Oliver Huang

Oliver Huang noted the improvement in oil cut in the 2026 outlook and inquired about the drivers, specifically the weighting towards western acreage, and GOR trends through 2030.

Answer

CEO Danny Brown confirmed a slight weighting towards the western side of the portfolio in the 2026 program, which typically has a lower GOR profile, contributing to the higher anticipated oil cut. He noted that while GORs in the core basin will increase on a declining base, new production will come online with lower GORs, resulting in very minimal increases to the oil cut.

Oliver Huang inquired about the source of organic inventory additions across the basin, the remaining running room, and the drivers behind the improved oil cut in the 2026 outlook, including GOR trends through 2030.

Answer

CEO Danny Brown stated that inventory improvements are basin-wide, driven by a lower cost structure, refined development geometry, and new assets across Chord's 1.3 million-acre position. He expects continued organic inventory additions through capital, OpEx, and productivity enhancements. For the oil cut, Mr. Brown confirmed a slight weighting towards the western portfolio in 2026, which has lower GOR. He anticipates GORs in the core basin to increase on a declining base, with new production having a lower GOR, leading to very minimal increases in oil weighting.

Oliver Huang asked for detailed takeaways from the Rysted four-mile well's performance and inquired about the potential for incremental inventory expansion from a broader shift to four-mile laterals.

Answer

EVP & COO Darrin Henke described the Rysted well's execution as nearly flawless, with drilling outperforming expectations and production exceeding its type curve by 30%. President, CEO & Director Daniel Brown explained that while it's too early to quantify inventory additions, the improved breakevens from four-mile wells will make peripheral acreage more competitive for capital, noting these laterals could comprise up to 50% of future development.

Oliver Huang of TPH&Co. sought detailed takeaways from the first four-mile Rysted well, including drilling, completion, and productivity, and asked if the company might tweak its approach for subsequent wells. He also questioned how a significant shift to four-mile laterals could expand the company's economic inventory.

Answer

COO Darrin Henke described the Rysted well's execution as nearly flawless, with drilling performance exceeding expectations and production outperforming its type curve by 30%. He noted the company will have seven four-mile wells online by year-end to gather more data. CEO Daniel Brown explained that the superior economics of four-mile wells will make peripheral acreage more competitive for capital and that these longer laterals could constitute up to 50% of future development.

Oliver Huang asked for color on the composition of the Permian program for the year, specifically how much activity is expected from the Delaware Basin and, within the Midland Basin, the split between the traditional oilier RockStar area versus the southern part with a higher GOR mix. He also inquired about the maintenance CapEx on a pro forma basis at the second-half run rate, given all the moving pieces.

Answer

President and CEO Beth McDonald stated that the Permian program's composition is approximately one-third Delaware and two-thirds Midland Basin. She noted that optimization of allocation within the Midland Basin is ongoing to increase returns and capital efficiency through late 2026 and into 2027. EVP and CFO Wade Pursell suggested that for 2027, assuming CapEx in the area of this year's guided CapEx or slightly less would be a reasonable ballpark figure for maintenance capital. Beth McDonald clarified this refers to the one-time guided number for the current year.

Oliver Huang, Director of E&P Research at Tudor, Pickering, Holt & Co., asked about the composition of SM Energy's Permian program for the year, specifically the allocation between the Delaware and Midland Basins, and the split within the Midland Basin between the RockStar area and the southern part. He also inquired about the pro forma maintenance CapEx at the projected back-half run rate, considering A&D and stream conversions.

Answer

President and CEO Beth McDonald detailed the Permian program's composition as approximately one-third Delaware and two-thirds Midland Basin, with ongoing optimization within the Midland Basin to enhance returns and capital efficiency. EVP and CFO Wade Purcell suggested that maintenance CapEx for 2027 would likely be similar to or slightly less than the guided CapEx for the current year.

Oliver Huang asked for specific drivers of the improved Uinta well performance, given the wells were from an inherited DUC backlog, and questioned the expected oil production trajectory into Q4 and 2026.

Answer

EVP & COO Beth McDonald pointed to a comprehensive development strategy, including landing zone optimization and lateral extensions, as drivers for performance. President & CEO Herbert Vogel acknowledged a likely Q4 production rolloff due to well timing and provided a preliminary 2026 outlook of flattish BOE production with a six-rig program, emphasizing a focus on maximizing free cash flow.

Oliver Huang asked about the expected water supply for the Bolt partnership, specifically if it would involve source water, treated desal water, or a combination, and how desal water meets the specifications for CCGT and data centers. He also questioned TPL's capacity to scale treated water volumes for multi-gigawatt projects, potential constraints, and the capital required for an incremental 250,000 barrels per day of capacity. Finally, Mr. Huang sought updates on securing commercial partnerships and anchor customers for the Bolt agreement, facility sizing, and the anticipated timing for revenue flow from the first data center project.

