q3 production beat expectations with oil production of 161000 barrels of oil per day and total production of 347000 barrels of oil equivalent per day. Our strong performance is attributable to multiple factors, including continued D&C efficiency gains and consistent well performance.
Moving into quarterly results, Q3 production beat expectations, with oil production of 161,000 barrels of oil per day, and total production of 347,000 barrels of oil equivalent per day. Our strong performance was attributable to multiple factors, including continued DNC efficiency gains and consistent well performance.
Speaker Change: That I will turn the call over to James Thanks will.
James: Turning to slide six we wanted to spend some time discussing our Permian resources is approaching the marketing of our hydrocarbons as you guys. All know the economics of Permian resources business are primarily oil driven.
Speaker Change: These have and will continue to be.
On these results we are raising our full year oil guidance again this quarter amounting to 11000 barrels of oil per day increase compared to our initial guidance in February.
Speaker Change: But it's worth pointing out that <unk> is also one of the largest natural gas producers in the Permian basin, producing approximately 600 million cubic feet per day of residue gas.
Notably nearly 8000 barrels of oil per day.
Speaker Change: The potential for significant upside to free cash flow generation, if natural gas prices improve going forward as is widely expected.
Our guidance increase this year is a direct result of the outperformance of our base business with the balance resulting from executing on highly accretive M&A.
Speaker Change: For example, a $1 increase to our residue natural gas realizations increased the annual free cash flow by approximately $200 million and a.
Importantly, we are doing so without changing our original capex guidance. Despite bring online more wells this year than originally budgeted.
Speaker Change: $3 increase would increase free cash flow by almost 50%.
Speaker Change: Permian resources, we are incredibly proud of our performance operationally and pride ourselves on being a leader in the basically across almost all metrics, but given our rapid growth. We have historically focused our midstream and marketing efforts more on flow assurance and on optimizing net backs and we've been extremely effective in ensuring all of our hydrocarbon you can get to market with zero interruptions over the past five years.
We were able to accomplish this due to our reduced cycle times and further cost optimization.
Continued to deliver leading cash costs that support strong margins with Q3, low $5 43 per BOE cash G&A of 95 cents per B E. N. G. P. M T of about 57 per Boe.
Strong production results paired with low cash cost and capex of $520 million in the quarter resulted in adjusted operating cash flow of $823 million and adjusted free cash flow of $303 million.
Speaker Change: But as our business grew to the scaled as today, particularly with the <unk> acquisition. We closed 12 months ago, we have shifted our focus to also enhance the prices we received for our oil and natural gas and we've been successful working to optimize our netback so far in 2024.
Well I will hit on this later, it's worth noting we achieved these results despite modest contributions from our gas and NGL production streams, particularly where we had another weak quarter for one gas. This demonstrates the strong underlying performance of the PR business model and the potential upside, we see them improving natural gas realizations.
Speaker Change: For example, we have increased the amount of natural gas, we sell at the Gulf coast by almost 50% and netting an extra dollar on those molecules as compared to selling them at Whitehall like we had historically.
Speaker Change: But we arent satisfied with where we are today midstream and marketing is an area, we expect to improve performance and drive meaningful incremental free cash flow in the coming years.
Turning to slide four this updated version of a slide we shared at Investor Conference. A couple months ago emphasize it's not just the growth of the company, but how we've been able to transform our business first we have been consistent with what we believe creates value which is shown on the right hand side of the page. These value drivers are really the same as when James and I founded the predecessor company Colgate.
Speaker Change: Fortunately, we have a lot of levers to pull to do just that we have significant flexibility improved downstream sales contracts for both crude and natural gas, we expect to able to leverage our scale in the base into reserves based on existing long haul pipes take equity in future pipeline projects and ultimately increase our access to Gulf coast oil and gas markets.
2015.
Speaker Change: The expectation of the U S will see a step change in power demand over the next 15 years has created opportunities for increasing dialogue around the parties for power generation at data projects within the Permian Basin.
Speaker Change: Our focus remains on the Delaware basin, but she believes the top oil shale play in the lower 48, the single patient focus along with our Midland headquarters has established us.
Speaker Change: Most efficient cost structure in the Delaware, which in turn drives outsized returns on acquisitions.
Speaker Change: We're also exploring opportunities to more efficiently power operation using in basin gas. Although most discussions are in the early innings. We are excited about the potential demand implications for Permian gas over the next several years.
Speaker Change: Acquisitions, not only improve the quality of our business, but also provide near term midterm and long term accretion.
Speaker Change: In early September we updated our return of capital policy to further emphasize the base dividend as our primary form of capital return, we increased the base dividend by 150% to <unk> 60 per share annually, our current base dividend yield of over 4%, which puts us well above our peers and highlight the relative value of that Permian resources stock represents today, our base dividend as a percentage of free.
Speaker Change: At the core of our strategy is a relentless focus on creating long term value for our shareholders, which we measure on a per share basis. My primary goal is to grow long term free cash flow per share with total shareholder returns expected to fall off.
Speaker Change: Slide five illustrates how our base and expertise and cost leadership have continued driving efficiencies throughout this year on the drilling front, we set a record this quarter of 13 days spud to rig release to put this in perspective, we began the year expecting to tell 250 wells with 12 rigs and are now on track to till 270 wells without the same rig count effectively adding an entire rigs.
Speaker Change: Cash flow remains below our peer average reinforcing the dividends sustainability across cycles.
Speaker Change: We will continue to approach buybacks with the same philosophy, we've had since inception, where we used to buy back opportunistically and in periods of clear market dislocations, rather than targeting a consistent monthly a formulaic approach to buybacks.
Speaker Change: Worth of wells through efficiency gains on the completion side, we've increased pumping hours per day again this quarter to 22 hours per day, and now run all dual fuel frac fleets, which represent a material savings in the current gas price environment.
