Q3 2024 Veren Inc Earnings Call
Good morning, ladies and gentlemen, my name is Jenny. And I will be your operator for Behrin's third quarter, 2020 Corps Conference Call.
This conference call is being recorded today and will be webcast along with a slide deck which can be found on various web site homepage.
All amounts discussed today are in ten agent dollars, with the exception of West Texas Intermediate or WTI pricing, which is coded in US dollars.
All lines have been placed on mute, prevent any background noise.
A fair to speak as your mark, there will be a questioning answer session for members of the investment community.
If you would like to ask a question over the phone line during this time, simply press star, then the number one on a telephone key that. If you would like to withdraw your question, press star 2.
During the call, management-demate projections were other forward-breaking statements regarding future events or future financial performance.
Any such statements are made subject to the forward-looking information and the non-get measure sections, but press release as should earlier today.
Speaker Change: I will now turn to Call of Earth to Craig Bryksa
Resident and Chief Executive Officer at Baron. These go ahead, Mr. Greksa.
Thank you, operator. Welcome everyone to our Q3 2024 Conference Call. With me today are Gennelmont Archie Financial Officer and Ryan Gritzville Archie Fawbering Officer.
Our third quarter results were highlighted by generating excess cash flow of 114 million dollars.
Speaker Change: are turning 85 million to shareholders through dividends and share purchases.
And now it's in our strategic infrastructure transaction for proceeds of $400 million, which close in the fourth quarter, and further net debt reduction with total expected repayment of $1.3 billion in 2024.
We will continue to prioritize operational execution, optimizing and strengthening our balance sheet and are increasing our return of capital to shareholders.
In the third quarter we produce 185,000 bui per day comprised of 65% boil on liquids.
Our third quarter production was impacted by third party facility downtime and our own infrastructure constraints.
To address these challenges, we are investing incremental capital to improve and increase our facility's capacity.
Our teams have gained a better understanding of our Alberta Montney assets and we are implementing some changes to enhance our execution.
We believe implementing these changes will positively address recent under recent well under performance in some of our Montmi wells that have contributed to adjusting our overall outlook for the remainder of 2024, which will also impact 2025.
Overall, we remain very excited by the quality and depth of our corporate inventory and believe it is one of our biggest strengths to supporting our long-term sustainability and our future value creation.
The quality of our Alberta Monty asset is evident when looking at our results.
Well, on the first school Creek West Pat that were drilled, completed and brought on stream earlier this year. Rank amongst the top 1% of all oil and liquids wells in North America over the last three years.
These wells have already accumulated 440,000 B.E. per well in just nine months. And are currently producing at a rate of 1800 B.E. per day per well.
This patent includes a recently optimized well that is showing higher productivity than its IP 30 rate of 2000 BUE per day.
In early 2025, we expect to bring on stream an adjacent Seventh Well Pad in the Gold Creek West area and are currently expanding our facilities capacity to accommodate increasing production from future development and well optimization in the area.
In total, we have over 300 net, and turn the identified drilling locations in this area alone.
Since entering the Alberta Montmied, we have focused on identifying efficiencies in the play to further improve our area economics. To that end, we trailed the use of plug and perfe completion's design in our gold creek area as the beginning of 2024 instead of single point entry design.
We believe this change could generate similar production results at a lower cost.
Although the wells completed with plug and perfor economic and lowered our costs, production results have not matter expectations.
Our own findings have been confirmed through the additional data review, including adjacent well-logs, reservoir diagnostics and microsismic analysis.
Results seen an early October meet is finally conclude that we will continue to use the single point entry design in the gold creek area going forward.
Speaker Change: This update is now reflected in our 2024 guidance, 2025 budget and our five year plan.
We will always seek to maximize efficiencies and returns and we will continue to find to our drilling and completion design when data warrants it.
We have achieved substantial efficiency gains in K-Bob since entering the play in 2021, including lowering our average drilling days for 1,000 meter lateral length by approximately 30%.
