Q4 2023 Magnolia Oil & Gas Corp Earnings Call
Participants
Tom Fitter
Chris Stavros
Brian Corales; Chief Financial Officer, Senior Vice President; Magnolia Oil & Gas Operating LLC
Neal Dingmann
Leo Mariani
Charles Meade
Oliver Huang
Presentation
Operator
Good morning, everyone, and thank you for participating in Magnolia Oil & Gas Corporation's Fourth Quarter 2023 earnings conference call. My name is Andrea, and I will be your moderator for today's call. At this time, all participants will be placed in a listen only mode as our call is being recorded.
I will now turn the call over to Magnolia's management for their prepared remarks, which will be followed by a brief question and answer session. Please go ahead.
Tom Fitter
Thank you, Andrea, and good morning, everyone. Welcome to Magnolia Oil and Gas's Fourth Quarter Earnings Conference Call are participating.
On the call today are Chris Stavros, Magnolia's President and Chief Executive Officer, and Brian Corales, Senior Vice President and Chief Financial Officer. As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of the federal securities laws. And these statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. Additional information on risk factors that could cause results to differ is available in the Company's annual report on Form 10 K filed with the SEC and full safe harbor and can be found on Slide 2 of the conference call slide presentation. With the supplemental data on our website, you can download Magnolia's Fourth Quarter 2023 earnings press release, as well as the conference call slides from the Investors section of the Company's website at w. w. w. dot Magnolia Oil and Gas.com.
I will now turn the call over to Mr. Chris Stavros.
Chris Stavros
Thank you, Tom, and good morning, everyone. We appreciate you joining us today for a discussion of our fourth quarter and full year 2023 financial and operating results. I plan to briefly speak to our results, which closed out a strong year for Magnolia and during which we took several actions to improve our overall business. I will also discuss our business model and our core principles in the context of some of last year's accomplishments and note how Magnolia's stacks up compared to many other E&P companies on several key financial metrics.
Lastly, I will provide an update on Magnolia's 2024 capital operating plan, which follows the same principles on which the Company was founded nearly six years ago. Brian will then review our fourth quarter and full year financial results in greater detail, along with some additional first quarter guidance before we take your questions and starting on Slide 3 of the investor presentation and looking at some of the highlights. Magnolia ended 2023 on a high note with fourth quarter production volumes of 84.85 400 barrels of oil equivalent per day, bringing full year 2023 production to 82,300 BOE per day. This represented year-over-year production growth of 16% for the fourth quarter and full year 2023 volume growth of more than 9%. Production at our Kings asset grew 55% compared to the prior year fourth quarter, reaching 63,000 BOE per day, which included oil production growth of 59%. Giddings production represented approximately 71% of overall Magnolia volumes last year. And the Giddings area continues to see operating efficiency improvements in the field, such as fewer drilling days per well and realizing significant gains of stimulation stages per day. D&c capital totaled 91 million for the quarter and 422 million for the year, representing 47% of adjusted EBITDA for the year and leading to free cash flow generation of $413 million or roughly 10% of our current enterprise value. We returned 74% of this free cash flow to shareholders through our dividend and share repurchase programs with the remaining allocated to our balance sheet, which helped support attractive bolt-on oil and gas property acquisitions geared toward improving the overall business.
Turning to Slide 4. Magnolia's business model remains unique since it was devised in 2018 with the objective to create a highly investable attractive E&P business that is enduring and focused on generating absolute per-share value over the long term. As we have often expressed, Magnolia's primary objectives are to be the most efficient operator of best-in-class oil and gas assets, generating the highest returns on those assets, while important the least amount of capital for drilling and completing wells, our high-quality asset base allows for a low reinvestment rate while still providing moderate growth for the business over time. This results in significant free cash flow generation, and we strive to return a significant portion of this to our shareholders in the form of share repurchases and a safe, sustainable and growing dividend. And some of the excess cash may accrue the balance sheet, helping us to opportunistically pursue bolt-on attractive bolt-on oil and gas property acquisitions that improve the business, which helped us sustain our returns and enhance and enhance the dividend per share payout capacity. We continue to adhere to our core principles and believe it's a sound formula for creating long-term shareholder value for our shareholders.
