Nissa Darbonne, executive editor-at-large, Hart Energy: Thank you for joining us. I'm Nissa Darbonne, executive editor-at-large for Hart Energy. I'm visiting today with Clay Gaspar, COO for Devon Energy. Clay just spoke at SUPER DUG 2023 here in Fort Worth. Clay, thanks for joining us.
Clay Gaspar, COO, Devon Energy: Happy to be here, Nissa.
ND: Appreciate it. Your refracs in the Eagle Ford, you have a somewhat accelerated program there, you're having great success. You have 30 wells online so far, and doing more this year and plans for, for additional ... in the future of the program. What are you seeing in terms of production and EUR uplift?
CG: Yeah, it's a really exciting program both for the Eagle Ford and specifically for Devon, but even for the broader industry. You know, we also have programs in North Dakota. We have programs going on in the midcontinent, and I think there's just a ton of opportunity to go back and redo some of the barrels that we've done, we've left behind before, go enhance those wells and really extract more and more value. When we look at the economics of the wells that we're delivering today, the original well economics are actually on a rate-of-return similar to these new refracs. Uh, the EURs are roughly about half. They can be as much as a half of the original reserves, and so the economics with using existing infrastructure, the existing well bore are really strongly compelling.
ND: And then also too as history goes, Devon Energy, back to the 1980s and NEBU Field in New Mexico was, you know, kind of a, an incredible platform, and it was pure Wildcatting. Devon was built upon that. So in the past 40, is that 40, 50 years? My goodness. In that time frame, Devon has somewhat demonstrated where Devon goes, eventually, so does the industry. It's just been somewhat patient and incredible foresight. So based on that track record then, where is Devon going, therefore suggestive of where is the industry going?
CG: Well, appreciate those compliments and there's real benefits of working for a company that's been around for more than 50 years, understanding some of the things that we've learned along the way and have that experience of cycle upon cycle as our industry does. We look at it through an interesting lens. There's two versions of it, kind of the one lens is in a 0-5 year look, how do we continue to get better at what we do? How do we drill wells more efficiently, think about the completion, stimulate more rock extract, just a little bit more of those hydrocarbons that we're sought after. How do we do it in a more cost effective manner? How do we do it in a safer manner? And very importantly today, how do we continue to drive environmental improvement around emissions, water recycling, and so many other important categories.
So all of this kind of first lens is really focused on how do we do what we do with a continuous mindset improvement? And that really kind of drives a rolling five year approach. But we also have some teams that are freed up from delivering this week's production, this month's returns, this quarter's results. And so they have a little bit more of a blue sky, almost a exploration kind of mindset to say, what is it beyond what we're doing today? Certainly enhancing what we're doing today, extending the runway of what we're doing, but also thinking about adjacent businesses, maybe up up the value chain or down the value chain. Thinking about really creative opportunities in this world of transition. We recently made an investment in a geothermal company that in a 0-5 year lens may not look material, but when you really open it up to that longer term approach, it could really be a material way that energy is created going forward. So, we always are looking to think about Devon in a 2030 and a 2040 mindset and really making sure that we are generations ahead in some cases.
ND: Well, speaking of carbon, it is ... in oil and gas operators ... clearly oil and gas is going to be crucial and essential to energy in the future for a long time going. But, in carbon footprint, kind of carbon credibility, in those terms is kind of, it looks like it's going to define the oil and gas operators that exist in the future versus the oil and gas operations of the past. In terms of M&A, I would gather that there are merger and acquisition candidates, just like all operators are always, you know, considering and looking at, that you would kind of lean towards wanting to acquire and merge with one, with a very good low carbon program. How does that work for you?
CG: I think it's an important consideration, but it's no more important than the base fundamentals of the eNPS assets that they have. Do they enhance the footprint that we have today? Are there other things that they bring maybe some breakthrough technology or a mindset that is really beneficial to and incremental to what we're already doing? We would certainly love to have a really clean acquisition that fits right into our footprint, bought for the right price that enhances our absolute business model and makes us a better version of ourselves, but you usually don't get all of those things to line up. So if, for your example, if in the case of a company that we acquired may not have had the highest standards as we have, we're fine with going in and retrofitting. In fact, one of the deals that we did last year, part of the acquisition cost in our minds was making sure that we had the opportunity to go rebuild a lot of facilities and run things in a little bit different manner with a longer term view. And that's been very beneficial and it's beneficial from an economic standpoint, from our operations standpoint, and for Devon's continued credit with how we operate. It's fundamentally important.
ND: Wonderful. Thank you, Clay.
CG: Thank you Nissa, appreciate it.
ND: Really appreciate it. And thank you for joining us. Again, this was an interview with Clay Gaspar, COO of Devon Energy, here at SUPER DUG 2023 in Fort Worth. Please stay tuned to HartEnergy.com for more intelligence gained from the conference.
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