We continue to benefit from knowledge transfer between our plays and have applied the same strategy of optimizing our approach to neoliberta Montney where we have lowered our drilling days by approximately 20% since entering the play in the first half of 2023.
Based on the production impact I discussed earlier, we now expect to generate annual average production of 191,000 B. Lee per day in 2024, weighted 65% to oil on liquids with development capital expenditures of 1.45 to 1.5 billion dollars.
We also announced our 2025 budget today where we expect to produce a 188th.
290-6000 bui per day. Weighted 65% to oil and liquids with development capital expenditures of 1.48 to 1.58 billion dollars.
year over year our 20 25 production growth based on fourth quarter is still expected to be 10,000 B.E. for day which is in line with our prior plan.
Our 2025 budget reflects a $70 per barrel WTI price assumption that is backstopped by our diversified hedgebook to protect our 2025 cash flow. However, should the money prices weaken, we will use our discipline and flexibility to lower our capital budget.
We expect to generate 575 million to 775 million a full year excess cash flow in 2025 at 70 to 75 dollar per barrel of WTI crisis.
Speaker Change: We have allocated 85% of our 2025 budget to our short cycle K-Bob doverney and Alberta Monty assets that provide top four tower turns, scale ability and quick pails. As mentioned, this includes incremental capital and the Alberta Monty to increase facilities capacity.
The remainder of our Capitol budget is allocated to our long cycle load applying Saskatchewan assets, which generate our highest operating netback and significant excess cash.
Consistent with our capital allocation framework, we've also allocated a small portion of our budget to long-term projects such as decline mitigation and various environmental initiatives.
Under our updated five year plan, our annual average production grows to 250,000 B.E. per day in 2029. Driven by our Alberta Monty and K-Boff-Dubrenning assets.
We expect to generate $4 billion of cumulative after tax excess cash will over the life of this plan at $70 per barrel WTI pricing and $3 per MCF AACO pricing.
On a compounded annual basis, our excess cash flow per share growth were so to be over 10% which is similar to our prior plan.
We will continue to return 60% of our excess cash will back to shareholders while retaining the remainder for debt reduction. As our balance sheet strength improves, we will look to increase the percentage of excess cash will return.
We remain excited about the quality of our assets and our overall potential to generate significant excess cash so and create future long-term value for our shareholders.
I'd like to thank everyone for their ongoing support and I look forward to taking any questions. I'll now turn to call back to the operator to begin the Q&A.
Operator please open the lines
Thank you. I'll say reminder for members of the investment community, but if you would like to ask a question, please press Thor, then the number one on a telebound keypad. If you would like to withdraw your question, press star 2.
Speaker Change: We will pause for a moment from Palctic Human A-Roster.
Speaker Change: Good.
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Speaker Change: Your first question comes from the line of Michael Harvey from RBC Capital Market. Your line is that open?
Yeah, sure, good morning. Thanks for taking the question. I guess it's a couple from me. Just kind of getting close to your end. Do you expect to see?
Any of these recent well results having an impact on the reserves you're carrying or a mechanical is carrying for these areas and or is it kind of too early to make an assertion on that and then the second one is timing. When would you expect to see or be able to provide the market with some updated well results with the new completion strategies?
Morning Mike. Thanks for the question. So it's Craig here. As far as reserves, we're making our way through that process.
I can tell you we do do.
Media Reserve Update with the independence as well as the full.
Speaker Change: Your end reserve update so so far as we go through the process our reserve books looks really good
Keep in mind when we entered into the play.
We took the approach of wider weld density right from the get those. We had our weld space quite a bit wider than what had been booked in the past. So overall when you look through the field the reserve book looks really good and really strong.
Speaker Change: Um, some ups and downs, but overall, um, I would say it looks good on that standpoint. Mike and we'll have that finalized year obviously for year and we'll get some color on that as, as that gets done. As far as, you know, your next question on recent well results.
Speaker Change: Um...
You know, as we were going through the quarter here and starting to see the production and two of these pads keep in mind, Mike, they just came on here in October.
between our 10 to 28 pad and our 7 to 17 pad.