I'd like to spend a moment reviewing how this model has helped us achieve our goals over the past several years and as our operating program has shifted more to our Giddings asset.
Slide 5 shows that Magnolia's had one of the lowest capital reinvestment rates compared to most other E&P companies while achieving a superior compound annual rate of growth in terms of production per share over the past three years. This is a powerful combination allowing us to maximize our free cash flow generation.
Turning to Slide 6. Our corporate level returns or return on capital employed continue to be some of the best in the upstream energy sector, highlighting our strategy of disciplined capital spending, including last year's success in reducing our well costs and the beneficial impact of our ongoing share repurchases. Our cost reduction efforts in 2023 helped further support these returns as we were able to meaningfully grow our production per share with capital that was 17% less than what we had expected at the beginning of the year. And 8% below full year 2022 levels. Key elements of our business model are maintaining our low leverage and generating high operating margins.
Slide 7 and 8 demonstrate that Magnolia is best in class one company with one of the lowest leverage profiles in the industry with some of the highest operating margins. This is compared to E and P companies of similar size to Magnolia as well as much larger companies and is a testament to our underlying asset quality and the characteristics of our overall strategy and philosophy.
Turning to our 2020 24 guidance shown on slide 9. We expect this year's plan to deliver similarly strong results. Current product prices, Magnolia's capital and operating plan is expected to deliver high single digit percentage growth this year or approximately 7% to 9% on both an oil out of the on a BOE basis with a capital budget estimated in the range of 450 to $480 million. This would result in a spending level below 55% of our EBITDA for 2024, assuming current strip pricing for products. Total production for the first quarter is estimated to be approximately 84 to 85,000 BOE per day, which includes production of facilities downtime caused by severe winter weather conditions during a portion of January. Despite the transitory weather impact last month, our production's fully recovered and is running normally, and we are confident in our full year plan and guidance of high single digit production growth for the year. We expect this we expect first quarter D&C capital expenditures to be approximately 130 million and anticipate this to be the highest quarterly rate spending for the year. Most of the full year 2024 production growth is expected to come from our development program in our Giddings area and as the main driver will receive approximately 80% of our overall capital and includes some activity on our recently acquired assets. We plan to operate two drilling rigs and one completion crew during 2024 and expect to maintain this level of activity throughout the year. While this activity level is similar to last year's operating plan, lower well costs combined with improved operating efficiencies allow for more net wells to be drilled, completed and turned in line helping us support Magnolia's overall high margin growth. Most of the development activity will consist of multi-well development pads in Giddings with a smaller amount of development planned in the Karnes area. In addition to some appraisal wells for this year's development activity in Giddings, we currently expect to drill multi-well pads with somewhat longer lateral lengths of approximately 8,500 feet. We continue to run a focused business and in an industry where operational execution and financial discipline are essential. The actions we took last year to reduce our well costs, helped to significantly reduce our capital, improve our operating margins and generate additional free cash flow together with the acquisitions completed last year. These accomplishments have strengthened our position into 2024 when we expect high single growth, high margin and high margin total Company production growth with our oil volumes growing at similar rates. We have a strong five year history of demonstrated operating financial results and expect our business model to enhance per share value over time.
And I'll now turn the call over to Brian to provide more details on our fourth quarter 2023 financial operating results.
Brian Corales
Thanks, Chris, and good morning, everyone. I'll review some items from our fourth quarter and full year results and refer to the presentation found on our website.
I'll also provide some additional guidance for the first quarter of 2020 for the remainder of the year before turning it over for questions, I know you've closed out 2023 on a high note as we continue to execute on our business model during the fourth quarter, we generated total net income attributable to Class A. common stock of $98 million, with total adjusted net income of $108 million or $0.52 per diluted share. Our adjusted EBITDA for the quarter was 240 million with total capital associated with drilling completions and associated facilities of $91 million or just 38% of our adjusted EBITDAX and below our guidance for the full year, adjusted EBITDAX was $899 million, with D&C capital representing 47% of EBITDA. Fourth quarter production volumes grew 16% year over year to 85,400 barrels of oil equivalent per day. For the full year, production volumes grew 9% to 82,300 barrels of oil equivalent per day. During the year, we repurchased a total of 9.6 million shares and our diluted share count fell by 5% year over year.
