So the current plan is based on the assumption that we will not get additional new well permits this year. So from that perspective, it is conservative. Now tell me again about the…
Charles Meade: Yes, compare the rates of return.
Fernando Araujo: Question on the rates of return.
Charles Meade: Right, for workovers versus new drills.
Fernando Araujo: The rates of returns for workovers because of the low capital intensity of the project is very, very good. It tends to be north of 100% rate of return. And that’s what we’ve seen throughout the year, in the last couple of years at least. And for our new wells in California also, because of the pricing environment and because of the low cost to drill and complete wells, the rates of returns are also on the order of 100%, and that’s what we have assumed for the year in 2023 as well. So we get very good rates of return for both workovers, sidetracks and new drills in California.
Charles Meade: That’s what I was looking for Fernando. Thank you.
Fernando Araujo: Thank you.
Operator: Please hold for our next question. Our next question comes from Nicholas Pope with Seaport Research. Nicholas, your line is open.
Nicholas Pope: Thanks. Good morning, everyone.
Fernando Araujo: Good morning, Nicholas. How’re you?
Nicholas Pope: Great. I was hoping to get — when you look at the size of the resource opportunity on doing the workovers, doing the sidetracks, how — what’s the — I guess, what’s the running room that you have on that side of things? Is that every well that you’re looking at? I mean what — how do you think about inventory length, I guess, in — with respect to kind of this near-term stuff that the capital program is going to be focused on?
Fernando Araujo: Okay. Let me start with workovers. With workovers, we have an extensive number of wells that are currently shut in. We probably have a pool of over 500 wells right now that we can — that we’re looking at for workover opportunities, which is very, very extensive. At the same time, you have to remember that workover and recompletion opportunities, the whole opportunity set is very dynamic because as wells fail, a new opportunity is created. So it’s — so it changes every day. So in terms of workover potential, we have a good, solid pool of opportunities. In terms of sidetracks, as you know, sidetracks are mechanically a bit more risky, also — from the reservoir perspective, also a little bit more risky than drilling new wells where you want to drill new wells.
But we do have that same pool of shut-in wells for sidetrack opportunities as well. Currently, the team has identified on the order of 70 to 80 additional sidetrack opportunities that we’re working through. But the main thing that you have to remember is that our asset is one of the best assets in the world in terms of oil in place. The oil in place that we have in some of the assets in California are comparable to some of the best assets in the world. So that’s the great advantage that we have. We have a great asset base.
Nicholas Pope: Got it. That is helpful. And then flipping over to the financial side. Looking at 4Q, it looks like you all prepaid on kind of income tax. I was curious about projections for ’23 and maybe even to ’24, as you look at what you all are expecting in terms of income tax rate and how much might be deferred in ’23.
