Q4 2024 SM Energy Co Earnings Call - Q&A
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Greetings and welcome to SMEnergy's 2024 Financial and Operating Results and 2025 Operating Plan Question and Answer Session.
At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation.
If anyone requires operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jennifer Samuels. Please go ahead.
Jennifer Samuels: Thank you, Donna. Good morning, everyone. In today's call, we may reference the earnings release, IR presentation, or prepared remarks, all of which are posted to our website.
Speaker Change: Thank you for joining us. To answer your questions today, we have our President and CEO, Herbert Vogel.
COO Beth McDonald and CFO Wade Purcell
Speaker Change: Before we get started, I need to remind you that our discussion today may include forward-looking statements and discussion of non-GAP measures.
Speaker Change: I direct you to the accompanying slide deck, earnings release, and risk factors section of our most recently filed 10-K.
Speaker Change: which describe risks associated with forward-looking statements that could cause actual results to differ.
Speaker Change: Also, our 2024 10-K was filed this morning. With that, I will turn it over to Herb for brief opening commentary. Herb? Thank you, Jennifer. Good morning, everyone, and thank you for joining us. We posted a lot of information yesterday afternoon, so I'll sum up some key takeaways.
Speaker Change: SM's 2025 plan is expected to deliver a sizable 40% increase in free cash flow which would be even higher if gas exceeds $3.25 or oil prices
Speaker Change: improved. This is supported by step change 30% oil production growth.
Speaker Change: while maintaining a very strong balance sheet that should meet one times leverage by the second half of this year.
Speaker Change: While the Uinta Basin acquisition realized a cash production margin right on top of Midland production at about $40 per BOE, while increasing gross inventory count by about 40%. I believe we're off to a great start in 2025.
Speaker Change: With that, I'll pass the call to Donna to start the Q&A. Donna?
Thank you. The floor is now open for questions.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad at this time.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.
Speaker Change: We do ask that you please limit yourself to one question and one follow-up before rejoining the queue for any additional questions. Again, that is star 1 to register a question at this time. Today's first question is coming from Mike Scala of Stevens. Please go ahead.
Mike Scala: Hi, good morning everybody. I want to see if you could speak to the first quarter guidance, why production was down sequentially and
Speaker Change: One to see specifically was the third-party issue that I guess impacted the
Speaker Change: He had some delays in railing oil. Was that resolved in the fourth quarter or some of that still in the first quarter as well?
Speaker Change: Thanks for the question, Mike. I'll pass that one over to Beth so she can cover the rationale there.
Speaker Change: Alright, so when you look at the first quarter production, we dropped a South Texas frat crew in the fourth quarter, and so we have about a three month gap in our tills.
Speaker Change: which impacts the volumes in the first quarter. We restarted that crew in January, and as discussed, our production will grow throughout the year and into the third quarter.
Speaker Change: So really just a timing issue, nothing more than that. Exactly, yes.
Speaker Change: And then you talked about the 40% increase in drilling inventory year over year. Can you provide any detail behind where that number is and can you break it out by area even at a high level?
Speaker Change: Yeah, Mike, this is Herb. So, we're not really breaking down the inventory. What we know is obviously that the Utah acquisition was a big contributor to the inventory growth.
Speaker Change: And, as usual, we're being conservative on our inventory, making sure we stick up everything with detail and put it in our database. And we'll continue to do that over time.
Speaker Change: Okay, very good. If I could follow up with just one more on that inventory. I don't think last year you included any of the...
Speaker Change: dry gas locations that you have in the Eagleford. I'm wondering if you included any of those this year given the increase in prices and are there any plans to develop any of those assets?
Speaker Change: with the stronger. Yeah, Mike, great question. I think we put that in one of our slides. You'll see that.
Speaker Change: We aren't focused on the dry gas portion of the Eagleford at all and other intervals that have pretty much dry gas. So yeah, that's not an area of focus. We don't really count that. And when we're at 10 plus years of inventory, we don't really feel the need to go and really push that. Unless prices go up. Unless prices go up substantially, yeah.