Speaker Change: where we had went to the Plugin Purf Design relative to the single-point entry design.
Speaker Change: [inaudible]
Speaker Change: a pad that we had on kind of later in the third quarter and our 15 to 16 phase 3. So keep in mind, Mike, all these pads sit in a great area of the reservoir where you've got a number of producing wells. All have been developed in the past using the single-point entry design.
as we were seeing these results.
Speaker Change: Playout we had quickly started to change any further completion designs on any of the paths that we were moving on forward to the single point entry.
So the completions and drilling teams were actually did a great job on switching that out in very rapid time.
Speaker Change: including some of the wells down in car. There's some of the pads down in car south, which we're drilling right now too. So I'd expect to have you some color.
Olaid December as far as the next two pads that are using the single point entry. And then as we get into the new year you're going to start to see more pads coming online throughout the new year with.
the biggest one being the six to seven phase three offset. That's seven will paddle becoming on sometime in your own February. But again.
Speaker Change: We have made that switch to the single-point entry design which
Speaker Change: I'm excited about especially when you think of the hammerhead, a griger that car cell figure where it hasn't been done before and really what this is going to end up doing for us in that area. You know we've had good results in that area. I think with the new system ideally to see even improve that even more.
It's a long wind at answer, say, and reserve book looks pretty solid and then when you look into well results kind of December and into Q1.
Gotcha, thanks for that Craig.
Yep, thanks for the question Mike.
Speaker Change: Thank you. Your next question is from Jeremy McCray from BML Capital Market. Your line is now open.
Jeremy McCray: I think Craig, kind of a question Sarah Beagle, just start with the elephant in the room
Jeremy McCray: Can you comment on your stock price here this morning and just terms of, do you think this is an overreaction? Do you think this is just anything, what you think on the market's reaction to the guidance here is some of these wall results. And then I'll just wait for a second question after hearing this.
Yeah, I, you know, obviously Jeremy, well first of all Jeremy, thanks for the question. I think it's obviously tough for me to comment on the market. Do I think it's an over-action? I do, you know, I think when you look at where we are on an overall guidance cut for 20-25 relative to where we were, it's, you know, you're...
You're basically off 10,000 barrels a day or 5%. Up that 10,000, so we've made to our guidance.
Speaker Change: [inaudible]
You know, it's really driven by oil and that overall impact to our oil production next year is only 2000 B.E. per day out of that small 5% revision to our guidance. So I think that plays into it but then the other thing too Jeremy.
You know, I think...
Like any company that is went through a transformation you're always going to have questions on your wells and your well performance.
Speaker Change: in the near-term until you're demonstrating that like we are in K-Bob where we took that and we have really put that in.
into the market where they have all that confidence. And I think maybe the market just got a little bit spooked on a few pads here that have under performed relative to what we've seen in that area over the past and keep in mind on that to Jeremy.
You know, decides the prize.
on us moving forward with the plug-and-perf design was fairly significant when you think.
at an all-in cost now depending on...
What exactly type of completion in the number of...
Sleeves are using in these. They can be, you know, it could be upwards of a million dollars per well. We're able to save by going to plug in per foot.
Ultimately, the performance of the wells hasn't been what we've expected. So, you know, I think...
is still filtered through over the next couple days. I think people are the market. I'll start to see the opportunity in front of them.
You know when I'm excited when we start to look into 2025.
Knowing that we're so much smarter going into that year than as we entered into 2024 on third parties and the infrastructure around them on our own existing infrastructure on the different mitigation components that we put into that and then most importantly on what we've learned.
Speaker Change: as a team, as far as landing and completion design in this area and then how we translate that into the car acreage as well too. So that's where I start to get pretty jazzed.
So I, you know, and fairly long ago on your question Jeremy, sorry.
I think it's just it's a bit of confidence here and I think the market did have some high expectations coming into the year and just what the latest well share.
Jeremy: Give like some more specific details on why the single point entry is going to be better than the plug and purifier. Like I know what probably has things to do with it. You're pumping rates in that, but just...
