Good morning, and welcome to Permian Resources conference call to discuss its fourth-quarter and full-year 2023 earnings. Today's call is being recorded. A replay of the call will be accessible until March 13, 2024, by dialing 877-674-7070 and entering the replay access code 855841 or by visiting the company's website at www.permianres.com At this time, I will now turn the call over to Hays Mabry, Permian Resources' Senior Director of Investor Relations, for some opening remarks. Please go ahead.

Thanks, John, and thank you all for joining us on the company's fourth-quarter and full-year 2023 earnings call. On the call today are Will Hickey and James Walter, our Chief Executive Officers; and Guy Oliphint, our Chief Financial Officer. Yesterday, February 27, we filed a Form 8-K with an earnings release reporting fourth-quarter results. We also posted an earnings presentation to our website that we will reference during today's call. I would like to note that many of the comments during this earnings call are forward-looking statements that involve risks and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors and the forward-looking statements sections of our filings with the SEC, including our Form 10-K, which is expected to be filed tomorrow afternoon. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance and actual results or developments may differ materially. We may also refer to non-GAAP financial measures that help facilitate comparisons across periods and with our peers. For any non-GAAP measure, we use a reconciliation to the nearest corresponding GAAP measure that can be found in our earnings release or presentation, which are both available on our website. With that, I will turn the call over to Will Hickey, Co-CEO.

