Q3 2024 Veren Inc Earnings Call
Music
Jenin: Good morning, ladies and gentlemen, my name is Jenin. When I will be your operator for Berins of 3rd quarter, 2020 for conference call. This conference call is being recorded today and will be webcast along with a slide deck, which can be found on Berins website homepage.
All amounts discussed today are in ten agent dollars, with the exception of left-toxest intermediate or WTI pricing, would just code it in US dollars.
All lines have been placed on mute for them to any background noise. A few speakers are smart, 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 your telephone key that. If you would like to withdraw your question, press star 2.
During the call, management will be made projections where other forward-biting statements regarding future events or future financial performance.
Any such statements are made subject to the forward-looking information on the non-gap measure sections, but press release is in the early year today.
I will now turn the collar to crack with them.
President and Chief Executive Officer at Darren. These go ahead Mr. Greksa.
Thank you, operator. Welcome everyone to our Q3 2020 Ford Conference Call. With me today are in the month our chief financial officer and Ryan Grissfield our chief operating officer.
Our third quarter results were highlighted by generating excess cash flow of 114 million dollars.
for turning 85 million to shareholders through dividends and share purchases.
and now seeing our strategic infrastructure transaction for proceeds of $400 million, which closed 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 BUE per day comprised of 65% oil and liquids.
Our third quarter production was impacted by third-party facility downtime and our own infrastructure constraints.
Through address these challenges, we are investing incremental capital to improve and increase our facilities capacity.
Our teams have gained a better understanding of our algorithm on the 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 modern 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, supporting our long-term sustainability and our future value creation.
Jenin: The quality of our Alberta Montney asset is evidence when looking at our results.
Jenin: 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 well in North America over the last three years.
These wells have already accumulated 440,000 BLE per well in just nine months. And are currently producing at a rate of 1800 BLE per day per well.
This patent includes a recently optimized well that is showing higher product activities than its IP 30 rate of 2000 BUE per day.
In early 2025, we expect to bring on stream and adjacent seven well paths 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 nets and turn me identified drilling locations in this area alone.
Since entering the Alberta Montney, we have focused on identifying efficiencies in the play to further improve our area economics.
To that end, we trial the use of plug-in-first completion design in our bulk creek area at 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 per for 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-lubs, reservoir diagnostics and microsismic analysis.
Results seen an early October meet a finally conclude that we will continue to use the single point entry design in the Gold Creek area going forward.
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 two in 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 a thousand 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 the Alberta Montenegro where we have lowered our drilling base 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. We per day in 2024, waited 65% to oil and liquid 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 188.
290-6000 Bui per day weighted 65% to oil on liquid with development capital expenditures of 1.48 to 1.58 billion dollars.
Jenin: year over year our 2025 production growth based on fourth quarter is still expected to be 10,000 B-way per 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 commodity 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 WGI price.
We've allocated 85% of our 2025 budget to our short cycle cave up doverney and Alberta Montney assets that provide top four tower returns scale ability and quick payals. As mentioned, this includes incremental capital and the Alberta Montney to increase the facilities capacity.
The remainder of our capital budget is allocated to our long cycle load-up line Saskatchewan assets, which generate our highest operating netback and significant excess cash.
In system with our capital allocation framework, we have 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.P.D. in 2020. Driven by our Alberta Monty and K-Boff-Dubbering assets.
Jenin: We expect to generate four billion dollars of cumulative after tax excess cash will over the life of this plan at seventy-dollar per barrel WTI pricing.
Jenin: and $3 per MCF AACO price. On a compounded annual basis, our excess cash flow per share growth works out 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 of our 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 increase 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'm now turning to call back to the operators to begin the Q&A.
Operator please open the line.
Thank you. I'll say reminder for members of the investment community, but we will like to ask a question, and express to our then-dem number one or in a telebound keybed. If you would like to withdraw your question, press star 2. We will pause for a moment from Public Human A-Roster.
[inaudible]
i
Your first question comes from the line of Michael Harvey from RBC Capital Market. Your line is not open.