Speaker Change: When we do choose to execute on our buyback program, we expect to do so in a meaningful way and as such have increased the buyback authorization for $500 million to $1 billion.
Speaker Change: As a result, our Q3 sales are 15% cheaper than last year on a per foot basis translating to over $1 million per well savings. Given these reductions are mostly due to efficiencies. We expect they will be here to stay.
Speaker Change: Our management team owns over 6% of Permian resources today, and we approached decisions with a strong alignment that comes with being meaningful owners of the business.
Speaker Change: Everyday to drive total returns for our shareholders and we think this updated policy positions us well for continued outsized value creation.
Speaker Change: That I will turn the call over to James Thanks, well.
James Colgate: Turning to slide six we wanted to spend some time discussing our Permian resources approaching the marketing of our hydrocarbons.
Speaker Change: Turning to slide eight we are really proud of where our balance sheet is today and all we've accomplished this year, we have deployed over $1 billion on acquisitions, while maintaining leverage right at one times, we've increased the average maturity of our outstanding bonds to approximately six years.
James Colgate: We all know the economics of Permian resources business are primarily oil driven.
James Colgate: These have and will continue to be but it's worth pointing out that PR is also one of the largest natural gas producers in the Permian basin, producing approximately 600 million cubic feet per day of residue gas.
Speaker Change: And we've meaningfully increased our liquidity position from the started the year today and are actively building cash between our cash balance and our Undrawn <unk>, we have almost $2 8 billion of liquidity that should be available through up and down cycles.
James Colgate: The potential for significant upside to free cash flow generation, if natural gas prices improve going forward as is widely expected.
Speaker Change: We are also protected our downside hedging where over 25% hedged heading into Q4 at $74 and similarly hedged as we head into 2025.
James Colgate: For example, a $1 increase to our residue natural gas realization increases annual free cash flow by approximately $200 million and a $3 increase with increased free cash flow by almost 50%.
Speaker Change: Going forward, we're highly focused on achieving investment grade ratings in 2025, we were upgraded by all three agencies this past quarter.
James Colgate: Our Permian resources, we are incredibly proud of our performance operationally and pride ourselves on being a leader in the basin across almost all metrics, but given our rapid growth. We have historically focused our midstream and marketing efforts more on flow assurance and on optimizing net backs and we've been extremely effective in ensuring all of our hydrocarbons you can get to market with zero interruptions over the past five years.
Speaker Change: Our financial strategy is the same as it has been the last nine years to maintain a fortress balance sheet with low leverage and maximum liquidity. So we can capitalize on opportunities across multiple cycles.
Speaker Change: Turning to slide nine we can be proud of our track record of operational execution and financial performance. We are increasing our full year oil guidance for the third consecutive quarter by 6500 barrels per day with the majority of this outperformance coming from our legacy business rather than recent acquisitions.
Speaker Change: But as our business grew the scaled as today, particularly with the <unk> acquisition. We closed 12 months ago, we have shifted our focus to also enhance the prices we received for our oil and natural gas and we've been successful working to optimize our netback. So far in 2024. For example, we have increased the amount of natural gas we sell at the Gulf coast by almost 50% and netting an extra dollar on those molecules.
Speaker Change: The outperformance comes from a combination of accelerated cycle times and strong well performance.
Speaker Change: Efficiency, we've seen on the drilling and completion side are allowing us to accelerate welcome production, while maintaining capex within our original guidance range.
Speaker Change: We continue to optimize our cash costs were 2024, realizing better tax synergies from the <unk> merger than we had previously expected.
Speaker Change: As compared to selling them at Whitehall like we had historically.
Speaker Change: But we arent satisfied with where we are today mid stream and marketing is an area, we expect to improve performance and drive meaningful incremental free cash flow in the coming years.
Speaker Change: As such we are reducing our current tax guidance for 'twenty 'twenty four to $10 million to $15 million from $50 million previously.
Speaker Change: Looking back at the full year, we have increased oil production guidance by 11000 barrels per day or 7% up from our original guidance with over 70% of this outperformance coming from our base business.
Speaker Change: Fortunately have a lot of levers to pull to do just that we have significant flexibility improved downstream sales contracts for both crude and natural gas, we expect to it to leverage our scale in the base into reserve space on existing long haul pipes take equity in future pipeline projects and ultimately increase our access to Gulf coast oil and gas markets.
Speaker Change: We think there's continued outperformance demonstrates the strength and quality of our business.
Speaker Change: I will be concluding today's prepared remarks on slide 10, where we reemphasize our value proposition for investors the strength of our business is underpinned by an industry, leading cost structure low breakeven and long dated high return inventory, which together have driven leading free cash flow per share growth for our investors.
Speaker Change: The expectation that the U S will see a step change in power demand over the next 15 years has created opportunities for increasing dialogue around the potential for power generation and data projects within the Permian Basin.
Speaker Change: We talked about having generated leading shareholder returns since inception, and we think it's important to note that these outsized returns have been driven by strong operational performance and accretive acquisitions rather than multiple expansion.
Speaker Change: At the beginning of 2023, we have meaningfully increased the size and quality of the business, but more importantly have increased oil production and free cash flow per share by 50% all while improving the strength of our balance sheet.
Speaker Change: As large owners of the Permian resources business, we are highly aligned with shareholders to continue to drive outsized shareholder returns for years to come thank.
Speaker Change: Thank you for tuning in today and now we will turn it back to the operator for Q&A.
Speaker Change: Thank you the question and answer session will be conducted electronically.
Speaker Change: If you would like to ask a question. Please do so by pressing Star then the number one on your telephone keypad.
Speaker Change: I would like to withdraw your question Press Star two.