Great. Thanks for the color. Appreciate it.
You bet. Thanks, Mike.
Speaker Change: Thank you. The next question is coming from Gabe Dowd of Cowan. Please go ahead.
Gabe Dowd: Hey Sana, hey morning everyone. I was hoping we could maybe touch on just the full year guidance range for 2025. Quite a quite a wide range there. Could you maybe speak to what you need to see or confidence level and maybe getting close to that hundred and twelve thousand barrel a day level?
Sana: Gabe, I'll start on that one. So yeah, it's not really in our view, it's not that wide a range, and you start with the BOEs, and then we put an oil percentage of 51 to 52 percent, and so we just tied the 51 to 52 percent to that BOE range.
Gabe Dowd: So that's why the oil looks wider, because of those percentages on the BOE range.
Okay, okay.
Gabe Dowd: And so just on the prior question, Mike's question, but so the trajectory is basically significant growth in 2Q, 3Q and then down in 4Q. Is that how we should think about it?
Gabe Dowd: Yes, I mean that's it's all timing related as it relates to the activity that I laid out on slide 10 yesterday and so that the production will grow through the third quarter and then level out in the fourth quarter.
And it's all just timing related
Speaker Change: Okay, okay. Thanks, Beth. And then my official follow-up is how should we be looking at 2026? Obviously a lot of moving pieces in 2025.
Speaker Change: starting the year with a heavy level of equipment and dropping. So maybe the shortest way to ask is what would maintenance capital be to hold, let's say, the midpoint of 2025 oil production flat into 2026?
Speaker Change: single-digit growth in production. You can view it that by year 2025 or our balance sheet will be in great shape and one or below and you can expect 2026 to really be about return of capital increasing for our stockholders.
Speaker Change: So those are really the key aspects of 2026 as we see it today.
Speaker Change: We'll play out 2025 and see where things go on commodity prices.
Speaker Change: okay okay then and so similar capital spend was that fair to or no
Speaker Change: Yeah, I mean, it'll depend on where things go with tariffs and commodity prices and activity levels in the industry, but that would be a way to look at it is to, it'll be slight growth at flat capital levels.
Okay, awesome, great. Thanks a lot guys, very helpful.
Speaker Change: Thank you. The next question is coming from Zach Parham of JP Morgan. Please go ahead.
Zach Parham: Thanks. Maybe just following up on Michael's question, you mentioned some some transport delays during the quarter. I think those are rail delays in the event. Can you just give us a little more color on those delays? Is this a one-off or would you expect, you know, or at least
Speaker Change: things that regularly happen just and you have to plan for in the future and just trying to get a sense on this as It's a new asset for y'all
Speaker Change: So I think a couple things, if I start on the fourth quarter, we did have takeaway constraints there and that was really on the refinery downtime in Salt Lake City as well as with the rail delays.
Speaker Change: And just a reminder, we have about 15 to 20% of our crew going to Salt Lake City, and the other is going to a rail station in Wellington, Utah.
Speaker Change: And so, both basically just defer the timing of recognizing sales for us, and we're building in flexibility within our rail car and our storage capacity to be able to deal with this in the future. So, that's the main thing, I mean, as it relates to Q1 and how we're moving forward.
Speaker Change: Got it. Thank you. And then my follow-up, in the release you mentioned the potential for some non-op spending that would be decided on later in the year. Could you just give us a little more color there? What non-op assets or projects are you considering? Maybe could you quantify the potential level of spending?
Speaker Change: So, Zach, we excluded the potential non-op activity from our capital expenditures, so we've had discussions with certain Midland neighbors, so this is all Permian Basin, about non-op drilling that hasn't been confirmed or approved, and it's the back part of the year.
Speaker Change: potentially, so it wasn't really appropriate to include it in the budget. It would represent several net wells and wouldn't contribute production at all until 2026, so it's that late in the year. So we just wanted to give you a heads up that we may participate if we find the economics stack up with ours.