Looking at the annual cash flow, water waterfall chart on Slide 11, we started the year with 675 million of cash cash flow from operations before changes in working capital was 872 million with working capital changes and other small items impacting cash by 59 million during the year, we paid dividends of $102 million. It allocated 205 million toward share repurchases. We added 355 million of bolt-on acquisitions primarily in Giddings and spent 425 million on D. and CD. and C. and facilities capital. And we ended the year with $401 million of cash.
Looking at slide 12, this chart illustrates the progress in reducing our total shares since we began our repurchase program in the second half of 2019. Since that time, we have repurchased 61.9 million shares, leading to a change in diluted shares outstanding of over 20% net of issuances. This is one of the largest decreases in the upstream energy space, but the majority of the companies increasingly increasing their diluted shares outstanding over the past five years, Magnolia's weighted average fully diluted share count declined by more than 2 million shares sequentially, averaging 206.5 million shares. During the fourth quarter, we have 9.2 million shares remaining under our current share repurchase authorization, which are specifically directed toward repurchasing Class A. shares in the open market.
Turning to slide 13, our dividend has grown substantially over the past three years, including a 13% increase announced earlier this year to $0.13 per share on a quarterly basis. Our next quarterly dividend is payable on March first and provides an annualized dividend payout rate of $0.52 per share. Our plan for annualized dividend growth is an important part of Magnolia's investment proposition and supported by our overall strategy of achieving moderate annual production growth, reducing our outstanding shares and increasing the dividend per share payout capacity of the Company. I know you had the benefit of a very strong balance sheet and we ended the quarter with zero net debt and 401 million of cash on the balance sheet. Our 400 million of principal debt is reflected in our senior notes, which do not mature until 2026, including our fourth quarter ending cash balance of $401 million and our undrawn 450 million revolving credit facility. Our total liquidity is approximately $850 million, our condensed balance sheet as of December 31st, as shown on slide 14.
Turning to slide 15 and looking at our per unit cash costs and operating income margins. Total revenue per BOE declined substantially declined due to the substantial decrease in product prices and especially natural gas prices when compared to fourth quarter of 2022 our total adjusted cash operating costs, including G&A, were 1055 per BOE in the fourth quarter of 2023, a decrease of $1.60 for POV or 13% compared to year-ago levels. The year-over-year decrease was primarily due to lower production taxes and GP. and T. Our operating income margin for the fourth quarter was $17.56 per BOE or 43% of our total revenue. The year-over-year decrease in pretax operating margins was driven by the significant decrease in commodity prices.
On slide 16, I know, you had a very successful organic drilling program during last year, but total proved developed reserves at year-end 2023 were 135 million barrels of oil equivalent. Excluding acquisitions, sales and price related revisions, the Company added 44 million barrels of oil equivalent of proved developed reserves during the year. Total drilling and completion capital was 422,000,020 23, resulting in organic proved developed F&D costs of $9.60 per BOE and reflective of our drilling program. Our organic proved developed F&D cost declined by approximately 40% compared to last year as a result of our well cost reduction efforts and strong loan results.
Turning to guidance, we expect our 2024 D&C capital spending to be in the range of 450 to $480 million, which includes an estimate of non-operated capital that is about the same as 2023 levels. We expect first quarter D&C capital expenditures to be approximately 30 million and expect this to be the highest quarterly rate of spending for the year total production for the first quarter is estimated to be approximately 84 to 85,000 barrels equivalent a day, which incorporates the impact of production and facilities downtime caused by severe winter weather conditions in January. Despite this impact, our production has fully recovered, and we are maintaining our guidance for high single digit production growth in 2020 for most of this growth is expected to come from our development program at our Giddings area. Oil price differentials are anticipated to be approximately a $3 per barrel discount to Magellan East Houston or MEH and Magnolia remains completely unhedged for all of its oil and natural gas production. Fully diluted share count for the first quarter of 2024 is expected to be approximately 205 million shares, which is 4% lower than first quarter 2023 levels. We expect our effective tax rate to be approximately 21% with most of this being deferred, our cash tax rate is expected to be between 6% and 9% for 2024.