Speaker Change: Once again to ask a question please press star one.
Speaker Change: Our first question will come from Neal Dingmann with Truth Securities. Please go ahead.
Neal Dingmann: Good morning, guys outstanding quarter, guys My first.
Neal Dingmann: Question is just on your future operational plans I'm just wondering.
Neal Dingmann: 2025, D&C regional focus I'm, just wondering when you look at new Mexico, and Texas will that stay.
Neal Dingmann: Essentially the same and just wondering maybe probably nothing here, but just wondering if any potential loosening of restrictions by the administration, particularly maybe in like new Mexico or wherever.
Neal Dingmann: <unk> had any sort of changes operationally for you all.
Neal Dingmann: Yeah.
Neal Dingmann: I think 25, it will look similar to what the last couple of years have majority of the capital spend in new Mexico.
Neal Dingmann: With the balance probably being Texas, Delaware and kind of keeping Midland is sub 10% I think there's a chance that you see a little bit less even in the Midland Basin and then we had this year as we ended probably move that to the <unk> acquisition on the Texas side, but.
Neal Dingmann: Kind of majority of new Mexico development, just like we've been for the last couple of years.
Neal Dingmann: We're well ahead of the permitting and all the need to like really having.
Neal Dingmann: A looser or easier kind of regulatory environment, I think probably doesn't change anything from our side.
Neal Dingmann: On balance probably gives us a little bit of flexibility. If we want to make some kind of more last minute changes around different pads, which is nice to have but not a need to have.
Speaker Change: Great point.
Speaker Change: Then just my second question, Kevin can help to ask around your slide six specifically could you just I don't know.
Neal Dingmann: What type of plans you can do with those 25000 surface acres in the 40% taking time gas.
Neal Dingmann: Upsides of that Optionality provided.
Neal Dingmann: On the service side I think that's just that's really just one of several non upstream assets. We're constantly working through how we can maximize value for our shareholders for something Thats I think a little more under the radar than our base business. We've got a big royalties business. We've got a modest midstream business, but I think specific to the surface I think outright sale could be in <unk>.
Neal Dingmann: But I think really we think theres potentially some interesting developments that I think ultimately take time, but could provide ways for us to work with more infrastructure related parties to really fully optimize the value from that surface. I mean, I think kind of embedded in your question I think as we look at AI data center demand, we think thats going to be really United States going.
Neal Dingmann: Forward and I think especially with administration changes I think natural gas is really well positioned to be a beneficiary of changes in the power consumption landscape going forward and we think that the Permian basin in Permian resources, particularly it should be very well positioned to benefit from that tailwind and should help and based on natural gas prices over time, I mean, if you think about the Permian.
Neal Dingmann: We've got abundant natural gas you've got a supportive regulatory environment, we've got a very rural landscape and.
Neal Dingmann: A tremendous long dated inventory with a lot of gas that that historically has been pretty cheap. So I think we're really optimistic that that can provide a tailwind on the gas side of the business in the coming years.
Speaker Change: Thank you gentlemen.
Speaker Change: And to answer your third question or second part of your second question. The ultimate goal at that 40% of the gas it would be to move as much of those volumes over time to more favorable downstream market specifically the Gulf coast and I think it's important to point out on that slide you referenced I think of that 60%. We have that's currently committed.
Neal Dingmann: But have those volumes are selling at the Gulf coast. Today. So if you kind of took the 40 and 30, there I think over time could ultimately have between 60 and 70% of our gas pricing and kind of non <unk> markets, but that does take some time to get there.
Speaker Change: Thank you both.
Speaker Change: Thank you. Our next question will come from Scott Hanold with RBC. Please go ahead.
Speaker Change: Yes, thanks al.
Speaker Change: I wanted to get a little bit on how you view 2025, I know, it's probably from you guys too early to give some firm numbers, but.
Speaker Change: On our side of the table.
Speaker Change: We see a very strong point of emphasis right now so just conceptually can you help us think through like look you guys are really peaking on production in fourth quarter. As you look at strip commodity prices from that peak level or average levels in 2024, how should we think about the progression of production into <unk>.
Speaker Change: Next year at current strip prices and what does that mean roughly for capex.
Speaker Change: Yes, Scott I mean, I think we're going to continue on now longstanding policy of not providing much of a look at 2025 guidance until we get to February of next year I think our policy has served us and our shareholders really well. The last couple of years I think that gives us a couple of months to further refine our plan, but I think just as importantly to assess the kind of backdrop.
Speaker Change: Macroeconomic backdrop and kind of the service cost environment, I think really our approach to what the next year and what growth looks like Hasnt changed I think we're targeting a growth range of zero to 10% based on the prior year's average and I think.
Speaker Change: For us it's really too early to tell what next year looks like I think we will referenced in his prepared remarks like our our returns are really attractive today, but I do think there's some potential storm clouds on the horizon or some questions on the on the oil price from a macro standpoint, so for us it's really too early to tell what it could look like I think youre right in pointing out that.
Speaker Change: Q4 is a really strong exit to the year end and what kind of have to wait until next year to see what the balance of the year looks like.
Speaker Change: Got it got it so just.
Speaker Change: Sort of.
Speaker Change: What was the point I was trying to get to like what would it take to kind of keep that fourth quarter run rate flat.
Speaker Change: That's obviously from your view of maintenance plus kind of level is that correct.
Speaker Change: Yes, I mean, I think historically, we've talked about maintenance Capex, we talked about the prior full year average would be that $1 $58 five we got at the back of the deck.
Speaker Change: And I think we've talked about this cabinet in the past in the past as a.
Speaker Change: A few hundred million dollars below what we've spent this year, which is about $2 billion at the midpoint. So.
Speaker Change: Probably to answer your question its something that looks about like what we spent this year would be a good round number, but thats, all really preliminary and not something we're ready to come to market with today.