Michael Harvey: Yeah, sugar warning, thanks for taking the question. I guess it's a couple from me. Just kind of getting close to the year end. Do you expect to see?
Any of these recent well results having an impact on the reserves you're carrying or a McDonald's is carrying for these areas.
Jenin: and it was kind of too early to make a certain on that and then the second was just 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 to that process.
I can tell you we do do.
Media Reserve update with the independence as well as the full.
Your end reserve update was 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-go so we had our weld spaced quite a bit wider Then what had been booked in the past so overall when you look through the field the reserve book looks really good and really strong
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.
You know, as we were going through the quarter here in certain 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.
where we had went to the Plugin Purf Design relative to the single-point entry design.
So as Pat said, just recently came on but they did confirm what we had suspected based on.
a pad that we had on kind of later in the third quarter in 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.
Jenin: as we were seeing these results.
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.
Jenin: 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.
OLEAT 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 the round February. But again.
We have made that switch to the single-point entry design which
I'm excited about especially when you think of the hammerhead, a griger that car, self-acre, 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 this even improves that even more.
It's a long wind to answer, say, and reserve books, looks pretty solid and then when you look into well results kind of December and into Q1.
God, you're next to the Craig.
Speaker Change: Yep, thanks for the question Mike.
Thank you. Your next question is from Jeremy McPray from the ML Capital Market. If you're not interested, open.
Jeremy McPray: I think it's a couple questions here at Beagle to start with the elephant in the room.
Can you comment on your stock price here this morning and just turns of, do you think this is an overreaction? Do you think this is just anything, what do you think? I mean, the market's reaction to the guidance here is one of these wall results and then I'll just wait till I'll ask a second question after hearing this next.
Michael Harvey: 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.
Jeremy McPray: You know, I think when you look at where we are on an overall guidance cut for 2025 relative to where we were at, you know, year.
You're basically off 10,000 barrels a day or 5%.
and we have a lot of time to get to the hospital.
But six thousand of that is gas and only two thousand of that is oil with the rest being made up is NGL. So as far as the streams that drive the revenue in this business
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 in the other thing too Jeremy.
Jeremy McPray: You know, I think...
Like any company that has went through a transformation, you're always going to have questions on your wells and your well performance.
and then the retirement till you're demonstrating that like we are in K-Bob where we took that and we have to really put that in.
Jeremy McPray: 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 too Jeremy.
You know, decides the prize.
on us moving forward with the plug-and-perf design, which is fairly significant when you think.
at an all-in cough now depending on...
What exactly type of completion in the numbers of...
Sleeps are used in these. They can be, you know, to be upwards of a million dollars per well, you're able to save by going to plug and per foot.
Ultimately, the performance of the wells has been what we've expected. So, you know, I think...
is this I'll filter through over the next couple of 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.
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 you know, and fairly long we'll be 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 these latest wells here.
He's like more specific details on why the single point entry is going to be better than the plug and purpose I can know but probably has things to do with it. You're pumping rates in that but just...
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?
Speaker Change: 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.
Jeremy McPray: So...
when you are.
Speaker Change: 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.
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 first.
So one thing I would note 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. So we got more rate per entry point and that pad is significantly better than the other two. So never mind just just.
Speaker Change: 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 went through and looked at the micrecise mic 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 treat you like you're me is when you look at when you look at the competitors and you move to the south and the west across the place the majority of the play is developing.
Plug and Perth, right? So it's not that we are stepping on and doing anything any different. We, we in fact
Jeremy McPray: We're trying to drive the cost structure on a proven technology, but with our area, the reservoir and that our reservoir is a foil, you have a little bit higher viscosity and all those things come into play on these types of things.
Paul, I'm learning experience and we're going to take this and run this and grow from 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 from 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 prior wealth?
Speaker Change: Yeah, so, you know, you're always experimenting on things but as far as pump rate, going to this, 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 at six and a half you're certainly getting there.
Jeremy McPray: [inaudible]
Thank you. Your next question is from Dennis Com from CIBC World Market. Your line is now open.