Speaker Change: and then just for reference in 2024 we did include non-op in our budget then that was 19 million dollars in 2024.
Speaker Change: Is it fair, if it's a few net wells, is it fair to say that it would be in the ballpark of the same level of spending you had in 24 on Donoff?
Speaker Change: No, a few net wells would be more and it would be back-end weighted in the year. And so there's always that question of will it actually happen or not? Depending on where commodity prices go, you know, if you saw commodity prices
Speaker Change: increasing and those operators are increasing their activity, you could see how that could come about, but there's no guarantee. Plus, we have to check the economics.
Thanks Herb, appreciate the color.
You bet, Jack.
Speaker Change: Thank you. The next question is coming from Leo Mariani of Roth Capital. Please go ahead.
Thank you.
Thank you.
Speaker Change: Hi, guys. I wanted to ask really just about the drilling and completion activity this year. So, looking at this right, you guys are drilling 105 net wells in 2025.
Speaker Change: but completing 150 net wells. So, definitely seems like a bit of a mismatch on the drilling, you know, versus the completion. So, I was hoping you could speak to that a little bit more. It sounds like you guys are maybe blowing down some duck inventory here.
Speaker Change: Would you foresee a situation where you have to kind of pick up drilling in 26 to maybe get back to a similar number of completions? Just any color on that would be helpful.
Speaker Change: Yeah, thanks Leo. You know we don't manage to dux, right? And so it's an outcome of a program and we just took on a big asset from Utah which was at a pretty furious pace of drilling.
Speaker Change: So I'll pass that over to Beth to give you more color on it.
Beth: Yeah, we ended 2024 with a duck count of 104, which just like Herb said, was really due to some of the Utah activity there. And so based on 2025 net drilling completes, we should reduce that number by about 45.
Beth: And really, again, it's just timing-related, and the duck count is an output of that activity timing.
Speaker Change: Okay so do you see a situation where you have to increase drilling a bit to kind of get back to that kind of 150 roughly completions if that's the plan?
Speaker Change: Leo, not really. If you just look at the pace we're at and what, if you want to keep production flat or slightly growing, you don't need an enormous duck count. It will ultimately, though, depend on the size of the pads.
Speaker Change: So, if we're doing eight well paths versus six well paths versus more, that would influence where the duck's inventory builds to.
Speaker Change: So, that's all in the details of it. So, that's why we really don't manage to duck count. It's really, we're driving for capital efficiency here.
Speaker Change: Yeah, and the other part, just to elaborate a little bit, is
Speaker Change: Okay, that's helpful, Kohler. And then just jumping over to the UINTA here, I know these were like really early numbers, but you guys announced the acquisition in mid-2024. You know, there was discussion of UINTA production of around 43,000 BOE per day. It looks like it came in at 36, you know, in the fourth quarter. I know you guys said that.
Speaker Change: Some of that was, you know, inventory, you know, bills. And then also, I think you guys had talked about an LOE in Utah of around 470 a barrel. Looks like it came in around 715 in the fourth quarter. So, I was hoping you could just give a little bit more color in terms of the variance from a high level on those numbers.
Speaker Change: took over, basically got all the information in Utah in August once we passed the HSR review. Then we closed October 1st, and then we took over operations on January 1st.
Speaker Change: So that's kind of a noisy quarter when it comes to Utah to think about.
Speaker Change: And we do see what we said back in June is where ultimately things will shake out because these are really oily assets and there's a lot of infrastructure that really helps us on the cost effectiveness on the OPEX side.
Speaker Change: during the back end of the year. Yeah, Leo, I'd add one thing. The thing to me, I always go straight to the bottom line margin. And our cash margin, if you notice on that same table that you're looking at for LOE, you know, it's pretty darn close to the Midland margin for barrel, which is what we anticipated and hoped for. And that's kind of where it is.
Okay, thank you.
You bet, Leo.
Speaker Change: Thank you. The next question is coming from Oliver Hong of Tudor Pickering Holt. Please go ahead.