Jeremy: Is it almost 100% completion design and is there a risk of geology or is this really just going to go back to the old completion design?
Yeah, so if you look at if you look at where these pads are and where they sit relative on the map they are right in gold creek right in the core of that area and in fact
In fact, the wells that we, the pads that just came online should be better than the offsetting wells based on the geology and how that improves as you're moving a little bit to the south and the west in this area.
Speaker Change: So...
When you are pumping your frack down hole, a single point entry system only has one entry point into the reservoir. And the biggest difference within this reservoir is the rate at which you enter that reservoir is going to really dictate how far and how you can crack that rock vertically.
Speaker Change: and on the single point entry system were basically were over double the rate at the entry point. So it allows us to do a much better stimulation into the reservoir than it did relative to the plug-in perfe.
So one thing I would know Jeremy is on that.
the Tana 28 pad that came on last there in this gold creek area. One of the things that we did do is we were as we were learning this and catching up to this we did change the
Perth intervals in that stage. So instead of going to five clusters, we pulled back into three clusters.
Speaker Change: So we got more rate per entry point and not pad is significantly better than the other two. So never mind just just...
How much better that would have been using the single point entry system. So, you know, it's all that data and all that learnings. And you take that, we've done the reservoir modeling, we've done the diagnostics, we've went through and looked at the microsismic and you can see all this data on there.
Speaker Change: So yes, you'll see us move fully here to that single point entry system and then we'll deploy that down into the other areas of the play as well and that's why we're excited.
So the other thing I will do is when you look at the competitors and you move to the south and the west across the plate, the majority of the play is developing.
Speaker Change: Um
Plug-in Purf, right? So it's not that we are stepping on and doing anything any different. We, in fact, we're trying to drive the cost structure on a proven technology.
But with our area, the reservoir and that our reservoir is oil, you have a little bit higher viscosity and all those things come into play on these types of things. So, Paul, I learning experience and we're going to take this and run this.
Speaker Change: and girlfriend going forward.
Just on the old NCS systems versus the new what you're going to try. It looks like you're using about six and a half tubes a minute for pumping. Is that going to increase at all going forward here? Or is there anything different with the NCS that you want to use differently than Firewells?
Speaker Change: Yeah, so you know you're always experimenting on things but as far as pump rate, going to the you know full on single point entry systems, you're limited by your coil as your pump and down coil, that rate is kind of...
It's at those pressures and the loss of these that you can inject that. So we'll go with that.
Six and a half just based on mechanical limitations, but the other thing do know is as we do our reservoir diagnostics.
The real tipping point for the rock is in and around five. So if you're over that five you start to get that better effective frack and it's six and a half you're certainly getting there.
Well, Bob that, right? Yeah. Okay, let's give it to me. Thanks, Craig. Okay, thanks, Jeremy.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question is from Dennis Com from CIBC World Market. Your line is now open.
Good morning and thanks for taking my questions. I guess my first one follows along, I guess a little bit of the prior to...
Dennis Com: So obviously, as you've kind of been editing your completion design, can you talk towards a little bit more and I think you alluded it to
Harvey's or your answer to Harvey's question is really just around drilling density. Obviously there's a lot of focus around elevator freps accessing other areas of the reservoir giving kind of your revised completion.
Speaker Change: [inaudible]
Yeah, and I, so thanks Dennis. And what I would say to that is
In order for us to get that proper elevator crack we need to use the single-point entry and that is what has become abundantly clear to us here over the last couple of months.
So that design is what is necessary for us to capture that entire portion of the reservoir. So keep that in mind. But as far as well-densing and well-spacing,
Speaker Change: We're fairly conservative on that already, like if you remember when you think through Gold Creek and Gold Creek West, we space our wells in the five to seven is the tightest we would go on a per DSU basis.
mostly in that five range, but certainly there are some areas where we're a little bit tighter at seven.
which again when you look at industry over the long term this is I would say it's a fairly conservative well density and then when you move down south into the car and car south areas
Speaker Change: Our well spacing there is generally 8 on a per DSU basis and that's between the two benches.
But again, that's a significant...