Dennis Com: Good morning and thanks for taking my questions. I guess my first one follows along, I guess a little bit of the prior to...
Jeremy McPray: and...
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.
Jeremy McPray: Does that mind? Can you talk towards how that might have evolved a little bit, how that may impact inventory just again depending on how you think about the completion design going forward as you rotate back towards the point entry for some of your fields.
and I, so thanks, Dennis, and what I would say to that is...
In order for us to get that proper elevator track, we need to use the single point entry and that is what has become a 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, dancing and well-specing.
Jeremy McPray: We're fairly conservative on that already. Like if you remember when you think through goal-creaking goal-creak west, we space our wells in the 5 to 7 is the tightest we go on a per DSU basis.
Jeremy McPray: 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, is a fairly conservative well density and then when you move down south into the car, car and car, south areas.
are well-spacing there is generally eight on a perdius tube basis and that's between the two benches.
But again, that's significant.
Widening of spacing when you think of what hammerhead and the prior operator had been doing in the past. Their well density was in at 10 to 11. Well, and we certainly believe that is too tight.
Jeremy McPray: I think you can see that on Interwell and your parents, 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...
Jeremy McPray: You know, single point entry has never been tried down there. Actually, I shouldn't say that sort of there's one pad in the far end of the south field that is...
Jeremy McPray: is single point entering 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: I appreciate that incremental. Sorry, go ahead, Craig. Yeah. Well, I was going to say that it's really, you know, this production performance that we've seen out of this latest path, a couple paths called 11 wells.
Jeremy McPray: with, you know, 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 buoyant, right? Not the fuel-boiling screw on the off-coated 2000 on oil.
Jeremy McPray: Hissing
No, I appreciate that the incremental color on
and the details around the next step on the development side.
Switching gears a little bit, you also mentioned it in your prepared remarks. You talk a little bit around.
Optimizing facilities. Can you discuss maybe a little bit more in depth as to what an entails is a compression, it's incremental, capacity of batteries, the pipelines, the combination of all three I guess. Just a little bit more color on that side would be great things.
And so the one thing you'll note in the 2025 budget is we bumped up our...
are Monty to Sili, these capital spend by about $70 million, year over year from 24 to 20, five. And that's the big component of that change in the capital guidance is that. And you know, Dennis, as we got into these areas and you're working through things.
We started to realize that, you know, as you're bringing fluids, volumes in, that capacity of some of these batteries is not had the same, they played capacity.
So we've been doing a significant amount of work in 2024. We actually reallocated $30 million out of...
Production and drilling spans in Saskatchewan into facilities in the Alberta Monty this year.
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 end of next year you'll see us being more of called a more steady state facility spend going forward as we get these issues addressed but it.
Dennis, it's what you mentioned. It's a combination of everything. It's some line looping to make sure that we have flexibility to move beyond the between the batteries. It's adding incremental tankage, free water knockouts. It's...
Jeremy McPray: 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 and mixed bag of everything that you see in facilities that we have identified and are now addressing across the field, top to bottom.
The other thing to note, Dennis like...
Speaker Change: with six to seven. So I'd talk in Gold Creek West now if you think of that six to seven pad, which is just been an incredible pad and we're following up that pad up now with with.
Jeremy McPray: Phase 3
and we're, you know, that's just super excited about what Gold 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, 25. We've accelerated that into...
24, so that as those phases of the next phases of those paths come on, we're already for that. So that has been going on here in the background too, and actually that shutdown is on right now.
So it's a little bit of everything there Dennis as far as that. I don't know if that helps you or not.
Speaker Change: I appreciate that that contact so I was just wondering if they were kind of a couple will call it.
He already said news to be kind of improved upon or optimized, but it sounds like it's a little bit of everything. So if you shape that color, it's like they're correct. Well, turn it back. So people don't dance. One thing I would say is gold creek is where we're spending a lot of that, which is where some of these newer paths come into to. And then we do have.
We are working on a new gold creek battery that would be online in 2026 to the background.
Speaker Change: Perfect, thank you.
