Diamondback Energy Inc (FANG) 2023 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Diamondback Energy Fourth Quarter 2023 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Adam Lawlis, VP, Investor Relations.

美好的一天，感謝您的支持。歡迎參加響尾蛇能源 2023 年第四季財報電話會議。 （操作員指示）請注意，今天的會議正在錄製中。現在我想將會議交給今天的發言人、投資者關係副總裁 Adam Lawlis。

Thank you, Daniel. Good morning, and welcome to Diamondback Energy's Fourth Quarter 2023 Conference Call. During our call today, we will reference an updated investor presentation and letter to stockholders, which can be found on Diamondback's website. Representing Diamondback today are Travis Stice, Chairman and CEO; Kaes Van't Hof, President and CFO; and Danny Wesson, COO.

謝謝你，丹尼爾。早安，歡迎參加響尾蛇能源 2023 年第四季電話會議。在今天的電話會議中，我們將參考更新的投資者介紹和致股東的信函，這些資訊可以在響尾蛇的網站上找到。今天代表 Diamondback 的是董事長兼執行長 Travis Stice； Kaes Van't Hof，總裁兼財務長；和首席營運長丹尼·韋森 (Danny Wesson)。

During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

在本次電話會議期間，與會者可能會就本公司的財務狀況、營運績效、計畫、目標、未來績效和業務做出某些前瞻性陳述。我們提醒您，由於多種因素，實際結果可能與這些前瞻性聲明中所示的結果有重大差異。有關這些因素的資訊可以在該公司向 SEC 提交的文件中找到。此外，我們也將參考某些非公認會計準則措施。與適當的公認會計準則措施的對帳可以在我們昨天下午發布的收益報告中找到。

Now I'll turn the call over to Travis Stice.

現在我將把電話轉給 Travis Stice。

Thank you, Adam, and I appreciate everyone joining this morning. I hope you continue to find the stockholders' letter that we issued last night, an efficient way to communicate. So obviously, a lot of the material is in that stockholders letter.

謝謝你，亞當，我也謝謝今天早上大家的加入。我希望您繼續找到我們昨晚發出的股東信，這是一種有效的溝通方式。顯然，股東信中包含了許多資料。

So with that, operator, would you please open the line for questions?

那麼，接線生，請您撥打電話詢問問題好嗎？

(Operator Instructions) Our first question comes from Neal Dingmann with Truist Securities.

（操作員指示）我們的第一個問題來自 Truist Securities 的 Neal Dingmann。

My first question is on Endeavor, specifically. I just want to go back to this. You all highlighted about 344,000 acres with about 2,300 locations. That compares to 494,000 and 3,800 for you all. And I'm just wondering, does this slightly smaller current core footprint provide a material amount of immediate incremental locations, Travis, and I'm just wondering or potential upside, and I'm wondering how you would be thinking about? I know it's still a while until this thing likely closes, but how you will attack these assets?

我的第一個問題具體來說是關於奮進號的。我只想回到這個主題。你們都強調了大約 344,000 英畝的土地和大約 2,300 個地點。相比之下，你們所有人的數字分別為 494,000 和 3,800。我只是想知道，這個稍微小一點的當前核心足跡是否提供了大量的直接增量位置，特拉維斯，我只是想知道或潛在的好處，我想知道你會怎麼想？我知道這件事可能還需要一段時間才能結束，但是你將如何攻擊這些資產？

Yes, Neal, I mean, listen, we wanted to be conservative in how we laid out the inventory counts for both us and them. It's sub-40. I mean, I think there's been a lot of aggressive inventory counts put in deals lately and I think for us to be able to say that combined, we have about 12 years of sub-40 breakeven inventory is truly a best-in-class number in North American shale. And that's kind of why we put it there. I mean I think generally, as with Diamondback's position, there's a lot of inventory that breaks even well above those numbers. I think there's a lot of testing going on throughout the basin. There's probably some zones like the Upper Sprayberry that we'd probably call a sub-40 breakeven zone today, but I don't think we're ready to fully put it in the location count.

是的，尼爾，我的意思是，聽著，我們希望在為我們和他們制定庫存數量時保持保守。這是40歲以下。我的意思是，我認為最近的交易中有很多激進的庫存數量，我認為我們可以說，加起來，我們擁有大約 12 年的低於 40 的盈虧平衡庫存確實是一流的數字在北美頁岩。這就是我們把它放在那裡的原因。我的意思是，我認為一般來說，就像響尾蛇的立場一樣，有許多庫存的損益平衡遠高於這些數字。我認為整個盆地正在進行大量測試。可能有一些區域，例如 Upper Sprayberry，我們今天可能將其稱為 40 以下的盈虧平衡區域，但我認為我們還沒有準備好將其完全納入位置計數中。

So I think it's just conservatism. And I think on a relative basis, not all locations are created equal and within that combined 6,000 location count, there's some that breakeven below $30, right? I mean it's all about what we're developing today and saving the upside for later, and we know that, that upside is going to accrue to us with the size of the acreage position pro forma.

所以我認為這只是保守主義。我認為，相對而言，並非所有門市都是平等的，在 6,000 個門市總數中，有些門市的盈虧平衡點低於 30 美元，對吧？我的意思是，這一切都與我們今天正在開發的內容有關，並為以後保留上行空間，而且我們知道，隨著預計面積頭寸的大小，我們將獲得上行空間。

Neal, just to add to that point, if you think about a company's future, two things are really important for the oil and gas sector. One is kind of this durable inventory and Kaes just walked you through some numbers there. But it's also the conversion efficiency of that inventory. And I think now with the announcement of this endeavor merger, we're in control of both the numerator and denominator of that ratio. So our durable inventory greatly extends and then our conversion efficiency that we've been known for, for a long time actually gets to come to bear on a larger asset base. And I think to give you a little bit more color and comfort, we didn't put our thumb on the scale as we looked across above our fence. And what I mean by that is we simply applied what Diamondback is doing today on drilling and completion and operating wells. And then physical adjacent, this case was just explaining, made the assumption that, that can be applied across above our fence. So I want to give you a little bit more color there, Neal. Thanks for your question.

