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Noble Energy Inc (NASDAQ:NBL)
Q4 2019 Earnings Call
Feb 12, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Noble Energy's Fourth Quarter 2019 Earnings Results Webcast and Conference Call. Following today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to, Brad Whitmarsh. Please go ahead.

Brad Whitmarsh -- Vice President, Investor Relations

Thank you, Chad. And thanks to all of you for joining today's conference call. I hope you've had a chance to review the news releases and presentation deck that we published this morning. These materials are available on the Investors page of our website, and they highlight our strong 2019 and an updated capital allocation framework with specifics on our 2020 plans. Later today, we'll file our 10-K with the SEC. I want to remind everyone that today's discussion contains projections and forward-looking statements, as well as certain non-GAAP financial measures. You should read our full disclosures in our latest news releases and SEC filings for a discussion of those items.

Following our prepared remarks, we will hold a question-and-answer session. I would ask that analysts limit themselves to one primary and one follow-up. Our planned comments this morning will come from Dave Stover, Chairman and CEO; as well as Brent Smolik, President and COO. Also joining us for Q&A is Ken Fisher, EVP and CFO; Hodge Walker, SVP of Onshore; and Keith Elliott, our SVP of Offshore. I also want to extend a welcome to Robin Fielder, SVP of Midstream who is joining us for her first call as well. Our planned comments will go about 25 minutes, and we will wrap up today's call in an hour.

With that, I'll turn the call to Dave.

David L. Stover -- Chairman and Chief Executive Officer

Thanks, Brad. And good morning everyone, and thanks for joining our call. At this time last year, I started my comments by saying, we were on the cusp of something very unique and very special. Today, I'm excited to highlight how we have now delivered and poured the foundation for Noble Energy to provide a differential future for investors. I want to start this morning by taking a proud look back at 2019, which was a remarkable year for the company as we executed on our strategy of a low-cost diversified E&P, delivering moderate growth and sustainable free cash flow to our shareholders.

As highlighted in our fourth quarter press release and slides, we finished the year with another impressive quarter of operational execution and cost discipline. Production was toward the high end of expectations and capital and unit production expenses were again below plan. For the full year 2019, we delivered extremely well on all areas in our control. It was quite possibly the best year of execution and delivery of our strategic objectives of any year that I've experienced in this business. I want to congratulate the Noble Energy and Noble Midstream teams, our partners, and shareholders for all that we accomplished last year.

Many of our accomplishments can be seen on slide 3. Beginning the year, we lowered our capital expectations 17% from 2018 levels, while anticipating 5% pro forma volume growth. We actually drove nearly 7% total production growth on 25% less capital. Combined our capital savings with $240 million and operating cost reduction of $120 million, improved our total cash flow by $360 million from where we expected when we started 2019.

In our US Onshore business, we delivered 10% total equivalent and 10% oil growth over 2018, while achieving record safety performance for the year. We promised to have Leviathan on production by year-end and did so at more than $200 million under budget. Also in our Eastern Med business, we substantially expanded the total quantities of our gas sales contracts into Egypt, while securing a pathway through the acquisition of interest in the EMG pipeline.

In West Africa, we sanctioned the Alen Gas Monetization project and first production remains on schedule for early 2021, driving incremental cash flow and volumes next year. We also commenced production from the Aseng 6P oil well, which is producing in excess of expectation. 2019 was an exceptional year for reserves, as we replaced 233% of our production at just over $7 per equivalent barrel development cost. US onshore proved developed reserves were added an attractive cost of under $8 per equivalent barrel.

On the portfolio side, we continued to build long-term value potential for Noble Energy with an exploration farm in offshore Colombia, and we added to our low-cost unconventional acreage position now totaling over 200,000 acres, primarily in the Powder and Green River basins in Wyoming.

We targeted $500 million to $1 billion in portfolio proceeds for 2019. We're able to achieve that outcome with full year proceeds of over $800 million including $670 million from the Noble Midstream transaction. This helped us close the -- close out the year with $4.5 billion in financial liquidity. I was also pleased that our Board approved a 9% increase in our dividend last year, reflecting confidence in the significant cash flow increase that is occurring in 2020.

On the EFG front, I mentioned earlier, our record onshore safety performance in 2019. We noted other advancements in our 8th Annual Sustainability Report and our 1st Climate Resilience Report, which utilized the TCFD framework. We also welcomed Martha Wyrsch to our Board in December, our third new member in the last 2.5 years.

The greatest single achievement in 2019 was successfully bringing Leviathan offshore Israel on production. The safe and successful execution of this unique development has been world-class, continuing our exceptional track record of major project delivery. We are already delivering volumes into Israel, Jordan and Egypt, making it the first time in Israel's history to have significant exports to regional customers. Brent will provide more details on the fields ramp up and sales outlook, but I am extremely pleased with the early production history and reservoir performance.

The notion that world-class field gets bigger and better certainly applies to Leviathan. An essential part of Noble's competitive advantage comes from the blend of short cycle onshore unconventional assets with world-class offshore conventional assets. Few companies have this combination in their portfolio. This asset mix provides us investment optionality, the top tier corporate decline rate, and the ability to build the company in a capital-efficient manner focused on generating returns.

You'd have seen slide 9 before, and we've updated it to highlight a real differentiator for Noble Energy. With Leviathan now on production, we expect our total company annual production decline rate to be in the low 20% range. You can see how well that positions us compared to the decline profiles of key US onshore basins. This year we expect over 30% of our production and nearly 40% of our operating cash flows to come from our conventional low decline assets. This provides more certainty of cash flows, lower maintenance capital and ultimately positions us to make the right capital allocation decisions for our shareholders in all macro environments.

We've also updated slide 10, which represents our multiyear capital allocation framework. As compared to last year, 2020's model reflects a substantial improvement in our maintenance capital needs from $1.6 billion projected annually to $1.4 billion going forward. The improvement primarily reflects the significant reduction in well costs from our onshore business. This framework remains highly focused on generating strong returns through commodity cycles and driving sustainable free cash flow.

As mentioned many times before our planning targets the following. One plan the business for a long-term WTI oil price of $50 to $60 per barrel. Two, generate a competitive free cash flow yield annually with significant return to investors, focus on delivering at least $500 million in upstream free cash flow this year with the potential to continue to grow going forward. Three, maintain a strong balance sheet and financial flexibility; and four, drive a long-term production growth CAGR of 5% to 10%.