Thanks, Hays. We're excited to share our fourth-quarter and full-year 2023 results, as Permian Resources was able to deliver another quarter of outperformance, closing out an incredible first year of operations under the PR name. I think that over the past five quarters, we've demonstrated just how good this Permian pure-play business is, operating efficiently on our core Delaware assets, executing on highly accretive deals, and continuing to demonstrate low-cost operatorship across the business, which all contribute to PR's industry-leading returns since inception. As we look to 2024, we expect to continue maximizing shareholder value, and I want to take a moment to walk through how we think about value creation here at PR. Our relentless focus is on creating value on a per-share basis, and our team has positioned us to deliver a 2024 plan that's expected to generate peer-leading production, cash flow, and free cash flow per share growth without increasing leverage. We're able to drive this outsized growth per share through PR's continued focus on being the lowest cost operator in the Delaware, our thoughtful capital allocation and development plan, and the highly accretive transactions we completed during the year. In the midst of closing the Earthstone acquisition on November 1, the Permian Resources team was still able to deliver an outstanding fourth quarter across all metrics. Q4 production outperformed, with total production of 285,000 barrels of oil equivalent per day and oil production of 137,000 barrels per day, exceeding both internal and external expectations. This production beat was attributable to three things. First and most significantly, we saw outperformance across the board between both PR and legacy Earthstone assets. Second, a reduction in downtime on legacy Earthstone assets led to higher-than-expected runtimes as the team realized operational synergies more quickly than planned. Third, and finally, our drilling and completion efficiencies continue to impress, bringing incremental wells and producing days into the quarter. Even with the increased activity, capital expenditures were in line due to per-unit cost reductions, leading to significant free cash flow outperformance in the quarter. Our team was also able to transition seamlessly into integration and synergy capture mode in the fourth quarter, executing on our proven integration playbook while maintaining focus on driving low-cost leadership across the business. PR continued to increase operational efficiencies in the fourth quarter while integrating legacy Earthstone rigs and fleets into its program, contributing to overall program decreases in per-well unit costs that we've been able to carry forward into the full-year 2024 plan, culminating in a program average of $860 per lateral foot. In addition, the team demonstrated strong controllable cost discipline, driven largely by lower LOE with controllable cash costs decreasing 8% quarter over quarter to $7.33 per BOE despite higher legacy Earthstone costs. Overall, our strong production and low-cost structure allowed PR to report $0.47 per share of adjusted free cash flow or $332 million in total. In addition to our focus on execution, we believe our portfolio optimization program willcontinue to drive meaningful value for shareholders. As many of you saw last month, Permian Resources announced a series of transactions which added 14,000 net acres and 5,300 net royalty acres in the core of the Delaware Basin, just three months after closing the $4.5 billion Earthstone acquisition. Most notably, the two bolt-on acquisitions add over 100 high-return locations, directly offset our core Parkway position, which represents one of the highest returning assets within our portfolio. This is in addition to a sizable acreage swap, a non-core divestiture, and our ongoing ground game. Importantly, when you combine all of our portfolio management efforts from the last year, our inventory additions more than replaced the wells we drilled on a standalone basis. We believe that excellent execution on these types of difficult transactions and smaller deals is a great path toward material improvements in our inventory position, NAV, and overall value proposition to stakeholders and will continue to be a key focus for us going forward. Our excellent Q4 results and increased free cash flow allowed us to deliver a total return of capital of $0.24 per share to shareholders during the quarter. We announced a $0.05 per share base quarterly dividend, and we are excited to be able to demonstrate sustainable base dividend growth as we plan to increase our base dividend by 20% to $0.06 per share next quarter. In addition, we remain committed to paying 50% of the remainder of free cash flow to shareholders via dividends and or buybacks. And once again, we executed both methods of variable returns during the fourth quarter. First, we repurchased a total of 5 million shares at an aggregate price of $13.32 per share for the quarter. And consistent with our framework, we announced an incremental variable dividend of $0.10 per share, bringing the all-in quarterly return of capital to $0.24 per share. As I mentioned before, our team has absolutely hit the ground running with the integration and synergy capture phase of the Earthstone acquisition. We are well ahead of schedule, giving us a high level of confidence that we'll be able to beat the original synergy target timeline laid out in August. Importantly, drilling and completion costs and efficiencies are realized almost immediately at closing, with a 12% D&C savings per well already realized on the legacy Earthstone wells and more to come. I want to take a second to highlight the amount of effort that's gone into that 12% cost reduction per well since closing the Earthstone acquisition because it's not just swapping out rigs or changing a casing design. Slide 6 shows around 10 drivers. But in reality, it's close to 40-plus small initiatives that add up to meaningful improvements. And our team has not stopped pushing on those efforts. Two of the largest savings, drilling and completion efficiencies, have improved by 35% and 20%, respectively, versus historical Earthstone results, as equipment has been high-graded and best practices have been shared across the unified team. These faster drilling completion time has both reduced costs and improved returns by shortening cycle times. Our field operations team has also made incredible progress on the LOE front, optimizing production operations in many large and small ways. We couldn't be more pleased with the synergy results to date and look forward to providing another positive update next quarter. The same relentless focus on low-cost leadership that allowed us to maximize synergies in the Earthstone acquisition also allowed us to drive controllable cash costs to peer-leading levels. Our 2024 plan, which James will outline here in a minute, benefits from lower-than-expected all-in costs, with the combined business able to basically get back to PR's legacy cost structure despite higher historical Earthstone costs. Given the marginal nature of free cash flow, running a low-cost business is critical to supporting strong free cash flow per share generation. With that, I'll turn it over to James to talk through the 2024 plan.