尼爾，補充一點，如果你考慮一家公司的未來，有兩件事對於石油和天然氣產業來說非常重要。其中之一是這種耐用的庫存，凱斯剛剛向您介紹了其中的一些數字。但這也是庫存的轉換效率。我認為現在隨著這項努力合併的宣布，我們控制了該比率的分子和分母。因此，我們的耐用庫存大大擴展了，然後我們長期以來聞名的轉換效率實際上開始對更大的資產基礎產生影響。我認為，為了給您更多的色彩和舒適感，當我們在柵欄上方看時，我們沒有將拇指放在秤上。我的意思是，我們只是應用了 Diamondback 今天在鑽井、完井和作業井方面所做的事情。然後物理相鄰，這個案例只是解釋，做出了假設，這可以應用於我們的柵欄上方。所以我想給你更多的色彩，尼爾。謝謝你的提問。

No, I appreciate from both. I definitely appreciate the conservatism. I think you're right, Kaes, There has been a lot of -- something inflated. And my second question is on your current Slide 11 of today on the multi-zone development strategy. Specifically, really like that you all -- for '24 had -- or I'm sorry, for '23, had the average project size of around 24 wells. And I'm just wondering, will that be approximately the same this year? And I'm just wondering with that, how do you all continue to mitigate the frac hits that seem to plague other operators so much when they do these larger projects?

不，我對兩者都很欣賞。我絕對欣賞這種保守主義。我認為你是對的，凱斯，有很多——一些誇大的東西。我的第二個問題是關於今天的幻燈片11，關於多區域發展策略。具體來說，真的很喜歡你們所有人 - 24 年 - 或者我很抱歉，23 年的平均專案規模約為 24 口井。我只是想知道，今年的情況會大致相同嗎？我只是想知道，當其他業者進行這些大型專案時，你們如何繼續減輕似乎困擾其他業者的壓裂事故？

Yes. Look, I mean, I think generally, Neal, the project size is up. I mean 25 is not an exact number. It's going to be different in different counties where we have different spacing within different zones. We're not -- we don't use a cookie cutter strategy to develop the asset. We use a unique development strategy for each -- each area. I think with a lot of experience with frac hits over the years, I think we've learned in our planning group has gotten significantly better at looking around the core and seeing what issues might arise.

是的。聽著，我的意思是，我認為總的來說，尼爾，專案規模擴大了。我的意思是 25 不是一個確切的數字。不同縣的情況會有所不同，不同區域內的間距也不同。我們不會－我們不會使用千篇一律的策略來開發資產。我們對每個領域都採用獨特的發展策略。我認為，憑藉多年來在壓裂方面的豐富經驗，我認為我們的規劃小組在審視核心並了解可能出現的問題方面已經取得了顯著的進步。

And certainly, there's a benefit of size and scale, right? If we have 1 of these 24 projects coming on every quarter, well, there's a lot of risk in that 1 tubular project. But here, we have 4, 5, 6 of these coming on every quarter, and that allows us operational flexibility to move around and plan our business. And that's just one of the other benefits of size and scale that will only be magnified with the potential and with the Endeavor merger.

當然，規模和規模是有好處的，對吧？如果我們每季都會進行這 24 個項目中的 1 個，那麼這 1 個管狀項目就會存在很大的風險。但在這裡，我們每個季度都會推出 4、5、6 個此類服務，這使我們能夠靈活地移動和規劃我們的業務。這只是規模和規模的其他好處之一，這種好處只會隨著潛力和奮進合併而放大。

And Neal, when you look at our 2024 budget, you kind of see that the capital efficiency shining through because we're essentially maintaining the volumes profile that we had in the fourth quarter but we're doing so with 10% less CapEx. And as Kaes was just talking to, our development strategy yields the same well performance. So I think as we look across the industry universe, capital efficiency for this year is going to be very, very important. And I like the way that our budget and execution is shaping up in terms of that capital efficiency.

Neal，當您查看我們 2024 年的預算時，您會發現資本效率顯著提高，因為我們基本上維持了第四季度的銷售狀況，但資本支出減少了 10%。正如凱斯剛才所說，我們的開發策略產生了同樣的油井性能。因此，我認為，當我們縱觀整個產業時，今年的資本效率將非常非常重要。我喜歡我們的預算和執行在資本效率方面的形成方式。

Our next question comes from David Deckelbaum with TD Cowen.

我們的下一個問題來自 David Deckelbaum 和 TD Cowen。

I was just curious, Travis, if you could provide an outlook. I know when you announced the Endeavor deal, I think you said that you weren't going to sell anything, obviously, until the deal closes, which makes plenty of prudent sense. But I'm interested just with all of the minority interest that you have in various pipeline investments. How should we think about just where that pipeline cycle is right now relative to investing versus harvesting? Is that something that we might see -- if we think about the risk for -- or probability around '24, seeing some of those investments being harvested, is the market kind of ripe for that right now? Or do you kind of expect these to be more long-term investment harvesting Endeavors?