For 2020, we've set our capital budget at $1.6 billion to $1.8 billion at the upstream level, as we prioritize our free cash flow generation and balance sheet support over additional growth. Capital spend for 2020 is estimated down 25% from last year while production volumes should grow 10% and operating cash flow grows even higher. This occurs as our margins improve with Leviathan start-up but also from the allocation of capital within the US Onshore business unit. Brent will touch on this more later. But even with level year-on-year onshore equivalent volumes, we expect moderate US Onshore oil growth. Use of free cash flow will continue to be prioritized for return to investors through dividend growth and balance sheet improvement.

With everything we've delivered in 2019 and recognizing commodity price volatility, I'm even more confident now in our ability to generate sustainable free cash flow while continuing to build our business. This year, we've also modified our short-term and long-term compensation programs to further highlight our focus on organic free cash flow and ESG improvement. These changes reflect an increased weighting in the short term bonus pool toward define metrics with organic free cash flow being the highest weighted metric for 2020.

In addition, we have modified our long-term incentive plans, moving away from solely peer relative total shareholder return performance and incorporating cash return on capital employed and ESG measures. I believe these changes further aligns our interest with those of our shareholders. As I hand over to Brent, I want to highlight three key factors where Noble Energy is distinguishing itself. First, outstanding execution, which sets the stage for 2020 is decreasing capital and increasing cash flow and volume. Second, the move to a lower annual corporate production decline rate and maintenance capital. And third, a global inventory that includes substantial low cost discovered resources that can utilize existing infrastructure to generate competitive returns.

Our accomplishments in 2019 serve as evidence of our ability to provide differential performance for our investors. Thanks for your time this morning, and I will now hand this over to Brent.

Brent Smolik -- President and Chief Operating Officer

Thanks, Dave, and good morning everyone. 2019 was truly a tremendous year for the company. We closed out the year with a strong fourth quarter and with an extensive list of accomplishments during the year. As we move into 2020, we're building on our 2019 successes and as Dave discussed, we expect to increase cash flow and production and decrease capital and expenses. In US Onshore, we achieved sustainable reductions in capital last year through several initiatives, including faster drilling rates, accelerated completion times, lower cost facilities and well connects.

On the expense side, optimize compression, improved uptime and reduced workover frequency are examples of long-term changes in the efficiency of our base production operations. I expect the 2019 capital and expense gains to continue into 2020 and beyond. We also achieved those improvements in our execution and cost culture, while -- cost structure while maintaining a strong company wide safety culture. In 2019, we achieved a record low total recordable incident rate for the US Onshore and we delivered the Leviathan platform in Israel, and the Aseng 6P well in Africa, without a recordable injury. Each of these programs are well executed for less capital than planned, which strengthens our conviction that efficient operations are safe operations.

Our 2019 execution success has also shaped our thinking about capital allocation for 2020. As Dave mentioned, we set the total capital budget for the company at $1.6 billion to $1.8 billion, which includes offshore major projects, exploration capital and essentially maintenance capital level for the US Onshore. Due to the year-over-year improvements in capital efficiency, we're planning a similar number of activities in the DJ and the Delaware for the 2019 drilling campaigns for approximately $200 million less capital. The program is expected to generate DJ growth to offset Eagle Ford decline and maintain or modestly grow Delaware production.

We think that the focus on DJ makes sense based on the scale and the remaining inventory in the DJ Basin, our track record of successful execution returns there, and the ability to grow while generating significant cash flow. We expect this capital plan to deliver moderate onshore oil growth as production increases in the more oily DJ assets and offsets decline in the NGLs, and natural gas in the Eagle Ford. All three US basins are designed to generate free cash flow in 2020.

Jumping into some asset specifics in 2019, the DJ Basin delivered more than 20% growth over 2018 and during the year Mustang and Wells Ranch both delivered quarterly record production. The strong performance in the Mustang development area resulted in positive reserve revisions of almost 27 million barrels equivalent for the year, validating the quality of our acreage and the importance of consistent row development. DJ operating costs were down more than 15% year-over-year with record lows in the fourth quarter.

Furthermore, the DJ DD&A rates improved by more than $3 a barrel for 2020 reflecting the improvement in EUR and cost per well. The exceptional performance for the year is trending into 2020 and we expect even more efficient development in Mustang. Our first TILs for the year, we will complete Row 2 in Mustang on the far eastern side of the development and then we'll move to Row 3, which is immediately adjacent to Row 2. And we plan to utilize the existing upstream and midstream infrastructure, therefore reducing the well costs and improving the efficiency of the well connects.

In the first quarter, we plan to run three rigs and two frac crews and are targeting about 20 TILs. Our North Wells Ranch comprehensive drilling plan is progressing through the approval process and the CDP will add about 250 long live drilling permits to our existing permit inventory and will give us clarity to about two more years of drilling activity.

In 2019, the Delaware Basin delivered 25% growth over 2018 and during the year, we realized several important improvements in the asset. Row development has improved the consistency of our well results, drilling and completion efficiencies have helped produce well costs by over 20% and LOE has decreased by more than 30% on a per unit basis.

In my experience, it is rare to see such dramatic year-over-year improvements in an asset, and it would be difficult for us to replicate the magnitude of the 2019 improvements. However, we still expect to see cost structure and well performance gains in the Delaware again in 2020. So for example, in the fourth quarter 2019, we completed four wells in the southern portion of our Delaware acreage and the 30-day IPs on those wells averaged 200 barrels of oil per 1,000 foot or 260 barrels per foot on an equivalent basis. Those great results demonstrate how we can further improve well performance with optimized landing zones and customized completion designs.

As we apply those ideas and techniques across the acreage position, we expect to see improved well performance, increased capital efficiency and even better returns in 2020. In the first quarter, we'll have two rigs and two frac crews running in the Delaware and deliver about 15 TILs. The Eagle Ford asset will continue to be a considerable cash flow generated as we maintain focus on base production optimization in 2020.

Closing out the US Onshore, I want to highlight the strong underlying performance of Noble Midstream. The team at NBLX has done a great job of building out the gathering infrastructure to support Noble Energy's activity in the DJ and the Delaware. Like Noble, Noble Midstream is nearing the end of a heavy investment cycle and transitioning the longer-term sustainable cash flow. And the impact of long haul pipes out of both basins along with significantly reduced organic capital outlook positions Noble Midstream very well for 2020 and beyond.

Turning to the Offshore, we delivered several strategic milestones in 2019 clearly punctuated by the start up of Leviathan at year end. As we signaled, we expect EMED and Leviathan to be the growth engine for the company in 2020. Since start-up the field has been ramping up and on peak days we've exceeded 1.8 Bcf per day from both Tamar and Leviathan combined. As Dave mentioned, we also successfully opened up new markets in the region with exports flowing into both Jordan and Egypt. As we ramped up production in the field the Leviathan wells have proven to be even more prolific than we anticipated. With well deliverability is exceeding 400 million cubic feet a day due to the very high reservoir permeability and thickness.