Jeremy McPray: [inaudible]
Speaker Change: Thank you, your next question is from Eligabeth Davis from Neiman James. Provide a cell open.
Hey, good morning guys. Just had a couple of questions related to the guidance that you put up this morning. So, so, I'm 20, 25.
I'm just wondering within that base budget that you all wanted to speak a little bit to some of the contingency that you've put in there both for planned and on planned downtime just trying to get a sense for how conservative you guys are you're looking at that at this.
Yeah, so they look it's Craig. You know, that's a good question. I would say after experiencing what we experienced in Q3 of this year and just 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 cement for mental downtime into the budget for 2025.
So we have layered in an incremental couple of thousand barrels of day beyond what we had already.
just to ensure that as we make our way through the year that some of these unexpected things can be absorbed within our overall numbers. So we had a layer in there.
Speaker Change: On an annualized basis and obviously forecast that monthly. But we've layered on, called an incremental couple thousand a day on an annualized basis. Again, forecasted monthly and then that'll show to the quarters. So we have...
I would say we have a very...
Speaker Change: A much more robust number on that in 25 than we had in 24.
Speaker Change: That helped you.
Yeah, no, that is helpful. And then I guess just to follow up to that related to the budget, I just want to leave you can.
Speaker Change: Outline what a potential program would look like in sort of a 65% meatball overall. They know spots below the budget that you put up this morning, 25% is back related. So even lower than that. So from what I'm sitting now, I'll say it presents a little bit more downside risk in terms of one new.
firm that up in December. So just trying to understand sort of what the book ends might look like.
Yeah, so what I can assure you of Luke is that we are not adding capital. I'd oil can rip 250 bucks, so we will not be adding capital. So know that.
And I think with the way the program is set right now is a good apples to apples comparison with the market itself on this previously so it gives you a good data point as far as a benchmark. I think if commodity slide into that 60-ish dollar range for a while, we would look to be discipline on that and we'd look to pull back.
on that. And at that point in time, we'd likely look at cut-picked cutting. I don't know I would say somewhere in the neighborhood of.
250 to $300 million out of that. That would probably pair your overall production.
Down in the range of caught, you know, three to five thousandish beauty per day on the annualized basis and that would be You know, basically looking at peeling out one of the Monti-Rapes.
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, it's so if come on these slides, we are going to be disciplined, we are absolutely not tone deaf.
Speaker Change: to the market and how things have been playing out there. All that being said, we do like to plan especially for learning from 24 and 25 and then what that means into our five-year plan is you look to go forward on that. But absolutely, in a commodity slide, we will react and react in the right fashion.
Scott and that's helpful. I guess just fine I want for me related to the infrastructure looks a lot about an incremental 75 million or so into 2025. How does that cascade into future years?
and how should we go back to the infrastructure spend to sort of shape up, say it over the next 3 to 5.
Speaker Change: Yeah, so when you look at our five-year plan and the detail in there, 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.
into those next two years and then beyond that it starts to get even a little bit lower. So, you know, this year we're both 15% of our budget.
and in the back part of the five-year plan we start to get in that kind of eight to 10-ish percent of the total budget as we start to have some of these issues behind this. But this 2025 is the biggest year as far as the facility spend from that standpoint.
Speaker Change: i
Great, appreciate that. Thanks Craig.
Speaker Change: Thanks for the questions.
Speaker Change: Thank you, Norne. The question is from Michael's Piker from HTM. Your line is now open.
Morning, guys. Morning, my co-host, Loughford.
Michael's Piker: How's it going? It must be a tough morning at Varen, but we move forward.
Michael's Piker: 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
Michael's Piker: For you guys a cabob have you guys seen any wins from the tighter spacing on a 2-3-5 pad and going forward Kind of any learnings on inventory and completion there in the in the cabob oil window So I know that's one of your strong rafts as well. I'll start with that.
Yeah, so Michael, thanks for the questions and obviously we love K-Bog and we love the consistency and the repeatability of K-Bog and you've seen us slowly over time creep in and are well spacing on what we've been doing in the area now.
and the way we run in that hot 400-ish meter spacing. We craft in from 600 meters and in some of the areas you're going to see is tightening a little bit more.
