Shareholder Returns & Capital Allocation Q: How will shareholder returns vary with oil prices? A: Management emphasizes flexibility in their return of capital program, able to shift between buybacks and variable dividends based on oil prices. In weaker markets, they'll aggressively buy back shares, while in stronger markets (oil at $80s or $90s), they'll pay larger variable dividends. They focus on maintaining production with a base dividend breakeven at $40 crude and adjust capital allocation based on free cash flow.

Synergies from Endeavor Acquisition Q: Will efficiencies increase synergies from the Endeavor deal? A: The operational efficiencies achieved since announcing the Endeavor merger are permanent and cultural, such as drilling more wells per rig and improving completion designs. These efficiencies enhance synergies by reducing the need for higher rig counts and frac crews on the combined asset base. They now expect to run 18–20 rigs next year versus 22–24 previously planned.

Debt Reduction Strategy Q: How do you plan to reduce net debt post-acquisition? A: The company aims to deleverage primarily through organic free cash flow generation, supplemented by selective asset sales totaling nearly $1 billion to date. They remain committed to reducing net debt to $10 billion as quickly as possible while retaining strategic operated properties in the Permian.

Operational Efficiencies Impact Q: What drives recent drilling and completion efficiencies? A: By focusing on every operational detail and fostering a culture of continuous improvement, they've increased drilling efficiency from 24 to 26 wells per rig per year and completions from 80 to over 100 completions per crew per year. These gains result from optimizing processes, design changes, and incentivizing crews, rather than new technologies.

Gas Price Volatility Management Q: How are you addressing Permian gas price weakness? A: The company is taking greater control over its gas by securing pipeline commitments on Whistler and Matterhorn to transport gas out of the basin and reduce exposure to low in-basin prices. They're also exploring in-basin demand opportunities, like powering operations with gas and gas-to-gasoline projects, to create local markets for their gas.

Longer Lateral Development Q: What is the plan for longer lateral wells post-acquisition? A: Management plans to extend lateral lengths where lease geometry allows, having already drilled a 20,000-foot lateral in under nine days. While maintaining an average lateral length of 12,000 feet for 300 wells, they anticipate opportunities to drill longer laterals on the combined asset base starting in the back half of 2025 into 2026.

Dividend Growth Commitment Q: Will efficiency gains impact dividends? A: Efficiency gains reduce maintenance capital requirements, potentially allowing for increases in the base dividend over time. Management remains committed to a sustainable and growing dividend, having returned nearly $8 billion to shareholders since 2018, and maintaining a base dividend breakeven at $40 crude.

Production Growth Outlook Q: Any plans to accelerate production growth? A: Currently, the company does not foresee ramping up production growth in the near term. They prefer to prioritize free cash flow generation over growth and plan to maintain production levels while integrating the Endeavor assets and capitalizing on efficiencies.

Well Performance and Inventory Expansion Q: Are you seeing improvements in well productivity? A: While per-well productivity remains flat year over year, the company is expanding its resource base by adding new zones like the Upper Spraberry and Wolfcamp D into development without degradation in performance, effectively increasing their inventory without sacrificing returns.

Reducing Exposure to Waha Gas Prices Q: How will Endeavor's gas marketing affect you? A: Post-acquisition, they aim to reduce exposure to Waha gas prices by aligning gas marketing strategies, increasing control over gas molecules, and securing more takeaway capacity out of the basin to improve gas price realizations for the combined company.