Our focus in 2020 is going to be to deliver safe operations, demonstrate supply reliability and increase value to greater contracted sales. We have a combined 2.3 Bcf of capacity. And we're primarily focused on increasing the utilization of that capacity this year. Capital allocation for 2020 in the will be approximately $100 million, which includes the Tamar South West Pipeline project compression at Echelon on the EMG pipeline and a debottlenecking project on the Israel INGL pipeline grid.

In addition to the value creation of the project and the regional economic benefits, Leviathan is a very long-term source of clean reliable energy because of the use of more natural gas, and less coal for electrical generation will result in significantly better air quality in the region. In West Africa, the Aseng 6P well and the LN sanction were the highlights for the year. The 6P well has continued to outperform expectations and will help reduce base declines in 2020. Also for 2020, we will allocate approximately $165 million to the oil and gas project facilitating an early 2021 start-up.

The project already had a positive impact on the 2019 results with 34 million barrel equivalents of reserve additions from Alen and 18 million barrels of positive revisions from extending the economic life of the Alba field. Bigger picture. Our longer-term capital planning also includes exploration as a means to adding future resources and maintaining longer term portfolio value. In 2020, we allocated $65 million to drill the Cumbia prospect in Colombia, which is in the second half of the year. This will test targets approaching 0.5 billion barrels of resource at the midpoint of estimates and a successful well here will derisk additional prospects in the basin. So I'll wrap up this morning with guidance.

First, for the full year. During the year, we expect US Onshore capital spending to be about 60% weighted to the first half of 2020 similar to the profile in 2019. And we also expect the 2020 production profile to be similar to 2019 with second half growth and the US Onshore driven by peak second quarter TIL counts. Importantly, US oil production is expected to be up 3% to 5% year-over-year, and 5% to 7% 4Q to 4Q.

In the Eastern Med, we anticipate the second quarter to be the lowest sales for the year with a peak in the third quarter due to growing contract quantities and second quarter lower seasonal demand. Based on the successful start-up of the field, we're maintaining our prior guidance of 1.4 Bcf to 1.6 Bcf per day gross, from our Israel fields in the first half and 1.8 Bcf to 2 Bcf per day in the second half of the year. Due to shift in Africa due to greater capital and maintenance activities this year and then in 2019, we expect more quarterly variability in our sales, expenses and cash flows.

Q1 sales will be -- will benefit from additional lifting and then we also expect some fourth quarter downtime as we prepare for the Alen gas project to come online and due to planned maintenance at Aseng and the Alba fields.

Specifically in the first quarter, we expect Q1 volumes to be up meaningfully from the fourth quarter primarily due to our incremental Leviathan production and all three US Onshore business units should be down in Q1 because of low fourth quarter and first quarter activity levels. In Israel, we expect 410 million cubic feet to 440 million cubic feet a day net from our Tamar and Leviathan assets. In West Africa, all sales are anticipated to be higher than production with total equivalents down slightly quarter-over-quarter primarily due to natural gas declines in the Alba field.

Total company sales for the first quarter anticipated to be 378,000 barrel equivalents per day to 398,000 barrel equivalents per day. And I'd expect the second quarter to be relatively consistent with the total first quarter volumes before we see another substantial jump up in the third quarter. For 2020, we remain committed to capital discipline and shareholder return and we believe it's a -- it's prudent to prioritize total company free cash flow generation over US onshore production growth particularly when considering the total company year-over-year production and cash flow growth from the Eastern Med and the uncertain commodity price environment.

Beyond 2020, the combination of the depth and quality of our unconventional and conventional inventory, our ability to execute on our plan as a Met and manage costs, our low decline rate, and our capital discipline, all enable us to deliver long-term sustainable growth and free cash flow. This completes our prepared comments. We will now turn the call over to the operator for Q&A.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Arun Jayaram with JP Morgan. Please go ahead.

Arun Jayaram -- JP Morgan -- Analyst

Yeah, good morning. Dave, you did reduce your maintenance capex by $200 million. I wanted to know how you will deal with uncertainties in 2020 regarding the plan, you obviously have the coronavirus, the warm start to the winter weather season and weak gas prices in the US and Europe. So I'm wondering how you would flex 2020 if prices are below the reference prices that you highlighted in slide 25?

David L. Stover -- Chairman and Chief Executive Officer

I appreciate it, Arun, and I'll tell you what, it's great to be sitting here in 2020 despite all those other outside influences coming off the momentum that we created in 2019. And I think that will go partly to answering your questions I talk about it because I think to your point, we had a reference deck out there we were looking at when we budgeted, but we've also obviously kept track of strip pricing and so forth. And I'd say even in the strip case that's out there now that's been influenced by some of those things that you've talked about, we're still staying committed to that free cash flow generation, partly because of the hedges we have in place already, and partly because of the momentum that we're continuing to carry in on the capital efficiency improvements. So I think we're staying committed and focused on that and we'll play it out from there.

Arun Jayaram -- JP Morgan -- Analyst

Yeah, fair enough. I had one question regarding 2021. I was wondering if you could help us think about the volume impact from the Alen gas monetization project, it looks like it's going to be start up in early 2021 and in your mind is the path to get to full volumes are at Leviathan in 2021 or 2022?

David L. Stover -- Chairman and Chief Executive Officer

Yeah, I think when you think about Alen, we should be able to and what Keith and his team is working on is getting that ready for early '21. I think a full year impact of that what we laid out in there was around 260 million a day growth. So somewhere on an equivalent basis 15,000 barrels to 20,000 barrels a day equivalent for us, if I'm not mistaken. So that's a nice catalyst as you look into '21.

And then the other piece that you referenced is, when you look at the profile this year is the ramp up in the Eastern Med in the second half of the year and carryover into next year. So our focus in '21 will be on carrying over that ramp up from the second half of this year and then seeing if we can supplement that by filling out some of that capacity that we still have available there. So I think you've got opportunity for both of those things to be very nice catalyst as you go into '21.

Arun Jayaram -- JP Morgan -- Analyst

Great, thanks a lot.

Operator

The next question comes from Brian Singer with Goldman Sachs. Please go ahead.

Brian Singer -- Goldman Sachs Group Inc. -- Analyst

Thank you. Good morning.

Brent Smolik -- President and Chief Operating Officer

Good morning, Brian.

David L. Stover -- Chairman and Chief Executive Officer

Good morning, Brian.