Speaker Change: Okay, that's clear and obviously you've seen some pretty good progressions on reducing D&C well cost down to 800 give me can you give us thoughts on where you see some upside opportunity.
Speaker Change: The other way is like what are the attention to actually pushing that too I don't know call. It 750 at some point.
Speaker Change: Yes.
Speaker Change: Two biggest spending on the drilling and completion side I think what you'll see is on the drilling side.
Speaker Change: If we're going to keep cutting costs, it's going to come on the data side. We've made a lot of progress this year kind of couple of days per well.
Speaker Change: After spud to rig release.
Speaker Change: The majority of our costs on drilling side are variable in nature, and if we can keep cutting days and I think.
Speaker Change: You still have a lot of room to go relative to what people are doing in the Midland Basin, and we keep trying to learn from that side and that side of the basin and trying to cut days every corner. So.
Speaker Change: We can cut another day, that's 100000 Bucks, a well plus or minus and then I think the completion side, we're starting to push the upward limit of pumping hours per day. So it's going to require kind of something creative we've made some strides on using more natural gas and more compressed natural gas, but if we could take that to using field fuel gas or continue to optimize water recycling I think theres some.
Speaker Change: Kind of created outside of the box ways to cut costs on the completion side and so I think thats where were focused we've made progress every single corner this year, some more than others, but.
Speaker Change: Given just where the overall market is rig count continues to fall I think we're very confident that this 800 number is here to stay and there's probably upside from here.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question will come from John Freeman with Raymond James. Please go ahead.
John Freeman: Good morning, guys.
Speaker Change: Good morning, good morning.
Speaker Change: Yes.
Speaker Change: First one on the three simulcast you all did during the quarter just any color on sort of the cost savings that you all saw on those.
Speaker Change: Maybe relative to the metrics that you all show on slide five.
Speaker Change: I think it's like 10% to $15 a foot.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: And then I guess on the last.
Speaker Change: Topics you touched on water recycling, which you all are up to the 50% range.
Speaker Change: Second water on the completions.
Speaker Change: If you all are sort of looking out over the next couple of years like what would be sort of goals on that percent of recycled water and just sort of any what investments we need to be made to kind of achieve it.
Speaker Change: I think that 50% that we're very very happy to get there I think that that has become a unbelievably useful tool for it saves us money both on the Capex side, but also on the low side not to mention it's just environmentally the right thing to do so this is a real kind of win win win situation.
Speaker Change: I think there is room to continue to increase.
Speaker Change: We could get to two thirds of our water or maybe even three four so I think that would probably be.
Speaker Change: Where it tops out at some point theres always going to be about a quarter of your.
Speaker Change: Fracs are a quarter of your water that you can't recycle so maybe that's a good goal over the next two years that we can push it up to two thirds to three fourths.
Speaker Change: And then the.
Speaker Change: The majority of the water recycling do as kind of contracted through third party midstream. So it's not a big capital expenditure for us we give them a little bit of margin they spend the capex and and we both benefit from the recycling.
Speaker Change: I think I don't know if thats.
Speaker Change: Two thirds or half somewhere in there and so the balance of that obviously is <unk> and that's part of that is what's in that infrastructure budget that we that makes up the last quarter of our capex budget and so I would expect that to or at least that part to stay in there every year, if not slightly increase as we continue to pursue more.
Speaker Change: Water recycling overtime.
Speaker Change: Very helpful. Thanks, I appreciate it.
Speaker Change: Thank you. Our next question will come from Neil Mehta with Goldman Sachs. Please go ahead.
and trying to cut days every quarter, so.
Neil Mehta: Yeah, good morning team and very strong execution. This quarter. That's the first question is there is there are a lot of headlines around new Mexico and.
I think the completion side...
Neil Mehta: Potential risks around things like setbacks.
Speaker Change: using more natural gas and more compressed natural gas, but if we could take that to using, you know, field fuel gas or continue to optimize water recycling, I think there's some...
Speaker Change: I think the investor feedback with a lot of that theme.
Neil Mehta: Media reports and things that would impact the business, but.
Speaker Change: kind of creative, outside-of-the-box ways to cut costs on the completion side. And so I'd say that's where we're focused. You know, we've made progress every single quarter this year, some more than others, but, you know,
Speaker Change: You guys, probably spend a lot of time with new Mexico thinking through this how should how should we assess some of those headlines.
Speaker Change: Yes, no. That's a good question I think the real answer on setbacks as that we don't believe there is any substance to some of the concerns raised over the past few weeks, especially there was an article out a couple of weeks ago about a report commissioned by the Legislative Finance Committee.
Speaker Change: Given just where the overall market is, rig count continues to fall, I think we're very confident that this 800 number is here to stay and it's probably upside from here.
Thank you.
Speaker Change: Thank you. Our next question will come from John Freeman with Raymond James. Please go ahead.
Speaker Change: Honestly that report that the committee.
Speaker Change: Catering we think it was the right conclusion, which was it confirms that these sorts of actions would be costly and detrimental to the state and people of new Mexico and as such we don't think theres any chance that something like that would ever get to the legislature in new Mexico.
Good morning, guys.
Speaker Change: The first one on the three simulfracs that y'all did during the quarter, just any color on sort of the cost savings that y'all saw on those, maybe relative to, you know, the metrics that y'all show on slide five.
Speaker Change: Canadian Mexico has long been supportive of and dependent upon oil and gas development in a way that we firmly believe is mutually beneficial for both responsible operators like Permian resources and the people who are in new Mexico, So I would say.
I think it was like $10 to $15 a foot.
Speaker Change: Because we're highly confident the state would not adopt something like statewide setbacks that would impact our ability to continue to operate efficiently in new Mexico, and we think it should be business as usual there for a long time.
and many more. Thank you. Thank you.
