Chris Mathews: Hi, this is Chris Mathews, senior editor of shale/ A&D at Hart Energy and Oil and Gas Investor. I'm here at the SUPER DUG Conference & Expo in Fort Worth, Texas joined by John Raines who leads Devon Energy's Delaware Basin business unit.  John, thanks so much again for being here today.

 Can you tell us why the Delaware Basin stands out so much in Devon's portfolio? I think it's attracting around 60% of the total 2024 capex at this point.

John Raines, vice president of Delaware Basin business unit, Devon Energy: When you think about Devon's portfolio, we operate and have one of the best multi basin portfolios in the U.S. We're up in the Williston Basin, we're in the Powder River basin, we're in the Anadarko Basin and we're in the Eagle Ford Shale and all of those areas are active and busy and have really competitive inventory, and they're all doing really great things, but there's simply no denying the scale we have in the Delaware Basin, the running room we have in the Delaware Basin and then the associated competitiveness of that inventory, it is just tough to compete with. If you look at any other multi basin company that has that Permian footprint, much less a Delaware footprint, I think you see similar capital allocation trends across the basin. But it's like I said, simply unmatched from a competitive standpoint.

CM: You have a big footprint in the state line area, Loving County, Texas and Lea and Eddy counties, New Mexico. I've heard that is called some of the best rock, one of the best zip codes in the Lower 48 from an oil and gas perspective. Why is that?

JR: Geology. It all comes back to geology at the end of the day. So we actually have an asset area we call state line, but I'll just generally refer to the area that consists of Northern Loving County, Eastern Eddy County and Lea County. That would be the generally accepted core of the Delaware Basin. When you look at well results and consistent well results, those are some of the best in the basin. When you look at the number of landing zones, intervals that work in the Delaware Basin, those are also very robust and very consistent. One of the things about it is you've got just a tremendous amount of H or what we call height or thickness in that part of the basin. You also have competent frac barriers in that part of the basin carbonate zones, whatever they may be, that baffle or even block frac energy from zone to zone.

So you really get a lot of that energy isolation that helps some of the other inventory in the zone. I mentioned in the presentation today a Wolfcamp program that we brought online that's actually in our Eastern Cotton draw area, which sits in this part of the Delaware zip code. Those were tremendous wells, but importantly, we drilled those wells at 12 wells per section just in the upper Wolfcamp or the Wolfcamp A. And that's not spacing you see in other parts of the basin. There are parts of the basin where you're as low as six [wells]. A lot of the basin is at eight. Some parts of the basin are 10 [wells], 12 [wells] is actually really high. But even if you move east from there and more into that core area, you see companies developing at 14[ wells], 15 [wells], even 16 wells per section. So it's probably some of the best rock in the best basin in North America.

CM: Fascinating. It sounds like there's bountiful oil supplies. That's not necessarily the issue, but talk about some of the infrastructure issues that operators are facing both in New Mexico and on the Texas side.

JR: Infrastructure is the thing I wake up thinking about and go to bed thinking about and probably dream about at night. Maybe don't call those dreams, but it's the most prolific basin in North America. So when you talk about infrastructure, everybody is allocating capital to the basin. It takes a lot of infrastructure to move the product associated with these prolific wells, and frankly, a lot of times the production outpaces the infrastructure. Everything from your downstream gas takeaway can be constrained. I talked about that in my presentation, that's led to depressed gas pricing in the basin. Something I didn't talk about in my presentation is you have local gas gathering and compression that can also be constrained, and that's something you've got to stay ahead of as well.

Five years ago from a Devon operated standpoint on the gas gathering and compression side of our business, we were maybe moving 250 MMcf/d. As we sit here today, I'm moving 1 Bcf/d just on my own operated local gathering systems. So the growth has just really been tremendous. As I mentioned in the presentation, there's a prolific amount of water associated with Delaware production in 2023, it was 12 MMbbl/d that's got to go somewhere. A lot of that's being disposed of. There's a lot of recycling infrastructure in the basin, which is good. So we [industry] have beneficially reused about 20%. Devon's a little bit higher. We're sometimes in the 35%, 40% range, but all things infrastructure are really the key to being able to unlock that prolific inventory.

CM: That makes sense. One thing I'm interested in personally is exploring new zones, maybe deeper benches that you might have access to in the Delaware Basin as well as new and innovative completion designs. We talked a bit about U-turn wells and the possibility of doing those. Some of your neighbors are out there drilling U-turns in the Delaware Basin. How do you think about exploring deeper zones if they're competing for capital yet [developing] new designs like that?

JR: There is the capital allocation aspect, and so exploratory wells, better nature have a higher risk just in terms of whether they'll produce a higher risk in terms of execution. And so allocating significant amounts of capital to exploration is difficult when the market is so laser focused on your well productivity. So I don't want to project that we're not doing any of it, but we're very, very selective in how we do it. I can tell you, without getting into the real details, we've had some success in the past few years in the Wolfcamp B really delineating the B and delineating some secondary Bone Spring intervals that are in the shallower zones. Those are firmly part of our development programs now, but even beyond the B later this year, we're going to go a little bit deeper in the Wolfcamp and test a couple of new play concepts, so we are doing some exploration within the basin itself.

CM: Fascinating. Thank you so much, John again for your time today and for more head to