Brian Singer -- Goldman Sachs Group Inc. -- Analyst

First question is on Israel gas sort of a slight follow up there. You talked about increasing utilization of Leviathan over the course of the year, and I wondered if you could just add even more color on some of the moving pieces, production capacity versus seasonal demand versus maintenance or pipeline constraints versus contracting as we go through the year? And specifically what you see is the market for additional contracts and how that could impact your production and pricing?

Brent Smolik -- President and Chief Operating Officer

Yeah, Brian. This is Brent. We took all those things into consideration when we originally guided the third quarter last year, on our third quarter call last year for this year's full year. We still think we're going to see a step-up in the first half to the second half all factors considered. But the the start-up has gone very well, and as I mentioned in the prepared comments. We've been above 1.8 Bcf a day on peak days from the combined total of Tamar and Leviathan on a gross basis. So I think other than some seasonal lower demand in the second quarter, we think we've got the profile -- profile model about right. And then, remember, as we move into the second quarter, the contracts and the exports to Egypt step up. So we go to 450 million a day. So that's what's influencing our second -- first half to second half year growth and it's -- what's already contracted.

Brian Singer -- Goldman Sachs Group Inc. -- Analyst

My second question is on proved reserves. Can you speak to the drivers and the production mix in the US sort of the increase in PDP, and then what drove the downward revisions? And how does the reserve report as well as the points that you made on expectations for well performance and cost in 2020 impacts your interest in pursuing inorganic growth projects in the US going forward?

David L. Stover -- Chairman and Chief Executive Officer

Yeah, I think just to hit on the proved reserves. The biggest positive revisions and improvements on proved reserves in the US were in the DJ. The downward revisions were more a reflection of change in activity timing and making sure that we're staying in that four year to five year level on activity. And then also, there was obviously some impact from price. There was significant price changes from '18 to '19.

Brian Singer -- Goldman Sachs Group Inc. -- Analyst

And then from an inorganic perspective, when you take that and how you see the costs and expectations for performance in the US business. Does that make you more or less interested or uninterested in pursuing inorganic growth acquisition types in the US?

David L. Stover -- Chairman and Chief Executive Officer

I think we've said and we've consistently said, we're not focusing on acquisitions, if that's what your question is, but we're focusing on continuing to get more and more efficient and develop out the large global resource base that we have both US and international. We have that significant benefit of a large global discovered resource base.

Brian Singer -- Goldman Sachs Group Inc. -- Analyst

Thank you.

Operator

And our next question will come from Charles Meade with Johnson Rice. Please go ahead.

Charles Meade -- Johnson Rice & Company -- Analyst

Good morning, Dave to you and your whole team there.

David L. Stover -- Chairman and Chief Executive Officer

Hey Charles.

Charles Meade -- Johnson Rice & Company -- Analyst

I wanted to ask a question about the US Onshore and if you guys could deliver or offer a few more details on how some of the drivers over the back half of '19 into '20. If you look at the -- you guys came in under capex -- under capex guidance in both 3Q and 4Q, and I think part of that was the US Onshore. And when we look at your 1Q guide, the US Onshore Oil is going to decline by depending on where you fall in your guidance, 8,000 barrels to 10,000 barrels a day. But you guys are putting the -- you guys are putting the pedal down it seems on your spending in 1Q. So can you talk about what those drivers were and how much of that decline we're seeing in 1Q was really a function of you guys coming in perhaps below what you're spending -- what you thought your spending was going to be in the back half of the year?

Brent Smolik -- President and Chief Operating Officer

So just to give you a little background, we got more activities done through the full year 2019 than we budgeted for less capital but it's timing related, because we were accelerating the completion pace and the drilling pace. We pulled some of those third quarter completions in the second quarter and some of the fourth quarter into the third. So our fourth quarter last year and our first quarter of this year TILs, the new projects that turned into line were lower than we would have -- we thought about at the beginning of last year.

So that's what contributed to the production outperformance through the year. And also -- it's also what's causing the shape of it as we go fourth quarter to first quarter. All that is was in line with our expectations with the exception maybe of the outperformance that we saw in the DJ. And so in that case, we beat volumes in the DJ over what we would have guided in the fourth quarter and we grew more oil in the full year 2019 because of that outperformance. So, so far we're not seeing anything negative in the way we were modeling well performance, capital or capital efficiency.

David L. Stover -- Chairman and Chief Executive Officer

I'd say, Charles, just to add to that. And Brent highlighted it in his prepared comments, you look at that even fourth quarter to fourth quarter, oil volume increased from '19 to '20, that's pretty significant for the onshore portion.

Charles Meade -- Johnson Rice & Company -- Analyst

Got it. That's some of the color I was hoping for. And then I have a question on kind of your -- a refresh or an update on how you guys are thinking about your target leverage or target that you guys, you're going to have some free cash flows here that you guys mentioned the dividend is a priority, but can you, can you tell us or give us an update on your thinking on what metrics you guys use whether it's an absolute debt level or whether it's a consolidated leverage or upstream only leverage that you're -- that you're looking to get to.

David L. Stover -- Chairman and Chief Executive Officer

Yeah, Charles, I think we've been fairly consistent of staying focused on talking about the net upstream that the EBITDA target of 1.5 or lower over the next few years and that's the trajectory we're going to continue to watch and stay focused on. So I'd say the priorities as you mentioned are dividend and balance sheet trajectory.

Charles Meade -- Johnson Rice & Company -- Analyst

Got it. Thank you, Dave.

David L. Stover -- Chairman and Chief Executive Officer

Okay, Charles.

Operator

Our next question comes from Doug Leggate with Bank of America Merrill Lynch. Please go ahead.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Thanks. Good morning, everybody.

David L. Stover -- Chairman and Chief Executive Officer

Hey Doug.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Dave, I wonder if I could hit Israel first of all. I mean thanks first of all for the cadence in the second half, but I wonder if you can give us some idea as to what your exit rate looks like in Israel? What your expectations are maybe in the answer, if you could address some of these headlines that have been circulating around Jordan as it relates to the exports and I've got a follow-up, please.

David L. Stover -- Chairman and Chief Executive Officer

Yeah, we've been very pleased with our exports and what we've been seeing out of both Jordan and Egypt and the support and cooperation in both places, I think has been remarkable. When you look at our second half of the year, what we've said that 1.8 Bcf to 2 Bcf a day for the total Eastern Med volume. And I think that's still a reasonable place to be thinking about. I think when you look even beyond that, and was touched on earlier and is a good place here to dive into this I think, but it's been absolutely remarkable the impact that Leviathan has had on the region. When you think about how it's brought together the countries, I mean obviously the cooperation between Israel, Jordan and Egypt.

