Permian Basin Gas Price and Fundamentals

2025 Guidance: CapEx: $2.1B - $2.4B. Total Production: 710 - 770 Mboe/d. Oil: 152 - 168 Mbo/d (47% YoY growth at midpoint). Natural Gas: 2.675 - 2.875 Bcf/d (flat YoY). Q1 2025 Production: 710 - 750 Mboe/d. Oil: 134 - 144 Mbo/d. Natural Gas: 2.85 - 3 Bcf/d.

Drilling & Basin Activity Permian Basin: Running 3 frac crews & 13 rigs (dropping to 10 later in 2025). Culberson County: Full-year simul-frac operations. 2025 Well Cost: $960/ft (-6% YoY). Recent Acquisitions: Franklin Mountain & Avant assets integrated, $50M in synergies. Anadarko Basin: Cost per foot reduced 18% YoY to $1,070/ft. 2025 plan includes first three-mile laterals. Marcellus Basin: Restarting two rigs in April. Cost per foot reduced to 800/ft (record-low). 2025 activity increase could add $50M in CapEx, depending on gas market strength. Key Basin Activity: Delaware Basin: 50%+ of capex, 14 rigs, 265 wells planned, focusing on multi-zone developments. Eagle Ford: JV dissolution with BPX, controlling 46,000 net acres, $2M+ savings per well expected Williston Basin: 3-rig program, integration of Grayson Mill assets, achieving $600K savings per well Anadarko Basin: Dow JV extended for 49 more wells, adding $40M in drilling carry.

Analysts Q&A Takeaways: Growth Capital Allocation: If gas holds at $4+ Henry Hub, expect further Marcellus investment. Returns, not growth, drive capital allocation between basins. Marcellus Strategy: Longer laterals reduce costs, improve efficiency. Upper Marcellus to play larger role in future drilling. Permian Expansion: Goal to reduce Lea County costs to Culberson levels. Frac design optimization driving lower costs, better recoveries. M&A Strategy: No intent to be a serial acquirer, but will remain opportunistic. Shareholder Returns vs. Deleveraging: $1B debt repayment priority, but buybacks will continue opportunistically.

2025 Production Guidance: Total production:815 MBOE/d. Oil production 383 MBbl/d. Natural gas production 1.3 Bcf/d

Drilling & Completion: 22 Active rigs (14 in Delaware, 3 in Williston, and others split among Eagle Ford, Anadarko, and Powder River). Fracturing Crews totaled 6 (3 in Delaware, 2-3 across other basins). Plans for about 265 wells in Delaware in 2025.

Key Basin Activity: Delaware Basin: 50%+ of capex, 14 rigs, 265 wells planned, focusing on multi-zone developments. Eagle Ford: JV dissolution with BPX, controlling 46,000 net acres, $2M+ savings per well expected Williston Basin: 3-rig program, integration of Grayson Mill assets, achieving $600K savings per well Anadarko Basin: Dow JV extended for 49 more wells, adding $40M in drilling carry.

Total production was 1.33 MMBOE/d in 2024, exceeding guidance. Record levels driven by Delaware, DJ, Midland, and Powder River Basin.

2025 Guidance & Capital Plans. Capex: $7.4 billion-$7.6 billion. Production Target: 1.42 MMBOE/d (includes full-year CrownRock impact). Oil Growth: Expecting ~3% oil volume increase. Permian Growth: Expected to grow 15 in 2025 (CrownRock: 170 MBbl/d, +5%). Midland Basin JV with Echo Petrol: Extended; 23 wells planned in 2025

Transwestern Pipeline is seeking federal regulatory approval to add a compressor station in southeast New Mexico to increase pipeline capacity by 80,000 Dth/d for deliveries into North Texas.

The project is designed to be in service by Nov. 1, 2026, at a cost of nearly $52 million, according to the application (CP25-37) at the Federal Energy Regulatory Commission.

Transwestern intends to install the compressor on its 24-inch-diameter West Texas lateral, which stretches into New Mexico and connects with Transwestern’s mainline which provides transportation into several states in the Southwest and California. The facilities, dubbed the WT-0 compressor station project, would be used to enable deliveries on Transwestern’s Panhandle lateral, which extends from New Mexico into North Texas.

Devon Energy reported higher 3Q24 production volumes as they acquired Grayson Mill Energy in the Williston Basin and grew existing volumes.

Their total volumes lifted from 707 Mboe/d to 728 Mboe/d for the quarter, with 3 Mboe/d of that increase coming from Grayson Mill.

Devon guided for 4Q24 volumes of 811-830 Mboe/d, which features a full quarter with the new Grayson Mill assets that contribute 110 Mboe/d. Looking into 2025, Devon guided for average volumes of 800 Mboe/d, a net drop versus expected 4Q24 rates.

Operationally, the 2025 program will feature CapEx of $4.0-4.2 billion Due to efficiency gains, Devon was able to reduce drilling activity from 16 rigs to 15 rigs in 3Q24, and they will drop another rig in 1Q25 thanks to those gains.

At the current D&C pace, Devon intends to duplicate the 2024 16-rig output with a smaller 14-rig footprint in 2025.

The company is expanding its NGL export capacity at the Nederland terminal, with the initial phase expected to be in service by mid-2025.

The company mentioned having massive storage and the ability to increase its storage in the DFW area as well as down around Houston.

The company mentioned having a big diameter pipe, especially if they can get Warrior to the finish line, which will bring a huge influx of Permian Basin supply.

International demand for ethane and LPG continues to grow rapidly, with an "insatiable demand" for LPG globally, particularly in China.