On midstream infrastructure, some of the issues that we’ve talked about before can be — they can be weather related, they can be related to some regulatory items, they can be related to a particular gas processing plant or gathering or off-take pipeline system. We’re working all of those because your point is well made as a large producing asset at that scale. We need really, really reliable performance downstream of the wells and we have no constraints on takeaway capacity out of the basin. So we’re well positioned, not just for ’24 but into ’25 and ’26 with ultimate takeaway capacity to access the market, but we do have a lot of pipes, pumps, tanks and other things between the field and the market and those things need to perform and that is a high priority for our operations team in the field.
As I mentioned, fourth quarter performance was very strong and they’re on this and it’s a very high priority. We saw a little bit of weather in January, which Pierre guided to that will have a modest impact, but we’re confident that we’ve got a line of sight on all the operational priorities in order to ensure that that market access isn’t constrained.
Operator: We’ll go next to Devin McDermott with Morgan Stanley.
Devin McDermott: Hey, thanks for taking my question and Pierre, I want to echo the congrats. Thanks for all the help over the years. I wanted to circle back to TCO and Mike, I think last quarter when you provided the updated guidance on timeline, one of the things that you noted was workforce productivity and I was wondering if you comment on some of the changes that you’ve implemented to improve labor productivity over the past several months, how it’s progressing first plan and in your comments, you mentioned improved scope of work in the context of FGP. I’m not sure that’s related to labor or something else, but if you could elaborate on that comment as well, that’d be great. Thanks.
Mike Wirth: Yeah. So, we have multiple contractors working on commissioning and startup and so this is everything from walking systems down to ensure that that they’ve been properly inspected that we refer to as punch list items have been identified, which is work that still needs to be completed by contractors and then you get into the loop checks and equipment runs and all the work to bring pieces of equipment up into service. So we’ve got a number of contractors working on this. We’ve moved scope from contractors that have had lower productivity to those that have exhibited a higher productivity. We’ve brought in additional resources to beef up the overall capacity and the resources are the contractors that had lower productivity, we’ve worked with them to understand where are the constraints in the bottlenecks and we’ve seen one who had a productivity factor as we measure it that was down in the kind of 0.4 range previously is up above 0.7 now and we’re targeting to get that up again by a similar quantum.
So there’s a lot of work on the ground to be sure we’ve got the right people working on the right things that we have enough contract resources. We’re also bringing in technical resources as we discover items that need more technical solutions and that can include company people or vendor people and we’re out much further ahead. Last quarter or the quarter before the walk downs and other identification of issues was a few short weeks ahead of the crews that were actually doing this work. We’re several weeks now, seven, eight or more weeks out ahead of the teams that are doing the work. So you’ve got much better ability to plan and execute the work in a much more efficient manner because you’ve got some time to put the work backs together, get the permitting done, be sure that you’ve got all the right tools, equipment, etcetera.
So it’s a great big project, Devin. It’s the largest brownfield project and most complex brownfield project I’ve seen in my life and we’re seeing good improvements in terms of the on the ground performance out of our team and out of all the contractor teams that are working on this.
Operator: We’ll take our next question from Jason Gabelman with TD Cowen.
Jason Gabelman: Yeah, hey, I just want to echo everyone’s comments. Pierre, been great working with you and good luck in retirement.
Pierre Breber: Thank you, Jason.
Jason Gabelman: I wanted to ask, go back to the Permian Basin and I appreciate the type curve data that you provided in the back of the slide deck. It’s a bit difficult to reconcile with the data with the type curves you provided, particularly for the Delaware at the 2023 Capital Markets Day when you forecasted a large improvement in productivity. Can you just talk about if your type curves, particularly in the Delaware basin, ended up in line with where you anticipated them being as shown in that Capital Markets Day type curve?
Mike Wirth: Yeah. So I’ll quickly just touch on the Midland Basin where we continue to be a first quartile performer, steady consistent performance. We understand the geology. There’s less fluid complexity and so we’re a top quartile, first quartile performer there in the Midland. In the Delaware, we last year showed actual data on a Delaware-wide basis and then we showed some forward guidance, particularly focused on New Mexico because we were shifting so much of our program into New Mexico, which, as I mentioned earlier, is a more productive portion of the basin and in the Delaware, New Mexico, we saw significant improvement with our second half POPs. Last year more than 80% of our POPs were in the second half in these more productive areas and the subsurface performance there has been very strong.
In the appendix, we’ve got a slide that shows you 49 POPs out of the 59 POPs were in the second half and you can see that they lay right on the type curve and then you can see the improvement in the Delaware Basin, Texas, which we didn’t guide to last year because it was in that combined chart there, but we’ve seen strong improvement. We’ve updated our well spacing and completion designs there and within the basin, there are sub-basins and some of those are performing exceptionally strong as well. So we’re seeing performance that is very consistent with what we outlined in the markets today last year. I think the shift in basis was just to provide you a little bit more detail into these sub-basins and we’ll continue to report on that basis going forward.
Pierre Breber: And just as a reminder, too, Jason, so last year’s performance in New Mexico wasn’t impacted by long-sitting DUCs. So the year-on-year is bang-on. It’s consistent with the set guidance and you see the improvement in Texas because there was the impact from long-sitting DUCs in the prior year.
Operator: We’ll take our next question from Jeffrey [ph] with TPH & Company.
Unidentified Analyst: Good morning, everyone. Thanks for taking my question. I wanted to follow up actually on the Permian and specifically ask on the program this year, what kind of opportunity do you see from here for further improvements to spacing and completion design cycle times, if any, in the Texas Delaware region? And could what’s working well there translate to New Mexico to make those wells even stronger or quicker to drill and complete or even to the Midland side? And then secondly, how are you all thinking about the mix of capital allocation across these regions within the Permian throughout this year? Thanks.
Mike Wirth: Yeah, so, we’re constantly looking to learn and improve and as I mentioned earlier, we’ve seen significant improvement in drilling time, completion time, time from completion to POP this year and these are a lot of little things, right? This is as you continue doing things, you find more and more efficiencies. We can bring more technology to bear, etcetera. So, and we look to extend those learnings across the basin and frankly between basins. So into the DJ basin and from the DJ basin down to the Permian, there are differences in the sub-basins that you have to understand and respect, but, the short answer is yes. We are looking for ways to transfer, learnings across there and every time I think we’re probably, at the plateau in terms of productivity improvement, smart people find ways to continue to get even better at this and so, I don’t think we’ve seen the end of the performance improvement cycle.
