Cash Return Philosophy
Q: How will you approach cash returns given stock valuation?
A: Management emphasized that they are inclined to increase share buybacks due to the stock's compelling valuation and strong liquidity position. They recently issued $500 million in notes to refinance existing debt, which clarified their liquidity and allowed them to lean into the share buyback program. They target maintaining $1 billion in liquidity but are comfortable operating between $600 million and $1.4 billion. They believe the company is not overleveraged and focus on prudent balance sheet management.

M&A Strategy
Q: What's your view on future consolidation and M&A?
A: Management stated they are active in evaluating assets for potential acquisitions. They focus on financials and asset quality rather than commodity type. While they haven't announced any transactions, they remain curious and active in the space. They would consider adding more oil to the portfolio but prioritize sound financials and asset quality.

Marcellus Wells Deferral
Q: What market conditions affect deferred Marcellus wells?
A: The company is monitoring received prices, particularly the Leidy index. When netbacks are below $1, they consider deferring turn-in-lines on a month-to-month basis. They currently plan to bring additional wells online in July but will be guided by market conditions.

Future Outlook and Efficiency
Q: Will efficiency gains improve the 3-year outlook?
A: Management believes efficiency gains reinforce their confidence in delivering 5% plus oil growth within the $1.75 to $1.95 billion annual capital range. They do not factor future cost reductions into their guidance but continually strive for operational excellence.

Cost Reductions in Permian
Q: Can you elaborate on cost reductions in Windham Row?
A: The simul-frac operations in Windham Row have achieved cost savings of about $25 per foot, exceeding the initial expectation of $20 per foot. While these savings are significant, simul-frac is most effective on pads with many wells, and they are exploring how to expand this technique where it makes economic sense.

Capital Allocation if Gas Prices Improve
Q: How will you allocate capital between Anadarko and Marcellus if gas prices rise?
A: The company will allocate capital based on incremental economics. They have tremendous gas resources in both basins and would likely increase activity in both if gas prices improve to the $3.50 to $4 range in 2025–2026. They are also considering creative long-term contracts to benefit from increased gas demand.

Marcellus Strategy in Second Half
Q: What's your approach to Marcellus operations later this year?
A: They plan to bring wells online in July but will make decisions based on market conditions. They do not typically ramp production up and down based on near-term price changes but are cautious due to structurally low gas prices.

Reallocation of CapEx if Gas Prices Underperform
Q: How would you adjust CapEx if gas prices stay low?
A: They built flexibility into their capital planning and may decelerate investment in the Marcellus if gas prices remain weak. They have a strong inventory in other areas that would attract capital in such a scenario.

Effect of Deferring Wells
Q: Does deferring wells affect completion effectiveness?
A: Management does not see degradation due to shut-in time. Data indicates that the reservoirs do not suffer from deferred completions, and they anticipate turning wells online later in the year without issues.

CapEx Trends
Q: Is second quarter CapEx the peak for the year?
A: Yes, they expect second quarter to be a peak capital quarter, with capital spending moderating in the second half of the year.

Upper Marcellus Activity
Q: Will Upper Marcellus activity increase?
A: Yes, as Lower Marcellus inventory is drilled out, the Upper Marcellus will become the focus. They are testing and delineating the Upper Marcellus, which will be a larger part of the program.

Inventory and Well Spacing
Q: How do you view inventory estimates given recent trends?
A: They include only deliverable inventory based on current knowledge. While they have future landing zones not modeled, they prefer to promise what they can deliver and continually optimize well spacing and development.

Windham Row Simul-Frac Limitations
Q: Why not use simul-frac on all Windham Row wells?
A: Simul-frac is most cost-effective on pads with many wells. Not all pads have sufficient wellheads to optimize savings, so they apply simul-frac where it makes economic sense.

Deferring Completions vs. Curtailment
Q: How did you decide between deferring completions and curtailing production?
A: While continuous frac operations are preferred for efficiency, current gas prices necessitate slowing down capital investment in the Marcellus. They accept some loss of efficiency to make prudent capital decisions.