Answer

EVP of Texas Pacific Water Resources, Robert Crain, stated that water supply for Bolt would likely be a combination of both source and treated desal water, highlighting synergies between desal, power generation, and data center usage, especially with produced water. He confirmed no feedstock shortage for produced water (25 million barrels/day in Permian) but noted that scaling facilities and capital needs would depend on specific generation capacity and water requirements, with capital offsets from power generation and compute helping economic returns. CEO Tyler Glover mentioned Eric Schmidt's public goal of swiftly reaching 1 gigawatt, with a 10-gigawatt campus as the ultimate aim. He anticipates announcements this year, if not in the first half, with revenue streams expected from land use, water rights, and equity returns from Bolt.

Oliver Huang asked for updates on the Bolt Data & Energy agreement, specifically regarding securing commercial partnerships and anchor customers, insights into potential facility size, and the expected timing for revenue generation from the first data center project.

Answer

CEO Tyler Glover referenced public comments by Eric Schmidt, indicating a goal of swiftly reaching 1 gigawatt with an ultimate 10-gigawatt campus. He noted that conversations are progressing rapidly, with hopes for announcements this year, if not in the first half. Glover highlighted land use, the right of first refusal on water, and the potential for material equity returns from Bolt as key benefits for TPL.

Oliver Huang then asked about Texas Pacific Land Corporation's position and prospects in the power and data center market in West Texas, specifically how their ability to capture market share has evolved over the past quarter or year, and which areas of their expansive footprint are most prospective for such deals.

Answer

Chris Steddum, CFO, affirmed TPL's strong positioning due to extensive available land and attributes attractive to power generators and data center developers. He noted West Texas's increasing popularity for multi-gig facilities and mentioned ongoing "really good conversations" with potential news to share soon.

Oliver Huang inquired about TPL's position in participating in the West Texas power and data center market, comparing it to previous quarters, and identifying prospective areas for executing such deals given TPL's expansive footprint.

Answer

Chris Steddum, CFO, affirmed TPL's strong position due to available land with necessary attributes, making them attractive to power generators and data center developers. He noted West Texas's growing popularity for multi-gig facilities and expressed optimism about ongoing conversations, anticipating news on interesting opportunities soon.

Oliver Huang from TPH&Co. asked if faster operational cycle times could push capital spending and well completions toward the high end of guidance. He also inquired if there is a long-term absolute net debt target beyond the goal of reaching one-times leverage.

Answer

President & COO Clay Carrell acknowledged that faster cycle times pull activity forward and stated the company is actively balancing this to maintain a level-loaded program into 2026. CFO & Treasurer Marianella Foschi noted that while there isn't a specific absolute debt number, the company will continue to pay down debt materially post-2025, focusing on holistically de-risking the business through its capital structure, maturity profile, and hedging.

Oliver Huang asked about the primary levers for further productivity gains in the Midland Basin over the next year. He also inquired about the outlook for service costs in 2025 and the deflation assumptions baked into the maintenance capital forecast.

Answer

CEO M. Doyle explained that future gains will come from focusing on incremental well returns, which may mean drilling fewer wells per section, alongside continuous improvements in subsurface targeting and completion designs like simul-fracs. He noted it's too early to predict 2025 service costs given market volatility but stated recent deflation was mainly in consumables.

Oliver Huang of TPH&Co inquired if lower D&C costs were driven by service cost deflation or purely by efficiency gains. He also asked about the possibility of building DUCs if the company runs ahead of schedule, versus slowing down or pulling forward 2026 activity.

Answer

CFO Brandi Kendall clarified that the 3% reduction in the capital guide was entirely due to drilling and completion efficiencies, not service cost deflation. She noted that the resulting $100 million in incremental free cash flow would be retained for shareholder benefit rather than reinvested. CEO David Rockecharlie affirmed that the company's outlook for the year remains the same and they would not change their plan absent large commodity price moves.

Oliver Huang asked about the economic criteria and return thresholds used to add 40,000 net acres to the core Giddings development inventory. He also inquired about service cost trends and expectations heading into the next contracting season.

Answer

CEO Christopher Stavros explained that the acreage acquisitions were viewed as a low-cost entry point for upside potential, with the acreage being contiguous to their core position and offering opportunities for longer laterals and new wells. On service costs, Stavros acknowledged that things are harder for service companies, leading to some deflation. He expects a several-percent benefit in Q3 but noted that steel inflation and tariffs could flatten costs in Q4, with a potential for costs to trickle higher early next year as activity ramps up.

Oliver Huang of TPH&Co inquired about the economic criteria for adding new acreage to the core Giddings development program and asked for an outlook on oilfield service cost trends.

