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Diamondback Energy Inc (NASDAQ:FANG)
Q4 2020 Earnings Call
Feb 23, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Diamondback Energy Fourth Quarter 2020 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to your host, Vice President of Investor Relations, Adam Lawlis. Sir, please go ahead.

Adam T. Lawlis -- Vice President, Investor Relations

Thank you, Latif. Good morning, and welcome to Diamondback Energy's fourth quarter 2020 conference call. During our call today, we will reference an updated investor presentation, which can be found on Diamondback's website.

Representing Diamondback today are Travis Stice, CEO and Kaes Van't Hof, CFO. During this conference call, the participants may make certain forward-looking statements relating to the Company's financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the Company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

I'll now turn the call over to Travis Stice.

Travis D. Stice -- Chief Executive Officer and Director

Thank you, Adam, and welcome to Diamondback's fourth quarter earnings call. Diamondback continue to execute well in the fourth quarter of 2020, setting the company up for continued solid operational performance in 2021. The benefits of the company's strategy to move activity to our most productive areas in the second quarter of 2020 is now starting to pay dividends in terms of capital efficiency and early time well performance. Well costs and cash operating cost remain near all-time lows and our average completed lateral length in the fourth quarter was over 13,000 lateral feet, a company record. These operational achievements will translate directly into increased returns to our stockholders as commodity prices have risen in recent months.

We are still operating in a market supported by supply that's been purposefully withheld to allow global inventories to decline as demand recovers from the depths of the global pandemic. Diamondback continues to see no need to grow oil production into this artificially under-supplied market and instead plans to hold fourth quarter 2020 production flat while generating free cash flow used to pay our dividend and pay down debt.

The Board's decision to increase our dividend by 7% exhibits it's confidence in the forward development plan released today, further demonstrating our commitment to capital discipline. Our capital allocation philosophy remains unchanged, hold production flat in the most capital-efficient manner with free cash flow used for our dividend and to pay down debt. Growing our dividend and paying down debt are not mutually exclusive, and the majority of our free cash flow will be used for debt pay down in 2021.

The fourth quarter of 2020 built on the momentum started in the third quarter, with free cash flow increasing to over $242 million, up 58% from the $153 million of free cash flow generated in the third quarter last year. We expect this trend to continue in 2021, where we currently expect to generate nearly $1 billion of free cash flow at $50 oil, pro forma for the closing of our acquisition of Guidon this Friday. This free cash flow implies a reinvestment ratio below 60% at $50 oil in the midpoint of our $1.35 billion to $1.55 billion capital budget for this year.

Note that our capex guidance includes the addition of approximately $100 million of capital for the Guidon acquisition, which encompasses one net operated rig added as well as associated infrastructure and environmental spend. Our production guidance that ties to this capital budget for 2021 assumes that we hold Diamondback's expected fourth quarter oil production of 1,70,000 barrels to 1,75,000 barrels of oil per day flat plus ten months of the 12,000 barrels of oil per day that Guidon on was producing at the time of acquisition announcement.

This production guidance also accounts for the estimated impact of the severe winter storms in the Permian Basin last week, which we estimate to have knocked out the equivalent of 100% of our production for four to five days. Production has nearly returned to pre-storm levels as of today and we expect to make up a majority of our lost production throughout the year, but we will not be able to make it all up in the first quarter.

The stockholder meeting to vote on our pending merger with QEP Resources is scheduled for March 16th. The merger is expected to close shortly thereafter subject to QEP stockholder approval. Should the deal approve, we will update the market on our pro forma plans as soon as practicable after closing. While this creates a noisy first quarter in terms of production additions, it will also create a clean look at the pro forma business in the second quarter and beyond. We have only one material term debt maturity due in the next four years, $191 million that remains outstanding on our 2021 maturity. We expect to have cash on hand to retire this note when it is callable at par later this year. After this maturity, we do not have any material outstanding obligations until 2024. We also have a legacy high yield bond due 2025 that's currently callable, providing optionality for further gross debt reduction as free cash flow materializes.

Turning to ESG, Diamondback today announced a major initiative relating to ESG performance and disclosure, including Scope 1 and methane emissions intensity reduction targets as well as a commitment to put forward Scope 1 carbon neutrality or Net Zero Now. We are committing to reduce our Scope 1 GHG intensity by at least 50% from 2019 levels by 2024, and we are committing to reduce our methane intensity by at least 70% from 2019 levels also by 2024. A detailed breakdown of our Scope 1 and methane emissions from 2019 can be seen on pages 13 and 14 of our latest investor presentation.

Diamondback expects to continue to reduce flaring, which is now down almost 90% from 2019 levels, directly impacting over 50% of our 2019 Scope 1 emissions. We also expect to spend approximately $15 million a year over the next four years to retrofit about 600 of our tank batteries with air-powered pneumatic control systems, replacing methane-emitting gas-operated pneumatic control systems. These two changes will be significant drivers in reducing our carbon footprint, but other initiatives like methane leak detection and full-field electrification will also have a direct impact on our emissions reduction strategy.

Diamondback today also announced the Net Zero Now initiative, which means that of January 1, 2021, every hydrocarbon molecule produced by Diamondback is anticipated to be produced with zero net Scope 1 emissions. The GHG and methane intensity reduction targets mentioned earlier are the primary focus as it relates to our environmental responsibility, but we recognize we will still have a carbon footprint. Therefore, carbon offset credits will be purchased to offset our remaining emissions. Eventually we expect Diamondback or one of our subsidiaries to invest in income-generating projects that will more directly offset our remaining Scope 1 emissions, but the credits are bridged to that time in place.

With these major announcements, Diamondback has chosen to adopt a strategy to operate with the highest level of environmental responsibility. Our social and environmental license to operate as a public oil and gas company based in United States is going to be influenced by our capital providers, and we do not expect our investor pressure for oil and gas companies to improve their environmental performance to subside anytime soon. It is incumbent on us to improve our environmental performance and compete for capital in an industry with ever-increasing external pressures. Carbon emissions or cost, Diamondback is working to become the low carbon operator in addition to our leadership position as the operator with the lowest capital and operating cost.

