Matt Portillo

Matt Portillo inquired about the strong well performance in the DJ Basin during Q3, specifically asking if changes in completion or spacing design were driving the outperformance. He also asked about Occidental's DJ inventory and its flexibility to shift capital between the DJ and Permian basins in a lower commodity price environment.

Answer

Richard Jackson, SVP and COO, attributed the DJ Basin outperformance primarily to improvements in base production, including artificial lift and analytics, along with better new well performance from refined subsurface designs and flowback. He also discussed optimized activity in the DJ and progress in the Powder River Basin, highlighting the opportunity to flex capital between these regions without increasing overall capital.

Matt Portillo inquired about the drivers behind Occidental's strong well performance and production upside in the Rockies (DJ Basin) during Q3, specifically asking if there were any changes in completion or spacing design. He also sought insight into the company's DJ inventory and its strategy for flexing capital between the DJ and Permian basins in a lower commodity price environment.

Answer

Richard Jackson (SVP and COO) attributed the Rockies' strong performance primarily to improved base production, including artificial lift and analytics, along with better new well performance from refined subsurface designs and flow back, supported by enhanced processing facility uptime. He explained that DJ activity is optimized with a couple of rigs and one Frac Core, and highlighted progress in the Powder River Basin with over 25% improved drilling performance, indicating flexibility to reallocate capital within the Rockies without increasing overall spend.

Matt Portillo inquired about Coterra Energy's power opportunities in the Permian, specifically the timing and planned megawatts for microgrid deployment, and updated thoughts on regional power demand growth in Northeast PA and longer-haul infrastructure like Constitution.

Answer

Michael Deshazer, Executive Vice President of Operations, explained that Coterra is expanding existing microgrids in the power-constrained Northern Delaware Basin, with opportunities for about three expanded microgrids to dramatically decrease electrical costs. Shane Young, Executive Vice President and CFO, addressed Constitution pipeline, noting Coterra would be a logical partner if it materializes, and mentioned ongoing dialogues for power demand in PA. Tom Jorden, Chairman, CEO, and President, emphasized patience and prudence in the Northeast, not bringing on incremental volumes at current incremental prices, but preparing to strike when opportunities arise.

Matt Portillo asked about the power opportunity in the Permian, specifically microgrids, their timing for service, and planned megawatts. He also inquired about the Northeast's soft guide for flat volumes, medium-term thoughts on regional power demand growth in Northeast PA, and updated thoughts on longer-haul infrastructure opportunities like Constitution.

Answer

Michael DeShazer, Executive Vice President of Operations, explained that Coterra is expanding inherited microgrids in the power-constrained Northern Delaware Basin to connect multiple leases to single permanent turbine stations, with opportunities for about three expanded microgrids. Shane Young, Executive Vice President and CFO, discussed challenges for the Constitution pipeline but noted other projects with momentum and significant announced/unannounced power demand activity in PA. Tom Jorden, Chairman, CEO, and President, emphasized marketing flexibility and patience regarding incremental volumes due to current incremental pricing.

Asked for a comparison of the return profile for 3-mile laterals in the Bakken's Ajax area versus the Hector area, and inquired about recent drilling and completion efficiency gains and their impact on full-year guidance.

Answer

The Ajax program is becoming more competitive with over 20% well cost savings and solid initial production, though more long-term data is needed. The company has seen significant D&C efficiency gains across all basins, including drilling 40% faster than peers on a recent Permian pad. These efficiencies increase confidence in hitting full-year targets but primarily affect the intra-year phasing of activity rather than changing the total number of wells brought online for the year.