Speaker Change: Got it. And then I guess on the last topic, you touched on water recycling, which y'all are up to the 50% recycled water on the completions. If y'all were sort of looking out over the next couple of years, what would be sort of the goals on that percent of recycled water and just sort of any, what investments would need to be made to kind of achieve it?
Speaker Change: That's very clear and then just your perspective on the M&A market you guys have done a great job.
Speaker Change: With consolidation, but as we think about transformative M&A versus bolt on M&A is it fair to say that right now the focus would be more bolt on M&A, but just curious to get your perspective.
Speaker Change: I think that 50%, we're very, very happy to get there. I think that that has become an unbelievably useful tool for, you know, it saves us money both on the CAPEX side but also on the LOE side, not to mention it's just environmentally the right thing to do. So this is a real kind of win, win, win.
Speaker Change: Yes, I mean, I think the opportunity set today definitely feels more like like bolt on M&A I think for us.
Speaker Change: We've been really successful over the past nine years buying the right deals at the right times in a way that's driven outsized return for shareholders.
Speaker Change: I think a really important part of that for us as we've always wanted to buy assets buy businesses that make our our base business better and are confident can drive outsized shareholder returns for years to come in with the quality of the business that we've got today I'd say that raises the bar really really high and I think a lot of the deals that are out there and all the deals we've looked at lately just just don't achieve our return.
situation. Thank you.
Speaker Change: I think there's room to continue to increase it. You know, if we could get to two-thirds of our water or maybe even three-fourths, I think that would probably be...
Speaker Change: where it taps out, there's always going to be about a quarter of your fracs or a quarter of your water that you can't recycle, so maybe that's a good goal over the next two years that we can push it up to two-thirds to three-fourths.
Speaker Change: Hurdles that don't make our business better so I think the focus.
Speaker Change: Lately has been on those smaller bolt ons to kind of more cash deals that we're doing are accretive to our inventory life and compete for capital day. One. So I think we're always open to evaluating things and as they come along if we found the right one we'd obviously be excited to do it but a lot of the time and momentum today seems to be more on on more of the bolt on acquisitions.
And then...
Speaker Change: The majority of the water recycling we do is kind of contracted through third-party midstream. So it's not a big capital expenditure for us. We give them a little bit of margin. They spend the CapEx.
and we both benefit from the recycling.
I'd say, I don't know if that's...
Speaker Change: two-thirds or half somewhere in there and so the balance of that obviously is us and that's what part of that is what's in that infrastructure budget that we that makes up the last quarter of our cap ex budget and so I would expect that to at least that part to stay in there every year if not slightly increase as we continue to pursue more
Speaker Change: Very clear thanks, guys.
Speaker Change: Thank you. Our next question will come from Gabe Daoud with TD Cowen. Please go ahead.
Gabe Daoud: Thanks, Hey, good morning, guys.
Speaker Change: Wanted to go back to I guess infrastructure spend for 2020 for you guys actually just noted a couple of questions ago that 25% or so of the capital.
and water recycling over time.
Very helpful, thanks, appreciate it.
Speaker Change: Towards infrastructure, but I think this year was a bit elevated just given some some spin around archstone debt. So could you maybe just confirm that's the case and how should we expect infrastructure capital to trend into 2025.
Speaker Change: Thank you. Our next question will come from Neil Mehta with Goldman Sachs. Please go ahead.
Neil Mehta: Yeah, good morning team and very strong execution this quarter. The first question is, there are a lot of headlines around New Mexico and...
Speaker Change: Yes.
Speaker Change: We're still working through 25 I can confirm you are correct, we had call it $100 million are.
Neil Mehta: potential risks around things like setbacks. I think the investor feedback was a lot of that seemed more media reports than things that would impact the business.
Speaker Change: Infrastructure spend associated with the Archstone acquisition that came through in 2024 so.
Neil Mehta: You guys probably spend a lot of time with New Mexico thinking through this. How should we assess some of those headlines?
Speaker Change: Absent any acquisitions I would expect infrastructure spend to be down year over year.
Speaker Change: We've done quite a few not <unk> seismic between.
Speaker Change: Tassos.
Speaker Change: Green Stephens and then the <unk> acquisition, we've done quite a few acquisitions over the course of this year as well so.
Speaker Change: I don't know if that means that it would've been down 100, but now it's only down 50 or.
Speaker Change: I'm, just spitballing exactly what it looks like but I think it's fair that infrastructure spend should be slight.
Speaker Change: Slightly down year over year, I don't know exactly that looks like yet though.
Speaker Change: Okay. Okay. No. That's helpful. Thanks for confirming that and then I guess as a follow up you noted in the release and the prepared remarks.
Speaker Change: I guess, it's the prepared remarks, but we're taking an equity stake potentially.
Speaker Change: Natural gas long haul pipe over the next couple of years well.
Speaker Change: Well I guess the question would be you're referring to apex or black home or is it something more longer dated I'm, just trying to get a sense of when that could materialize.
Speaker Change: So I would say not going to go into specifics on any conversations that may be ongoing today, but I do think if an equity stake made sense, both kind of ensuring we had the right downstream interconnectivity and sales point and confident we can earn a return on our investment it's something that's certainly on the table, but that's more intended to be one of the tools at our disposal today.
Speaker Change: And we feel like we've got a really good plan on that whole strategy. So nothing.
Speaker Change: Nothing specific we can share today, but I would say kind of all all potential options like that are on the table.
Speaker Change: Understood understood. Thanks, guys.
Speaker Change: Thanks.
Speaker Change: Thank you. Our next question will come from John Abbott with Wolfe Research. Please go ahead.