I'm very excited about Diamondback's current position and the strength of our forward outlook as evidenced by our 7% dividend increase announced yesterday. We are forecasting significant consistent free cash flow generation translating into returns to shareholders. We look forward to successfully closing and integrating the Guidon acquisition and the QEP merger and we'll update the market on our pro forma plans as soon as practicable.

With these comments now complete, operator, please open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Arun Jayaram of J.P. Morgan. Your line is open.

Arun Jayaram -- J.P. Morgan Chase -- Analyst

Good morning, Travis and team. Travis, I wanted to pick your brain a little bit, a bit about the long-term kind of profile at Diamondback. On a pro forma basis in our model which includes QEP, we calculate about $1.4 billion of after dividend free cash flow over the next five years, and I think your dividend is about $300 million, so call it $1.4 billion after the dividend or $7 billion. You guys talked about today paying off little less than $200 million of debt due later this year, plus funding the $375 million of cash from the Guidon acquisition. And then also, it sounds like leaning into the dividend on a go-forward basis is something you plan on, but I guess our broader question is, what are your plans on a longer-term basis in terms of deploying this excess cash.

Travis D. Stice -- Chief Executive Officer and Director

Well certainly Arun, that's a good problem to have, right, and I think our cost structure really magnifies our ability to generate that free cash flow. First, the operating metrics of the company continue to just look outstanding, so I'm really excited about that and we've evidenced now for a couple of quarters. But at the board level, we consistently talk about leaning into the base dividend and continuing to enhance our shareholder as a form -- as a way of enhancing our shareholder return program, and it's really like I said, a problem of blessings to have that kind of free cash flow.

We want to continue to work to debt quantum down which we intend to do so, and we'll do like we've always done, and be creative with return and money back to our shareholders. I've been very demonstrative in our stance of not trying to grow production, so any fears that we're going to take money and start drilling more wells with it this year is just off the table. So it's a good problem to have.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, Arun, on the debt side, I think in general, anything that has a maturity prior to 2029 is on the table for debt pay down and I think we're looking to set the business up to have kind of a turn of permanent leverage with a long-term maturity over 10 years at $50 oil. So in the front-end of the curve, all that debt is eligible for pay down but also not mutually exclusive from the base dividend continuing to increase here.

Arun Jayaram -- J.P. Morgan Chase -- Analyst

Got it, got it. Kaes, maybe my follow-up is for you. One of the questions that we got last night was just looking at the Midland Basin DC&E guide on lateral foot basis. I think you averaged about 520 a foot in the second half, the 2021 guidance is a little bit above that. So I just wanted to understand what you're dialing in terms of perhaps some inflation and does the mix -- and is there a mix effect with the Guidon and assets being added there, I assume that this is excluding in QEP.

Travis D. Stice -- Chief Executive Officer and Director

Yeah, there is nothing on the mix side, Arun. I think we have said in the past, we're not going to guide to all-time well low cost. I think right now we're in the $500 to $520 a foot range and we're trying to hold onto that as long as we can. We know that service industry has suffered through this downturn as much as anybody, if not more and there are some pricing pressures at the margin. I wouldn't say it's on the big-ticket items, but you already certain see some pressure on casing prices and smaller field service items.

So like we talked about, the midpoint of our guide is 8% to 10% above where well costs are today. I'd hope the good guys can keep some of that on our side and outperform as we go through the year, but just being conservative on, today is February 23rd and we've got 10 more months left of hopefully $55 plus oil and that will result in some service cost pressures.

Arun Jayaram -- J.P. Morgan Chase -- Analyst

Great, thanks a lot.

Travis D. Stice -- Chief Executive Officer and Director

Thank you, Arun.

Operator

Thank you. Our next question comes from the line of Neal Dingmann of Truist Securities. Please go ahead.

Neal Dingmann -- Truist Securities -- Analyst

Hey, Kaes and Travis, my question is, I know I'm trying to think how long if it hasn't been too terribly long though you all restructured, I know you're gathering and processing. You took I think at your expense on that. Could you talk a bit about now the benefits of that from a -- just not only from a pricing, but from -- I know some folks earlier around the storm were all having trouble, had people take through gas. Could you just talk about both those aspects? And now sort of after converting those contracts from a percent of proceeds to a fixed fee kind of what -- if there's anything more or less needed to be done and the benefits there.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, Neal, I mean we had a pretty high flaring number in 2019, and it was pretty frustrating to us that that number was as high as it was. Unfortunately, it was that high, because we had a gas processor, who had a percent of proceeds contract that was losing money on that contract, and therefore wasn't very fair on how much they sent us the flare versus some of their other contract. So we took that price risk and decided to restructure that contract into fixed fee deal, and you can see in the flaring numbers, it's -- our numbers have come down dramatically, mostly because of that particular contract moving to fixed fee.

Now with NGLs and gas rallying, that fixed fee stays the same and we get the benefit as the operator, so that's helping a lot. I don't think it had a lot of impact on -- from a storm perspective. I think our field organization during the storm actually stepped up to get power or get natural gas flowing back to local power plants in the Permian, which eased the problem and stopped the rolling blackouts in the Permian almost immediately. So two separate items, but certainly proud of the field organization for what they did for the city of -- the cities of Midland and Odessa.