We are now ready to take your questions.
Question and Answer Session
Operator
We will now begin the question and answer session. To ask a question. You may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two time. We will pause momentarily to assemble the roster. And our first question comes from Neal Dingmann of Truist.
Neal Dingmann
Morning, Chris and Jim and guys, another nice prudent guide on my first question's on Giddings specifically, can you talk about the recent Giddings acquisitions and how these assets are looking definitely realized and it's early days. And then maybe, Chris, anything we should be thinking about on the development plan specifically there?
Chris Stavros
Yes, thanks. Good morning. Giddings is one of those fields of all fields that it's sort of just keeps getting better. And in our mind, my level of confidence now versus say, five, six years ago is quite a bit better. And a lot of that is borne out of the results, obviously, and certainly what we've learned and what we've been able to do with the field.
So on the subsurface and I said it's one of those. It's one of those fields that where where you it's got gone through different phases of its life over the last several decades. And we happened to get involved optimally prior to it going through this latest phase and utilizing modern frac techniques and decide. So where this is headed is we've got a sizable position more than 0.5 million acres. And we've done some recent acquisitions, and I think that's improved our position and will help us learn some more.
There's some gassier areas of Giddings or some oilier areas of Giddings.
But I think the proof is in the pudding in terms of the results having been borne out when we picked it up, but the original acquisition, the field and the asset was producing maybe 10,000 a day equivalent or so.
I said it's producing more than 60,000 a day now.
And that will continue to grow. And this is really what the the returns, the quality returns that we've seen in the business are really, in many cases, a function of the outcome of Giddings. So where does it go on?
Frankly, I think there's more for us to go after here and there. I mean, some of them will be a little bit smaller. Some things might be a little bit larger like on similar terms what we did or size what we did back in in the fourth quarter of last year. I will just have to see I can't tell you that we'll go after everything or anything and everything, but we'll go after some things. And we're starting to integrate the assets that we recently acquired from early days. Look good. It's on this particular asset happens to be a bit oilier on the wells that we plan to drill are shallower on 7,000 feet shallower, as I said, a little bit earlier with the economics broadly quite similar to Giddings as a whole overall. So I remain real optimistic about our prospects going forward for the field and what it's going to mean to Magnolia going forward?
Neal Dingmann
I'd definitely love the footprint there and maybe found a little bit. We're getting noticeable. As you pointed out, the operating margins are certainly notable and I'm just wondering, you know, when you look at the expanded getting results, I mean, is that potentially and will that even lead to do you think even lower reinvestment rates? Could certainly notable how you know how good your reinvestment rate and as you highlighted, the operating margin, I'm just wondering some baked on maybe a higher Giddings plan could receive and potential increases in this?
Chris Stavros
Yes, it's a it's a that's a tough one.
I mean it I think the results are pretty good over in our three year, five year type period. And if you want to say it's almost through a cycle, if you will. I don't think it's going to be meaningfully different. I mean, there might be some things around the edges as we as we learn more. But I think the outcome, if I had to look out, I think the outcome is not going to be meaningfully different, which I will take that in our sort of any day of the week.
Neal Dingmann
Absolutely.
Thank you all.
Nice quarter.
Operator
Next question comes from Leo Mariani of MKM Partners.
Leo Mariani
Hi, guys.
I was hoping you could provide maybe a little bit more color on the increased activity in 2024. I think in the press release, you guys alluded to the fact that maybe some more wells this year?
Or is there any way to quantify that as you know, kind of five or six wells?
And just kind of any detail around any of the splits here. Is it primarily more of a development drilling program? You did mention there would be some appraisals. Is it a fairly similar appraisal split versus last year? And I guess there's going to be some drilling on the newly acquired acquisition from the fourth quarter? Or do you always also consider that kind of appraisal drilling? And is it just a handful of wells.
Any color around the kind of complexion of the program this year versus last would be helpful.
Yes.
Chris Stavros
Thanks, Leo. I think you if you repeated some of what I said and answered your own question somewhere.
But anyway, yes. So we'll probably drill maybe a little more than a half dozen additional wells this year versus last year.