Thanks, Will. Turning to slide 8, we're excited to discuss our 2024 development program, which is focused on maximizing returns and free cash flow per share through thoughtful capital allocation and efficient low-cost execution. Our plan is a result of a tremendous amount of work from every department at Permian Resources, and we want to thank our entire team for the work that went into this plan. Our goal is to focus on high-return developments in the Delaware Basin that allow the company to maximize returns while ensuring we minimize any future well or location degradation. Fortunately, our robust inventory allows us to drill similar zones, areas, and packages to what we drilled in 2023 and, as such, achieve similar well productivity. For the full year 2024, we expect total production to average between 300,000 and 325,000 BOE per day and oil production to average between 145,000 and 150,000 barrels of oil per day. We expect production to be in the lower half of the full range during the first half of 2024 and the upper half during the back half of the year. Our capital program consists of approximately $2 billion, of which 75% is allocated to drilling and completion operations. We expect to turn-in-line 250 wells this year. The balance is primarily investments in infrastructure that position PR to continue to drive value in 2024 and years beyond. In terms of CapEx cadence, we expect CapEx to be slightly front-half weighted. Our drilling program is largely focused on our high-returning Delaware Basin asset, with a particular emphasis on the New Mexico portion of the Delaware, given the returns we're seeing from those assets today. The Midland Basin will not be a substantial part of our development plan in 2024. As Will mentioned, we expect our controllable cash cost to be approximately $8 per BOE, which screens well relative to other operators in the Permian and is particularly impressive given the higher legacy cost structure that came over from the Earthstone assets. Turning to slide 9, we wanted to concisely lay out how our business is getting better this year through the lens of capital efficiency-related metrics. Simply put, in 2024, we expect our cost to be lower and our well productivity to be the same or slightly better than last year, which is a winning combination. We would also like to highlight that these improvements in capital efficiency do not come easy. Our team is focused on maximizing value by analyzing every input into our model on a per-unit basis and looking for areas to improve. We moved very quickly and leveraging our increased size and scale to receive better pricing on key consumables, such as casing and sand. But some key input costs, such as drilling rigs and pressure pumping, remain at elevated prices as we head into 2024. Our team continues to find ways to do more with less, and we're always looking for ways to tweak and optimize well designs and find that these individual changes only reduce cost by a percentage point or two, but the cumulative effect adds up to real dollars when multiplied over a 250-well program. This hard work drives our basin-leading cost structure and really makes a difference in our ability to extract as much value from every single asset as possible. I'd like to conclude today's prepared remarks on slide 11, which helps to re-emphasize our value proposition for current and future investors. Since the formation of Permian Resources, we have delivered best-in-class returns for our sector and meaningfully outperformed the S&P 500. This outperformance was largely driven by successful execution, low-cost leadership, and accretive acquisitions. As a result, our business continues to represent a compelling value proposition against other large cap oil companies. For some of the recent deals announced, there are fewer and fewer Permian pure plays solely focused on the highest returning base in the lower 48. It's worth emphasizing Permian Resources now fits to the new cost of large-cap peers with an enterprise value of greater than $15 billion and 100% of our business focused on the Permian. It continues to be our belief that quality businesses such as ours with core assets in the Permian, efficient operations, and strong production and free cash flow per share growth have room to re-rate to higher multiples. By continuing to cultivate and enhance these attributes through efficient execution and opportunistic transactions such as Earthstone, we believe that we can continue to create outsized value for shareholders and solidify our position as a leader in the energy sector. Thank you for tuning in today. And now, we will turn it back to the operator for Q&A.

Your first question comes from Scott Hanold at RBC Capital Markets.

Thank you. It was a great quarter, and it's encouraging to see the synergies coming in faster than anticipated. Turning to page 6, where you outline Earthstone's current costs, could you explain how the current costs compare to the PR legacy costs? What specific areas will lead to those differences, and how quickly can you implement those changes? Is it related to drilling efficiencies or casing? What steps will bring you to the PR well costs, and how fast can you achieve that?

I believe we've reached this point much quicker than I anticipated. Considering the five Earthstone rigs we acquired, we've already replaced three of them just three months after the deal closed. We successfully implemented our casing design from day one. Fortunately, there was no significant backlog of casing that we needed to address before we could begin our wellbore design and casing work. This is how we achieved substantial cost reductions in such a short time. Looking ahead, it's not just about pricing power, which we've already utilized. We need to continue developing the last bit of efficiencies across all the Earthstone equipment. There are still two more rigs that either need to meet our standards or be swapped out eventually. We will also focus on enhancing efficiency in both drilling and fracking, but we’re already more than halfway to our goals, and we've accomplished this in just three months. Overall, we are optimistic about the significant reduction in Earthstone well costs and the timeline to reach that.

Understood. And as we think about the 2024 activity and budget, it looks like it’s maintaining your current pace coming into the year. But with you all seeing better efficiencies and performance, you obviously pulled a few wells into 2023. Would that allow you guys to reduce the well count next year and the rig count? Or would you guys just produce at a higher level if your efficiencies continue through next year? So it's really a question on pace of next year. And if you keep going faster, will you just keep rolling through that?