Neal Dingmann -- Truist Securities -- Analyst

Yeah, nice changes there. And then Travis just my follow-up. Just on the efficiencies you're seeing. Could you talk -- maybe give us an idea, I think let's call it post QEP, I know you've talked about maybe going 8, 9 rigs. I'm just trying to get an idea of both on the D&C side, how many like -- kind of what you're up to now is wells per year. For a while was it six to seven rigs and you were talking about completing I don't know nearly 200 or up to 200, could you give us idea of kind of where your optimal efficiencies are, and is there -- I mean, really is just that sort of what I'd call crazy levels versus where we were a couple of years ago, I'm just wondering can that get any better?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, I mean, I think Neil, the rigs, the efficiencies continue to creep up, but we're going to run I think nine rigs essentially average for the year to drill 190 wells, 75% of that in the Midland Basin all over 10,000 feet, but really the efficiency that's improved is on the frac side. I mean I think our completion cadence, we're expecting to complete 220 or 225 wells all over 10,000 feet with three Simul-Frac crews and one spot crew. So really the efficiency on both sides is pretty, pretty dramatic. And you can see that also in the lateral length, right. I mean we completed over 13,000 average lateral feet in Q4 and we're looking for opportunities throughout our entire asset base to push lateral length for that 12,500 or 15,000 foot range.

Travis D. Stice -- Chief Executive Officer and Director

Yeah, Neal, I'll just add to that. This time last year just prior to this time, we were running over 20 drilling rigs and today we're running 7 or 8 and when you go from that many rigs to that fewer rigs, you have the opportunity to have greater rigs. And then secondarily, when activity really troughed in the second quarter of last year, rather than just sitting on our hands, and bemoaning the outlook, our organization really leaned in to try to improve efficiencies. As you know, it was a great opportunity with less field activity going on to really examine all of the processes, both on the drilling and completion side and on the production side as well.

And so we took advantage of that trough in activity and as the industry picked back up and as our activity picked back up, we were able to kind of make permanent some of those efficiencies that we revealed through the second quarter and early third quarter. So really, really proud of that. And I think we're going to see the direct benefits of that in 2021 and that's going to translate to more cash flow for our shareholders.

Neal Dingmann -- Truist Securities -- Analyst

Thanks for the details guys.

Travis D. Stice -- Chief Executive Officer and Director

Thanks, Neal.

Operator

Thank you. Our next question comes from the line of Gail Nicholson of Stephens. Your question please.

Gail Nicholson Dodds -- Stephens Inc. -- Analyst

Good morning. The Net Zero Now strategy is great. Can you talk about the expectations on the cost of purchasing carbon offset? And is that something that will be done at year-end? And is that cost in the infrastructure and environmental capex line item?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Gail, I'll start with the added capex. The big piece and the big goals here on the GHG side is all the emissions reductions, right. I think the Net Zero Now initiative is a great addition to the story, but it's not the primary focus and the primary focus happens to be working down all the numbers you see on slide 13 and 14 and so the big dollars we're going to spend. We are going to spend about $15 million a year, converting legacy gas pneumatic, tank batteries to air and those batteries run off methane essentially and converting that to air dramatically reduces your methane intensity automatically. So I'd expect to see $15 million a year in the budget for that and we've also built that in on the the Guidon and QEP acreage as we get hold of that and look to convert that.

On the carbon credits, we've already -- are in process on a contract for some carbon credits. I won't give all the details, but I'll say it's a mid seven-figure number, not an eight-figure number and the projects that we're investing in are tied directly to carbon capture or carbon sequestration rather than the tree planning side of the business.

Travis D. Stice -- Chief Executive Officer and Director

Gail, we're not trying to buy our way into carbon neutrality. As I mentioned in my prepared remarks, the purchasing of these carbon credits are really just a bridge until we get our operations enhanced and maybe look at some other future investments down the road. But we're really trying to invest in the future. And you know how tight the Diamondback runs, our capex and spending money on tax credits actually provides us a great incentive to not use those, but doing the right things out in the field like Kaes was mentioning and articulating to effectuate these changes, and it's a nice bridge in the interim, but that's not the focus of what this initiative is about.

Gail Nicholson Dodds -- Stephens Inc. -- Analyst

Great. And then there's been some discussion lately regarding the benefits of hedges. Can you talk about the hedging strategy on go-forward basis and Kaes, specifically in your view, how important is hedging to being able to deliver a consistent free cash generation profile?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, I think it's really important, Gail, and I think in the depths of April and May of last year, I told Travis that to not get mad at me if we lost money on some hedges in 2021 and now we're at that point, and the commodities rallied, and I think we're sleeping a lot better at night knowing that the commodities rallied. So I think overall if you look at our hedge book, we've tried to keep very wide two-way callers. We're at the bottom end of our callers. We are protecting our dividend and protecting -- paying down some near-term maturities, but also trying not to limit all the upside to our shareholders. So I think you'll see us keep building that hedge book with wide callers. I think the percent hedge that we have is inverted just like the forward curve, and I think we're going to be patient adding hedges, but overall, I still think hedging is a important form philosophy for an oil and gas company to guarantee returns and guarantee returns to shareholders in the form of true cash distributions.

Travis D. Stice -- Chief Executive Officer and Director

Gail, I just want to return to your question that you asked earlier and reemphasize the point that, we feel like we have a social and environmental license to operate. And I'll tell you for last multiple quarters, we've been really digging into this, but one of the things that surprised me was relatively, it's still a lot of money, but relatively how little cost is required to do the right thing here with regards, particularly the methane emission and converting these tank batteries. And I think as other companies trying to dig into that, I hope they find the same outcome that it's -- it is real dollars and it is real shareholder funds that we're diverting away from the drill bit, but yeah, it's not as bad as maybe what we were originally thinking. And again, I just go back to our environmental and social license and try to do the right thing here.

Gail Nicholson Dodds -- Stephens Inc. -- Analyst

No, I agree, it's basically two to three well diversion every year if those pneumatic gas on your batteries install makes a huge difference, so I congratulate you guys for making that effort and more companies should do that.

Travis D. Stice -- Chief Executive Officer and Director

Thank you, Gail, and yeah, it does sting a little bit, but I think it's the right thing to do.

Operator

Thank you. Our next question comes from the line of David Deckelbaum of Cowen. Your line is open.

David Deckelbaum -- Cowen Inc. -- Analyst

Good morning, Travis, Kaes and everyone. Thanks for taking my questions.

Travis D. Stice -- Chief Executive Officer and Director

Good morning, David.