Net wells most of that is, you know, our part of it anyway is of some of the new assets that will be broader integrated into the plan. Some is just the ongoing development at Giddings and keep in mind that that the average lateral length is a little longer in this year's program compared to last year. I would tell you also that the working interest in the wells is also a little bit higher. And as far as appraisal goes, no, I wouldn't consider the drilling on the new assets as appraisal and in Giddings. But there may be depending on product prices. There may be some appraisal drilling in Giddings or Bob, just to sort of see if we can learn a little bit more around other areas so we'll see how that goes. And so that's that by and large and some of the color I would I would tell you the current program will be fairly similar to what it had been not really very different generally.
Leo Mariani
Okay.
That's helpful.
And then just do you have any added color you might provide on a few of the big picture expense items. I think that perhaps the new early asset had a little, you know, kind of higher cost, any kind of range at all. I can kind of threw out there. If LOE. is going to continue to tick up a little bit and maybe DD&A and maybe G&A has not really changed anything you can have high level on some of those kind of key cost items?
Chris Stavros
Yes, sure.
On well, the new assets, especially the latter acquisition that we did in Giddings kind of considering that it is or they are in nature?
Yes, there is a little bit more in the way of LO. We it would be common or typical as we're also sort of bringing it up to Magnolia standards. If you will, where we're owners of the assets where the prior folks might have been viewed as more renters of the assets. So there's some things that we need to do it probably will do to to bring it up to our standards. However, I will tell you that my my choice and my view is that we're going to pursue sort of a program to focus a little bit more on L. We are broadly up through the year trying to get that down a bit. So on as we transition with the new asset into the first quarter, you might see a little bit more in terms of pump and Ella, we are not very meaningful, frankly, but a little bit. And then my hope and view is that, you know, we're going to trying to attack this and manage it to the point where we could see some decline later into the year.
Leo Mariani
Okay.
That's helpful.
And I guess just anything on any other cost? Is the G&A per barrel still pretty flat?
Chris Stavros
And if there's any impact on GP& T's new asset either, is that pretty pretty ratably flat at not really, I mean yet GP&T, actually, I think we're doing a pretty good job there, and we'll see how that goes. I'll just say we're doing a good job around that G&A. I know not going to change very much, frankly at all, not meaningfully on a per-barrel basis.
Operator
Our next question comes from Charles Meade of Johnson Rice. Good morning, Chris and Brian and the rest of the team there. Chris, I see a risk of frustrating you. I'm going to amass one more question about the about your activity on this recently acquired, et cetera, et cetera. You wouldn't be the first ones.
It will maybe I'll be the best. And I would put it. And presumably, I think you indicated actually that that you guys had a slightly different view of that asset or maybe a maybe you thought you had a differential insight on that asset. And so I'm curious if you could tell us what further activity you have. Maybe just kind of characterize the number of wells that you're going to up that you're going to drill in some of the pads you're going to do on that new newly acquired asset? And if there's any, is there any aspect of the well design that's going to test perhaps some of those differentiated ideas that you have in which case, what's kind of a time line for any kind of results or update there?
Chris Stavros
Yes. Thanks, Charles. It's a little early days to be too granular specific around how we're going to drill the well or wells on. There will be a handful of wells that will be drilled later this year where we'll have some results that it probably through some of this data, these data sets you will be able to see over time. I just don't know we're still sort of studying it and looking at prior results to see how this how it's gone. We may make some smallish modest changes going forward, but we're not at a point frankly, where these are these are going to be probably more single wells, frankly, at this stage.
So we're just not quite there yet.
Frankly, we we closed on the deal, our three months ago. So we're still integrating it and devising it developing it fully get it to the plant. So it's still somewhat early days.
Charles Meade
Okay. Look, thanks for that detail. And then a second question this is about excuse me and A. and D. in the Eagle Ford, more Eagle Ford more broadly, how do you how would you characterize the opportunity set for Magnolia and how much of your attention are you spending on looking at opportunities right around Giddings? And how much of is directed to the larger Eagleford and also talk trend across taxes?
Chris Stavros
Yes, fair question.