崔維斯，我只是好奇你能否提供一個展望。我知道，當您宣布 Endeavour 交易時，我想您說過，在交易完成之前，您顯然不會出售任何東西，這非常謹慎。但我只對你們在各種管道投資中擁有的所有少數股權感興趣。我們應該如何考慮目前管道週期相對於投資與收穫的位置？如果我們考慮到 24 年左右的風險或機率，看到其中一些投資正在收穫，那麼市場現在是否已經成熟？還是您期望這些是更長期的投資收穫努力？

Yes, David, I mean some are able to be harvested today. Some are probably further down the line. I mean we've done a pretty good job selling some of these noncore, I won't call them noncore, but equity method investments over the last 12 months. We sold the Gray Oak pipeline interest. We sold our interest in the OMA oil gathering JV. I think it's logical that some of our assets that we can control the sale of will likely pursue at sale, but there's others that we're probably some of would tag along with a bigger sale, and I can't control when those happen. But it's certainly an asset that we -- or assets that we have on our side of the ledger that will be used to reduce debt quickly on a stand-alone basis or through the Endeavor merger.

是的，大衛，我的意思是今天就可以收穫一些。有些可能會更進一步。我的意思是，在過去 12 個月裡，我們在銷售一些非核心投資方面做得非常好，我不會稱它們為非核心投資，而是權益法投資。我們出售了灰橡樹管道權益。我們出售了 OMA 石油採集合資企業的權益。我認為，我們可以控制出售的一些資產可能會出售，這是合乎邏輯的，但我們可能會在出售其他資產時進行更大的出售，而我無法控制這些資產何時發生。但這肯定是我們的資產——或者我們在帳本上擁有的資產，將用於單獨或透過奮進合併快速減少債務。

So I think that's certainly on the table. I think Travis' point on not having to sell significant assets is important, right, when we structured the cash stock mix of the deal, we don't want to be a forced seller of assets to pay down debt. And I think we've done that with the mix we presented last week.

所以我認為這肯定是擺在桌面上的。我認為特拉維斯關於不必出售大量資產的觀點很重要，對吧，當我們建立交易的現金股票組合時，我們不想成為被迫出售資產以償還債務的人。我認為我們已經透過上週推出的組合做到了這一點。

Yes. I can't emphasize that point enough, David, that we're not going to be forced sellers of any of our assets. We're going to be very thoughtful as we move forward post close in looking at monetization strategy for these minority interests, particularly in relation to debt reduction. So we'll be very thoughtful and do the right thing.

是的。大衛，這一點我再強調也不為過，我們不會被迫出售我們的任何資產。當我們在結束後研究這些少數股東權益的貨幣化策略時，我們將非常深思熟慮，特別是與債務削減有關的策略。所以我們會非常深思熟慮並做正確的事情。

Appreciate that. And then just maybe a little bit in the weeds on this one, but the '24 plan when you lay out the Midland Basin development and this year, maybe coincidentally or not, there's more -- a little bit more on the margin going to Wolfcamp and some of the other zones. Is that just more coincident of geography where you're developing this year and then presumably years beyond? Or are there some things that you saw in '23 that are sort of increasing your confidence of wanting to allocate more capital there? And if there's any color you could provide.

感謝。然後可能只是在這方面有一點雜草，但是當你制定米德蘭盆地開發時的24 年計劃，今年，也許是巧合，也可能不是，還有更多——更多的邊緣將流向沃爾夫坎普以及其他一些區域。這是否與你們今年以及未來幾年開發的地理位置更加吻合？或者您在 23 年看到的一些事情是否增強了您想要在那裡分配更多資本的信心？如果有任何顏色你可以提供。

Yes. I mean I think both from our drill bit and from others drill bit, we've seen really good results in the Wolfcamp D. I think it makes sense to put it into the stack today maybe not in every situation, but in more and more situations. So more Wolfcamp D in the plan. And then on the other bucket, we have more Upper Sprayberry in the plan. So I think generally, if we're able to add these zones to our development plan and see similar productivity per foot, that only extends the inventory duration that we have, both on a stand-alone basis and pro forma with endeavor. They've been developing a lot more Wolfcamp D than us, and we talked a little bit about that last week. But I think it just shows the beneficial nature of the Midland Basin stacked pay that we're adding zones like the Upper Sprayberry and the Wolfcamp D that we didn't talk about 3, 4, 5 years ago and now becoming core development targets.

是的。我的意思是，我認為從我們的鑽頭和其他鑽頭來看，我們在Wolfcamp D 中看到了非常好的結果。我認為今天將其放入堆疊中是有意義的，也許不是在所有情況下，但在越來越多的情況下情況。所以計劃中還有更多的 Wolfcamp D。然後在另一個桶子上，我們計劃中有更多的Upper Sprayberry。因此，我認為一般來說，如果我們能夠將這些區域添加到我們的開發計劃中並看到類似的每英尺生產率，那麼只會延長我們的庫存期限，無論是在獨立基礎上還是在努力預期的基礎上。他們開發的 Wolfcamp D 比我們多得多，上週我們對此進行了一些討論。但我認為，我們增加了像Upper Sprayberry 和Wolfcamp D 這樣的區域，我們在3、4、5 年前沒有談論過這些區域，而現在它們已成為核心開發目標，這恰恰表明了米德蘭盆地疊加薪酬的有益本質。

Our next question comes from Neil Mehta with Goldman Sachs.

我們的下一個問題來自高盛的尼爾·梅塔。

Yes. I guess I have a couple of pricing-related questions. And the first, I would love your perspective on just hedging as stand-alone and then also pro forma once you roll in the Endeavor assets, historically, you talk about trying to maximize upside exposure while protecting extreme downside. Just curious what that means for you as you think about hedging in 2024?

是的。我想我有幾個與定價相關的問題。首先，我喜歡你對沖作為獨立的觀點，然後一旦你捲入奮進資產，從歷史上看，你談到試圖最大化上行風險，同時保護極端下行。只是好奇，當您考慮 2024 年的對沖時，這對您意味著什麼？

Yes, Neil, I mean, I think we need to protect our side of the ledger through the period between signing and closing, so we can generate free cash that reduces the cash portion of the purchase price. I think we've done that. We've historically bought first in the kind of $55 WTI range. We now kind of stepped it up to kind of that $60 range and we'll probably be a little more hedged on our side between sign and close than we have been in the past, closer to, I don't know, 2/3, 3/4 hedged so that we can make sure that, that cash is there to reduce the cash portion of the purchase price.