Answer

CEO Christopher Stavros explained that the recent bolt-on acquisitions were viewed as a low-cost entry point for high-upside acreage adjacent to their core position, offering opportunities for lengthening laterals and new wells. Regarding service costs, he noted some ongoing deflation due to reduced industry activity, estimating a several percent benefit in Q3. However, he cautioned this could flatten out in Q4 due to steel tariffs, with a potential for costs to rise again with activity in 2026.

Oliver Huang inquired about the current state of service costs and how they might trend into 2025. He also asked if recent large acquisitions introduced any new required drilling or lease obligations that could impact near-term capital allocation.

Answer

President and CEO Christopher Stavros noted that service costs have been softer than anticipated, contributing to Q3 capital savings. He sees potential for additional mid-single-digit savings into next year across categories like OCTG, pressure pumping, and rigs. He anticipates 2025 capital will not be much higher than 2024. On the second point, Stavros confirmed that recent deals did not create any meaningful new drilling obligations.

Oliver Huang of Tudor, Pickering, Holt and Company asked for a walkthrough of the anticipated frac activity cadence for the remainder of the year, noting that spending guidance implies a slowdown in Q4, and its effect on early 2026.

Answer

EVP & CFO William Lambert confirmed that current plans imply lower capital spending in Q4. He explained this is a result of operational efficiencies pulling activity forward into Q3. Wells turned on late in Q3 will primarily contribute to Q4 production. Lambert highlighted that large-batch, multi-zone developments in the Delaware basin will inherently create lumpiness in production and capital cadence due to longer cycle times.

Oliver Huang from Tudor, Pickering, Holt & Co. asked for details on the cadence of frac activity for the rest of the year, noting that spending guidance implies a slowdown in Q4.

Answer

EVP and CFO William Lambert confirmed the spending trajectory, explaining that operational efficiencies allowed the team to pull activity from Q4 into Q3. He noted that wells completed late in Q3 will primarily benefit Q4 production. Lambert advised investors to expect some 'lumpiness' in production going forward due to the longer cycle times of large, multi-zone development pads in the Delaware Basin.

Oliver Huang of Tudor, Pickering, Holt & Co. requested details on the cadence of frac activity for the remainder of the year and the potential flow-through effects on early 2026 production.

Answer

EVP and CFO William Lambert confirmed that operational efficiencies have pulled some activity forward into the third quarter. This will result in higher Q3 capital, with the associated wells being turned on late in the quarter and contributing more significantly to Q4 production. He noted that the nature of large-batch, multi-zone development in the Delaware Basin will inherently create some lumpiness in production profiles due to longer cycle times.

Oliver Huang of Tudor, Pickering, Holt and Company asked for a walkthrough of the anticipated frac activity cadence for the rest of the year and any potential flow-through effects on production at the start of 2026.

Answer

EVP and CFO William Lambert confirmed that operational efficiencies have pulled some activity forward into Q3, which could lead to lower spending in Q4. He explained that wells turned on late in Q3 will primarily benefit Q4 production. Lambert also noted that large-batch, multi-zone developments will naturally create some 'lumpiness' in production due to longer cycle times but result in prolific initial output.

Oliver Huang from Tudor, Pickering, Holt & Co. asked about Lease Operating Expense (LOE) trends, considering the impact of Ameredev volumes, and inquired about specific plans to reduce operating costs on the newly acquired assets.

Answer

Glenn Stetson, EVP of Production, clarified that while Ameredev's assets have a higher initial operating cost, the company has already identified $1 million per month in potential savings. These efficiencies will come from increased use of recycled produced water, optimizing production chemical programs, and consolidating operations to be field-based in New Mexico. He noted the Pinyon sale does not affect these properties' opex.

Oliver Huang of TPH & Co. asked for APA's updated corporate breakeven oil price required to cover capital expenditures and the dividend, given the accelerated cost savings. He also requested quantification of the shift toward denser well spacing from 2024 to 2025.

Answer

CEO John Christmann stated that with the full $350 million annual run-rate savings, APA can fund its entire program, including exploration and the dividend, at a $50 WTI price. Regarding well spacing, he explained that a significant portion of the current program already utilizes the denser design, driven by operational changes like using slimmer casing, and that it is a dynamic optimization process rather than a fixed percentage shift.

Oliver Huang asked if Permian Resources is considering larger pads or developing more zones to lower costs, and inquired about power reliability and related capital needs.

Answer

Co-CEO William Hickey explained that while development is rock-dictated, the company's tolerance for larger pad sizes has increased with scale and pad sizes will likely be slightly higher next year. He clarified that power is reliable and not a production risk, but improving it by moving off generators presents a significant opportunity for future LOE savings, not a major capital concern.