Um, you know, what percentage of my time know it pretty pretty meaningful.
I mean, because it's there's a lot of things out there.
And again, as I said earlier, much of this is borne out of our own experiences and knowledge. And as we gain further understanding of, I think the wells that we drill and directionally where we want to go and what what excites us, what is more attractive for us. And I said this to folks before the end of the day, we're trying to have and maybe this is why we're not overly open about what our plans are, but we're trying to build a little bit of a mosaic around the asset and fill in some of the blanks and improve the business based on some of the quality areas that we see. So we won't go after everything. It's Alex, I say, well, you know, I'd like to own all the acreage everywhere. It's not not that, but there are some areas that look interesting and will help us and will help the business from where I can see this you know, enhancing the runway, if you will, and provide more sustainability for the business over time. So I think the opportunity set is reasonably good for six months.
Operator
Next question comes from Oliver Huang of TPH & Co.
Oliver Huang
Good morning, Chris and Brian, and thanks for taking my questions. Just wanted to hit on the 2024 outlook really quick. I think you all did a great job last year and being able to exceed initial expectations. Capex 17% lower for nearly in-line production volumes. And I know last year is probably a unique year, just kind of given the misalignment to start the year on service costs. But as you kind of look forward into 2024, what are some of the key levers or upside catalysts that you all foresee or are most excited about that could drive better than expected capital efficiency? And also any sort of color on what drives the lower and higher ends of the CapEx guidance range would be helpful as well.
Chris Stavros
Thanks, Oliver. Are you know, I don't know how how much of a disconnect there was, but we got after this early and I credit our teams both on the supply chain side and on the operations side on drilling completions and working with everyone to make it happen, but it didn't just happen. It took a lot of work from, you know, talking with the vendors and you know, creating some linkage between us and them as being true partners. And we did benefit from some of the the weakness in large gassier fields to the north east of us are that where activity was slowing up and we saw some benefit from that in our proximity to us. So we had to take a lot of work in terms of what's left on. We've locked in our costs for the certainly for the first half of the year, and I'm very comfortable with where things are headed in the first half of the year.
In terms of our outlook for the second half of the year. It doesn't seem to me as it is if activities just kind of saw a way higher, in fact, maybe sort of sees things in a flat to a little bit lower softer, considering where gas prices are. It's not not all that pleasant. And so we'll just have to see it. It may provide us with a little bit of wiggle room for the back half of the year. But generally, things feel pretty good on the specific areas or items. We did a terrific job around efficiencies last year, especially on the on the completion side in completions and stages per day, I'd like to think that we could see some improvements on the drilling side, and we'll work towards that with some hopefully some efficiencies and maybe some something on the cost side as well. But we'll see and child outlet that can shed a little bit of color.
Oliver Huang
Yes, that's definitely helpful. And just a quick follow-up on a comment you made earlier about potentially higher working interest in wells this year. Just wondering if there's any way to kind of quantify the magnitude of that shift really just trying to get a sense of how the net lateral footage amount of increase on a year-over-year basis, we can get back to you and answer that more specifically.
Operator
Next question comes from Adam Murdock of Goldman Sachs.
Please go ahead.
Hi, good morning, team.
Thank you for taking the questions. I guess you mentioned there's still a lot of opportunity in acquisitions in the Giddings area. I'm just wondering if these are largely smaller acreages or are there entities that are relatively large as well. And what is the level of interest may be that those players have to trying to replicate what you are doing versus hand the asset overview? And does that mean that you would be more active in M&A this year versus last?
Well, I don't know what I don't know what other operators are looking to do or willing to do or are able to do, frankly, if they're looking to replicate our plan or whatever. I mean, I wouldn't think that this is necessarily going to be a more active year than what we just had in 2023, we're going to our plan is to digest and integrate some of what we've done last year, which was, you know, up overall at a bit of a heavier year and deal-related activity for us, acquisitions. So there is some it digestion and integration that needs to occur on. So I think it'll if there are some things, they'll tend to be a bit smaller, but may hopefully pack a punch. And really, again, as I said, fill in that mosaic of what we've been trying to accomplish in recent history and going forward. So I don't think it's going to be larger, at least that's not my sense right now, guarded.