David Deckelbaum -- Cowen Inc. -- Analyst

Just -- good morning. Just wanted to ask around lateral lengths, as you integrate Guidon and hopefully QEP your -- you saw the tick up on this larger pad in the fourth quarter where you were averaging 13,000 feet per well. You budgeted next year at 10,000, I guess for FANG and Guidon. Should we expect that number to tick up in '21 and '22? I would imagine as you're integrating two assets, the availability of swaps kind of opens itself up there. Can you talk about where that lateral length progression is moving and is this something that we should be thinking about the over for on that 10,000 per well over the next couple of years?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, David, good question. I think the beauty of the Guidon and QEP assets as they sit relative to our position is that you have -- they all fit hand-in glove, and so that gives us an opportunity to push lateral lengths for one of our -- what will be our biggest operating area for the next few years. So I'd put 10,000 as the floor. We still have rigs running outside of that main block, but if we're having -- and we're going to have half of our rigs running in the big block in Martin County, I'd expect those five rigs probably average a little higher than 10,000 where the rest of the position might be a little below. So can we get it up to -- up 10%, I think that's possible, but again, the teams are doing their work and the contiguous nature of that block is going to promote a lot of capital efficiency.

David Deckelbaum -- Cowen Inc. -- Analyst

I appreciate that. And my second question is just you talked, Travis, about the macro environment and kind of issuing growth in favor of returning on capital to shareholders over time. It seems like with this fixed dividend increase, you guys are signaling that this is sort of a sustainable level at a $40 price and below, maybe mid $30s to $40. Considering now that we're in almost a $55 to $60 environment, does anything change operationally? You guys responded to a low price environment by coring up your activity. I know that you are not interested in growth at this point, but do you change the design at all at the field level and perhaps not core as much as you have been?

Travis D. Stice -- Chief Executive Officer and Director

No, David, it's -- we can't pay attention to weekly changes in commodity price. We have to try to do the best thing, the right thing from a reservoir performance all the time, and we're not getting enamored or stars in our eyes with higher commodity price.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah. No one ever blamed you for drilling wells that are too good, David.

David Deckelbaum -- Cowen Inc. -- Analyst

That's true. That's true. Well, good luck guys. Thank you.

Travis D. Stice -- Chief Executive Officer and Director

Thank you, David.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thank you, David.

Operator

Thank you. Our next question comes from Scott Hanold of RBC. Your question please.

Scott Hanold -- RBC Capital Markets -- Analyst

Yeah, thanks. And maybe I'm going to follow-up on that -- the last line of questioning. Obviously it's -- commend you guys for sticking to the plan with maintenance this year, but there is a lot of potential for an oil super cycle and if that does occur, like, how do you see Diamondback in a 2022 plus outlook, and is there going to be a limit to the amount of growth you could push? I would assume that there's going to be some amount of growth that you'd see acceptable, given the amount of free cash flow that's out there. If you could just give us some color on, is it a reinvestment rate you'd target, is it a growth rate of free cash flow yield, how do you look at a much stronger for longer oil price cycle?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Well, Scott, that would be a good problem to have, so hopefully we're on our way, but I think we've been pretty clear that we don't want to put a very complicated business into a box in terms of reinvestment rate, growth rate. I mean I think what we can say is that, if there was ever growth called upon by U.S. shale, it would not be double-digits, it wouldn't be zero, but yeah, there is a oil price where your free cash flow increases more if you grow slightly and we've done that work. I still think we're a ways away from it but we've proven that we can grow in the past, and I think a low cost structure benefits you when prices are weak, but it also is a kick starter to potential growth if prices are strong. So I don't think it's time to talk about growth, but if there was growth ever mentioned for us it's sub-double digits or mid-single digits.

Travis D. Stice -- Chief Executive Officer and Director

Yeah. Just to reemphasize the point I made earlier about, we're still in an under-supplied world and we can see the tea leaves talking about a super cycle, but that's not where we are today. I think just at -- in the final analysis, Scott, growth Diamondback -- we'll have to see the fundamental shift in the macro of supply demand but future growth is not something we're scared of. Now as Kaes pointed out, hyper growth is probably still not a role but growth when it drives incremental shareholder returns, it's part of our long-term decision matrix, but right now we simply don't need to grow, right, with this much excess storage and still production capacity out there in the world. But I think trying to put ourselves in a decision straitjacket is anticipating a -- an oil super cycle is not good business for us right now.

Scott Hanold -- RBC Capital Markets -- Analyst

I appreciate that response. My follow-up is a little bit on current production rates, and if you could help me at a couple of things. I guess, first off, you talked about holding the line on the Diamondback legacy assets around 170 to 175. Obviously -- and you kind of said it, our fourth quarter levels, obviously you guys outperformed that. You outperformed that in January as well. Just giving a little bit of color on what do you mean by holding 171, 175 flat when your prompt in the purposes above that rate. And if you can give also some color on what we should expect with QEP when it starts with you guys and understanding that the last sort of like data point update was back in the third quarter of 2020.

Travis D. Stice -- Chief Executive Officer and Director

Yeah, Scott. I am going to let Kaes answer that, but I'll just provide him an opportunity to talk about how pleased we are with our operation performance -- operational performance. We saw it in fourth quarter, we saw it in January and had not been a historic 100-year storm out here in the Permian, February would be looking good as well. So really, really pleased at the way that we're executing right now in our operational performance.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, I think Scott, we're looking to keep production guidance and capex guidance very simple. I mean I think we said we're going to work our way up to 170 to 175 oil by Q4, luckily we outperformed that, but that was going to be the baseline for our plan in 2021 all along. And if we outperform that plan then that's some for the good guys. So overall, nothing has changed in terms of our anticipation of keeping Guidon plus QEP plus Diamondback flat through 2021. And in this guidance we put out, we're basically giving you saying at 170 to 175 plus 10 months of Guidon out of a 12,000 barrels a day, and a little storm impact which we expect to make up throughout the year.