John Abbott: Hey, Thank you very much for taking our questions I want to approach 2025, a little bit.
John Abbott: Apparently I wanted to start with 2024.
John Abbott: So when you're in your remarks in your press release, you reduced well costs by approximately $1 million.
John Abbott: Compared to last year.
Speaker Change: If you repeated if you had those costs today.
Speaker Change: Where do you think your Capex for 2000, and 424 would first shake out at.
Speaker Change: So.
Speaker Change: Maybe ask that differently 'twenty, we reduce it off of $1 million off of 'twenty three.
Speaker Change: Yeah.
Speaker Change: So.
Speaker Change: Maybe maybe I think the easy way I'd put it is we're expecting to come in.
Speaker Change: Near the midpoint of our Capex guidance, and we've added 'twenty to 'twenty tills to the year. So yeah, maybe thats a better way to answering what you are saying.
Speaker Change: Yeah.
Speaker Change: I was just trying to get a sense. If you had your cost today and you were sort of repeat your program today, where your capex it sort of come in but that's that's fair.
Speaker Change: Then my next question is that you have you've had been very youre operations, we're doing extraordinarily well.
Speaker Change: There are benefits to maintaining consistent operations.
Speaker Change: Strategically when you think about your operations is there a certain number of rigs in a certain number of frac crews.
Speaker Change: That you think are important as you sort of just strategically just to keep going from an efficiency perspective.
Speaker Change: Do you think about activity going forward.
Speaker Change: Our team over the last couple of years with acquisitions has has really shown the ability to.
Speaker Change: Pick up.
Speaker Change: Change out and drop rigs and Frac fleets without missing a beat so.
Speaker Change: I think that the 12 rig program, we're running is great and it's working really well, but I'd say I have the confidence in their ability to go to 11 rigs go to 13 rigs and run anywhere between 2% and four frac fleets without missing a beat and.
Speaker Change: That's something new I'd say, there was a point in time, a couple of years ago, where I would've.
Speaker Change: <unk> had a lot of hesitation to kind of bounce rig count around and given what I've seen.
Speaker Change: With changing out all of the rigs after the <unk> acquisition.
Speaker Change: Picking up a rig dropping a rig et cetera.
Speaker Change: They do it we pick up new rigs and eight.
Speaker Change: Are just as good as the rest of ours within a well or two so.
Speaker Change: Probably two different ways to answer your question I think the 12 rig three and a half Frac fleet program seems to be really efficient and working well, but I am not there is no operational nerves from me is picking up or dropping a rig if that's what the right answer is.
Speaker Change: And then just one really quick follow up to all of that so just to think about in terms of efficiency operations and you think about whether or not you.
Speaker Change: About growth into next year.
Speaker Change: Would you ever just be willing to build ducks or do you don't see any value for building ducks.
Speaker Change: I mean oil we built docs back and Kelvin if oil went to 30 or 40, we wouldn't build docs, but I don't think there is to spend a bunch of capital and leave it in the ground for a long time without getting the production is not something that we would do in a normal oil price scenario.
Speaker Change: Alright, Thank you very much for taking our questions.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question will come from Zach <unk> with J P. Morgan. Please go ahead.
Speaker Change: Hey, guys. Thanks for taking my questions.
Speaker Change: First you talked a lot about efficiency gains on the call and that driving costs lower but can you talk a little bit about what youre seeing on the service side.
Speaker Change: Im sure Youre going through the negotiating process now, but any thoughts on how potential deflation might trend in 2025.
Speaker Change: Yes, we feel we made a little progress over the last few quarters on the kind of true deflation.
Speaker Change: <unk> materials things like sand.
Speaker Change: The two biggest mezzanine sand and water I think water is probably more on the efficiency side with recycling, but sand being one we're just we've seen a little bit of a reduction there.
Speaker Change: The Big ticket service company Stuff's been stickier and we've made a little progress in areas, where we found some win wins, where theres a little price concession here or there so.
Speaker Change: I think that the.
Speaker Change: The balance of power is probably in our hands, but it feels like this is an environment, where we're trying to be constructive and find win wins before we really go kind of squeeze margins just to continue to maintain efficiencies.
Speaker Change: Okay.
Speaker Change: Thanks that makes sense and then just one follow up on cash taxes, you lowered the estimate that $10 million to $15 million, that's quite a bit lower than you were at the beginning of the year.
Speaker Change: Any thoughts on how cash taxes will trend in 2025 do you expect to be subject to the A&P next year.
Speaker Change: Yes. The production is really just a lot of refinement and optimization from our accounting tax team really around our stone. So that's been great progress there.
Speaker Change: We have to finalize our work.
Speaker Change: But we don't expect to be subject Kmt in 'twenty five we'll provide more detail on that in February.
Speaker Change: We do expect to continue to have meaningful tax deferral and twenty-five also so we will provide more detail but.
Speaker Change: Good work so far.
Speaker Change: Yeah.
Speaker Change: Hey, Ken.
Speaker Change: Thank you. Our next question will come from Leo Mariani with Roth. Please go ahead.
Speaker Change: Yes.
Leo Mariani: Wanted to kind of ask on activity heading into the fourth quarter here.
Speaker Change: Are you all expect can you see activity ticked down a little bit in <unk> versus <unk>. Obviously, you guys are really fast and in <unk> I think had probably certainly kind of more tails than expected. So should we kind of expect capex and activity to be down a little bit in <unk> versus <unk>.
Speaker Change: Okay.
Speaker Change: Yeah, I think that capex should be down quarter over quarter. A lot of that is just kind of a function of working interest in the quarter. So youll see we'll keep running or 12 rigs through the end of the year and into next year, but our.
Speaker Change: Quarter over quarter, Capex, we're expecting it to be kind of slightly down Q4 from Q3.