是的，尼爾，我的意思是，我認為我們需要在簽署和成交之間保護我們的帳本，這樣我們就可以產生自由現金，從而減少購買價格的現金部分。我想我們已經做到了。從歷史上看，我們首先購買的是 55 美元的 WTI 品種。我們現在將其提高到 60 美元的範圍，並且我們可能會比過去在符號和收盤之間進行更多對沖，更接近，我不知道，2/3 , 3/4 對沖，以便我們可以確保現金可以減少購買價格中的現金部分。

I think longer term, it all depends on the strength of the balance sheet and the breakeven that we have with our base dividend. We've always kind of tried to buy hedges at kind of 50% to 55%, and that protects free cash flow, balance sheet doesn't blow out and the dividend is well protected in that extreme downside scenario. So I don't expect us to move to an non hedging company because we just believe that it's prudent to protect the balance sheet and our base dividend, which we see like debt.

我認為從長遠來看，這一切都取決於資產負債表的實力以及我們的基本股利的損益平衡。我們一直嘗試以 50% 至 55% 的利率購買對沖，這樣可以保護自由現金流，資產負債表不會崩潰，並且在極端下行的情況下股息也能得到很好的保護。因此，我不希望我們轉向非對沖公司，因為我們只是相信保護資產負債表和我們的基本股息（我們將其視為債務）是謹慎的做法。

Okay. That's helpful. And then the follow-up is just on natural gas. I know it's a smaller part of your economics. But as gas prices have been under a lot of pressure. And in the Permian, we've been surprised to see associated gas supply up as much as it is 2Ps year-over-year. So just your perspective on how the gas market rebalances in the Permian, in particular, do you see this as a structural challenge of continued associated supply or as we move towards more oil discipline gas markets can calibrate with it.

好的。這很有幫助。然後後續行動就只是天然氣。我知道這只是你們經濟的一小部分。但由於天然氣價格一直承受著很大的壓力。在二疊紀，我們驚訝地發現伴生氣供應量比去年同期增加了 2Ps。因此，就您對二疊紀天然氣市場如何重新平衡的看法來看，您是否認為這是持續相關供應的結構性挑戰，或者當我們朝著更嚴格的石油紀律邁進時，天然氣市場可以與之校準。

I think generally, regardless of oil discipline, the gas curves in the Permian Basin always exceed expectations. I think we're always pretty conservative on the gas side and that almost universally beats expectations, which is why you're seeing in a basin level more growth than we all expect almost on annual basis. So I think that's going to continue, Neil. We don't -- we could run the gas price at 0 in the Permian and still make great returns on oil wells.

我認為總的來說，無論石油紀律如何，二疊紀盆地的天然氣曲線總是超出預期。我認為我們在天然氣方面總是相當保守，而且幾乎普遍超出了預期，這就是為什麼你會看到流域水平的增長幾乎每年都比我們所有人預期的要高。所以我認為這種情況會繼續下去，尼爾。我們不會——我們可以將二疊紀地區的天然氣價格維持在 0 水平，但仍然可以從油井中獲得豐厚的回報。

For us, personally, we try to protect our gas price by -- through hedging as well as through some pipeline commitments to get our gas to bigger markets as well as protecting our basis exposure. But generally, I think the Permian, even if you stay disciplined on oil, eventually you're going to have to move to gassier zones. And there's a lot of gas and associated gas left to be produced in the Permian.

對於我們個人而言，我們試圖透過對沖以及透過一些管道承諾將我們的天然氣推向更大的市場以及保護我們的基礎風險來保護我們的天然氣價格。但總的來說，我認為二疊紀，即使你在石油方面保持紀律，最終你也將不得不轉移到天然氣含量更高的地區。二疊紀還有大量天然氣和伴生氣有待生產。

Our next question comes from Arun Jayaram with JPMorgan Securities.

我們的下一個問題來自摩根大通證券的 Arun Jayaram。

Travis, Kaes, I'd like to know if you -- maybe you could walk us through kind of the past to get to the $10 billion net debt target in terms of timing? And how do asset sales, would that influence the timing of reaching that target?

Travis、Kaes，我想知道你們能否帶領我們回顧過去，以便在時間上實現 100 億美元的淨債務目標？資產出售如何影響實現該目標的時間？

Yes, Arun, I think we kind of laid out in a $75 world, generally, the 2 businesses throughout the course of this year will combine to generate about $5 billion of free cash flow. And if we're looking at a late 2024 close, just high level, half that number, $2 billion to $2.5 billion will be used to reduce the cash portion of purchase price. That kind of puts you in the kind of $12 billion of full net debt at close. And with the business continuing to generate more free cash in 2025 with the numbers we laid out, you could see that $10 billion number by middle of '25. Now that excludes any asset sales or acceleration. And I think we try to be an under-promised, overdelivered company, and there's a lot of things that we can do to accelerate that outside commodity price because I don't think we want to put the entire bet based on commodity price. So we're looking at what's available to sell down in the next couple of months here and beat that target.

是的，阿倫，我認為我們的佈局有點像 75 美元的世界，總的來說，今年這兩家公司將結合起來產生約 50 億美元的自由現金流。如果我們考慮的是 2024 年末的收盤價，那麼高水平，即該數字的一半，即 20 億至 25 億美元將用於減少購買價格中的現金部分。這樣一來，您在交易結束時就會背負 120 億美元的全部淨債務。根據我們列出的數字，隨著業務在 2025 年繼續產生更多的自由現金，到 25 年中期，您可以看到 100 億美元的數字。現在不包括任何資產銷售或加速。我認為我們試圖成為一家承諾不足、交付超額的公司，我們可以做很多事情來加速外部商品價格，因為我認為我們不想把全部賭注都基於商品價格。因此，我們正在研究未來幾個月內可以出售哪些產品並實現該目標。

Got it. And just maybe a follow-up. If you do plan to do something in the Delaware Basin, would you wait until kind of reaching close on the transaction? Or talk us through maybe the timing when you would contemplate doing asset sales.