Scott Hanold -- RBC Capital Markets -- Analyst

Okay. And what should we expect with QEP? Obviously the last update was I think at the third quarter average, what is the expected -- do you have a sense of what that looks like when it starts up in March with you guys?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, I can't give you that today, I mean QEP is going to report today or tomorrow, and we'll see what that report says, and we will surely update the market as quickly as we can. But I can't give guidance on a deal that shareholders need to vote on.

Scott Hanold -- RBC Capital Markets -- Analyst

Understood. Thank you.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks, Scott.

Operator

Thank you. Our next question comes from the line of Scott Gruber of Citigroup. Your question please.

Scott Gruber -- Citigroup Inc. -- Analyst

Yes, good morning.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Hey, Scott.

Scott Gruber -- Citigroup Inc. -- Analyst

Saw the dividend increase here, one of your peers is dimensioning their comfort level with the base dividend as about 10% of operating cash flow at their normal crude price. Can you provide some color on how you think about the appropriateness of the base dividend for Diamondback?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

I mean I think that would be a good goal to work to. Ours is a little lower than that, in a $50 world and certainly lower than that at strip today. I kind of see it as more what's our consistent dividend growth rate over a longer period of time, and what are we doing to decrease the size of the enterprise value with free cash flow. I think right now this dividend increase came a little early but we also leaned into the dividend in 2020 during some pretty dark time. So I think investors have universally asked us to hold the dividend and continue to grow consistently and while 7% is our lowest growth rate over the past couple of years, I don't think it's off the table that we can revisit this -- the dividend multiple times a year now at this point where we are.

Scott Gruber -- Citigroup Inc. -- Analyst

Got you. And then just thinking about the budget split across the Midland and Delaware, 75% to the Midland this year. Can you just speak to the medium-term split you're thinking over the next kind of two to four years, are you going to stay in that ballpark of around 75% to the Midland post the acquisitions? And how should we think about if we are back in an environment where you're starting to grow some top mid-single digit, how does that split start to shift if at all and does the Delaware provide more of the flex in the budget?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

I kind of see it more as -- we're going to have a really, really large block in Martin County, that we can put a lot of rigs to work pretty consistently, so long as we have the infrastructure in place and we expect to do so. So I think with QEP pending that deal closing that 75% Midland number is going to go up and hopefully it stays kind of in that 75% to 85% of lateral footage consistently for the next three to five years. I think that's a little lower percentage of total capital, but it's going to be a pretty high percent of our net lateral footage for a long time here.

Scott Gruber -- Citigroup Inc. -- Analyst

Got it, I appreciate it. Thank you.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks, Scott.

Operator

Thank you. Our next question comes from the line of Derrick Whitfield of Stifel. Please go ahead.

Derrick Whitfield -- Stifel Financial Corp. -- Analyst

Good morning all, and as many have said before, thanks for taking the leadership position for the sector with your ESG initiatives.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thank you, Derrick.

Derrick Whitfield -- Stifel Financial Corp. -- Analyst

With regard to your potential investment in CCS to offset your Scope 1 emissions, would you likely do that in concert with EOR and if so, have your teams evaluated the application of EOR in any of your interventional project areas?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, there I mean -- it's -- that's one of the pillars that we're looking at. I can't commit to anything today, but I think what we've tried to say is that the credits that we purchased here give us a little bit of time to study the market or even partner on projects that either Diamondback or Rattler to build out a more direct offset to our scope on emission, so that's in the fold. The hot topic of wind and solar power in Texas is also in the fold, and I think there's going be a lot of opportunities with companies with large balance sheets that are leading this energy transition that are also oil and gas companies. So I think we're going to play a small part it, and hopefully find a good partner to develop carbon capture or one of these other renewable sources to offset our Scope 1.

Travis D. Stice -- Chief Executive Officer and Director

But Derrick, I'll also add that, while we don't -- there is no specific EOR projects under way with 85% or 90% of the oil still left in the ground, even with the most advanced completion technologies, we know that enhanced oil recovery is a part of our industry's future and there are some guys out there kind of on the leading-edge that Diamondback as our style, we're following very closely to see if they're having success. But it would be nice if those two things were -- had the same mutual objectives, carbon sequestration and enhanced oil recovery and tight horizontally developed shale resources, but as Kaes pointed out, we're just barely getting started on that.

Derrick Whitfield -- Stifel Financial Corp. -- Analyst

Makes sense. And with my follow-up, shifting over to the capital side of your outlook. Could you offer any color on a clean maintenance capital estimate assuming the inclusion of QEP and based on your current cost expectations?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

I mean it's kind of what we gave. I mean QEP's put out some high level numbers on their full year 2021, so I think it's fair to look at those numbers. Now if you think about us, closing the deal in March, we'll only have cash capex for three quarters of that but at current cost estimates, like I said, I think the midpoint of our guidance is 8% to 10% above where our current well costs are so -- and if we stay the same, you could chop 8% to 10% off of that and get a solid maintenance number.

Derrick Whitfield -- Stifel Financial Corp. -- Analyst

Great update. Thanks for your time again guys.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks, Derrick.

Operator

Thank you. Our next question comes from the line of Jeoffrey Lambujon of Tudor, Pickering, Holt. Your line is open.

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

Good morning. Thanks for taking my questions. My first one is just on the M&A and A&D landscape. Yeah, I know it maybe a little too soon to talk about what opportunities both transactions can bring since the QEP deal is more expected to close next month, but are there any comments or thoughts you can share on how the landscape looks to you all in areas where you may be active once everything is rolled in? And then any comments on industry consolidation more broadly from here, especially following an active 2020 would be great as well.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, I'll let Travis talk about the macro, but just in general in A&D, we've been following it pretty closely, and I think there is a lot of capital that's been allocated toward PDP-type transactions, which bodes well for any potential deal we look to pursue in the Williston -- for QEP's Williston assets, seems like that's the hot A&D market of the year so far. So we're excited about that. Commodity price certainly helps.