Speaker Change: But it's more of a function of just kind of the well mix for drilling.
Speaker Change: Okay I appreciate that and then just following up on that you kind of alluded to this already.
Speaker Change: But.
Speaker Change: Clearly, we're able to go faster this year and yacht.
Speaker Change: 20 extra wells.
Speaker Change: The 12 rigs.
Speaker Change: Are you, giving kind of consideration to trying to kind of get back.
Speaker Change: To the previously planned place I'd say closer to 250 wells and do that with the 11 rigs or how are you thinking about that just trying to get a sense of your thinking about trying to capture.
Speaker Change: Some of those efficiencies in.
Speaker Change: Put it more into kind of Capex savings.
Speaker Change: As opposed to just kind of doing more with the same capital.
Speaker Change: We definitely can drill 250 wells next year with 11 rigs if that's what we wanted to do so I think whatever plan. We rollout in February will reflect the efficiencies we've picked up over the last two quarters.
Speaker Change: But we're not we're not there yet on exactly how much capital, we want to spend and what the right rig count is.
Speaker Change: Okay. Thanks.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question will come from Oliver Huang with Tpa. Please go ahead.
Oliver Huang: Good morning team and thanks for taking the questions I know in the past you all have spoken to running a fairly repeatable program targeting similar zone mix pad sizes regional allocation, just kind of given the increased size and scale. The business today is there any consideration to potentially expanding on the average number of wells per pad.
Speaker Change: That is potentially a lever to further drive down well costs, even further or maybe potentially tacking on an incremental zone in certain areas of the program when kind of considering the plan for the next 12 to 24 months.
Speaker Change: I would say our.
Speaker Change: Our plan kind of on a unit by unit basis is has been consistent over the last few years and is still what we believe is the right.
Speaker Change: <unk> of kind of how to develop our assets going forward just as a reminder, we are kind of.
Speaker Change: Very specific to the different areas, we are developing and what the rock needs. There. Some <unk> issues a lot of them on the Texas side, where you need to go co complete kind of all the different benches and thats. The strategy that we execute there as you move to new Mexico. There are some benches that need to be co completed, but others that have plenty of height separation.
Speaker Change: Our frac barriers that allow us to.
Speaker Change: Break different zones into different development packages. So.
Speaker Change: What we'll do what kind of let the rock dictate what the right answer is and I would say our tolerance or larger pad sizes is higher today than it was last year and higher last year than it was the year. Prior just as the total number of rigs number of wells in size and scale of the business gets bigger kind of the lumpiness from from really driving up pad.
Speaker Change: <unk> is we can mask you better than the business. So.
Speaker Change: <unk>.
Speaker Change: All of that to be said I bet pad size is slightly higher next year than it was this year just because of the tolerance we have but.
Speaker Change: We still had some 25 well pads this year, because that's what the rock dictated in certain places.
Speaker Change: We're not scared to do that and we'll continue to do that in the areas, where we need to.
Speaker Change: Awesome, that's helpful color and maybe for a follow up question just wanted to see if you all had any thoughts around power reliability. These days.
Speaker Change: Any sort of investments from a capital side beyond the norm that might need to be made with just kind of how fast you. All are working to ensure you're staying ahead of the til schedule.
Speaker Change: I think the right way to think we have a reliable power you can see from our operations like we have.
Speaker Change: We have never and don't expect to ever kind of quote downtime or a production mask due to power reliability.
Speaker Change: I do think that's an opportunity for a lot of future efficiency gains it probably shows up to the low side are our new Mexico position is still very generator heavy across the entire state and that's a function of just where.
Speaker Change: The grant is that kind of time, it takes to get things built to us and.
Speaker Change: Just overall, where that state is I'm hopeful that.
Speaker Change: Maybe maybe new kind of new federal.
Speaker Change: Regulations et cetera may help speed that up a little bit but on balance that's something that we'd like to continue to improve I don't know if thats working with the utilities, which we are or building some of that out ourselves, which we are also looking into but.
Speaker Change: I wouldn't view it as a reliability concern it's more just the efficiencies of if we can get off a generator and onto overhead power or onto using our own gas in the field I think youll see a cost savings that comes alongside it.
Speaker Change: Perfect. Thanks for the time.
Speaker Change: Net.
Speaker Change: Thank you. Our next question will come from Kevin Mccarthy with Pickering Energy Partners. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Hey, good morning, guys.
Speaker Change: Following up on that drilling efficiencies with the faster cycle times, how many more wells does that translate to a year.
Speaker Change: I guess asked another way.
Speaker Change: It's the 12 rigs and I think you said three to four completion crews does that equal something more than 270 wells a year kind of using your leading edge rates.
Speaker Change: Yes, probably slightly just because if you think about it we didn't have that January one of this year and we have it now so there is some amount of the 'twenty. We added this year are.
Speaker Change: Was growing over the course of the year. If you took our true run rate now, maybe it's $2 75, or something I don't know what exactly but it's probably slightly more than the $2 70.
Speaker Change: I appreciate that.
Speaker Change: And as a follow up I wanted to touch on NGL. The last two quarters have seen a big step up in NGL volumes and pricing has been relatively solid.
Speaker Change: What's changed there is that a representative of the change in production mix.
Speaker Change: Drilling or is there a change in how you are marketing your Ngls.
Speaker Change: It's really just more ethane recovery driven by weak wahhab like weekend basin gas pricing.
Speaker Change: Okay.
Speaker Change: So we're basically recovering ngls slightly less gas, but an overall uplift.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question will come from Phillips Johnston with capital one. Please go ahead.
Speaker Change: Hey, Thanks for the question first is on <unk> unit costs, it looks like youre expecting to be sort of at the high end the guidance range sort of implying.
Speaker Change: Uptick in the back half of the year versus the first half.