Good morning all and thanks for taking my questions.
Oliver Hong: I just wanted to start on the UINTA with respect to well productivity. I know it's still pretty early on the assets, but just any sort of initial takeaways with respect to well productivity you're seeing.
Thank you.
Speaker Change: Alright, Oliver, I'll take that one. When you look at the well performance of the upper and lower cubes in the Uintah, you could really use the Sprayberry Wolf Camp as
Speaker Change: kind of an analog for oil performance. So the upper cube there has kind of a lower rate. It takes a while to clean up and then to get to that peak oil rate, but it has a much shallower decline.
Speaker Change: So that's the difference that you're seeing there on the slide that I presented.
Speaker Change: So, I would say in general, we're creating value through the lower cube.
as we march through our 2025 plan.
Speaker Change: And we have some tests in the upper cube, as well as one well online in the deep cube and so we'll continue to enhance our understanding there in the other zones while maintaining most of our value creation within the lower cube.
Okay, perfect. That's a helpful color.
and maybe just...
for a follow-up.
Speaker Change: I was kind of looking at your inventory slide, the 10 plus years on an assumed 120 to 130 gross well run rate per year, just kind of wondering what average lateral length did that assume?
Speaker Change: And just kind of saying how you all are turning in line 150 net wells this year, the gross being a bit higher than that. Really just trying to reconcile if this 120 to 130 run rate is how you all are thinking about a sustaining program run rate beyond 2025, just kind of given that delta or if it's just more illustrative in nature.
Speaker Change: Yeah, that's a great one, Oliver. So we look at out five years on what we see as kind of our sustainable program that makes sense that...
Speaker Change: meets all those objectives we have around return of capital, what debt level we want to sit at. So when you look at that, that's how you get to that completion count per year.
Speaker Change: 2025 is a bit unique because of how we came into the year following XTL's activity level.
Speaker Change: So that's why you see it. So I'd say that the completion count in 2025 is high compared to what we need for a sustainable program that meets all the objectives we have.
Does that make sense?
Speaker Change: yes and just to clarify for the lateral length something similar to what the 2025 program met 11 to 12,000 range that's a good number to use for that
Speaker Change: In Utah, we assume 10,000 foot laterals. You know, we've done our first 15,000 footers, but we're not yet putting a full program together with the longer lateral lengths. But in South Texas and the Permian, they are over 11,000 feet.
Perfect, thanks for the time.
You bet. Thanks, Oliver.
Speaker Change: Thank you. The next question is coming from Michael Furrow of Tudor Energy Partners. Please go ahead. I'm sorry, Pickering Energy Partners. Please go ahead.
Michael Furrow: That's all right. Thanks for having me on this morning. I just wanted to hit on sort of the duck drawdown and, you know, what sort of went into that decision. So, you know, clearly there's a drilling...
Michael Furrow: cycle times are sort of outpacing your completion cycle times it looks like a 24 you brew your net ducks by about
Michael Furrow: 8 net ducks, down to like 100, up to 104, right?
Planning on drawing down 45 of those this year.
Speaker Change: really an efficient use of capital. So I was wondering if you guys could sort of walk us through, you know, what went into the decision to sort of draw those down this year and maybe give us an idea about, you know, what percentage of the current duck count is more of a, you know, a regular working duck count that's not just sort of a duck backlog.
Speaker Change: Yeah, Michael, you know, ducks are not something we manage to, they're just an outcome and with the acquisition from XCL where they were running three rigs, obviously the duck count went up high, so you could say the capital efficiency in 2024 is lower than you normally have because of those ducks.
Speaker Change: But that's not really what we managed to at all and it depends on the size of the pads through the year if you're doing more say three well pads in
Speaker Change: South Texas, then you'll have a lower duck count. If you're doing eight well pads in Utah, you'll have a higher duck count.
Speaker Change: So, that's not really something to manage to, and it's not around just getting capital efficiency.