Speaker Change: widening of spacing when you think of what Hammerhead and the prior operator had been doing in the past. Their well density was in that 10 to 11 wells and we certainly believe that is too tight.
I think you can see that on interwell interference, you can see that on decline rates of those wells.
So we've taken a little bit more of a conservative approach.
And now the next step for us is
You know, single-point entry has never been tried down there.
Actually, there's, I shouldn't say that, sorry, there's one pad in the far end of the south field that is...
Speaker Change: is single point entry. And in fact, Dennis, if you look at that pad, it's one of the best pads in that area. So this is where, you know, look for us to take that technology and apply it across that part of the field as well too. And that's what's got us excited as we go.
Speaker Change: Well, I was going to say, and it's really, you know, this production performance that we've seen out of this latest couple pads called 11 Wells.
Speaker Change: with them not coming on at Typewell that is played into Q4, into our Q4 numbers, and that really is what flows through into 2025, and that's where you see that setback on the production. But again, the bulk of that volume is...
is the gas volumes, right, not the oil volumes. We're only off, call it that, 2,000 on oil.
Speaker Change: No, I appreciate that the incremental color on
Speaker Change: and the details around kind of the next steps on the development side.
Switching gears a little bit, you also mentioned it in your prepared remarks, you talked a little bit around.
optimizing facilities. Can you discuss maybe a little bit more in depth as to what that entails? Is it compression? Is it incremental capacity of your batteries? Is it pipelines? Is it a combination of all three, I guess? Just a little bit more color on that side would be would be great. Thanks.
Speaker Change: Yeah, and so the one thing, the one thing you'll note in the 2025 budget is we've bumped up our Monty facilities capital spend by about $70 million year-over-year from 2024 into 2025. And that's the big component of that change in the capital guidance.
Speaker Change: We started to realize that, you know, as you're bringing fluid volumes in, that the capacity of some of these batteries is not at nameplate capacity.
production and drilling spans in Saskatchewan into facilities in the Alberta Monty this year.
Speaker Change: to get after that as soon as we could.
and then we're applying more capital into it in 2025 and I think by the by the end of next year you'll see us being more of call it a more steady state facility spend going forward as we get these issues addressed but it
Certainly is some incremental gas lift compression and making sure all that is in place and on-site.
So it's kind of, for lack of better terms, a mixed bag of everything that you'd see in facilities that we have identified and are now addressing across the field, top to bottom.
The other thing to note, Dennis, like with 6 of 7, so I talk in goal pre-quest now, if you think of that 6 of 7 pad, which is, it's just been an incredible pad and we're following up that pad up now with, with
Phase 3.
And we're, you know, that.
Just super excited about what Goal Creek West means and what the materiality it is for this company. We have accelerated that battery turnaround and expansion that was supposed to happen in February of next year, 2025. We've accelerated that into
2024, so that as those phases, the next phases of those pads come on, we're all ready for that. So that has been going on here in the background too, and actually that shutdown is on right now.
Speaker Change: So, it's a little bit of everything there, Dennis, as far as that. I don't know if that helps you or not.
No, I appreciate that context. I was just wondering if there were kind of a couple, we'll call it,
key areas that needed to be kind of improved upon or optimized, but it sounds like it's a little bit of everything. So no, I appreciate that color as well there, Craig. I'll turn it back. So, Dennis, one thing I would say is Gold Creek is where we're spending a lot of that, which is where some of these newer pads come into too. And then we do have
We are working on a new Gold Creek battery that would be online in 2026, too, in the background.
Perfect. Thank you.
Speaker Change: Mm-hmm.
Thank you. Your next question is from Luke Davis from Raymond James. Your line is now open.
Luke Davis: Hey good morning guys. Just had a couple questions related to the guidance that you put out this morning. So on 2025, I'm just wondering within that base budget that you've outlined if you can just speak a little bit to you know some of the contingency that you've put in there both for you know planned and unplanned downtime. Just trying to get a sense for you know how conservative you guys are you're looking at that at this point.