But then you think about it on a bigger scale, you now have an Eastern Med Gas Forum that started up. You've got countries like Cyprus, Israel, Egypt, Jordan, Palestinian Authority that are all getting together to think about how do you use this huge resource in the area that's now -- and I think, partly from Leviathan is getting a lot more international attention. And then you've got other groups that are looking at things like how do we get gas to Europe.

You've got groups pulling together discussions on a pipeline to Europe. We're looking at FLNG as a competitive option. You've got the opportunity to use the gas plants in the LNG plants in Egypt. So you've got some very strong competing options and a very strong pull to get gas in the Europe at some place, then just expand the whole horizon, the development and broader reach of this large resource and that's getting attention. It's getting attention from the countries themselves and it's getting attention from a lot of international players. So I got to give Leviathan a lot of credit now for having now been online to just creating kind of a revitalization of that part of the world from an energy perspective.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

I appreciate the lengthy answer, Dave. My follow-up, I'm not sure if you'll be able to offer any color here. But I'm looking at slide 20 in the book. And I think for at least for us on the sell-side, that's a really helpful chart in terms of how the cadence of Alen kicks in to the -- for the production profile. My question is what can you tell us about your cash flow coming out of EG, because obviously you're providing the resource, but there has not been much disclosure on the terms, obviously. So I'm just curious when we think about the contributions of volumes coming from your legacy asset, how does your cash flow trajectory evolve as we look at that chart on Page 20?

Brent Smolik -- President and Chief Operating Officer

Yeah, we haven't guided yet -- this is Brent, again. We haven't guided yet to that level. We've stated the volume level but we remind everyone that this is a very low cost to liquefy, a very low cost project to operate because it's all existing infrastructure with the addition of a new pipeline to the LNG plant and then the only other variable would be global gas prices that you can think about right now, they're softer than they've been in the past but long term, it would be a global gas price because we own the equity gas to end markets.

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

All right, guys. I thought I'd give it a go, but I appreciate the help, and appreciate the capital discipline. Thanks.

David L. Stover -- Chairman and Chief Executive Officer

Thanks, Doug.

Operator

The next question is from Michael Hall with Heikkinen Energy Advisors. Please go ahead.

Michael Hall -- Heikkinen Energy Advisors -- Analyst

Thanks, good morning.

David L. Stover -- Chairman and Chief Executive Officer

Good morning, Mike.

Michael Hall -- Heikkinen Energy Advisors -- Analyst

I appreciate the time. I just -- I guess focus a little bit on the US Onshore business that exit to exit growth rate you provided for US Oil, it looks pretty good relative to where we were. I'm just curious, how are you thinking about the sustainability of that level? And then how would you frame your inventory depth in the US Onshore, let's say for 2021 and beyond at this point? How are you thinking about that?

Brent Smolik -- President and Chief Operating Officer

Yeah, Mike, this is Brent again. Yeah, I think the second question first is we still feel like we've got a long runway, both in the DJ and the Delaware of high return, high quality inventory, partly because of the size and scale of the DJ position. And then, partly because of a lower activity levels that effectively extends our inventory life in both places. So we think we've got lots of sustainability in terms of depth and quality of inventory. In Colorado specifically, we've got a deep inventory of approved drilling permits and we're working to extend those more with the new CDP, we're working on.

In terms of the oil part of it, it's even though we're keeping the US essentially flat, year-over-year, 2019-2020 with the current capital plan because we're focusing it in the DJ and the Delaware that are oilier than Eagle Ford by comparison. Then that's why we're able to grow oil and that trend would continue going forward as long as we continue to focus capital in those two basins.

Michael Hall -- Heikkinen Energy Advisors -- Analyst

Okay. That last, that was, I was hoping to hear. That's helpful. And I guess maybe if you could also translate to total corporate oil. I mean, I know there are some downtime in the fourth quarter in West Africa. Is that just affecting gas volumes? Should we, how should we think about fourth quarter -- exit on a quarter-to-quarter basis?

David L. Stover -- Chairman and Chief Executive Officer

Yeah, there is some oil condensate type of mix but then when you -- when you get into '21 we will have that behind us and then Alen will also have some condensate that comes with that.

Michael Hall -- Heikkinen Energy Advisors -- Analyst

Okay. Great. I appreciate it guys. Thanks.

Operator

The next question is from Scott Gruber with Citi. Please go ahead.

Scott Gruber -- Citi -- Analyst

Yes, good morning.

David L. Stover -- Chairman and Chief Executive Officer

Good morning, Scott.

Scott Gruber -- Citi -- Analyst

I just wanted to follow-on the last line of question really focusing on the DJ because that's what you're growing in 2020. And you mentioned maintaining that momentum in to '21 given inventory depth. But just as you think about the asset long term, is there a plan to shift the asset to the maintenance mode at some point? And if so when and just how could international growth opportunities affect that timing?

Brent Smolik -- President and Chief Operating Officer

Yeah, I don't think, this is Brent, I don't think we think about it like shifted to maintenance mode or not, it's our capital allocation long-term is returns driven and the DJ returns, stack up very well right now in the portfolio. And so I think as long as it's in that position, then it would continue to garner its funding. And then the growth would be an outcome, not a goal. Remember that asset is already like all US assets, but even at the current capital and current growth rate, DJ's free cash flow positive at the asset level. And so we can continue to stay in this mode for long-term.

Scott Gruber -- Citi -- Analyst

Got it. And a follow-up on the seasonality in the US both from a capex and production standpoint, it sounds like it's going to repeat again in 2020 and potentially capex flexing down a little bit more in the second half, if commodity prices stay weak. But in general, are you comfortable with that seasonality on an ongoing basis? Would it be better to try to smooth out the capex over the course of the year? I guess the real question is, do you feel like you're losing any efficiency in our operations with that seasonality?

Brent Smolik -- President and Chief Operating Officer

Yeah, it's always best case, if you could be perfectly level loaded in all aspects of the business, but if you look at the performance from '18 to '19 and look at the improvements in cycle time reductions, capital, and capital efficiency for the US Onshore even though we were kind of 60% front half loaded and 40% back half loaded on capital. I think we've found ways to manage those -- that a little bit of unlevelness. It's not that much, but it's manageable and we're still able to hang on to the -- or drive even significant improvements in the capital efficiency. It takes a lot of planning and scheduling, but that's what we do.

Scott Gruber -- Citi -- Analyst

Got it. Appreciate the color.

Operator

The next question is from David Deckelbaum with Cowen. Please go ahead.

David Deckelbaum -- Cowen and Company -- Analyst

Good morning, everyone and thanks for taking my questions, and thanks for the outlook. Curious as you guys look at Leviathan, we've read reports that from some of your peers out there and some of your partners that there is decisions this year on expansion. I think Dave, you talked about floating LNG as a viable option. Can you give us a timeline on when you'd expect to make those decisions around the expansion and given some of the productivity, where do you sort of see that capacity tapping out for the field at this point.

