We’ve offset that pad here and have had that new pad for us come online over the last. It’s pretty early. These are early results in that last 10, 15 days and on average we’re in that call it 1,800 to 2,200 BOE per day, and in and around that 90% oil. So good strong results from that pad. And keep in mind that is a 4-well pad. So it’s really been coming at a strong. And then again, if you push down south on the Hammerhead position, I would highlight that maybe even a couple of the analysts notes picked up on a couple of the wells on that 5-11 pad that Hammerhead had been drilling right as we took over. Those wells are online, some good early results in there. But I would also put a caveat in there that keep in mind, we were bringing that new battery on, online during that period.
So that the chatter of operations obviously occurs, so you get some chatter in those hours. They get the kinks worked out of that battery. But wells are online, seems to be doing pretty good. But we’ll continue to monitor that and see how it goes.
Shant Madian: Thanks for that, Craig. Maybe shifting here to you, Ken, just as a return to capital question. It looks like buyback activity has been a little quiet here in Q1 to date. Can you just explain any rationale behind that? And at the same time, what should we expect going forward as preference between buybacks and dividends? And has anything changed as far as our return of capital framework?
Ken Lamont: Sure. So maybe I’ll start with that part of the question. No, we haven’t anything as far as our return of capital policy goes. We are going to return 60% of our excess cash base dividend. The preference over and above base dividend will be share repurchases only, so expect that. With respect to the share repurchase and the lack of activity in January, that’s just really a timing issue. As everyone knows on the call here, we added a second rig into the Duvernay in the fall of this year and we’re on a bit of a growth ramp as you look at the production profile within 2024. So, there’s a little less free cash here in Q1. And so obviously, we just manage our buybacks in accordance of when our free cash is being generated.
And so that’s why you see a little lack of activity in January. But expect as we grow our production, grow our free cash flow during this year that activity will commensurate increase with that. So, it’s just a timing issue. Nothing else. The policy hasn’t changed.
Shant Madian: Maybe another question for you just around debt management strategy. What are some of the tools in the toolkit and things that we’re working towards to try and get towards our lower targets at one time to lower commodity prices?
Ken Lamont: Sure. So, obviously, on the back end of the Hammerhead transaction, our debt did increase to $3.7 billion. And so, this has been outside of operations this year. Our next priority is obviously balance sheet. And the tools in the toolkit, first thing is we do generate significant excess cash flow, and we do retain 40% of that. And so that’s really the first weapon that’s always in the background that’s paying down your debt as you go. So, we do generate really good excess cash, and we’ll dedicate that retained portion to the balance sheet only. I would say secondly, we’ve talked about the disposition. We obviously and did talk about no acquisitions right now, but we are looking and active on the disposition front.
And I would say, you saw us being very active in Q4 with a couple of Alberta properties, we’ve announced that. So we’ve had those processes go by. We are looking at some other noncore smaller dispositions here. We’ve got two formal processes. We also are running a few informal processes here as well too. As Craig alluded to, it can be upstream, looking at other things as well too, and that’s infrastructure goals, things like that. So, I think we have a lot of tools in the toolkit and I just want to make clear that this is a priority for us. And outside of free cash flow, we are going to make some dispositions and get our debt down.
Shant Madian: Probably also worth mentioning the hedges that we have in place, we continue to protect on the downside.
Ken Lamont: Yes, it’s a fair comment. We’re about 45% hedged on the oil side and 30% hedged on the gas side. So obviously, we’ve layered on significant protection of that free cash flow as we look out this year and into early 2025. So, very solid on that front and that will help take the volatility of our excess cash out of the equation as well.
Shant Madian: I mentioned the gas because there’s or the hedges because there are two additional questions related to that. First, on the gas side, the question is given the collapse in gas prices, how is CPG managing its gas exposure to ensure profitability of some of its newer assets?
Ken Lamont: Sure. So maybe I’ll just start a little bit on the hedge side. Obviously, cost and cost control comes into play as well too. But from a hedge perspective, we do have 30% of our gas fixed price, hedged out over 2 years, so 2024 and 2025. You’ll see that in our corporate presentation. These are at 4 bucks at GJ and above. So, very strong hedge book on the gas side. Secondly, you’ll see in our disclosure as well too that we’ve also moved our basis exposure away from AECO. We’re now kind of in that 20% exposed to AECO and we’ve diversified that away to various points, being NYMEX, Dawn, Malin, and the Chicago area. So, not only from a fixed price perspective, we removed some risk on gas, but also from a basis perspective, we’ve done that as well.
Shant Madian: And the other side of that on the oil side, can you discuss your hedging strategy perhaps for the remainder of 2024 and maybe looking at 2025 as prices continue to move higher here?