Speaker Change: Yeah. So, hey Luke, it's Craig. You know, that's a, it's a good question. I would say after experiencing what we experienced in Q3 of this year and just...
Speaker Change: unplanned downtime, some planned downtime, as well as some of the facility constraints that we've seen and then as well you get smarter on how some of these facilities run through different weather conditions. We have built in some incremental downtime into the budget for 2025.
Speaker Change: So we have layered in an incremental couple thousand barrels a day beyond what we had already.
Speaker Change: Just to ensure that, you know, as as we make our way through the year that.
some of these unexpected things can be absorbed within within our overall numbers. So we had a we had a layer in there.
on an annualized basis, and obviously you forecast that monthly, but we've layered on, call it an incremental couple thousand a day on an annualized basis, again, forecasted monthly, and then that'll show through the quarter. So we have, I would say we have a very
a much more robust number on that in 25 than we had in 24.
Speaker Change: Does that help you?
Speaker Change: Yeah, no, that is helpful. And then I guess just a just a follow up to that related to the budget. I'm just wondering if you can.
outline what a potential program would look like in sort of a $65 to $70 world. I know, you know, spots below the budget that you put out this morning. $25 is backward aided, so, you know, even lower than that. You know, so from where I'm sitting now, it looks like it presents a little bit more downside risk in terms of when you
Speaker Change: firm that up in December. So just trying to understand sort of what the bookends might look like.
Speaker Change: Yeah, so what I can assure you of, Luke, is that we are not adding capital. Oil can rip to $150, we will not be adding capital, so know that.
And I think with the way the program is set right now, it was a good apples to apples comparison of what the market had saw from us previously. So it gives you a good data point as far as a benchmark. I think if commodities slide into that, you know, 60-ish dollar range for a while, we would look to be disciplined on that. We'd look to pull back.
On that, and at that point in time, we'd likely look at cutting. I don't know, I would say somewhere in the neighborhood of
$250-$300-ish million dollars out of that. That would probably pair your overall production
down in the range of 3,000 to 5,000-ish BOE per day on the annualized basis, and that would be basically looking at peeling out one of the Montney rigs.
Speaker Change: and then cut in some of the other operations as well as how we've been thinking through that.
Just to give you a bit of a flavor, so if commodities slide, we are going to be disciplined, we are absolutely not tone deaf.
to the market and how things have been playing out there.
Speaker Change: All that being said, we do like the plan, especially for
you know if the learnings from 24 into 25 and then what that means into our five-year plan as you look to go forward on that but absolutely in a if the commodity slide we will we will react and we will react in the right fashion.
Got it, that's helpful. I guess just final one for me, related to the infrastructure, looks like you got about an incremental...
$75 million or so into 2025. How does that cascade into future years? And how should we expect that infrastructure spend to sort of shape up, say, over the next three to five?
Yeah, so when you look at our five-year plan and the detail in there, Luke, this year is the biggest spend on that front.
And then when you start to look into 26 and 27, it pulls back by roughly the amount we added this year.
8 to 10-ish percent of the total budget as we start to have some of these issues behind us. But this 2025 is the biggest year as far as that facility spend from that standpoint.
Great, appreciate that. Thanks Greg.
Speaker Change: Thanks for the questions.
Thank you. Your next question is from Michael Spiker from HTM. Your line is now open.
Speaker Change: Morning, guys. Morning, Michael. Would love to say.
How's it going? It must be a tough morning at Varon, but we move forward.
So I guess my questions this morning come mostly from the plug-and-perf.
completions like everybody else has been touching on but I'll start with a reprieve
for you guys at KBOB. Have you guys seen any wins from the tighter spacing on the 235 pad and going forward? Kind of any learnings on inventory and completions there in the KBOB oil window? So I know that's one of your stronger assets, so I'll start with that.
Speaker Change: Typically in through the oil window we run in that about 400-ish meter spacing. We crept in from the 600 meters and in some of the areas you're going to see us tighten in a little bit more.