Speaker Change: efficient capital-wise across the full program, not year-in, year-out. That makes sense.
Speaker Change: Yeah, that makes sense. I wouldn't emphasize, I would not put any emphasis on duck count.
Speaker Change: All right, that's noted. I'd like to talk a little bit about capital allocation. A few big pieces with the company integrating the UINTA deal, you know, changing activity levels. I'm just looking at your your slide.
Speaker Change: So longer term does this seem like the right capital allocation split and you know the 150 net turn in line cadence for the go-forward company and would you expect to keep you know volumes around that 25 guidance level of you know 107,000 barrels a day?
Speaker Change: So, Michael, we run multiple scenarios when we set up a plan each year, and if oil prices are relatively strong or gas prices are relatively strong, we'll flex between the regions. We like having that flexibility.
more GASI in South Texas, more NGLs in South Texas.
and then Utah was very oily.
So...
Speaker Change: We basically have those scenarios and we line out a multi-year plan that
Speaker Change: maximizes free cash flow generation over multiple years, not just a single year. And that's really what drives ours. The returns are very similar. Yeah, returns are similar between the three programs at current commodity prices.
All right, that's helpful. I'll turn it back.
Okay. Thanks, Brian.
Speaker Change: Thank you. The next question is coming from Gregory Miller of Truist Securities. Please go ahead.
Gregory, please make sure your phone is not on mute.
Is this for me, for Neil?
Speaker Change: Yes, go ahead, sir. Okay. Thanks. This is Neil Bingman. My first question, guys, is just on another on the UNTIF by May, specifically. Just wondered, has, you talked a bit about this already this morning on the release, I'm just wondering, has the 25 plan program or your growth expectation changed at all based on the, where you're seeing the current expected status of that Salt Lake Refinery?
OK, I'll start on that one, Neil. So yeah, the.
Speaker Change: You know, we've got the customers in Salt Lake, the refiners, and they're going to have turnarounds at times that are planned and then things that were, you know, go bump in the night and they'll shut down and that will obviously affect volumes and we'll put stuff into storage that just affects the sales timing.
Speaker Change: to the degree we can. That's really a key point there. And then Beth, do you want to answer? Yeah, and there's really no changes in our 2025 plan as far as the activity is related to Utah and the crew take away from there.
Great. Great.
Speaker Change: No, great, great, Beth. And then maybe my second just on reserves, specifically noticing 24 net proof reserves went up nicely, obviously, given that you went to addition. I'm just wondering, when you look, sort of go forward, can you just talk about
Speaker Change: Maybe about what you're expecting for future. Can the UN to sort of hold based on what you're doing there and as you're adding things and then secondly It looked like the Midland reserve decreased a little bit. Was that related performance revisions or what was what was driving that?
So Neal, as it relates to
Speaker Change: The Midland assets, if you recall, were slowing down activity a bit in the spring, and so that will impact some of our PUDs falling out of that five-year window.
Speaker Change: And so that's the primary reason that you're seeing that difference. It doesn't take away from the stellar assets that we have. It's just following the activity level that we have there.
Speaker Change: And as far as Utah, I would think of it just like we think of all of our assets. We continue to optimize and understand those assets over time, and we'll have additions and infills as we would in any other year for all three of our core assets.
Speaker Change: Was that slowdown just driven by the UN to buy reallocation? Is that primarily what's going on there? Reallocation. Exactly, yes. Reallocation. Okay.
Speaker Change: They're still great PUDs, they're just not within five years now. Yeah, we call them, they convert from PUDs to technical PUDs, so all it means is you put them back in the plan five years and they come back. Right.
Great, great update. Thank you all.
Speaker Change: Thank you. The next question is coming from Tim Rezvan of KeyBank Capital Markets. Please go ahead.
Good morning, folks. Thanks for taking my question.
Speaker Change: I'll spare you on any more duck questions. I'll throw one at Wade here.
Speaker Change: Repurchases obviously came down a lot in 2024. It makes sense with the big Uintah acquisition. There's been an interesting dynamic in the market where companies that are actively repurchasing really didn't see much outperformance in 2024.