And then anything around the expectations were well, productivity in 24 versus the prior years. On the if you can talk about oil per foot basis, how should we think about the trends of this year?
Yes. I mean, that's been talked about, to be honest, and it's sort of an evolution of the, you know, the program in Giddings over time. I mean, early days, you know, there were what the population set of wells was our smaller obviously, and much more focused and concentrated within a very, very limited area. And as that's broad doubts, there may have been some movement around the productivity. But frankly, I'm not in a major way or a terrible way. I think that this year's program and results should yield similar results to what you saw 23. I don't see any any major change, frankly.
Got it.
Thank you for taking the questions that was done at all.
Okay, thanks.
Next question comes from Nicholas Pope of Seaport Research.
Please go ahead.
Morning, everyone.
A quick question on the reserve details that you provided in the presentation on the price-related revisions. Just wanted to make sure is there is there anything specific there or is it kind of balanced across the two assets? Is it just tail the tail of some of those PDP reserves coming off? I'm just trying to make sure I understand that 15 million kind of hit the uptick there.
Yes. When you roll forward from last year, which had significantly higher pricing, you do lose reserves. So the year-over-year change in the SEC required pricing was relatively significant, both oil and gas. So it's across both both assets, fairly close assets into those assets. But I mean, just remember, I think we're at 75 plus percent of our 75% of our production is Giddings, so it's probably proportionate.
And on the Giddings acquisition, can you be a little more specific what was the timing of the close of that acquisition?
It was right around mid-November.
Yes, I guess that's all I had.
Thanks.
Perfect.
Next question comes from Jeff J. Daniel Energy Partners. Please go ahead, guys.
I was just kind of curious, you talk about the efficiency gains, particularly on the completion side. Can you help understand help me understand, I guess like how significant that, that increases that occurred sort of looked around and benchmark that against your peers.
And if you think there's further efficiencies to come this year, we're looking into that now we're I mean, we're going through that process right now as we look to the latter portion or trying to think ahead into the back half of the year on our equipment and crews. I don't know how much I can really add on that specific item for each a touch F.
I just don't I don't know, Jeff, if I'll just maybe add one thing and Chris talked about a little bit earlier is we did a really, really good job one on stages per day on the completion side where the focus is on more for this year is on the drilling side. Are you able to improve more of those efficiencies?
Right.
Got it. I guess, you know what I saw in the press release that the costs of getting well costs were down about 20% of my curiosity was piqued about sort of how that might break down between efficiency gains and sort of pricing. And I don't know if you can if there was a way to kind of help me understand the interplay there.
Well, a lot of it is, as you know, a lot of it was steel of CTG., but there was no other meaningful steps in stem and frac. So that meaningful benefits there as well.
Excellent. Thank you.
Next question comes from Zach Farnham of JPMorgan.
Please go ahead.
Yes, thanks for taking my question.
I guess, first, could you quantify where your leading edge D&C cost are in Giddings and maybe give us some color on how much cheaper you expect the wells to be on the newly acquired shallower acreage?
Yes, the wells now are running about 1,100 of a foot I would say, and that's about 20% lower than a year ago. And so that for the longer some of the longer laterals that we'll drill this year, that's that's maybe in a $99 million roughly per well.
And the the well costs for the newer stuff?
Uhm-hmm?
Yes, as I said, they're shallow or quite a bit shallower three, 4,000 feet shallower, but there you don't get the exact deficiencies and pad development too. So that's sort of what I know right now.
In fact of liquids, we need to drill first, can we hit can give you a better answer, but it is it is shallower. So on a per foot, it should be it should be a little cheaper.
Got it.
Thanks for that color. I guess I also wanted to ask on natural gas gas differentials have widened out a bit versus both Henry Hub and ship channel over the last couple of quarters. We've also heard some concerns on ship channel widening out further given increasing Permian volumes fall into the Gulf. And can you just give us your thoughts on how you expect gas differentials to trend in 24 and going forward?
Yes.
Well, to be honest, I mean, all our gas goes to ship channel. We are price taker. You know, I still think it's the second probably best hub outside of Henry Hub to deliver your gas. We're closer to market than the Permian. We have all the infrastructure. We need it now is it is gas in general challenged?