You know, as far as the individual pads and how they play out in the areas, we'll see how the long-term performance looks and what that does before we start to shift inventory.
on any of those fronts, but so far.
things on as far as well density and well spacing looks pretty good. I would also say though Michael as you as you as we move through 2025 and we start pushing into the the more condensate rich fairway as opposed to the the volatile oil window where you get a little bit higher pressure.
We might even creep in a little bit tighter there as well too, so as opposed to call it 400 meter spacing, you know, somewhere in that 320 meter spacing, but we'll see how the long term performance is on those before we start to layer in incremental inventory.
and the new Aida-31, you guys are kind of thinking...
single-point entry NCS on those and what would be the kind of The boundary to the south where you you think about adding back plug-and-perf is that kind of Elmore Township 66 kind of area or how do you think about?
the windows of the asset where you'd start to bring back some of that plug-and-perf completion.
Speaker Change: So, you're 100% right as far as the rate and the height growth and you're not, you're, we on these last plug-and-perfs in the Gold Creek area, we didn't get that column.
We didn't get all the way to the top.
Speaker Change: And the results have shown that. So you're right on that, and it is driven by the rate.
Speaker Change: and the entry points into the reservoir.
Speaker Change: As far as six to seven phase three.
Speaker Change: We made the call to switch all of those to the single point entry system as we were drilling those.
Speaker Change: All that being said, Michael, keep in mind, one of them already had its liner run in, so it will be plug and perf.
And if you remember, we did the original Phase 2 pad there. Two of them were plug-and-perf, and two of them were single-point entry, and the results are good.
from that pad. They're actually phenomenal. But we do believe, now knowing what we know, we believe that the
Speaker Change: The plug-and-perf systems in the two wells was aided by the single-point entry systems in the offsetting wells. So, we believe there was some frack carryover into those wells that helped them.
So, we have made those changes, but, you know, as far as as moving down south.
I think we want to understand what the upside is to all this single point entry systems.
in car as we move from Township 66 down.
you know, just the production dict or the production results dictated, then we would look to stay with a single point entry system in those if, if things look great.
So, we'll see how that ends up playing out, but keep in mind, we've had some good results in CAR.
Speaker Change: and that area.
Speaker Change: That has been under the plug-and-perf system so let's now see what single-point will do in there and I that's where we you know like I mentioned a couple minutes ago that's where a person starts to get excited.
And then do know, Michael, if you look in 64-2, so Township 64-2, there's a 5-well pad in there that was originally completed.
by the Spartan Delta team actually using single point entry and it is it is a absolute outstanding pad. So you can use that one for a reference point when you're digging into the details a little bit.
Michael Harvey: Yeah, so just one last one for me. I think that's a 6 of 10, Pat. And so, I think you guys had said earlier that Car West in 64.3 is behaving like Car East.
I think we might have lost you there.
Speaker Change: Oh, sorry, can you hear me? Michael, but yeah, we can, but I think, you know, your question was on how do we expect the well performance on the single point entries in CAR?
Speaker Change: when 64.2 has that is that behaving or 64.3 behaving like 64.2?
So, you know, I can tell you that the typos in there are now built off of what we see in the offsetting production.
anything that
Speaker Change: benefits us through single-point entry would be upside to that, but what we are seeing is is less
less gas in that area, and more liquids, like the liquids rates have been strong, but they're they're not a very sharp decline, a little bit more steady on that oil front. So, I guess we'll see how these ones, you know, play out. I hate to speculate on that, Michael.
Michael Harvey: Sure. Alright, I appreciate it. I'll turn it back. Thanks guys. Happy Halloween.
Speaker Change: Thank you.
and I'm glad to talk to you. Thank you!
Speaker Change: The next question is from Amir Areef from
Thanks, good morning guys. I just wanted to get a little bit of a clarification on a couple of previous questions here. So, in Carr South, again, you've been historically doing plug-and-perf. You're going to test the sliding sleeve. Are you also going to be doing that at Carr North? Because I think you've got some Carr North wells in Q1.
Speaker Change: We're doing it across the play, Amir, and thanks for the question, but yeah, we're gonna move it across the play.
based on what we've been seeing.