Speaker Change: So just kind of curious, you have a pretty clear path to get leverage back at that .7, .8 times range at the end of the year. How are you thinking about repurchases and should we look at 2023 as like a kind of maybe a steady state, you know, kind of cadence for you all?
Thank you.
Speaker Change: A great one for Wade. Yeah, that's a great question and yeah, no, I take all of your
Speaker Change: All of your comments there, and I agree with them. You know, we are on a very clear path, you know, back to one times, and we're pretty disciplined about that.
just like we did in 22.
Speaker Change: get to one time, or get close to one time, you know I say that all the time, it's not a...
Speaker Change: It's not a hard and fast dark black line as we feel comfortable going through this year with the macro and with
Speaker Change: Execution and all those things you could see a step in before before then but it's definitely our plan to prioritize free cash flow To get to get the balance sheet really really strong. That's that's how we that's how we roll and and then
Speaker Change: prioritize return of capital once we're to that level. And your comment about, would the cadence be similar? You could model something like that. Every quarter is different. And we look at things on a daily basis when we're in the market. But for modeling purposes, you could probably assume something similar.
to 2023.
Yep.
Okay, okay.
Speaker Change: Okay, that's helpful. And then my follow-up, I noticed on the oil
Speaker Change: Realizations in the fourth quarter were a little better than what we expected, you know, it's hard to have a feel for kind of How you went is going to kind of trend over time So as you look forward, you know her beef sort of vaguely commented about initiatives you're looking to undertake
Speaker Change: to sort of tighten the Uintah oil diffs. Can you give any comments about sort of incremental initiatives you have or anything underway to maybe continue improving Utah oil diffs? Thank you.
Speaker Change: Tim, yeah I don't think it'd be prudent for me to say what we do out in the market for improving our gifts but you can rest assured that we're working that heavily and we think the opportunity set is wide.
Speaker Change: and it just hasn't been around that long with rail volumes out in the market and we see opportunities to do better and better over time. We'll see how those play out and you'll see it in our realizations over time.
Okay, fair enough. Thank you.
Thanks, Tim. Thanks.
Speaker Change: Thank you. The next question is coming from Scott Hanold of RBC Capital Markets. Please go ahead. Thanks. First, Jennifer, congrats on the retirement. It was good working with you all these years and best of luck in your future.
Thank you Scott
Speaker Change: You're welcome. My first question is going to be, you know, just on
Speaker Change: Some of the South Texas gas year assets, it seems like you guys have more of a, I guess, bent to kind of focus on the oil properties right now. I know the commodities are sort of moving in a different direction, where I think just broadly speaking, it feels like.
Speaker Change: More folks are more constructive on gas and less so on oil, but it seems like you're taking a different sort of angle. Is it more on the commodity view, or is it just the fact that your oil properties still, you know, provide a better rate of return opportunity?
Speaker Change: Yeah, Scott, that's a great question. There's a lot of things on gas that you can look at, and if you just look at where strips sat every January 1st and then where they panned out in the subsequent 12 months, it's quite a telling picture.
Speaker Change: And, you know, there was a lot of hype about gas being much higher currently. So we thought it's been prudent to just sit and not try and go after our gas assets. You know, if we if we saw, you know, that.
Speaker Change: Gas was priced at $4 when temperatures are over 50 degrees or summer temperatures are below
A hundred?
Speaker Change: Then we could start to think about it, but right now the volatility in natural gas is high.
Speaker Change: There's a lot of hope in the future and why would we do that now in terms of development?
Speaker Change: change in the administration and and what happened. And we have great returns. Yeah, and we have great returns where we are and and there's there's just less volatility in it. So that's kind of the way we look at it. We think yes, gas will be great, but do we need to rush into it? And our answer is no.
Okay, understood.
Speaker Change: When we take a look at the Permian opportunities, and specifically if we look at Klondike and the greater
Yes, Sweetie Peck, Woodford Barnett, Opportunity. How do those...
