Nathaniel Pendleton

Nathaniel Pendleton inquired about the evolution of markets for centralized gas lift, particularly with a slowdown in oil drilling, and how Archrock's large horsepower dedicated to this segment is performing. He also asked for more color on the Mach 4 natural gas liquid recovery amendment fee and the progression of Archrock's new venture investments.

Answer

Brad Childers (President and CEO) noted a flattening in order activity directly attributed to gas lift due to a slowdown in oil drilling, with demand shifting more towards gathering. However, he emphasized that gas lift units, once deployed, remain in use, contributing to historically low stop activity. Regarding the Mach 4 amendment fee, Childers explained it was to change the timing of Archrock's minimum equipment purchase commitments. He updated that Mach 4 had a successful pilot and is in early commercialization, with strong customer enthusiasm. He also mentioned EcoTech continues to grow, while Carbon Hawk has seen a slowdown in market acceptance due to regulatory changes, though both are valuable for sustainable operations.

Nathaniel Pendleton asked about the evolution of centralized gas lift markets, particularly how they are trending given the strong natural gas demand outlook. He also inquired about the Mach 4 natural gas liquid recovery amendment fee and the progress of Archrock's new venture investments, including ECOTEC and Carbon Hawk.

Answer

President and CEO Brad Childers noted a flattening in gas lift order activity due to a slowdown in oil drilling, with more demand shifting to gathering. He reiterated that gas lift units remain critical and stay on location, contributing to historically low stock activity. Regarding new ventures, Mr. Childers explained the Mach 4 amendment fee was to adjust minimum equipment purchase commitments. Mach 4 had a successful pilot with strong customer enthusiasm. ECOTEC continues to grow well, while Carbon Hawk has seen a slowdown in market acceptance due to regulatory changes. Neither ECOTEC nor Carbon Hawk are expected to be financial needle movers but are valuable for sustainable operations.

Nathaniel Pendleton asked about the scalability of Berry's thermal diatomite program, including potential operational or permitting bottlenecks for its 1,000+ locations, and also inquired about key learnings and the production timeline for the recently drilled Uinta Basin 4-well pad.

Answer

CEO Fernando Araujo explained that the thermal diatomite program has significant running room, with 125 PUD sidetracks providing at least two years of drilling inventory, plus additional new well PUDs and 1,000 future locations. He noted that sidetrack permitting is progressing well, with 45 received this year. For the Uinta Basin, Araujo highlighted drilling efficiency, including a 13-day spud-to-rig-release on the last well and cost savings of $90,000 per well from using produced gas as fuel. He stated that fracking will begin in June, with first production expected in August.

Nathaniel Pendleton of Texas Capital asked about California Resources Corporation's appetite for further bolt-on acquisitions in the state. He also inquired about how advancements in carbon capture technology are influencing discussions with potential CO2 emitters.

Answer

President and CEO Francisco Leon responded that while M&A is part of the long-term strategy, the immediate focus is on executing the Aera integration, setting a very high bar for any potential bolt-ons. Regarding technology, he stated CRC is agnostic, focusing on its core advantage in owning pore space and providing a 'sandbox' for technology partners to develop cost-competitive solutions.

Nathaniel Pendleton asked about the potential for cost deflation or increased rig availability amid softer oil prices and inquired about any specific cash-on-hand targets for capitalizing on growth opportunities.

Answer

President and CEO Paul Goodfellow noted it's early to see significant cost reductions but acknowledged some softness may be coming in the rig market. He emphasized that the focus is on total project efficiency through strong relationships. EVP and CFO Sergio Maiworm stated there is no specific cash balance target; cash will be deployed to the best opportunity, whether organic/inorganic growth, buybacks, or debt reduction.

Nathaniel Pendleton inquired about the Katmai field's performance relative to initial acquisition expectations, potential upside to its 200 million barrel resource estimate, and the expected production trajectory for 2025 given new project startups and planned downtime.

Answer

Interim Co-President and CFO Sergio Maiworm confirmed that the Katmai field is performing better than anticipated with potential upside beyond the 200 million barrel estimate. He outlined the 2025 production shape, noting Q1 would be strong, Q2 would have heavy planned maintenance, and Q3/Q4 would be impacted by maintenance and hurricane risking.

Nathaniel Pendleton of Texas Capital inquired about the impact of recent tariffs on the ATJ60 project costs, key future milestones for the ethanol-to-olefins (ETO) technology, and plans for the Luverne facility.

Answer

President and COO Christopher Ryan clarified that tariffs are not significantly impacting the project costs. Chief Business Officer Paul Bloom and CEO Patrick Gruber explained the ETO technology is in a 12-18 month development and derisking phase with Axens to prepare it for commercial scale. Gruber added that there are plans for the Luverne facility, but details could not be disclosed at this time.