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.
and any of those fronts but so far.
Things as far as well, then to the most facing looks pretty good.
I would also say it on Michael as we move through 2020-25 and we start pushing into the more common stage rich fairly as opposed to the volatile oil window where you get a little bit higher pressure.
Michael's Piker: We might even creep in a little bit tighter there as well too. So as opposed to caught 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.
Speaker Change: Awesome, thank you. So just to confirm that the plug-in purse.
Speaker Change: has kind of seen soft results and that's mostly due to less or frack high growth, so you're not stimulating the pay column as...
As much as you kind of would expect and then at 6-7 East
Speaker Change: and the new 8-31 you guys are kind of thinking.
Single-plan tree NCS on those and what would be the kind of...
The boundary to the south where you think about adding back plug and purpose, that kind of L. More Township 66 kind of area or how do you think about?
The windows of the asset where you start to bring back some of that plug-and-perf completion.
Speaker Change: So, you're 100% right as far as the rate in the high growth and you're not here. We on these last plug-in-person, the goal-precary, we didn't get that call up.
We didn't get all the way to the top.
and the results have shown that. So you're right on that and it is driven by the rate.
Speaker Change: in the entry points into the reservoir.
Speaker Change: as far as six to seven days three.
We made the call to switch all of those to the single-point entry system as we are drilling those. All that being said, Michael, keep in mind, one of them already had its liner run in so it will be plug and perfe.
Speaker Change: And if you remember we did the original phase 2 pad there, 2 of them were plug and perf and 2 of them were single point entry and the results are good.
from that pad there actually phenomenal but we do believe now knowing what we know we believe that
Speaker Change: The plug-and-perf systems in the two wells was aided by the single-point entry systems in the off-setting wells. So we believe there is some crack carry over into those wells that helped them.
Speaker Change: So we have made those changes but you know as far as moving down south.
Speaker Change: 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 and ultimately if the wells are there.
Speaker Change: You know, just the production dict or the production results dictated, then we would look to stay with a single point entry system and those if things look great.
Speaker Change: So we'll see how that ends up playing out. Like keep in mind we've had some good results in car and that area.
Speaker Change: That has been under the plug-and-perf system. So let's see what single point we'll do in there. That's where we, you know, like I mentioned a couple minutes ago, that's where a person starts to get excited.
Speaker Change: and then do know my go if you look in if you look in 64 or 2
So township 64 range 2 there's a 5 well pad in there that was originally completed.
Speaker Change: By the Spartan Delta team, actually using single-point entry, and it is a outstanding path. So you can use that one for reference point when you're beginning to detail a little bit.
So just one last one for me, I think that's a six-to-ten path. And so I think you guys have said earlier that car West in 64th, 3 is behaving like car east.
Speaker Change: I think we might have lost it there.
Speaker Change: [inaudible] an entry in car.
when 642 has that behaving or 643 behaving like 642. So I, you know, I can tell you that the typos in there now be able to talk about what we see in the offsetting production.
Anything that benefits us through single point entry would be upside to that. But what we are seeing is less.
Speaker Change: left gas in that area. And a more liquid that the liquid's ready to have been strong but there.
They're not a very sharp decline. A little bit more of a steady on that. That's what I'll front. So I guess we'll see how these ones play out. I hate to speculate on that, Michael.
I appreciate it. I'll turn it back. Thanks guys happy Halloween.
Thank you.
Speaker Change: Thank you.
The next question is from a mirror army from a TPD capital. Do you have a line of sound open?
Good morning, guys. I just wanted to get a little bit of a clarification on a couple previous questions here. So on in car south, that gives you been historically doing plug and per year, you're getting a test these sliding sleeves, or you're also going to be doing that car north because I think you've got some car north, well, I'll just want to see one.