I believe there are two main points to address. First, as we evaluate the pace of our operations, our expanding business and adjustments to working interests have led us to focus more on the total amount of capital we intend to reinvest. We're assessing our capital budget accordingly. Currently, we have 12 rigs in operation, and you may see that number fluctuate between 11 and 12 throughout the year as we optimize our rig fleet and enhance larger operations. We expect to maintain a fairly consistent capital profile aligned with our $2 billion budget. As we approach the end of the year, there may be unique scenarios regarding whether we will invest more to bring wells online within a specific quarter. We will handle those situations individually. Historically, when our per-unit costs have reached all-time lows due to high efficiencies and strong returns, as we experienced in Q4 just a few months ago, we tend to proceed with bringing additional wells online, focusing on the long-term value of the business rather than making short-term adjustments.

Your next question comes from the line of Neal Dingmann from Truist.

Good morning, everyone, and thank you for the opportunity. My first question is about well productivity, specifically regarding slide 10. Will, I’m curious about how consistent this production is not just in Lea and Eddy counties, but also in Texas. Additionally, as you continue your plans throughout this year and into next year and 2026, should we expect more child wells or the same mix you’ve had previously?

I believe it will be very similar. I can specifically address 2024 to 2025 because we have already mapped out the schedule for 2025. The well mix remains quite similar. Our development strategy hasn't changed since 2022, 2021, or 2023. You can observe this in 2024, and I expect it will continue into 2025 and 2026. We are methodically progressing across the area, matching the right-sized pads to minimize any future degradation, which is improving our capital efficiency. Therefore, we anticipate stability with no significant developments on the well productivity front for the coming years.

That's fantastic. For you, James, my second question is about your ground game yields. While you’ve done a great job with Earthstone and some larger deals, which have been really notable, could you discuss the potential upside that the bolt-on trades and grassroots efforts will continue to provide? It seems like that has been significant, even recently.

We released information in January that detailed our activities. Our operations in Delaware are impressive, supported by a strong land team and business development team that actively pursue opportunities to acquire acreage in overlooked areas. Last year, we completed 145 acquisitions, adding nearly 17,000 net acres to our portfolio. This strategy is a key component of our success and sets us apart from many competitors. We believe we can sustain this approach with smaller deals, and our pipeline looks promising for 2024 and 2025. We feel confident in our ability to secure the right deals at favorable prices.

Your next question comes from the line of Gabe Daoud from TD Cowen.

Thank you for taking my questions. I'd like to start by asking about the increasing pad size. You mentioned the target you'll be pursuing in Delaware. Could you please provide an overview of how the pad size or project size is expected to change this year compared to last year, and what the spacing will look like for this year?

In the Delaware?

Yeah. I mean, it ends up being a couple wells per pad bigger than where we were last year. But this isn’t really a change in kind of spacing or anything from a development perspective. It’s more just as we look at the footprint of the acreage we’re drilling, we’ve got some wider fairways than maybe we had the year before, which calls for slightly larger pads. So it’s factually correct. Our average pad size will be a couple of wells higher this year than it was last year, but I wouldn’t view that as any bit of a change in the development philosophy. It’s more just the acreage that we’re drilling this year calls for slightly larger pads to keep with a consistent development methodology and really nothing more than that.

Okay. Got it. Understood. Thanks for that. And then I guess as a follow-up, could you maybe just talk a little bit about that 25% non-D&C capital, what kind of infrastructure projects? And is that a similar level of spend we should expect on infrastructure in '25 and beyond?

This year, we are mainly catching up on the Earthstone side, focusing on building some batteries and other related projects. There are some additional costs associated with this catch-up and with our gathering operations to ensure we maintain excellent takeaway capabilities in New Mexico, as has always been the case. I view this as more of a one-time expense. Moving forward, I anticipate we'll return to approximately 15% of our total capital budget allocated for infrastructure spending.

Your next question comes from the line of Zach Parham from JPMorgan.

Morning, guys. Thanks for taking my question. First, we’ve heard from some of your peers about some natural gas processing tightness in New Mexico that’s been a headwind. Has this been an issue for you all at all? And maybe talk about how you’ve managed this issue and if you see anything impeding the '24 program as far as a processing standpoint.