Brent Smolik -- President and Chief Operating Officer

Yeah, this is Brent. Maybe I'll jump in and take that one. We've said pretty consistently for 2020, our priority is making sure we can demonstrate safe, reliable supplier coming from the Leviathan project so far so good in that regard and then utilizing the existing capacity. So in total, we now have 2.3 Bcf a day in the Med and so those are definitely going to be our primary focus for 2020 and even 2021 when we roll into it. But because of the size and in quality of this resource, we're -- I think for long term we are going to be talking about expansion possibilities. So the one that we've talked about publicly is that we've got a floating LNG, FLNG FEED study under way that Dave mentioned. And that's a possibility to expand to additional markets.

The others would be in all three countries. We can expand in Israel, Jordan and Egypt, and we can ultimately maybe get it exported out of Egypt through the LNG facility. So all of those are all actively being worked and we're looking to be able to expand with demand.

David Deckelbaum -- Cowen and Company -- Analyst

Got it. And I appreciate the color there. I recognize there is not a whole lot you can say there. And just wanted to ask a question on US Onshore. You talked about the mix right now focus on DJ obviously and Delaware. That mix of 60-40 split is pretty consistent I guess with 2019. Is there a point in your long-term development profile where that switches? Does it happen beyond the proposed wells around CDP?

And I guess as a follow-on to that is, as we think about capital of those assets I know it's returns base at this point. But given the corporate level focus on free cash generation, you know if we're looking at strip now in the low 50s, is there a sub maintenance profile that makes more sense from a free cash generation perspective.

Brent Smolik -- President and Chief Operating Officer

It feels like we've gone a long way here from '18 to '19 to '20 in terms of driving down US Onshore capital, and driving up capital efficiency, at the level that we're at now to the earlier question where we're pretty low in terms of activities, rigs and stem, and we've got it matched up pretty well in the pace of development. And so it feels like a good level, if prices go lower though, we've been very, very consistently committed to our free cash flow objectives. And so we'd have to think about something in the back half of the year for an adjustment there.

David Deckelbaum -- Cowen and Company -- Analyst

Thanks, Brent. Appreciate the color, guys.

Operator

The next question will come from Scott Hanold with RBC Capital Markets. Please go ahead.

Scott Hanold -- RBC Capital Markets -- Analyst

Yeah, thanks. I'm just kind of building on a couple of the line of questions a little bit. Obviously, in 2020, you got the nice growth in Leviathan and then EG in 2021. As you look a little bit bigger picture longer-dated, I mean do you feel -- I mean do you see the need to continue to ramp up the US Onshore a little bit more as you get into some of those out years to provide that 5% to 10% growth?

And maybe as a part of that discussion, when you think about things like FLNG. How long of a time frame do you really have there, is that two years, one year, two year, three years. Can you give us a sense of how long that would take to come to fruition?

David L. Stover -- Chairman and Chief Executive Officer

Well, I think, let me start with the last question. On FLNG, we will be doing a hard look FEED study this year. So by the end of this year, we'll have a better perspective and I think to actually bring it about to a reality probably say plus or minus three years, let's call it something like that. I think on your other question which goes to the longer-term outlook for this company. I think that's where our ability to have maintained our exploration capabilities also comes into play. I mean hopefully not missed in the discussion was the fact we're back to drilling significant material exploration prospect this year, offshore Colombia and we've consistently focused on three to five key material potential plays going forward. Any of those could supplement our outlook as we go forward just as our offshore developments so far were driven by exploration in the past.

And then in the onshore business, let's not forget the significant position we've built in particularly in Wyoming up there and the inventory and my expectation is over time over the next five years that will start to compete with DJ and Delaware to give us another leg to build off. So I think the beauty of our portfolio -- of a diverse portfolio is the fact that we've maintained our onshore capabilities, our offshore capabilities and our exploration and major project execution. That gives us a lot to look forward to going forward.

Scott Hanold -- RBC Capital Markets -- Analyst

That was a great color. And then my follow-up is on the Eagle Ford, obviously getting really no capital this year and not much last year. Given it's free cash flow but it is a declining asset. And just from a visual perspective, it obviously weighs on that US growth rates on especially on a BOE perspective. What is the big picture long-term plan of the Eagle Ford?

Brent Smolik -- President and Chief Operating Officer

Yeah. Scott, some of the things we've talked about in the past is there is still a lot of resource there that's in the secondary upper parts of the Eagle Ford and we tested last year pilot program to do some refracs to see what we can do with the older wells and the older vintage completions. So those that upside still exist and there is still potential that's out there. But right now the heads up drilling capital doesn't compete with the Delaware and the DJ. So it will stay in its free cash flow generation posture.

Scott Hanold -- RBC Capital Markets -- Analyst

Would it be a monetization candidate?

Brent Smolik -- President and Chief Operating Officer

Yeah, I mean we've said often on that we're willing to think about divesting non-core assets and we've done a fair amount of that over the last couple of years. So if somebody came out with a big enough check, we think about it.

Scott Hanold -- RBC Capital Markets -- Analyst

Appreciate it. Thanks.

Operator

Next question is from Paul Cheng with Scotiabank. Please go ahead.

Paul Cheng -- Scotiabank -- Analyst

Good morning. Thank you, guys. Two quick question. One, do you have an estimate what's the remaining prospect inventory at DJ and Delaware, if we base on a $50 WTI and $2.50 Henry Hub on all-in including capex, G&A and all that to generate a 10% return.

David L. Stover -- Chairman and Chief Executive Officer

I don't have numbers right here in front of me, but what we've continued to say is that the activity levels. We've got 10 years type inventory or beyond on this stuff that fits our return in certain criteria. So...

Paul Cheng -- Scotiabank -- Analyst

All right. And Brent that when you guys say 10 years, what type of return that you are based on and then whether that that's including on the all-inclusive on the field level? What I was trying to understand what's the baseline that we're using?

Brent Smolik -- President and Chief Operating Officer

Yeah, so just a reminder, our investment for the next well AFE is our hurdle rates of 30% hurdle rate and that's where we would start on these long-term inventory kinds of conversations. And then, remember that we've been driving capital efficiency significantly. So when we take out a couple of million dollars of well cost and/or improve the productivity of the wells, like we've been doing in both DJ and Delaware then that only and that increases the value of the inventory. So that's the way we think about it long-term.