知道了。也許只是後續行動。如果您確實計劃在特拉華盆地做某事，您會等到交易接近完成嗎？或告訴我們您考慮進行資產出售的時機。

Yes. I mean, I think we're highly focused on deal certainty and getting the deal closed, and we're not going to do anything that derails that process. So I think the Delaware Basin is great cash flow for us, great free cash flow and a very low decline rate, and we've reduced our capital commitments there and necessary wells we need to drill for lease holding purposes. So I think it's just -- it's a good asset to have for the time being and it's good option value over the long run, but certainly not looking to do anything in the near term.

是的。我的意思是，我認為我們高度關注交易的確定性和完成交易，我們不會做任何破壞這一進程的事情。因此，我認為特拉華盆地對我們來說是巨大的現金流、巨大的自由現金流和非常低的遞減率，我們已經減少了在那裡的資本承諾以及出於租賃持有目的而需要鑽探的必要油井。所以我認為這只是——暫時擁有它是一項很好的資產，從長遠來看它具有很好的期權價值，但肯定不會在短期內採取任何行動。

Our next question comes from Derrick Whitfield with Stifel.

我們的下一個問題來自 Stifel 的 Derrick Whitfield。

I wanted to start by committing -- wanted to start by really committing you guys for the leadership you've demonstrated on capital discipline as many of your peers are treating the environment as it were naturally balanced today.

我想從承諾開始——想從真正承諾你們在資本紀律方面所表現出的領導力開始，因為你們的許多同行正在以今天自然平衡的方式對待環境。

Thank you, Derrick.

謝謝你，德里克。

With my first question, I wanted to focus on the service environment. In light of the collapse in gas directed activity that is underway now and the preexisting lower utilization rates, the service industry experienced last year. Is there an opportunity to revisit service prices on some of the higher spec equipment?

我的第一個問題，我想關注的是服務環境。鑑於目前正在發生的天然氣主導活動的崩潰以及先前存在的較低利用率，服務業去年經歷了同樣的情況。是否有機會重新檢視某些較高規格設備的服務價格？

Yes. Derrick, good question. I think we expect that we'll see some softening in the service market this year. If the gas basins do kind of remain muted in their activity levels, we're not -- we don't set the price of the service market, we're price takers, but we'll certainly continue to push on our end on finding the market prices for all of our service lines where we don't have existing commitments in place.

是的。德瑞克，好問題。我認為我們預計今年服務市場會出現一些疲軟。如果天然氣盆地的活動水平確實保持沉默，我們不會——我們不設定服務市場的價格，我們是價格接受者，但我們肯定會繼續推動我們的目標查找我們沒有現有承諾的所有服務線的市場價格。

Terrific. And as my follow-up, I wanted to touch on Endeavor since you guys have been out meeting with investors since the deal was announced. Are there any aspects of the transaction that are underappreciated in your view?

了不起。作為我的後續行動，我想談談 Endeavor，因為自從交易宣布以來，你們一直在與投資者會面。您認為交易的哪些方面被低估了？

I think the first question that came up was on the synergies of the $3 billion worth of synergies. Most of those underpinned by our existing cost structure applied to the Endeavor assets. And so the those are usually the entry questions. But once we explained that the cost assumptions that we embedded are the same cost assumptions we're currently doing today, a lot of comfort was gained and then we went to the more kind of strategic questions with the shareholders. So I think probably the cost efficiencies were the first and then secondarily, were some of the debt retirement strategies that Kaes just went through were probably the 2 most topical questions that we dealt with.

我認為出現的第一個問題是關於價值 30 億美元的協同效應的協同效應。大多數以我們現有成本結構為基礎的成本結構都適用於奮進資產。這些通常是入門問題。但是，一旦我們解釋了我們嵌入的成本假設與我們目前所做的成本假設相同，我們就獲得了很大的安慰，然後我們就與股東討論了更多類型的策略問題。因此，我認為成本效率可能是第一位的，然後是第二位的，凱斯剛剛經歷的一些債務清償策略可能是我們處理的兩個最熱門的問題。

Our next question comes from Roger Read with Wells Fargo.

我們的下一個問題來自富國銀行的羅傑·里德。

I just wanted to come back, as you talked earlier about some of these other benches that might work and it's a question of whether they'll be as productive and efficient or the productivity and efficiency in those benches. Give us an idea of maybe some of, let's call it, science or just applied efforts that you're seeing that could open up some of these other benches on thinking within your footprint as well as what will be an expanded footprint here before year-end?

我只是想回來，正如您之前談到的其他一些可能有用的長凳，問題是它們是否會同樣高效，或者這些長凳的生產力和效率。請讓我們了解您所看到的科學或應用努力，這些努力可能會在您的足跡內開闢一些其他思考的平台，以及在今年之前將在這裡擴展的足跡-結尾？

Yes, Roger, I mean I think for the zones like the Wolfcamp D, we've got some testing on our assets, but also seen a lot of results across the fence line. Diamondback doesn't spend a lot of time -- we spent a lot of time looking at ourselves. We also spend a lot of time looking across the fence line and what other people are doing, either through M&A process or just general competitor analysis, and we've seen that the Wolfcamp D has been very competitive, particularly in that kind of Midland Glasscock County line area. And also as you get into Southern Martin County. So that's -- that's getting more attention.