We have some small stuff that we would look to sell in the Permian that's fully developed, that doesn't compete for capital and that market looks pretty good. So we're excited about A&D. I think from a consolidation perspective, a lot of big consolidation happened in 2020 obviously, and you can just see now, how much production is in the hands of 10 to 12 companies in the U.S. and I think that bodes well for capital discipline and industry consolidation, although I think it still needs to continue. Travis?

Travis D. Stice -- Chief Executive Officer and Director

Yeah. What we've seen in the past, Jeoff, when we go through one of these cycles of rapid commodity price increases, names that you would have thought would have come off the board, public names that would have come off the board probably now have a lot greater runway with the higher commodity price. So usually when you see these kinds of cycles accelerate, it makes a -- from a macro perspective, A&D harder to do. But just like Kaes was saying though, we've got Guidon and soon to be QEP rolled in the mix and we're very comfortable with where our inventory sits right now in terms of runway in front of us. So I just wanted to add that in as well.

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

Appreciate it. And then my second one is just on hydrocarbon mix as the newly acquired assets are rolled in. Just wanted to get a sense for how you'd expect the higher weighting for Midland activity, which I guess should increase further once QEP is more fully rolled into effect, oil and gas mix over the near-term.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, it should help a little bit, 100 and 200 bps of oil mix. I think that's why we started guiding to oil separately from BOEs. The BOEs continue to outperform primarily because flaring is down 5%, which has resulted in a lot higher BOE numbers and BOE reserve so. Midland certainly is oilier and moving to Midland, Northern Midland is going to help, but the production base is pretty large right now, so I think it's in the range of 100 to 200 bps, not more than that.

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

All right, I appreciate it.

Travis D. Stice -- Chief Executive Officer and Director

Thank you, Jeoff.

Operator

Thank you. Our next question comes from Brian Singer of Goldman Sachs. Please go ahead.

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

Thank you. Good morning. Travis, you've been very forceful on the capital discipline side, not using incremental cash flow back to the drill bit, focusing on paying debts and incremental return of capital to shareholders. You do have exposure and through your partnerships to what others are doing, and I wondered given some of the rig increases we've seen from private producers, if you have any perspective on what you see others doing and if you expect other upgraders in the Midland and Delaware Basins to reflect the discipline that you're expressing here.

Travis D. Stice -- Chief Executive Officer and Director

Yeah, Brian, I think I know you're asking those questions to those individual operators, but from a macro perspective, what I'm seeing is that, we still are under-supplied on rigs to keep the Permian Basin flat. So you may see some rig adds coming but right now it's probably not enough to offset the production declines that we've seen through the -- due to lack of investment over the last 12 months. So I believe and maybe I am the internal optimistic, but I believe, if moving through the depths of a global apocalypse that was created by this pandemic, if oil and gas companies haven't got disciplined now, they probably never will. So I'm optimistic that the industry is going to toe the line line on capital discipline irrespective of commodity price.

Now there will be sometime in the future a signal when supply has worked off and Iranian barrels are absorbed and surplus OPEC capacities is concerned, that the world will be signaling for growth, but as we tried to articulate earlier, the days of hyper growth in the shale industry should be part of our history, not part of our future. But I'll tell you...

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

Thank you.

Travis D. Stice -- Chief Executive Officer and Director

Just adding to that, and I know you guys get tired of hearing me talk about our operations and our low cost, but as the low cost producer, almost irrespective of commodity price, we are going to drive the highest returns to our shareholders.

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

Great, thank you. And then I wanted to further follow-up on the carbon Net Zero objectives and particularly on the sequestration and clean energy comments that you made. When you think about expanding the Diamondback footprints into sequestration or clean energy, do you see these as core competencies the Diamondback team already has, core competencies the team can easily bring in-house or should invest along with others to fund existing companies that have that core competency?

Travis D. Stice -- Chief Executive Officer and Director

Yeah. No, no, Brian, I don't see those core competencies inside Diamondback and it's unlikely that we will branch out into trying to say that we can become a better solar company or better wind farm companies than pre-existing. I think that's actually a trap that some companies get into as they try to diversify into areas where they're not experts. We at Diamondback know what the main thing is and the main thing is, is for us to produce barrels at the highest cash margin with the lowest cost and now the lowest carbon footprint. So I think the most likely scenario would be that we participate alongside a subject matter expert in whatever that carbon capture technology is.

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

Great, thank you.

Operator

Thank you. Our next question comes from the line of Richard Tullis of Capital One Securities. Your question please.

Richard Tullis -- Capital One Securities, Inc. -- Analyst

Thanks, good morning, Travis and Kaes. Just continuing with the Net Zero initiative discussion. So just listening to everything this morning, so is it fair to say you may be initially more interested in the carbon capture side of CCUS rather than the CO2 transportation sequestration side?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Richard, this is too early, right. I think we're getting away from the fact that the goal is get Scope 1 down by 50% as soon as possible and get methane down by 70% as soon as possible on the intensity side and those remain the focus, right. I think getting into other businesses is a three, five, seven-year discussion, but the discussion today is what are we going to do to get our carbon footprint down and not just offset it, right.

I think eventually offsetting it with something smart in terms of an investment, a small investment, but it's not going to end up taking 10%, 15%, 20% of our budget. I think like Travis said, the main thing is the main thing and that's we are an oil and gas producer that's going to be producing here for a long time, but as a public operator today, the pressures to operate in an environmentally responsible manner are only going one-way and we're taking the bull by the horns by getting those intensity numbers down as soon as possible.

Travis D. Stice -- Chief Executive Officer and Director

Yeah, Richard, we're not trying to buy your way into carbon neutrality. We're trying to be very specific, you can see on slides 12, 13 and 14 in our investor deck how much transparency we're using to try to describe exactly what we're going to do. We've been very prescriptive and talking about 600 tank batteries that need to be retrofitted and spend an $10 million to $15 million a year over the next three to four years in order to make that happen.

So our focus is not to try to buy our way into carbon neutrality. Our focus is how can we invest to eliminate our Scope 1 emissions. And the carbon credits now provide us a bridge and quite honestly provides us an incentive, because I don't like spending that money, but it provides us an incentive to get the operations in the shape that they need to be and that's what we need for our shareholders, and that's what our industry needs as well too. And I hope other companies can take a similar examination of what efforts they're doing to reduce methane emissions particularly.

