We’ve got the team to execute. I think where you’re guiding potential cost savings per foot, I think that’s very achievable. We’ve got a team that doesn’t want to be just part of the pack. They want to be at the head of the pack. And if that’s the case, then a 10% reduction in cost per foot, getting drilling days down into single digits. That’s all going to be part of it. We’re just not going to come out with a plan that prebakes success because we know the pitfalls that could arise from that. So I think you’re thinking about it correctly. We’re excited to get another quarter under our belt and continue to build that track record, a track record that we’ve built in the DJ, we want to replicate in the Permian.
Leo Mariani : And then just maybe jumping over to the thought process around buybacks. I think, obviously, very successful buyback that you just announced, taking NGP out. I know it’s kind of always hard to know, but I know you guys clearly have some other type of PE/insider shareholders in the stock. Is there a pretty strong appetite within Civitas to continue to maybe clean up some of these legacy shareholders that really came to the company through some of the M&A that all did over time? And how do you kind of think about that in terms of balancing debt reduction, as I know you’ve got the goal to get to 0.75x, but it sounds like you guys are going to be a little bit patient there. So maybe there’s more firepower for more buybacks at the right time here in ’24.
Marianella Foschi : Yes, absolutely. Leo, this is Marianella. I mean, look, we will continue being opportunistic. Like I said earlier, we hold that 0.75x target very true to ourselves. It’s one of four pillars. Our North Star, however, it is creating shareholder value. I mean we have done market — open market repurchases. We also have a track record of negotiating direct purchases. It’s a good way of getting a lot and getting at a discount. So we — I will note that we do have a decent amount remaining in our authorization $425 million. And we’ll continue to do so. We’ll continue executing at attractive prices, again, 61 and changes our weighted average share repurchase price and then obviously a meaningful discount where we are, which is still a discounted level relative to our peers and relative to the quality of our asset base.
So we will continue doing both. We’ll continue to do open market repurchases as well as buying in block and then just plans on where the best opportunities lie.
Operator: We’ll take our next question from Oliver Huang at TPH&Co Company.
Oliver Huang : I just wanted to jump over to the DJ. As we kind of think about the uplifted EURs out of the Watkins area year-over-year that you all have kind of seen in your 2023 results. Just wanted to get a sense of what drives the confidence that the outperformance will continue? And was there something that was kind of done differently between the 2022 and 2023 programs that drove that uplift?
Chris Doyle : Sure. I’ll kick this off and see if Hodge wants to add anything. Yes, ‘23 was different than ’22. ’22 was different than ’21, ’24 is different than ’23. We are continually working on how do we enhance returns. Some of the big moves from ’22 to ’23 were around extended laterals. We had going into that risk the additional mile. And what we saw was the degradation in that third mile just didn’t show up or didn’t — certainly didn’t show up to the level that we had risk. That was a big driver. We are always tweaking completion design, development, spacing and how we flow back wells, how we bring wells on and the team has done a phenomenal job getting stronger every single quarter. So we’ve rolled some of those enhancements and improvements into the ’24 plan, but it is a stark performance improvement year-over-year.
I’m super proud of what the team was able to deliver. This is some of the — this is Great Rock. These returns will compete for capital within the Permian and that’s why you’re seeing us allocate so much capital into the Watkins. And you couple that with three caps that will cover the vast majority of it. This is an area that’s primed to deliver for Civitas for a number of years to come.
Hodge Walker : I’d just add to a couple of the points that Chris mentioned. I mean if you look at our activity set in the DJ during 2024, 70% of our activity is going to be down in the Watkins area. We’ve got the Box Elder CAP that’s been approved. We’ve got a hearing coming up here mid-year on the Lowry CAP, and that’s really a 2025 plus development program. We’ve recently filed our Arapa CAP which is more of a program that is a long-term development. We expect that CAP to be approved towards the end of this year, beginning of next year.
Oliver Huang : And just for a follow-up question. I was hoping that you could provide us a reminder with how cash taxes might look for that 2025 plus time frame, if there’s some sort of rule of thumb?
Marianella Foschi : Sure. Absolutely. Obviously, for this year, we guided to 0 to 50 that’s a $75 oil. A lot of that has been — a lot of that is related to the Vencer transaction closing this year and giving us a slightly favorable tax treatment for this year. For 2025 and beyond, I would say, once we get out of 2024, what the favorable tax removal of the acquisition, as long as — along with bonus depreciation having down over time, you’ll probably see something higher probably in the range of $150 million a year and that’s a $75 oil. And I will say, as a reminder, on the AMT front, we at $75 oil flat, we’re not expected to hit that really in the foreseeable future, but going forward, I would say 150, 175 cash tax per year is probably a pretty good value in ballpark.
Operator: We’ll go next to Phillips Johnston at Capital One.