是的，羅傑，我的意思是，我認為對於像 Wolfcamp D 這樣的區域，我們已經對我們的資產進行了一些測試，但也看到了很多跨越柵欄線的結果。小響尾蛇並沒有花很多時間——我們花了很多時間審視自己。我們也花了很多時間跨過柵欄線以及其他人在做什麼，無論是透過併購流程還是只是一般競爭對手分析，我們已經看到 Wolfcamp D 非常有競爭力，特別是在那種 Midland Glasscock 中縣線區域。當您進入南馬丁縣時也是如此。所以這正在引起更多關注。

I would say the Upper Sprayberry, we've done a lot of work on ourselves. It's actually an old Energen well, it was drilled in the Upper Sprayberry in 2016 or '17, and we revisited that zone recently last year and some of the offer Sprayberry wells that we've completed, one in particular, is probably one of the best wells in our portfolio. So I'm not ready to say that the Upper Sprayberry exists across our entire acreage position, but certainly getting more capital and attention this year and particularly with the co-development strategy and the fact that these zones talk to each other in some form or fashion, means we got to get it now. And so we've added the Upper Sprayberry into our kind of Northern Martin County development plan, and I think the results speak for themselves because you haven't seen a degradation in productivity. I think that's the key to this exploration, resource expansion story is if you can expand your resource without impacting productivity, that's a win for our shareholders.

我想說的是Upper Sprayberry，我們自己做了很多工作。它實際上是一口古老的 Energen 井，於 2016 年或 17 年在 Upper Sprayberry 鑽探，我們去年最近重新訪問了該區域，我們已經完成的一些提供 Sprayberry 井，特別是其中一個，可能是其中之一我們的投資組合中最好的油井。因此，我不准備說Upper Sprayberry 存在於我們的整個種植面積中，但今年肯定會獲得更多的資本和關注，特別是在共同開發策略以及這些區域以某種形式或方式相互交流的事實下。時尚，意味著我們現在就必須得到它。因此，我們已將 Upper Sprayberry 添加到我們的北馬丁縣發展計劃中，我認為結果不言而喻，因為您沒有看到生產力下降。我認為這是這個探索的關鍵，資源擴展故事是如果你能夠在不影響生產力的情況下擴展你的資源，這對我們的股東來說是一個勝利。

Roger, I'll just add a comment from a high level what Kaes just mentioned. In my experience, as companies get bigger, the more inwardly focused they become. So they focus more on their own results and less on what others are doing around them. And it's been a hallmark of Diamondback since the very beginning. One, you -- out of necessity when we first started, but it's been a hallmark of ours to really pay attention to what goes on around us. And so right now, it's culturally ingrained not only to rigorously examine our own internal results, but also spend intellectual capital on looking across above our fence at what others are doing. And as we move into a much larger position post close, I promise you that culture will stay intact. We will continue to look and find what others are doing, potentially better than we are and adopt accordingly.

羅傑，我只想加入凱斯剛才提到的高層評論。根據我的經驗，隨著公司規模越大，他們就越關注內部。因此，他們更關注自己的結果，而不是周圍其他人在做什麼。從一開始，這就是響尾蛇的標誌。其中一個，你——在我們剛開始時出於必要，但真正關注我們周圍發生的事情已經成為我們的標誌。因此，現在，不僅嚴格檢查我們自己的內部結果，而且還花費智力資本超越我們的圍欄看看其他人在做什麼，這在文化上根深蒂固。當我們在交易結束後進入一個更大的位置時，我向你們保證，文化將保持完整。我們將繼續觀察並發現其他人正在做的事情，可能比我們做得更好，並相應地採用。

Our next question comes from Jeoffrey Lambujon with TPH & Co.

我們的下一個問題來自 TPH & Co 的 Jeoffrey Lambujon。

My first question -- my first question is on the step change in capital efficiency you are looking forward to into 2025. If you could talk more about the pathway there? I know you're already there for the legacy portfolio and well costs, as you mentioned, Travis. But can you comment maybe on the larger buckets or moving pieces you'll be focusing on for the Endeavor side, both in terms of that well cost reduction and in terms of the non-D&C line items which you think about as we shift from this year into next?

我的第一個問題——我的第一個問題是關於您期待的 2025 年資本效率的階躍變化。您能否更多地談談那裡的路徑？正如您所提到的，特拉維斯，我知道您已經在考慮遺留投資組合和油井成本。但是，您能否評論一下您將在 Endeavour 方面關注的更大的桶或移動部件，無論是在油井成本降低方面，還是在我們從這一點轉向時您考慮的非 D&C 訂單項方面。明年？

Yes, Jeff, I think generally, there's two big buckets on the D&C side that we see across the fence of Endeavor that we'll probably look to put in place with the team there as we start to integrate on the completion side, it's really the simul-frac development plan as well as probably half of that plan being a simul-frac E fleet, which only reduces the cost of the completion side of the business. I don't think we've modeled the benefits of a much larger supply chain to these numbers. This is just us getting their costs down to our costs on the capital side. So there's probably some upside there at some point. And then on the drilling side, we've been a big proponent of clear fluids, not using oil-based mud to drill these wells. It saves time and money. That was something we put in place and learned from the QEP team 3 or 4 years ago. .

是的，傑夫，我認為一般來說，在D&C 方面有兩個大桶，我們在Endeavor 的柵欄上看到​​，當我們開始在完成方面進行整合時，我們可能會考慮與那裡的團隊一起落實到位，這真的是同步壓裂開發計劃，以及該計劃的一半可能是同步壓裂 E 船隊，這只會降低業務完井的成本。我不認為我們已經根據這些數字模擬了更大的供應鏈的好處。這只是我們將他們的成本降低到我們資本的成本。所以在某些時候可能會有一些好處。然後在鑽井方面，我們一直是透明流體的大力支持者，而不是使用油基泥漿來鑽探這些井。它節省時間和金錢。這是我們三、四年前從 QEP 團隊學到的。 。

And so I think that's just a decision to make that save significant dollars. And what I'm excited about is to get under the tent with the Endeavor team and learn what they're doing that we can do better, right? I think that's not modeled in this pro forma business. And we've learned something from both Energen and QEP are two large mergers that we've done to date. So I think there's some upside there. But really, all we're doing is looking to put in place what we're doing today on a larger asset base.