Richard Tullis -- Capital One Securities, Inc. -- Analyst

Yeah, appreciate good discussion. That's actually all I had. I appreciate it, thanks.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks, Richard.

Travis D. Stice -- Chief Executive Officer and Director

Thank you.

Operator

Thank you. Our next question comes from Paul Cheng of Scotiabank. Please go ahead.

Paul Cheng -- Scotiabank -- Analyst

Thank you. Good morning. I have to apologize first, I may have joined a little bit late, you may have discussed it already. You -- with the regular dividend and you also mentioned that in the future, once your debt has come down further or that the position get better, you will look for other alternative ways to increase the shareholder distribution. So I want to see then, what is the precondition for that? What kind of step levels or any kind of criteria you could indicate? And also can you discuss your patterns between the variable dividend and the buyback or that the regular dividend increase will be the primary source of the distribution. Thank you.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, Paul, it's a good question. I think a variable or a buyback are things that are worth discussing when when debt levels are at a level that we're very comfortable with, which is probably close to one-times leverage at $45 to $50 WTI. So I think once we are closer to that range, we can talk about additional return to capital, which is kind of why earlier in the call, I mentioned that anything with a maturity prior to 2029 in our debt stack is probably up for grabs to pay down in conjunction with continuing to increase the dividend. But as soon as we get there, I think it's a worthy topic to say what is the best return to shareholders post or after the base dividend and when debt is very comfortably in that one-times range. But first and foremost, we need to get our debt back down to $5.5 billion gross debt pro forma for all the deals that we've just done and we'll be getting there as quickly as we can and and continue to work that down.

Paul Cheng -- Scotiabank -- Analyst

Thank you.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks Paul.

Operator

Thank you. Our next question comes from Leo Mariani of KeyBanc. Please go ahead.

Leo Mariani -- KeyBanc Capital Markets Inc. -- Analyst

Hey guys. Just wanted to follow-up on one of the comments you made earlier. Hey, so I think it was you, you said in terms of purchasing the carbon offset and credits, it's going to be some type of mid-seven figure number. Just wanted to clarify, is that an annual number, roughly speaking for you folks and it sounded like you also talked about this transition timeline, kind of being three to seven years, so should we expect that kind of for the next three to seven years, and that's something that would just kind of run through is an operating expense your financials eventually.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, it's highly dependent upon how many tons of CO2 equivalent we emit, right. I mean in 2019, we emitted 1.4 million tons, I think we'll be well below that in 2020 and on to 2021. So the cost goes down. Now if I was a betting man, I'd bet that carbon offset credits are going to continue to increase in price. We've secured a few years' worth right now, but I think it will be dependent upon what that -- how that market evolves over the coming years. But again, it's not a material expense and it's not the priority. The priority is getting the amount of CO2 equivalent emissions that we have down so that you pay less of a penalty.

Leo Mariani -- KeyBanc Capital Markets Inc. -- Analyst

Okay, great. And obviously you guys are clearly in the midst of closing the QEP and Guidon deals in the near-term here. Perhaps you briefly addressed M&A earlier but as you get to your target debt number here in the near future, do you still have a desire at Diamondback to continue to be a consolidator of choice in the Permian?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, look, Leo, we're very comfortable with where we are right now, particularly with these two deals closing, one Friday and then one in a couple of weeks after that. So we're very comfortable where we are. We'll just -- like we always do, we monitor the landscapes and if we think we can deliver outstanding returns to our shareholders, then we'll take a look at it, but in terms of inventory life and all of that, we're very comfortable with where we are.

Leo Mariani -- KeyBanc Capital Markets Inc. -- Analyst

Okay, thanks.

Operator

Thank you. Our next question comes from Charles Meade of Johnson Rice. Your question please.

Charles Meade -- Johnson Rice & Company -- Analyst

Good morning, Travis and Kaes and to the rest of the team there.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Hey Charles.

Charles Meade -- Johnson Rice & Company -- Analyst

Kaes, I think maybe this question might be for you. I appreciate you gave us a really pretty thorough rundown of your debt pay down options and you gave us a good framework. I'm wondering if you could refresh us a bit with your thinking or your options on the QEP debt in particular the 22s and 23s and how that might play into your your debt pay down plans?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, it's certainly a chess piece, Charles. I think QEP has three notes outstanding, 22s, 23s and 26s. Those notes probably end up getting tendered for and refinanced in some form or fashion, lower interest rates with longer average maturity, but also putting something on the front-end of our debt stack to guarantee further debt pay down. So it's really dependent upon how many people tender the bonds, if and when that begins.

I think the paying 2025 notes is a -- is also a chess piece that goes into that, and I think we're pretty close to starting that process with the shareholder vote coming up in March 16th. So we want to take advantage of these rates with three goals. We want to pay down gross debt overall over time at our discretion, we want to lower average interest rate and we want a longer average term to maturity, and I think we're setting ourselves up to accomplish that.

Charles Meade -- Johnson Rice & Company -- Analyst

Got it, Kaes. So if I understand you correctly, it's not committing to one path or another, but really just kind of continuing to push and optimization and finding the -- picking your spot.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, with the caveat that we do need to work on some restrictive covenants and some reporting requirements on the QEP notes, because we don't anticipate reporting as two separate companies for a long time. So I think Pioneer, Conoco, Chevron of all follow different or similar path in handling the notes of the company they acquired and we're going to copy one of those -- one of their path.

Charles Meade -- Johnson Rice & Company -- Analyst

Got it. That makes sense. Thanks a lot for that. And then Travis, this is perhaps for you. I wonder if you could characterize the assets you're picking up in Southeast Martin County or toward the -- in the southeast quadrant, that's -- could you characterize how prominently do those factor into your 2021 plans and to the extent you're going to put some rigs there? When would we expect to see some results from those assets?

