So there’s a good parallel there, and I don’t see us falling out of too much out of sync with that inventory run.
Nitin Kumar: Great. Thanks. As I follow up, Rick, I’m going to not assume that you won’t answer the M&A question. So look, industry consolidation is certainly front and center. You have been part of that consolidation in the past. Can we maybe get some thoughts – updated thoughts on how you’re viewing the go forward path for Devon, either as an independent company or as a consolidator?
Rick Muncrief: Yes. And I think it’s something that’s very – obviously very topical in light of some of the recent transactions out there. Really, as you know, you’ve been covering this sector a long time, many people on the call are, but really it’s part of the fabric of this industry, the sector. The one thing it won’t change is our approach. And we’ve always had been very compelled, just have a high bar, be very disciplined and make sure that it fits within the framework that we have. And as you’ve heard Jeff talk about in my prepared remarks, I mean, right now, we see one of the greatest, most clear cut opportunities is just ourselves with our share repurchases. And so that’s how we’re looking at it. I do think that you’ll continue to see consolidation.
We’ve been on record as saying we support continued consolidation in the sector. We think it’s the right thing to do for investors. But as far as Devon’s participation, I’m going to go back to those key elements and we’re going to have a high bar, be very disciplined, be very thoughtful, and make sure we can sell that to shareholders, that it’s the right thing to do.
Nitin Kumar: Thanks, Rick. Thanks for the answers.
Rick Muncrief: You bet, Nitin.
Operator: Our next question comes from Neil Mehta from Goldman Sachs. Neil, your line is now open. Please go ahead.
Neil Mehta: Yes. Good morning, team. The question I had was – first question was just around the cadence of production, obviously, Q4 and Q1 a little softer and then a nice ramp over the course of the year. Can you talk about the confidence interval you have around that ramp as you get into – through 2024 and help the market get comfortable on the oil side in particular, as that’s been a little bit shakier this year.
Rick Muncrief: Yes, thanks, Neil. I appreciate the question. We’ve been staring at this kind of saddle in fourth quarter, first quarter for quite a while. We don’t provide detailed guidance, typically ahead of the coming quarter. And so having the activity really that fourth frac crew in the front half of 2023, we’ve benefited certainly in this quarter and we’ll see a rollover in the fourth and first before we build that duct cadence back up again and we’re able to bring that fourth frac crew up. That provides some lumpiness. We realize that’s not ideal. We’re trying to make sure that we telegraph not just this fourth quarter, but the first quarter has a little bit of a saddle as well. I think once we get that frac crew back, we reestablish the higher rate.
It’s pretty – it’s steadier throughout the year. So think of two, three, four being a little bit flatter. The fourth could come down just a little bit, but probably not quite as much as a saddle as we saw in this fourth and first coming quarters.
Neil Mehta: Thank you. And then talk about the CapEx guide for 2024. It’s a little bit lower than consensus, which is good, although partially offset by lower activity or lower production. So maybe just talk about what gets to the top end, what gets to the bottom end of the range and the modeling that went into building that 2024 forecast.
Jeff Ritenour: Neil, so we do a lot of work, as you can imagine, we talked last quarter about some of the work we do with the board and back in September really looking out five and ten years. And that leads to a kind of a more focused look this time of year, November; we have a call with the board. We’re really starting to kind of firm things up. During that process, we run lots of sensitivities, the what ifs. We think about different deflation cadences, how that impacts us, different capital allocation. And what we’ve gotten to is we feel really good about this plan, refocusing as we’ve talked about on the Delaware Basin, benefiting from the work that we’ve done in 2023, around some of the assessment work. And so leveraging into that, we feel really good about the continued focus of the activity that we have and paring back on some of the other basins that probably could use a little bit more breathing room.
And then feel really good about the deflation that we’ve baked in. Call it roughly 5% or so that we have in hand today we feel really good about those numbers. The balance, the remaining 5% is a little bit pair back in activity, and then of course, we’re striving to exceed those expectations every day inside our shop.
Neil Mehta: Thanks, Team.
Rick Muncrief: Thanks, Neil.
Operator: Our next question comes from Scott Gruber from Citigroup. Scott, your line is now open. Please go ahead.
Scott Gruber: Yes. Good morning. Want to get just a bit more detail on the infrastructure constraints in the Delaware. It sounds like it’s starting to improve. But are you still seeing some peak rates constrained? Is it still impacting where your rigs are running today? And if the answer is yes, when do you think these constraints can be fully alleviated?
Rick Muncrief: Scott, the good news is we’re in the hottest basin in the world. The bad news is when you’re in the hottest basin in the world you’re always going to have some kind of constraint. And so we work really closely with our third-parties on trying to stay ahead of that. In fact, we do proactive work on even modeling their own infrastructure. We’ve done some big projects this year. The Stateline processing facility that we are part of, we added a 200 million a day to that processing that not only benefits Stateline, but certainly some of the gas that we have in New Mexico as well. We worked very hard on some of the water infrastructure, made some great improvements on that, some redundancy there. So we feel really good about that really good work.
Now we’re really focused on some of the electrification. While we’ve made good progress, I can tell you that’s going to be a continued focus for us and for industry. The weather specifically, around July, we had some serious windstorm blew over a lot of power lines. And as you can imagine, it’s not just getting those power lines back up, it’s not just getting our wells back up, but it’s all of the third-party infrastructure that’s daisy chained together. And so that’s where we saw some of the real tightness of that infrastructure, not having alternative outlets that you typically would in a looser environment. So that continues to build out. There’s been some really material improvement. But just know that this is a very active basin.
Certainly Devon’s not the only company very active in the basin. And so we’ll continue to try our best to stay ahead, not just on our own controllable activity, but working with our third-parties so that they can stay ahead with us.
Scott Gruber: Got it. And just a quick one following-up on the budget. Do you have a rough sense for the well count that’s incorporated in your budget for next year?