所以我認為這只是一個節省大量資金的決定。我很興奮的是能夠與 Endeavour 團隊一起深入了解他們正在做的事情，我們可以做得更好，對嗎？我認為這並沒有在這個備考業務中得到體現。我們從 Energen 和 QEP 這兩個迄今為止我們進行的大型合併中學到了一些東西。所以我認為這有一些好處。但實際上，我們所做的只是尋求在更大的資產基礎上落實我們今天所做的事情。

And Jeff, since I spoke just a second ago on some of the cultural elements of Diamondback. One another cultural element is when we combine assets in our history, we've done a really good job of checking our egos at the door and finding out what's really working and it's a culture of seeking first to understand as opposed to being understood. And as Kaes just mentioned, when we put the two companies together, we're really excited about understanding what they do, why they do it and making -- collectively making improvements, both on our side and on the income and asset side.

傑夫，因為我剛剛談到了響尾蛇的一些文化元素。另一個文化元素是，當我們結合歷史中的資產時，我們很好地檢視了我們的自我意識，找出真正有效的方法，這是一種首先尋求理解而不是被理解的文化。正如凱斯剛才提到的，當我們將兩家公司放在一起時，我們非常高興能夠了解他們在做什麼、為什麼這樣做以及共同做出改進，無論是在我們方面還是在收入和資產方面。

Perfect. And then for my follow-up, I wonder if you could just speak to how the philosophy around the balance sheet longer term will evolve at all once the deal closes, we appreciate the commentary on the path to get to the $10 billion net debt level. But we're just thinking about how the pro forma math continues to push timing back to new levels in terms of weight class kind of space.

完美的。然後，對於我的後續行動，我想知道您是否可以談談一旦交易完成，圍繞長期資產負債表的理念將如何演變，我們感謝對達到 100 億美元淨債務水平的道路的評論。但我們只是在考慮準備數學如何繼續將時間推回到重量級空間的新境界。

Yes. That's a question we got on the road a lot last year is kind of from investors saying, hey, listen, you're in a different weight class now and you probably need to reassess your long-term leverage profile. And I think that resonated with us and fits with what we're trying to do. I think we eventually want to get to kind of a $6 billion to $8 billion net debt number, keep real cash on the balance sheet. I think the concern that Diamondback is going to go do every deal and use all the cash to do deals has probably been removed with this merger. And in my mind, that leaves us flexibility in terms of capital allocation to lean into a buyback in a down cycle or lean into an acquisition in the down cycle and be -- or not be procyclical in how we look at allocating capital on the repurchase side or the deal size. So long term, $6 billion to $8 billion would be a good number. if it gets to 0, that would be great. But I think generally running in that half a turn at strip is a pretty good place to be.

是的。這是我們去年經常遇到的問題，投資者說，嘿，聽著，你現在處於不同的體重級別，你可能需要重新評估你的長期槓桿狀況。我認為這引起了我們的共鳴，並且符合我們正在努力做的事情。我認為我們最終希望達到 60 億至 80 億美元的淨債務數字，並在資產負債表上保留真正的現金。我認為，透過這次合併，響尾蛇將進行每筆交易並使用所有現金進行交易的擔憂可能已經消除。在我看來，這使我們在資本配置方面具有靈活性，可以在下行週期中傾向於回購，或者在下行週期中傾向於收購，並且在如何看待回購資本分配方面順週期或不順週期方或交易規模。從長遠來看，60億到80億美元將是一個不錯的數字。如果它達到 0，那就太好了。但我認為一般來說在脫衣舞場上跑半圈是一個非常好的地方。

(Operator Instructions) Our next question comes from Paul Cheng with Scotiabank.

（操作員說明）我們的下一個問題來自豐業銀行的 Paul Cheng。

Kaes, last week, when you announced the deal, you gave the 2024 and '25, CapEx profile and also the production. It was [2025], the pro forma comparing to [2024], will be about, say, (inaudible) Number $700 million lower. Can you break down that how much is related to because you think the antipathy will be lower on that asset because you're not going to grow as fast? And how much is truly is testing?

Kaes，上週，當您宣布這筆交易時，您提供了 2024 年和 25 年的資本支出概況以及產量。預計 [2025 年] 與 [2024 年] 相比，（聽不清楚）數字將減少約 7 億美元。您能否分解一下，有多少與您認為由於您的增長速度不會那麼快而對該資產的反感會降低有關？有多少是真正的測試？

Yes. Sure, Paul. You kind of cut out a little bit, but I think I get your question. The question was how we bridge the gap between the combined 2024 CapEx guide with us and Endeavor separately and the combined -- the business in '25, which is down $700 million. I would say most of it is running our cost structure on the Endeavor D&C. And so that's basically 175 wells at $1.5 million to $2 million cheaper, gets you to about $300 million. I think the combined business is not going to need as many wells to hit the production number. Endeavor was growing last year that started slowing down midyear, but their decline rate shallowing, so that will help.