Travis D. Stice -- Chief Executive Officer and Director

I mean we -- we're going to add one rig net for the Guidon deal and that rig's going to drill a 10 or 12 well pad here throughout the year and that pad's going to come on early next year. And then I think I can't speak to the QEP development plan, but I think as soon as we can move rigs to that big block themselves Southeast Martin County, we're going to move two or three rigs there and be active there for the next five, seven, eight years.

Charles Meade -- Johnson Rice & Company -- Analyst

All right, thank you.

Travis D. Stice -- Chief Executive Officer and Director

Thanks, Charles.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks, Charles.

Operator

Thank you. Our next question comes from Jeanine Wai of Barclays. Your question please.

Jeanine Wai -- Barclays -- Analyst

Hi, good morning everyone. Thanks for taking our questions.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Hey, Jeanine.

Jeanine Wai -- Barclays -- Analyst

You're probably going to kill me, my questions are on the the ESG and Net Zero Now, but maybe just two quick ones. We know you've made it clear that you're not looking to buy your way out of emissions or anything like that and the credits are really just a supplement to your good internal efforts. You mentioned you have some contracts in place with CCS, but in terms of the other options, what are the different markets that you're looking at in order to potentially buy offsets? I mean we're thinking it's not California, we know Texas has an exchange market and are you currently eligible to participate in all of the credit markets?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Yeah, we are Jeanine, and we're pretty focused on U.S. carbon credits versus international. International, you can get a little cheaper but I don't think that ties directly to our license to operate in U.S. So the couple of projects that we've invested in, two of them are based in Texas, one of them is based in Wyoming and that's our start. I think we're going to build a good relationship with our partners on this and eventually work to invest directly, but I think overall with us executing on this initiative, there is going to be a lot inbound phone calls on opportunities. And I just think our goal is to make sure, while we do invest in ties more directly to what we produce rather than other environmental aspects.

Jeanine Wai -- Barclays -- Analyst

Okay, great. Very, very interesting. And then maybe just following up on Brian's question earlier. I know you're not looking to be a power player or anything like that, but you're looking at both in-house and third-party opportunities it sounds like for the income-generating projects. So not to get ahead of ourselves, but we are, longer-term, could this be carved out as a separate business if you develop portfolio, because it seems like for a lot of these ESG projects, companies kind of really only get credit or a lot of interest when it turns into like a real business that investors can quantify, and longer-term, there's been lots of spin-offs and opportunities for that. So is that something that maybe you would consider?

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

I mean I think we're getting way ahead of ourselves, Jeanine on that, but I think we've proven to be pretty smart when it comes to spin-offs but I think my head might explode if we thought about another spin-off right now. So we're going to just first, get our numbers down, second, invest smartly or wisely with bigger partners, and then third, figure out how to monetize down the line, but certainly we're very cognizant of the multiples that side of the business gets versus an oil and gas company right now but that's not the reason why we're doing this.

Travis D. Stice -- Chief Executive Officer and Director

Yeah, Jeanine, and we want to make sure we emphasize keeping the main thing, the main thing. I said that earlier and we know what we're really good at and we know what we're still learning at and we're going to focus on what we're really good at and we'll participate alongside, someone that's really good at something else. And as Kaes said, for another fourth company or fourth entity, that's not -- that doesn't sound very good to me right now, so I think our focus is going to be doing the right thing, but Diamondback operations to drive down our emissions intensity.

Jeanine Wai -- Barclays -- Analyst

Okay, great. Thank you for taking my questions.

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Thanks Jeanine.

Operator

Thank you. At this time, I'd like to turn the call over to CEO, Travis Stice for closing remarks. Sir?

Travis D. Stice -- Chief Executive Officer and Director

Thank you. Occasionally I'll use my closing remarks to add a message that's kind of directed toward our organization and the message I think sometimes is important for our investors to hear that separates from sort of the standard quarter. This past week as we're all acutely aware of the Permian Basin experienced unprecedented weather event, we had over 220 hours of below freezing weather and really across the Permian Basin, we had extended periods of no electricity and water supplies frozen and really against all of that, we had a frozen and a dark oilfield.

And in our field organization and in some cases, these individuals working over 20 hours a day, they were working to get gas delivered to power generation plants. They weren't working to get Diamondback's volumes flowing in back online earlier because of our quarterly objectives, they were working to get gas delivered to power generation plants that were -- honestly that were sitting idle, particularly on the west side of Odessa.

They were sitting idle because they didn't have any fuel. And through our efforts and other operators' efforts, gas was delivered and Texas had power. This occurred Wednesday evening, early Thursday morning and by Thursday, most of Texas again had power and it's -- I just want to -- the efforts that were displayed by many individuals in the Permian Basin transcend normal procedures for returning production in the Permian Basin is grateful, we're really grateful for everything that you guys did. You answered the call and you put forth a heroic effort that will not be forgotten. I just want to tell you publicly, thank you for everything that you guys did.

So with that, thanks, thanks for everyone participating in today's call. And if you've got any questions, please contact us using the contact information provided. Thanks, Latif.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Adam T. Lawlis -- Vice President, Investor Relations

Travis D. Stice -- Chief Executive Officer and Director

Kaes Van't Hof -- Chief Financial Officer and Executive Vice President of Business Development

Arun Jayaram -- J.P. Morgan Chase -- Analyst

Neal Dingmann -- Truist Securities -- Analyst

Gail Nicholson Dodds -- Stephens Inc. -- Analyst

David Deckelbaum -- Cowen Inc. -- Analyst

Scott Hanold -- RBC Capital Markets -- Analyst

Scott Gruber -- Citigroup Inc. -- Analyst

Derrick Whitfield -- Stifel Financial Corp. -- Analyst

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

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

Richard Tullis -- Capital One Securities, Inc. -- Analyst

Paul Cheng -- Scotiabank -- Analyst

Leo Mariani -- KeyBanc Capital Markets Inc. -- Analyst

Charles Meade -- Johnson Rice & Company -- Analyst

Jeanine Wai -- Barclays -- Analyst

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