Speaker Change: returns, I know it's still early, but how do you think those returns will compare to sort of your legacy, you know, Permian activity?
Speaker Change: So that's a great one, Scott. I'm going to hand that over to Beth because she knows off the top of her head some of the recent well results that have been strong in those areas. So I'll just pass it over to Beth on that one.
Yeah, and I would say, you know,
Beth: As it relates to the world performance, we have very strong returns across all of our Permian assets and that's why they're in our optimized plan.
Beth: But just to talk specifically about Klondike, you know, when you look at the results that we've had to date, one of our best Klondike Dean producers produced over 150 MBOE in the first six months. So we've had really stellar results there in Klondike.
Beth: We have a great geoscience and engineering team working on our geologic model, and as those well performance and results come in, it's just verifying that model.
Beth: We'll continue our delineation program in Klondike with six more wells this year and then around the summer time frame. So we're really encouraged with what we see there.
Beth: and then Woodford Barnett. We had a really good Woodford Barnett.
Speaker Change: Yeah, in Sweetie Peck as far as the Woodford Barnett, we had a well-produced about 250 MBOE in the first eight months, so significantly outperforming our peers and definitely competitive for capital going forward.
Speaker Change: Yeah, okay, so it sounds like things are going well, but it I guess I'm sensing it may be too early for you guys to
Speaker Change: Put a stake in the ground and saying it's as good as your legacy stuff that you've done in the past? Is it just too early?
So, on that one, I'd say...
Speaker Change: You know, on the Klondike side of things, we expected some variability, and we're seeing that variability. And it's focusing in, okay, where are the best ones going to be, and where are the other ones going to be? It's going to be pad-dependent.
Speaker Change: But I would say the Dean, just because of the productivity, it's really competitive. And then as long as you select the right locations for it. And then on the Woodford Barnett, we're real pleased with that one. But it's, you know, we're two wells into it. We're drilling some more now.
Speaker Change: and then in South Texas we did that western extension and we're pleased with the one well that's really strong that's down there and so we'll sort that one out also. So I'm seeing them as competitive, very competitive.
Okay, thank you.
Speaker Change: Thank you. The next question is a follow-up coming from Gabe Dowd of Cowen. Please go ahead.
Gabe Dowd: Thanks for getting me back on. Jennifer, I do want to say congrats to you as well. I hope you enjoy retirement and then my follow-up question is just on the middle.
Gabe Dowd: pods related to the five-year window. But then the negative performance revisions and then the additions related to infills. Could you maybe just discuss a little bit what's going on there? Thanks.
But Beth, do you want to elaborate a little?
I mean, I agree with that, Herb.
Gabe Dowd: Just as you look at our ads and infills over time, and I would say relative to other years, our ads and infills is in line with what we've seen in the past, just the same as the performance revision. So the real change that you're talking about and you're seeing within our reserves number is associated with the PUDs going out of that five-year window.
Gabe Dowd: And a really cool gas price, too. Oh, forgot. Pricing, too. Right. Right. Okay. Okay. All right.
Thanks, Gabe. Thank you.
Speaker Change: Thank you. At this time I'd like to turn the floor back over to Mr. Vogel for closing comments.
Speaker Change: Okay, well, thank you all for joining us, and we look forward to seeing a number of you at an upcoming event. And I'll also mark today as to thank Jennifer.
Speaker Change: for a really great run at SM for the past many years. We've really enjoyed working with her.
Speaker Change: and I will say Scott Hamill beat me to the punch and then Gabe but Jennifer's been a key part of our executive team here at SM and we wish her a long happy and fruitful retirement
Speaker Change: Well, thank you very much, and I'll add that it's been 10 great years and a privilege to work with such smart and high-integrity people. And thank you to many of you on the call who have sent me such nice notes.
Thank you.
Speaker Change: Thank you ladies and gentlemen. This concludes today's event. You may disconnect your lines and log off the webcast at this time and enjoy the rest of your day.