Vicki Hollub : Yes. The legacy Anadarko assets in the Texas, Delaware are really, really top tier. We had — when we were working to do the acquisition, we knew that they were really good we thought they would come in and be almost equal to our Southeast New Mexico, and I’m going to get myself in trouble here. I think they were, I thought, for a while better than Southeastern Mexico. I think I happen to say that in the hallway one day, and the Southeast New Mexico team decided they would prove me wrong on that. So I would say that Southeast New Mexico and Texas Delaware are both incredibly important to us. They are very high quality, and they’re both a part of our program going forward. Richard, you had something to add?
Richard Jackson : Yes. Maybe just to help add on to that when we talk about assets in the portfolio and even legacy Anadarko. I think the Rockies trajectory, while very strong in the first half of the year, I think what’s impressive, we talked about knowing we would decline kind of through the first half of the year and then grow. And I think if you see our guide for 3Q and the implied guide for 4Q, that not only was the first half better, but the second half was better as well. And while the new wells are certainly core, how do we think about deploying capital and creating the efficiency, I’d like to also recognize all the team that works on our base production. I think the Rockies is a great example of being able to rethink our surface infrastructure, they’ve been able to kind of lead the industry, I think, in some of these tankless designs, but they’ve migrated to more efficient bulk and test.
They’ve been able to think about artificial lift earlier, things like gas lift earlier in the cycle of the well. And a lot of that beyond creating the most EOR per dollar spent is really helping our production. And so when you look year-on-year, that base production is another one that I think we’re really proud of from the teams.
Vicki Hollub : No doubt, it’s the Permian and the Rockies and the Rockies actually applying artificial intelligence to their pumps up there, which has been very, very impressive as well as the management of the gas lift in the Permian, Texas and New Mexico. So these are exciting things for us, and we’re — we have to definitely gets kudos to the teams. They’ve gone above and beyond expectations.
Operator: The next question comes from Neil Mehta with Goldman Sachs.
Neil Mehta : Yes. I’m thinking team one to start off on the return of capital. Just curious on your thoughts on the commodity price level or the oil price level at which you believe you can get back to taking out the preferred. And just in the absence of that, how aggressive can you be around buying back stock?
Vicki Hollub : Well, certainly, we have the capability at almost any price environment. There’s a lower limit to where we would probably not do much share repurchases at $60. But at $70, we could continue a common share purchase program. And certainly, at $75 and above, we’ve got the cash to do both. But what we feel like with our current shareholder framework is that share repurchases are a big part of that because our — in common share repurchases because what we’re really trying to do is we’re trying to create value per share for our investors. And to create value per share, it not only means that we need to grow production a bit. Again, that’s with the cash flow is the main thing we’re trying to grow when we’re growing production, and that’s an outcome of our capital program.
So this year, we will get incremental earnings growth from our incremental volumes, but also developing our reserves at the lower cost, like we’ve talked about and like I talked about in the script and like we’ve been talking about here, what the teams are doing that’s so important is to develop reserves, replace our production every year by at least 130% to 150%. And again, we’ve seen years up to 230%, where the DD&A or the funding and development cost is $6 or less in some cases. And we were able to do that with the DD&A rate of what we have today versus that, that’s creating value for our shareholders, creating earnings. And then the last thing is to couple with the cash flow growth and income growth from the volume creation and the reduced cost of those binding and development reserves is to buy back shares.
And especially given the fact that we feel we’re very undervalued right now. So share repurchases, whether or not it triggers the preferred is really important to us. But in the near term, what we’ll do is we will probably wait a little period of time here to watch what’s going to happen with the macro. And if the macro plays out the way we expect, we should be able to do both to buy common and to get back at some point within the next few months to doing both buying not only common, but triggering the preferred, it could take into next year before we’re able to get a program going. But we do believe that we can at $75 or above, have a program that will do that.
Rob Peterson: I’ll just add that part of the challenge that we have is that our program last year was very back-end weighted. We did $2.4 billion of share repurchases concentrated across the second half of the year of $1.8 billion of that just in the third quarter alone. And so it’s the pace at which we were able to retire shares last year, matched up against the commodity prices that we have this year, that’s really making it difficult to stay with the 4 consistently. So if you go back to last year, gas pricing, we realized over $7 in Q3, oil prices were over $95 realized in Q3. And so that’s the big change year-over-year that we’re seeing.