We are in a fortunate position with the right long-term midstream partners in New Mexico. We have previously mentioned that we are associated with some of the biggest and best natural gas processors and transporters in the basin, both in New Mexico and Texas. Historically, we haven’t encountered any issues and we don’t anticipate any going forward. This is simply the result of having the right partners in the right locations, and we do not expect any problems on the midstream side.

Thanks. And my follow-up is just on cash taxes. You guided to $75 billion in cash taxes for 2024. Could you give us some color on how you expect cash taxes to trend in 2025 and in future years?

Yeah. I mean, we’ll start getting closer to a normal-course cash taxpayer beginning in '25. We have some sensitivity in '24 oil prices, obviously. But we have NOLs today, a meaningful portion of which we’re using. And we’ll start turning to more cash taxes in '25 and beyond.

Your next question comes from the line of Oliver Huang from TPH.

Great quarter. And you all have obviously done a good job with integrating the Earthstone assets ahead of schedule. But I just wanted to see if you all might be able to provide some incremental detail to help us better understand the drivers of LOE moving sustainably lower for both Q4 and for the 2024 guide being so quick, just kind of looking at where the figure was just six months or so ago from the standalone Earthstone business.

I believe there are a few key factors contributing to lower LOE. First, I want to acknowledge the Earthstone team, as their LOE has been improving each quarter even before the acquisition. We’ve implemented some best practices that have further enhanced that progress. The LOE was on a downward trend independently, so we have a bit of a tailwind there. Secondly, the overall production profile in Q4 and beyond is advantageous, as an increased production volume will positively impact LOE. Additionally, we are focusing on optimizing water disposal, addressing failure rates, and fine-tuning artificial lift for each specific well. We apply the best practices at our production sites and tailor our solutions based on the needs of each well rather than using one-size-fits-all approaches. This careful alignment is leading to better performance and lower LOE. You’ll notice different lift types for wells that are close to each other because we cater to their specific requirements. We're already seeing positive outcomes from this strategy, and there is still more to be gained. Furthermore, I believe we can enhance our water disposal efforts significantly. We’ve already achieved some quick wins with favorable water contracts and effective disposal and recycling solutions in locations previously underutilized by Earthstone. Moving forward, we will continue to focus on addressing LOE, particularly in relation to water.

Okay. That’s certainly helpful. And maybe for a follow-up. I mean, definitely good to see some of the drilling and completion efficiency improvements starting to be realized right off the bat for Earthstone. But just with understanding that there’s still solid running room to converge those well costs towards the legacy PR business, just wanted to see how much of that future benefit has already been taken into account when looking at the D&C budget that you all laid out for this year.

It is taken into account. So I’d say from what we have line of sight on, expect to get all of it. Obviously, we’re hopeful in doing everything to try to get more. But the budget does take into account the synergies that we have achieved to date and expect to achieve between now and year-end.

Your next question comes from the line of Leo Mariani from Roth MKM.

Hi, guys. You had very, very strong production here during the fourth quarter. And I was hoping you could provide a little bit more detail. I mean, did you get some extra wells on? Were there some extra non-op benefits? Obviously. you just had very strong growth in both oil and in total volumes. And I guess my understanding was that you maybe had quite a fewer wells down this quarter versus last, but perhaps I'm mistaken. So maybe you could just provide a little bit more color on the dynamic there.

I tried to address some of it in the script, Leo. I’d say the biggest driver would be the strong performance of our legacy Earthstone wells and the PR wells that we brought online during the quarter, which exceeded our expectations. This accounts for more than half of the volume increase for the quarter. The remainder comes from our significant progress in reducing downtime on the Earthstone assets in Q4, leading to better runtime than what we had budgeted for and what we've seen historically, which positively impacted Q4 production. Additionally, we did bring some more wells online during the quarter. I don't have the exact numbers, but there were a few wells with a significant number of producing days that we had initially expected to come online in 2024. We also did not anticipate drilling 35% faster and fracking 20% faster on the Earthstone assets right from the start, but we achieved that, which led to increased activity in the quarter.