Paul Cheng -- Scotiabank -- Analyst

Okay. The second one that I think with -- on East Med with that, now, your total capacity 2.3, I think you have two opportunity maybe up 400 million cubic feet per day each time. Just curious that I mean, do you have a rough estimate, what is the capex requirement if we do want to expand the mix 400 million cubic feet and then the next one?

David L. Stover -- Chairman and Chief Executive Officer

Yeah, I think the best way to think about it is to take you back to our long-term capital framework, what we've laid out total company is 1.8 Bcf to 2 Bcf a day over the next five years, and that includes both exploration and major projects and those expansions, you're talking about in Leviathan fit within that framework. So the major project capital per year includes our thinking about how those expansions would come in over time.

Paul Cheng -- Scotiabank -- Analyst

So at least one of them is included in that, say you call it the next five years.

Brent Smolik -- President and Chief Operating Officer

Paul, say that again, please.

Paul Cheng -- Scotiabank -- Analyst

Does it mean that at least one of the 400 million cubic feet per day expansion is included in the next five years?

Brent Smolik -- President and Chief Operating Officer

Yes, you can assume that because remember, the first expansion is really low cost. We're only talking about some incremental wells and facility mods. And so the first expansion is easily fits within our capital framework.

Paul Cheng -- Scotiabank -- Analyst

Okay, very good. Thank you.

Operator

The next question is from Leo Mariani with KeyBanc. Please go ahead.

Leo Mariani -- KeyBanc Capital Markets -- Analyst

Hi guys. I wanted to dig in a little bit more into the trajectory of the Permian production here in 2020. I think you guys were kind of talking flattish year-over-year. You did have some pretty good Permian growth in the second half of '19. So kind of get the flattish, should we be thinking that Permian is kind of down a little bit in the first half of '20 before ramping in the second half '20. Just wanted to see if I'm reading that right.

Brent Smolik -- President and Chief Operating Officer

Yeah, that's right. And before I expand on it. Remember that it's flattish on equivalents, it grows on an oil basis year-over-year. And then it should grow exit to exit, fourth quarter to fourth quarter, which means then because of the completion activity in the fourth quarter, lower completion activities in the fourth quarter and the first quarter then we're down a little bit in Q1 and then we grow through the year. Got it, right.

Leo Mariani -- KeyBanc Capital Markets -- Analyst

All right. No that's helpful for sure. In your comment with the oil growing and the equivalents sort of flattish. Is that just reflecting where you may be shifting some activity in the Permian at some oilier areas in '20.

Brent Smolik -- President and Chief Operating Officer

No, it's -- that was really a mix comments. That was a flattish on equivalent basis for the -- all of US Onshore. For the Permian, it will grow oil and equivalents.

Leo Mariani -- KeyBanc Capital Markets -- Analyst

Got it. Okay, that's helpful. And I guess just jumping back over to Israel, obviously you've got a significant ramp in production here in 2020. I just wanted to get a sense, I think that all of that ramp is volumes that are already under contract, which will clearly benefit you guys into 2021 as well. Just wanted to get a sense now that Leviathan is online and the wells look great. Are you starting to see accelerated discussions around new contracts there and you think there is a decent chance you guys might be able to get something in place here in '20?

And lastly with respect to Israel, is there any possibility you could sell volumes above what's contracted in 2020 and '21 or do you sort of need kind of hard contracts to get those new volumes going?

David L. Stover -- Chairman and Chief Executive Officer

Well, I think your question, Leo. We were starting to see accelerated interest before Leviathan even came on line from potential customers. So I think those discussions will continue to kind of get back to that mode, you build it and they will come type of thing. And you're seeing that and you're seeing that interest over there. The other thing to keep an eye on is how quickly Israel starts to displace coal. We've always talked about that being about a 600 million a day plus or minus type opportunity there and now with Leviathan on, we'll see if they kind of accelerate some of that conversion on that opportunity.

So, I think they've already talked about moving that up from late this decade to middle of this decade and now that Leviathan is on, I think that's an opportunity. So yeah, we'll see. We're obviously not limiting ourselves. We're not limited on capacity right now. We have some room to grow beyond what we've laid out this year and we'll see how it progresses, we're just a month, a little over a month into this and everything looks great so far. So it's a good start.

Leo Mariani -- KeyBanc Capital Markets -- Analyst

Okay, thanks for the color.

Operator

The next question is from Irene Haas with Imperial Capital. Please go ahead.

Irene Haas -- Imperial Capital -- Analyst

Yeah, very quickly to follow up on Brent's comment earlier that NBLX right now is going past a heavy investment stage. So any plan for like debt reduction like the term loan due '21. '22? And also related to this, your interest in NBLX Midstream, are you OK with it, any need to reduce ownership and deconsolidate in the near term? Thats's all I have.

David L. Stover -- Chairman and Chief Executive Officer

Irene, you're asking a financing capital structure question for NBLX?

Irene Haas -- Imperial Capital -- Analyst

Yeah, yeah, yeah.

David L. Stover -- Chairman and Chief Executive Officer

So that -- we will have that call a little later this morning too. But, yeah, you would expect as that business grows over time, it would term out some of its debt. That makes sense. In terms of the ownership, after the simplification and drop we now own 62% of the units. And as you know we consolidate that business accordingly. And so we have a lock-up for the first six months through mid-year this year. So nothing would happen in the first half and then longer term, we'd have to look at the merits of only 62% of it. We don't have to own that much of it to be able to manage, maintain the control of the pace of development to keep up with our DJ and our Delaware activity. So it's an option to think about.

Irene Haas -- Imperial Capital -- Analyst

Great, thank you.

Operator

The next question is from Gail Nicholson with Stephens.

Gail Nicholson -- Stephens Inc. -- Analyst

Good morning. Well my question is on the LOE side, there is a lot of moving pieces in 2020. But if we just typically look at the Delaware and the DJ. Can you talk about LOE trajectory in 2020? Is that -- should we think it's in line with 4Q '19 levels? Or should we think there's incremental improvement throughout the year?

Brent Smolik -- President and Chief Operating Officer

Think about it more in line with -- this is Brent. Think about it more in line with the second half of last year. The fourth quarter was an exceptional US Onshore LOE performance. It was our lowest per barrel unit cost that we've had in the US Onshore. It was a combination of things. We had really mild winter, not much to deal with there in the late part of the quarter, we had very low workover kind of maintenance activities. We had really good run time in wells and facilities. So we manage cost well and compression well and those kind of things. Some of those are sustainable and they'll flow right in to this year, but we'll probably not be as low as fourth quarter as we go through the full year and we've guided more like the second half.