Speaker Change: You may recall, the barilla draw properties include some midstream ownership there so.
Speaker Change: Can you maybe talk about the drivers there.
Speaker Change: Yes, <unk> always just going to be kind of where we pop wells in this slight variance in kind of contract rates, depending on that mix. So nothing nothing out of the ordinary there auctions midstream assets after a little bit separate from <unk> at 11 modest upward pressure on <unk>, but we're talking pennies.
Speaker Change: Okay.
Speaker Change: Great and then can you maybe talk about where you expect to end the year in terms of that.
Speaker Change: Next 12 months PDP decline rate and what that.
Speaker Change: Might look like relative to where you came into the year given the barilla draw a deal on a few other moving parts.
Speaker Change: I don't think are declining it's going to change much Bryan.
Speaker Change: Debris and draw it helps a little but the growth that we've had this year from an organic basis, probably offset fit so I'd call. It same kind of mid to high <unk> that we've been in for the last year or two.
Speaker Change: Okay. Okay. Thank you.
Paul Diamond: Thank you. Our next question will come from Paul Diamond with Citi. Please go ahead.
Paul Diamond: Hi, good morning, Thanks for taking the call.
Speaker Change: A quick one on the ground game.
Speaker Change: Pricing volatility really shifted any of those bid asks or is that still something thats youre going to be consistent part a better organic growth story going forward.
Speaker Change: Yes.
Speaker Change: Highly confident will be a part of our growth story going forward I think thats been something we've been doing successfully out here in Midland for nine years, and our business development team in Atlanta teams are extremely good at.
Speaker Change: I do think the volatility you saw in Q3.
Speaker Change: Definitely caused it to be a bit of a slower quarter on the ground game side I think that there's a lot of natural fluctuations that can end up being pretty lumpy on wind deals actually get done, but yeah. I think when you see the kind of volatility we've seen the last four months I think that definitely widening bid ask spreads but.
Speaker Change: Over time, we'll see some more consistency or people will get used to the volatility and I think we will.
Speaker Change: Continue what's been a really strong pace. The last couple of years on the ground game side.
Speaker Change: Got it I appreciate it and just one quick follow up on you talked about 60% to 70% kind of longer term goal on Gulf coast pricing.
Speaker Change: Pricing just wanted to get an idea of like how we should think about that cadence.
Speaker Change: So over the next several years is that more linear or be more lumpy I guess, how should we think about that progression.
Speaker Change: I think it'll be more linear I think theres some stuff that we're working on a day that should have effect.
Speaker Change: Much near term capacity and I think some of the things are going to be more slow burn, but I think I think it was trying to get there as over the next couple of years not not kind of next quarter.
Speaker Change: We should have some fruits from our labor that we can share.
Speaker Change: Much sooner than that but I think over time or just be chipping away at it.
Speaker Change: Understood I appreciate your time.
Speaker Change: Okay.
Speaker Change: Thank you as a reminder to ask a question. Please press star one our next question will come from Noah <unk> with Bank of America. Please go ahead.
Speaker Change: Good morning, guys.
Speaker Change: Yeah, I guess I wanted to start off on LOE.
Speaker Change: It seems like your alloy costs continue to trend below the low end of guidance.
Speaker Change: What's driving that and then could we is it fair to assume that kind of where <unk> is kind of a good go forward assumption.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Just as a reminder, we've kind of always said you're at the low end of the guidance range is where we thought we'd be at the <unk> integrated better and faster than we thought which kind of how that's trending in that $5 50 range I do think youll see in Q4, a slight uptick from there due to the oxy barilla draw that.
Speaker Change: That asset.
Speaker Change: I expect really quickly to get it back to something close to where PR historically has but for for the first month of Q4. It was still operated by Oxy. So youll see a slight uptick in Q4, and then I think as as we get into next year, we hope to get <unk> kind of back down to that call. It 550 range. So yes, not I don't think below the guidance.
Speaker Change: But somewhere in the $5 $55 60 range is probably where we are.
Speaker Change: Over the next kind of medium term.
Speaker Change: Makes sense and then the next question is just kind of on use of cash.
Speaker Change: With the revolver paid down and.
Speaker Change: How should we kind of think about the use of free cash flow moving forward.
Speaker Change: Excluding the payment for the base dividend should we just expect it to build on the balance sheet.
Speaker Change: Yes, I think kind of what we do with our free cash flow is going to be dependent on the kind of reinvestment opportunities. We see in front of us I think we've been really clear if.
Speaker Change: If we see the right accretive acquisitions that fit with what we're trying to do strategically we're going to pursue those I think if we see the right.
Speaker Change: Locations in the stock price, we'd be excited to lean in heavily on the buyback, but kind of absent either of those opportunities. We're excited to kind of put that cash to the balance sheet I think that the balance sheet could be kind of paying down some debt long term debt like we did earlier this quarter, where frankly I think we like accruing some amount of cash on the balance sheet today I think we like the strategic flexibility that that gives.
Speaker Change: And just.
Speaker Change: Just kind of further enhances our liquidity profile on the fortress balance sheet that we're really proud of.
Speaker Change: Great to hear guys. Thank you so much.
Speaker Change: Thank you at this time I am showing no further questions in queue I will now turn the call back to James Walter for closing remarks.
Speaker Change: As you can see from the results we reported a data business continues to perform at a very high level, which set the company up well for the quarters and years to come as we head into next year, we plan to build on our track record as the lowest cost operating the Delaware to continue to drive outsized returns for our shareholders. Thanks to everyone for joining the call today for continuing to follow the Permian resources story.
Speaker Change: Yeah.
Speaker Change: Thank you. This does conclude the Permian resources third quarter 2024 earnings call. Please disconnect. Your line at this time and have a wonderful day.