Yes.
Yes, Zach, it's going to be interesting to really see what how this evolves in the market. You've probably seen already some of the comments from some of the independent producers, the gassier producers here and maybe reducing their activity a bit. And so, you know, this is a market and the operators will respond as to the economics. So it will be interesting to see that response. And to the extent that things are pulled in that may over time, bring things into better balance, Chelsea Got it.
Thanks, Chris.
Thanks, Brian.
Next question comes from Tim residency of KeyBanc Capital Markets.
Please go ahead.
Good morning, guys. Thanks for squeezing me in. I'd like to start on repurchases. First, just trying to understand if we sort of back into like a repurchase amount based on your 1Q shares outstanding, independent from information suggest maybe a little lower than that 50 million ish range that you've run. Do you think about it is like not wanting to have a free cash flow deficit in the quarter? Just understand kind of you've been pretty methodical with the repurchases? Or is anything changing or just because the heavy first quarter CapEx that maybe you're pulling back a bit?
And while we didn't, we're not forecasting the share repurchases really. I mean, I think if I recall, I think we said we bought in 2.5 billion shares exactly in the fourth quarter. And I think that was about the same. It's not exactly the same as the third quarter. So sequentially, the amount of shares for repurchase was the same. The dollar amount might have been a little different because the shares might have been bought in a little bit less expensively, which is fine.
I look at the share repurchase. I mean just a broad comment. I look at the share repurchase program as sort of ongoing and opportunistic. And there might be some shares that come available in the market. And I'm not not that I know anything, but if that were to happen. We could certainly lead in if I feel as if there's a disconnect in terms of perceived value, we could lean in on that the share repurchase and dividend are sort of symbiotic in a way there's an integral relationship for us with that, the more shares I buy in of the more it supports our dividend payout, our share capacity so that's sort of how I think about it.
Okay.
Okay.
We're just if you do the math on that $2.5 million for the first quarter, it seems a little light. That's why I was just trying to understand if there's something there. And I guess there's not. So thanks, Chris. I appreciate that. And as my follow-up you, I thought was interesting. You said you should have a similar oil curve going through 2024. If we look at the Giddings asset in general, you've seen oil cuts, call it kind of mid 30s. Is your confidence that you have enough well control and getting that day, you're confident that oil use you're going to be getting from the 2024 program?
Is that what sort of gives you confidence in sort of that oil cut saying staying where it is?
You're trying to be on a treadmill, but.
Yes, no, thanks. I'm pretty confident with this year's program on the peak oil crude oil volumes, if you well, yes, I think we ran at a low 41, 42% mix of oil for the fourth quarter, right in that range. And if I had to take a view, I think it will be somewhat similar through the year, maybe a little movement, but not all that much the oil volumes. So they'll grow. As I said, they'll grow year on year, sorry, for each quarter and they'll grow on a similar basis to the overall BOE volumes so I am pretty confident with that. That's what the program is designed to deliver.
And then just in terms of the well control and the confidence in getting.
Yes, but that's how I feel.
Thank you.
Next question comes from Paul Diamond of Citi.
Please go ahead.
Well, thank you.
Good morning and thanks for taking my call.
Just one quick one for you as you guys think about getting this going forward as far as just the addressable total addressable acreage and you know how you progress to that, what you see as like you're right-sized about what you want to be at. I think that's something we should think about as like a in a single year effort or is that more now kind of multiyear goal.
I see this evolving over over years. So I don't I don't see it necessarily all occurring at once or in the shorter term. It's the amount of learning that we picked up and experience. It has been over this five, six year period. It's not all going to come at once here for us as a result. So we're still we have a large position that will where we'll continue to learn through our own activity and as an extension of that, we could and likely will pursue and some other small opportunities it makes sense.
Understood.
Indeed.
Do you think those are smaller opportunities and more kind of blocking on existing acreage? Or are there more kind of further flung areas you guys are really interested in exploring what that may mean, namely the former I'm filling in understood only the parent extra time.
Okay, thank you.
Concludes our question and answer session. The conference has now also concluded. Thank you for attending today's presentation, and you may now disconnect.