Sounds good. And then on the 25 guidance CapEx relative to WTI move, I think you were talking about a $250 to $300 million potentially lower capital spend. Was that closer to $60 WTI?
We're just in the way.
Speaker Change: Yeah, I don't think we're married to a price point at that, Amir. It's more, you know, how's the market and how's the market moving and how do you see things playing out? And obviously, we've got some data points coming out here.
this year that follow into next year with OPEC.
the election, what all these things mean to our commodity.
Speaker Change: Yeah and then you know we'll look to to react to that but that reaction will be to remove capital it certainly would not be like I said the same before it's not adding any incremental capital. So you're in those numbers like I mentioned.
Okay. Got it. Got it. That makes sense. And so the focus remains on generating free cash above delivering on the production growth for 25. Is that a fair way to think about it then? That's 100% fair. And then the idea is to continue to strengthen the balance sheet.
Speaker Change: with that share that we keep for ourselves that other remaining 60% goes back to the shareholders and in the base dividend and then
The top-up obviously tool of choice, you know, especially on days like today is share purchases.
And just one final question, on the five-year plan, what WTI pricing assumption have you made in that five-year plan, and is that like a two-rig program at DuVernay and then one rig at Montney?
And keep in mind that incorporates everything that I've been talking about here today, as far as typewells and understanding the typewells in areas. So, all that is baked in. So, we get there in 2029 and then add a $70 price deck and call it three-ish, well, $3 ACO.
That generates the four, just under four billion of excess cash flow, cum after-tax excess cash flow at that level, and that's at 70 bucks.
Speaker Change: Sorry, it's Ken's point to me here. It's a two-rig Duvernay program. So K-Bob Duvernay runs two rigs, the Alberta Montaney runs three rigs in that program, and then we bob and weave in the Saskatchewan asset base somewhere between one and three, depending on the seasonality, you know, with breakup and that sort of thing in that asset base. So, you know, it's very achievable from a cadence of operations.
Speaker Change: standpoint.
Okay, sounds good. Thanks for the call.
Amir: Yeah, thanks Amir.
Thank you. If there are no further questions at this time, please proceed.
Okay, I'll pass it over to Sarfaraz Samani. He's our manager in investor relations, and he's just gonna moderate a couple questions from the web.
Sarfaraz Samani: Yeah, thanks. So, there's just a couple coming here right now. So, one is what WTI price is needed for us to fully fund capital and base dividend right now based on our program?
based on the program we've laid out or
Speaker Change: Yes, so in that event, I mean if commodities slide, we'd look to...
to pull back the capital program so that we were fully funded in that $50 range. And then that would equate to somewhere in the neighborhood of about $1.1 billion, or $1 to $1.1 billion of capital. And that would fund the dividend and then the capital program.
In the interim, where do we hit the short-term target and what happens to the return of capital at that time? Yeah, so right now we're going to exit the year somewhere around $2.5 billion of absolute debt. Keep in mind that's going to be about a $1.3 billion debt repayment over 2024.
That'll put us in and around at the commodities we are today in and around one times debt to cash flow.
In the long term, we'd like to run the business at about.
about a billion and a half of debt. So that would equate to somewhere around one times debt to cash flow in that 45 to $50 price environment. And that point in time, I think our balance sheets.
Sarfaraz Samani: call it bulletproof and there'll be points in time where we we have less debt than that.
But as you look at it, that's just kind of a guide to give you on how
If you ask the executive team and the board on how we'd like to run the business, it's in those levels.
We do have a bit of a near-term debt target.
Sarfaraz Samani: where we'd like to be around 2.2 billion.
Sarfaraz Samani: And at that point in time is how we look to grow our return of capital and I think it depends on the strip and how this plays out, but that would occur at some point in 2025.
Speaker Change: Yeah, thanks Greg. There are no more questions online right now. So I just wanted to close the call here and thank everyone for joining us today. Thanks everybody.
Thank you. Variance and Best Relations Department can be reached at 1-855-767-6923. The conference has ended. Thank you and have a good day.