是的。當然，保羅。你有點被刪減了，但我想我明白你的問題了。問題是我們如何彌合我們和 Endeavor 單獨的 2024 年資本支出合併指南與合併後的 25 年業務之間的差距，該業務減少了 7 億美元。我想說，其中大部分是在 Endeavour D&C 上運行我們的成本結構。因此，這基本上是 175 口井，價格便宜 150 萬至 200 萬美元，可以賺到約 3 億美元。我認為合併後的業務將不需要那麼多的油井來達到產量。 Endeavour去年一直在成長，年中開始放緩，但其下降幅度正在縮小，因此這將有所幫助。

Our decline rate continues to shallow that will help. And I think we're going to allocate capital to the best combined resource probably in North America, which will help. And so that kind of gets you to needing probably 50 less wells at $6 million, $6.5 million of pop. That's about another $300 million. And -- and then I think generally, we're spending some dollars this year, probably about $50 million on environmental CapEx that is kind of onetime in nature and will be reduced on our side as well. So you put all that together, and that's a very, very capital-efficient business in 2025, assuming existing well costs, and that can move around, but that's how we're thinking about '25.

我們的下降率繼續下降，這將有所幫助。我認為我們將把資金分配給北美可能最好的綜合資源，這會有所幫助。這樣一來，您就可以減少 50 口井的需求，而石油成本則為 600 萬美元、650 萬美元。這大約相當於另外 3 億美元。然後我認為，總的來說，我們今年會在環境資本支出上花費一些美元，可能約為 5000 萬美元，這本質上是一次性的，我們也會減少。所以你把所有這些放在一起，假設現有的油井成本，到 2025 年，這將是一項非常非常資本效率很高的業務，並且可以轉移，但這就是我們對 25 年的看法。

Our next question comes from Leo Mariani with ROTH MKM.

我們的下一個問題來自 Leo Mariani 和 ROTH MKM。

Wanted to just ask about the Endeavor FANG combination here. Do you guys see any tax benefit for the combined entity where you might be able to defer some of the cash tax payments as a result of combining these two companies, if you had any preliminary look at that?

我只是想問這裡的Endeavour FANG組合。你們是否認為合併後的實體有任何稅收優惠，如果您對此有任何初步了解的話，您可能會因合併這兩家公司而推遲支付部分現金稅？

I mean there will obviously be some benefit with the cash portion of the transaction and the associated interest expense. But we're continuing to do our combination work. I mean we're a full cash taxpayer essentially, I mean, they're pretty close as well. So I don't think there's going to be too much to do there, Leo, but certainly, the cash piece is going to shield a little bit of taxes on our side.

我的意思是，交易的現金部分和相關的利息支出顯然會帶來一些好處。但我們正在繼續進行組合工作。我的意思是，我們本質上是一個全額現金納稅人，我的意思是，他們也非常接近。所以我不認為那裡會有太多的事情要做，利奧，但可以肯定的是，這筆現金將為我們這邊遮掩一點稅。

Okay. That's helpful. And then just jumping back over to M&A. Obviously, you guys got the -- the big prize in the Permian and the market has clearly rewarded the Diamondback shareholders here. As you look at kind of the remaining landscape, do you think there's anything out there left to do that's kind of chunky that would be of interest to FANG or is it maybe just kind of more little stuff over the years to kind of tie everything together?

好的。這很有幫助。然後又跳回併購。顯然，你們獲得了二疊紀盆地的大獎，市場顯然已經獎勵了這裡的響尾蛇股東。當你看到剩下的景觀時，你認為還有什麼可以做的，這些是 FANG 感興趣的厚實的東西嗎？或者它可能只是多年來更多的小東西，可以將所有東西聯繫在一起？

Yes. Listen, Leo, we're on the sidelines here. We're fully focused on getting this deal closed as soon as possible and we can assess the landscape when that happens. I mean, I am confident that the landscape will look different whenever that time does come.

是的。聽著，利奧，我們在場邊。我們完全專注於盡快完成這筆交易，並且我們可以評估交易發生時的情況。我的意思是，我相信每當那個時候到來時，風景都會有所不同。

Our next question comes from Doug Leggate with Bank of America.

我們的下一個問題來自美國銀行的 Doug Leggate。

My question is, does that have any impact on integration plan? Or does that go ahead anyway?

我的問題是，這對整合計畫有影響嗎？或者無論如何都會繼續進行嗎？

Doug, you have to speak up.

道格，你必須說出來。

This is John Abbott on for Doug Leggate, apologies, I was on mute. Just one more on just one question going back to Paul's question on the difference in CapEx between 2024 and 2025. That's about $725 million. And then you talk about the $550 million in synergies. So when you think about that $725 million, is there an addition on top of that as sort of we sort of think into 2025, just sort of we're trying to reconcile the 2 numbers?

我是 Doug Leggate 的約翰阿博特 (John Abbott)，抱歉，我處於靜音狀態。回到保羅關於 2024 年和 2025 年資本支出差異的問題，再談一個問題。大約 7.25 億美元。然後您談到了 5.5 億美元的協同效應。那麼，當你想到這 7.25 億美元時，除了我們考慮到 2025 年的情況之外，是否還有額外的支出，就像我們試圖協調這兩個數字一樣？

Yes. I think the difference between the 2 numbers is really activity between the $550 million and $725 million. But as the combined business has less activity in '25 versus '24, which is helping, but we kind of see the $550 million as more of a longer-term run rate, John.

是的。我認為這兩個數字之間的差異實際上是 5.5 億美元和 7.25 億美元之間的活動。但與 24 年相比，合併後的業務在 25 年的活動較少，這有所幫助，但我們認為 5.5 億美元更多的是長期運行率，約翰。

I'm showing no further questions at this time. I would now like to turn it back to Travis Stice, CEO, for closing remarks.

我目前沒有提出任何進一步的問題。現在我想請執行長 Travis Stice 發表結束語。

Great. Thank you, and I really appreciate everyone listening in this morning and asking questions. And if there's any follow-up, just reach out to us, and we'll address them then. Thank you, and you all have a good day.

偉大的。謝謝大家，我真的很感謝今天早上大家的傾聽和提問。如果有任何後續行動，請聯絡我們，我們會立即解決。謝謝你們，祝大家有美好的一天。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。