We're doing it across the play. And thanks for the question, but yeah, we're going to move it across the play.
based on what I've been seeing.
and then on the 25 guidance CapX relative to WTI group, I think we're talking about a 250 to $3 million potentially lower capital spend. So was that closer to 60 WTI?
We're just a guy in the room.
I don't think we're married to a price point at that. I'm here at Smor, you know, how's the market and how's the market moving and how do you see things playing out and obviously we got some data points coming out here.
This here that follow-in to next year with OPEC.
the election, what all these things mean to our commodity?
And then we'll look to react to that, but that reaction will be to remove capital. It certainly would not be like it's the same before it's not adding any incremental capital. So there may be no numbers like I mentioned.
Speaker Change: Hey, God, it's a big sentence. So the focus remains on generating free cash above delivering on the production group. Like about 25. For 25. Yeah, that's a 100% fair and then the idea is to continue to strengthen the balance sheet.
with that share that we keep for ourselves that other remaining 60% goes back to the shareholders and in the base dividend and then
Speaker Change: The top obviously two electrolytes, especially on days like today is share purchases.
Speaker Change: and just one final question on the five-year plan, what WTI-placing assumption have you made in that five-year plan and is that, is that a two-rate program at Duvane and one-ragette money?
No, so the fighter plan has this growing over that time period. So, you know, instead of the real difference between us in...
Speaker Change: The old five year plan relative to the new five year plan is that we basically lost the year here with what we learned. So now instead of 250,000 BLE per day in 2028, we get there in 2029.
Speaker Change: and keep in mind that incorporates everything that I've been talking about here today as far as typos and understanding the typos in areas. So all that is baked in. So we get there in in 2029 and then at a $70 price deck and call it three-ish.
Well, $3 a co. That generates the 4 just 104 billion of excess cash flow, Q and after tax excess cash flow at that level, and that's at 70 bucks.
and it's a story, it's a Ken's point to me here. It's a two rig.
Dovenate Programme to K-Bob Dovenate runs two rigs, the Alberta Monti runs three rigs.
and that program and then we bob and weave in the Saskatchewan Announcement Base somewhere between one and three depending on the seasonality.
and that sort of thing in that aspect.
It's very achievable from a cadence of operations standpoint.
Thanks for the college.
Thank you.
Speaker Change: i
Thank you with our further questions at this time, peace for see you.
Okay, I'll pass it over to Sir Fraas Semani, Sir Manager and Best Relations and he's just going to moderate a couple questions from the web.
Yes, thanks. So this is this couple coming here right now. So one is what WTI prices need for us to fully fund capital and base dividend right now in our program.
Based on the program we've laid out or it was really fun.
So in that event, I mean if commodity slide we've looked...
to pull back the capital program so that we were fully funded in that that's $50 range. And then that would equate to somewhere in the neighborhood and go 1.1 billion.
Speaker Change: of the 1.1 billion of capital. And that was fun to dividend in the capital program.
And second question is this on the long term debt, could you remind what the long term debt target is and at what point?
and then time where do we hit the the short term target and what happens to the return of capital at that time. Yeah, so
Speaker Change: 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 dollar debt repayment over 2024.
I'm not a put a scene around it that the commodities we are today in and around one time that the cash will. In the long term we'd like to run the business at a boat.
Speaker Change: What a billion and a half of debt. So that would equate to somewhere around one time's debt to cash on that 45 to 50-dollar price environment. And that point in time, I think, our balance sheets.
Speaker Change: and we call it bulletproof and there'll be points in time where we have less debt than that.
But as you look at it, that's just kind of a guide to give you on-house.
Speaker Change: If you ask exactly the team in 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 death target.
where we'd like to be around 2.2 billion.
and at that point in time is how we looked at Roar Return of Capital and I think it depends on the strip and how this plays over that would occur at some point in 2025.
Thanks, Craig. There are no more questions online right now, so I just wanted to close the poll here and thank everyone for joining us today. Thanks everybody.
Speaker Change: Thank you. Guarants and thus religious department can be reached at 1v5v7v7v6v23. We conference has ended. Thank you and have a good day.
Speaker Change: [inaudible]