Okay. That’s helpful in terms of all that color. I mean, just looking at 2024, I think you guys had mentioned that CapEx is a little bit front-half weighted. You generally expect it to decline during the course of the year. And I’m guessing production is maybe a little bit of a mirror of that. Would you generally expect first quarter to be low on production and to build a bit throughout the year? Just any color you have around the cadence in '24 will be helpful.

Yeah, I think how you said it is right. CapEx is a little bit front-half weighted and production's a little bit back-half weighted, but it's not giant swings. I'd say it's pretty modest, but what you said was just right.

Your next question comes from the line of Doug Leggate from Bank of America.

Hey, good morning. This is John Abbott on for Doug Leggate. Thank you for taking our questions. My first question is just on your Midland position. Just, what is your current production on that position? And then just given the continued interest in Permian assets, what is your latest thoughts on what you do with that position and also the possible timeframe?

Yeah. So the Midland position's about 20,000 barrels of oil per day and about 60,000 BOE a day. And it’s a great cash flow business. I think the Earthstone team and our PR team have that in a really good place, where we’ve got consistent low declines, low cost, et cetera. So we like having it. I think I’d say we’re doing a couple of wells on that asset the first half of this year. And I’m pretty excited of what our team has done to date just on the cost side. I think there could be some meaningful cost reductions there that are a big boost to the value of that asset. But I think over the long term, we’ve been really clear we’re a Delaware Basin-focused business, and that’s where the majority of our capital, our time, and our energy are focused. So I don’t think we’re going to do anything strategic with the Midland Basin asset in the near term. But I think over time, as we better understand that asset, if there are ways to extract more value other than owning it, I’d say we’re all ears. But I’d say that’s probably down the road, most likely a 2025 type of thing if we were to do anything at all.

Appreciate it. And then for our follow-up question, while it is not your focus necessarily, how do you think about long-term maintenance CapEx? I mean, do you look at the midpoint of your guidance of several million dollars or less than that? How do you think about long-term maintenance CapEx for your business?

I believe that's accurate. Considering all the integration and acquisitions from the past six months, it's difficult to determine what production level constitutes maintenance. However, if you're trying to estimate where we stood in Q4 or where we will be in Q1, then I think the maintenance CapEx you mentioned is about $200 million less than the midpoint of our guidance, roughly speaking.

Your next question comes from the line of John Annis from Stifel.

Hey, good morning, guys. Congrats on the strong quarter. For my first question, digging further into your comments around downtime, what was Earthstone's primary source of downtime and what were some of the specific practices in the field you've implemented to minimize it?

There are two approaches to addressing downtime. The first is to reduce the failure rate, which is the most straightforward and effective method. While progress is being made in this area, it does take time. The second approach is to respond more quickly when wells fail. We aim to have turnaround times for failing wells measured in days or even hours instead of weeks. The Earthstone assets have some favorable conditions, and the team has done a commendable job tackling these issues over the past six months. We entered the situation well-prepared for success, and the Earthstone team members who joined the PR team are eager to adopt our approach and fully engage in this process. We believe that by addressing these immediate opportunities, we can significantly enhance run times, which is the most effective way to reduce lease operating expenses and increase operational efficiency.

Terrific. For my follow-up, referencing slide 7 and where you stack up against peers in terms of cash costs, it’s quite impressive, especially with the Delaware being a little heavier in water production. What’s your sense of the biggest delta between you and other Delaware operators?

What sets us apart from other operators is that we don’t have many old vertical wells. Our clean, new horizontal production helps keep costs low, which is a significant advantage for us. We lack vertical wells that could raise our cost structure, and our assets are quite strong. In the Delaware Basin, while there's generally more water, we're located in some of the most productive areas in terms of oil cut percentage. We are positioned in the core of the basin, away from challenges like high H2S treatment. Our focus is on being a low-cost operator. We concentrate on what we can control, aiming to minimize costs in drilling and completion, lease operating expenses, and general and administrative expenses. I believe this is reflected in our performance.