Gail Nicholson -- Stephens Inc. -- Analyst

Great, thank you. And then I just kind of wanted to tack on to Irene's question in regards to that. The deceleration times with last year being that heavy in NBLX capex, how do you guys think about the benefit of that ownership in regards to free cash flow generation really in 2021 forward, it's like the market doesn't fully give you guys credit for kind of that annuity-ish like situation. I am just kind of curious on your thoughts of ownership benefit to the cash flow stream in '21 forward --

David L. Stover -- Chairman and Chief Executive Officer

Well, yeah as Brent alluded to it, Gail, on his comments that for NBLX it's entering its phase like we've entered now with Leviathan with the new pipes coming on and the big inflection -- infusion I guess is a better word of cash flow that will start to come in here this year, and then will carry over on a full year basis next year. So that's, that's the big benefit that we see of that that it's not that dissimilar to what we've seen from Noble that NBLX is undergoing their big inflection and transition right now to and so you get beyond this year. And you've got both companies now that are seeing the benefit of these past investments that are generating a tremendous amount of cash flow going forward.

Brent Smolik -- President and Chief Operating Officer

And I'd just add one thing, I think I understand your question better. The two big things that we saw last year at the -- when we announced the end of the strategic review, the benefits of having the two business together because of the collaboration and the synergies and the real examples of lower opex and lower capex is directly related to the synergies of having the business together. And then the quality of the cash flow is in the midstream business, especially as it expands downstream into the oil pipes. We like the quality of those cash flows and the ability to upstream some of that to Noble.

Gail Nicholson -- Stephens Inc. -- Analyst

Great. Thank you.

Operator

The next question is from Nitin Kumar with Wells Fargo.

Nitin Kumar -- Wells Fargo Securities -- Analyst

Good morning, gentlemen, and thank you for taking my question. I had a quick question on slide 9, as you've brought down the costs in the US Onshore business, what is the breakeven price oil or something for that business today, it seems like you're doing fee cash flow out of the US Onshore with the new plan. Is that fair?

Brent Smolik -- President and Chief Operating Officer

So two questions in there. So the breakeven has definitely come down, it partly depends on how you define it. So if you're talking about just breakeven at a cost of capital return, it's going to be sub $50. We invested a higher threshold in that, but there we've driven it down sub $50 for straight cost of capital like returns. What was the other part of the question?

Nitin Kumar -- Wells Fargo Securities -- Analyst

Is the US Onshore business stand-alone today free cash flow neutral. Let's say at strip, or $50?

Brent Smolik -- President and Chief Operating Officer

It is today in our plans for the total of US Onshore and each asset area of each business unit. So DJ and Delaware and Eagle Ford at this year's capital plans are all free cash flow positive.

Nitin Kumar -- Wells Fargo Securities -- Analyst

Great. The other question, David, you said in your prepared remarks, obviously you've raised dividends about 9% last year in anticipation of the Leviathan free cash flows as you think about 2020 in the cadence of your spending and production, clearly, it is going to be, the second half will be free cash flow profile. Are you, do you think the Board or the management team is looking to wait till you have more line of sight in actual free cash flows before raising the dividend? Or you could do it in an anticipation of the growth?

David L. Stover -- Chairman and Chief Executive Officer

Well, we look at that each quarter. If you look back over the last two years, it wasn't just '19 but '18 also we raised the dividend in April. So I imagine we'll take another pretty hard look at that this coming April also and we'll see where we get to.

Nitin Kumar -- Wells Fargo Securities -- Analyst

Great, thank you so much.

Operator

The next question comes from Jeoffrey Lambujon with Tudor, Pickering, and Holt. Please go ahead.

Jeoffrey Lambujon -- Tudor, Pickering, Holt & Co. -- Analyst

Good morning. Thanks for taking my questions. The first one is just a follow-up to one of the earlier responses regarding staying committed to the free cash flow generation. It sounds like the $500 million target is what will remain intact even if something closer to strip plays out. So if that's a fair interpretation just wondering to get a little more color on what the fuss could be on the budgeting side of -- that's in that scenario.

David L. Stover -- Chairman and Chief Executive Officer

Yeah, I think you're right, from the standpoint, we're staying committed to that even at a strip price scenario. The hedges helped protect that, we don't see that big of an impact when you move from the $55 to the strip because of that hedging that we have in place. And then the capital efficiencies that we've seen and we're continuing to stay focused on not just capital but operating efficiencies also give us a lot of confidence in, if we stay in that kind of a ballpark, we can still stay focused on delivering that cash flow targets.

Jeoffrey Lambujon -- Tudor, Pickering, Holt & Co. -- Analyst

Got it. And then my second one is just a nuance one on the Eagle Ford. Just wanted to see if you could give us a sense for what to expect there in terms of exit over exit production or just how you see PDP declines in general. Just thinking about the DJ and the Delaware receiving the bulk of the US Onshore budget.

David L. Stover -- Chairman and Chief Executive Officer

Yeah, I don't have the Eagle Ford decline rate in front of us. But if you look on page 9, we showed a typical Eagle Ford decline in the 30% to 40% that's probably pretty similar to where we are. Obviously, as you get further away from making investments, the decline will level off a little more than that or slow down a little bit, but as we go into 2020 that's probably a reasonable range.

Jeoffrey Lambujon -- Tudor, Pickering, Holt & Co. -- Analyst

Thank you.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Brad Whitmarsh for any closing remarks.

Brad Whitmarsh -- Vice President, Investor Relations

Sure. Thank you, Chad. And thanks to all for joining us today. Kim and I are around for questions and answers all afternoon. If you have anything and we look forward to talking with you.

Operator

[Operator Closing Remarks]

Duration: 89 minutes

Call participants:

Brad Whitmarsh -- Vice President, Investor Relations

David L. Stover -- Chairman and Chief Executive Officer

Brent Smolik -- President and Chief Operating Officer

Arun Jayaram -- JP Morgan -- Analyst

Brian Singer -- Goldman Sachs Group Inc. -- Analyst

Charles Meade -- Johnson Rice & Company -- Analyst

Doug Leggate -- Bank of America Merrill Lynch -- Analyst

Michael Hall -- Heikkinen Energy Advisors -- Analyst

Scott Gruber -- Citi -- Analyst

David Deckelbaum -- Cowen and Company -- Analyst

Scott Hanold -- RBC Capital Markets -- Analyst

Paul Cheng -- Scotiabank -- Analyst

Leo Mariani -- KeyBanc Capital Markets -- Analyst

Irene Haas -- Imperial Capital -- Analyst

Gail Nicholson -- Stephens Inc. -- Analyst

Nitin Kumar -- Wells Fargo Securities -- Analyst

Jeoffrey Lambujon -- Tudor, Pickering, Holt & Co. -- Analyst

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