I would like to emphasize that we have an exceptional culture in the field that fosters an ownership mindset. We dedicate a lot of time to addressing questions regarding management ownership and stock. What is truly impactful is the ownership mentality present in the field, where our team takes immense pride in their work and puts in great effort to promptly address any issues with wells, ensuring that business operations run smoothly and efficiently. This ownership mindset is something we frequently discuss, but it genuinely runs through the entire Permian Resources organization, and I believe it deserves more recognition.

Your next question comes from the line of Paul Diamond from Citi.

Thank you. Good morning. I appreciate you taking my call. I have a quick question about valuation. You mentioned the potential opportunity for you and similar peers to achieve a better valuation compared to larger companies. Can you provide more details on the kinds of catalysts you expect to see to bridge that gap?

Yeah. I mean, I think for us, it’s all about execution. I think the market has started to realize the quality of our business, looks a lot more like the other Permian pure plays than other large caps, albeit at a smaller scale. But I think over time, as we can continue to execute quarter in, quarter out and year in, year out, I think that re-rating happens on its own. I think it’s too obvious to miss. And the most important thing for us is to execute and continue to be the lowest cost operator at the Delaware.

Understood. Thank you. Just a quick follow-up. As you guys are thinking about the go-forward cadence on D&C improvement, you’re already catching that 12%. You note some more is coming from the full integration of Earthstone. I guess I’m trying to get an understanding of your guys’ view on the quantum you can expect going forward, into late '24 and '25 and beyond.

I believe it's challenging to assess. Regarding the Earthstone assets, we anticipate that in the upcoming months, those costs will align with the legacy PR costs, transitioning away from discussing legacy Earthstone or legacy PR. Instead, we will refer to these as Permian Resources well costs by area, which is progressing and expected to reach that point soon. As for the absolute PR D&C cost, we've stated that the guidance for this year is $860 per foot, based on our current observations. We're not factoring in additional efficiencies or deflation at this time. We are optimistic that we will see a bit of both in the coming years. However, we've already made significant progress recently, and we expect to see gradual decreases in costs rather than the step changes we've observed in the past four quarters.

Your next question comes from the line of Phillips Johnston from Capital One.

Hey, guys. Thank you. First, just to follow up on Neal’s question on well productivity. Slide 9, you show an expected 3% increase in your average productivity this year. Is that mainly a function of the geographic mix shifts with 70% of your activity on towards Mexico versus the 40% last year or were there other factors driving that?

No, well mix should be the biggest factor there. You’re spot on.

Okay. I assume that’s all baked into your '24 guidance, right?

Yes.

Yeah? Okay. And then just last question, just the next 12 months PDP decline, that was assumed in your year-end 23 reserve report. And would you expect that decline rate to change significantly between now and the end of this year?

I can't comment on the specifics of the reserve report, but I can share our perspective. The BOE decline is in the low to mid-30s. Do I anticipate changes? Certainly. Each year, particularly in those without significant growth like we experienced last year, the decline will gradually stabilize. While I don't guarantee it will be very substantial, the decline is expected to level off as we approach year-end.

Your next question comes from the line of Subash Chandra from Benchmark.

Yeah. Thanks, guys. The 150-ish type transactions, 17,000 acres are, I think, the metrics you threw out. What do you think the dollar per location map has worked out to?

We potentially haven’t published that information for many of these smaller transactions, as there are important competitive dynamics and confidentiality to consider. However, I would estimate that the dollar per location will be in the low single-digit millions, which should give you a general idea.

Yeah. Yeah, I guess directionally, that's cool. And then secondly, on the integration costs, are they all done at this point? Or should we see anything flow into '24?

Well, it’s about 20 in the first half of the year.

Another $20 million?

Yeah, and then done.

There are no further questions at this time. I will now hand the call back to James Walter for closing remarks.

In closing, I just want to say that we believe our Q4 '23 results and our 2024 go-forward plan speak for themselves and demonstrate just how good our Permian business is. As the lowest cost operator in the Delaware Basin, we believe that we are positioned to continue to generate significant returns for our shareholders as we build our track record of consistent low-cost execution, year in and year out. Thanks to everyone for joining the call today and following the Permian Resources story.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.