PDC Energy, Inc. (NASDAQ:PDCE) Q3 2022 Earnings Conference Call November 3, 2022 11:00 AM ET
Company Participants
Aaron Vandeford – Investor Relations
Bart Brookman – President and Chief Executive Officer
Dave Lillo – Senior Vice President of Operations
Scott Meyers – Chief Financial Officer
Lance Lauck – Executive Vice President
Conference Call Participants
Bertrand Donnes – Truist
Umang Choudhary – Goldman Sachs
Tim Rezvan – KeyBanc Capital Markets
Austin Aucoin – Johnson Rice & Co.
Operator
Good day, and thank you for standing by. Welcome to the PDC Energy Third Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.
I would now like to hand the conference over to Aaron Vandeford. Please go ahead.
Aaron Vandeford
Thank you, and good morning, everyone. On today’s call, we’ll have President and CEO, Bart Brookman; Executive Vice President, Lance Lauck; Chief Financial Officer, Scott Meyers; and Senior Vice President of Operations, Dave Lillo. Yesterday afternoon, we issued our press release and posted a presentation that accompanies our remarks today. We also filed our Form 10-Q. The press release and presentation are available on the Investor Relations page of the website at www.pdce.com.
On today’s call, we will reference both forward-looking statements and non-U.S. GAAP financial measures. The appropriate disclosures and reconciliations can be found on Slide 2 and the appendix of that presentation.
With that, I’ll turn the call over now to our CEO, Bart Brookman.
Bart Brookman
Thank you, Aaron, and hello everyone. A solid quarter for the company as our results reflect the first full quarter with contributions from the Great Western acquisition. I’d like to extend a sincere thanks to all employees who worked so diligently on the successful and timely integration of this highly accretive merger. Be assured, as we go through our comments today, the company is incredibly well-positioned for ongoing operational, financial, and ESG success for many years to come.
Let me pivot to some quarterly highlights. Free cash flow for the company $440 million 25% annualized free cash flow yield. Capital expenditures of $260 million in production, in-line with our expectations of 250,000 BOE per day. Shareholder returns for the quarter of $295 million, including our base dividend and the repurchase of approximately 4.2 million shares of PDC stock. This represents 4.5% of shares outstanding repurchased in the third quarter.
And the leverage ratio for the company decreased to 0.5 as we reduced total debt another $300 million. All this, while operational and G&A costs for the company, beat our expectations. Dave and Scott will provide a lot more detail around these numbers in a moment.
Along with these operational and financial highlights, our ESG program is making great strides. We are on target to reduce our greenhouse gas emissions by 15% and our methane emissions by 30% for the period 2021 to 2022, and we continue to expand our community outreach efforts, including our month long employee volunteer campaign. This past September, the events succeeded in donating over 5,700 volunteer hours across over 40 charities. My sincere thanks to all the PDC employees with this tremendous effort.
Let me share my thoughts on how the year is wrapping up. Production early fourth quarter looks encouraging. We anticipate over $1.5 billion free cash flow full-year 2022. Shareholder returns for the year should be approximately $1 billion with share repurchases over 10% of the outstanding shares of PDC. G&A for the company fully reflecting the synergies of the Great Western merger should be in the $1.55 to $1.65 per BOE range, an enduring story of financial success, including the company’s incredibly strong balance sheet.
In all this, while our operating teams continue delivering on some of the top projects in the country, projects clearly mapped by our multi-year permit and DUC inventory in the State of Colorado. As I mentioned earlier, our greenhouse gas emissions and methane emission reduction goals are meeting or exceeding targets and ongoing drilling and location optimization continues to enhance our capital efficiency.
2.5 and 3 mile laterals are becoming more common in our well design and the company’s completion pace is actually setting records. But the real success story here is how we are achieving these operational improvements with safety, front and center, always our top priority. All-in-all, the company is poised to deliver a solid fourth quarter in an extremely promising outlook for 2023.
With that, I’m going to turn the call over to Dave Lillo for an update on our operations.
Dave Lillo
Thanks Bart. Jumping in on Slide 6. Total production for the quarter came in at 23 million Boe or approximately 250,000 Boe per day, and oil production was 7.4 million barrels or approximately 81,000 barrels per day. On the investment and cost side of the equation, we invested approximately 260 million during the quarter, which was right in-line with our second half guidance.
Our team maintained great focus on managing costs in a tight market. Our LOE for the quarter was $3.01 per BOE and all in G&A expense totaled $1.75 per BOE inclusive of approximately $0.22 per BOE and cost associated with the Great Western acquisition. As Bart highlighted earlier in the call, the team has fully integrated the Great Western assets from a drilling, pumper schedules, and operation methodologies. And I’m very proud of the work the team has done to fully integrate this asset as planned with an aggressive timeline.
In the Wattenberg Field, we invested approximately 230 million to run three drilling rigs and one completion crew. For the majority of the quarter, we spud 47 wells and turned in-line 41 wells. Towards the end of September, we brought in a second completion crew as planned that will operate into the second quarter of 2023.
For the fourth quarter, production in the Wattenberg averaged 219,000 Boe per day of which approximately 32% was oil, LOE in the basin came in at $2.46 per Boe highlighting the low cost nature of our operations. In Delaware, we invested approximately 30 million and maintained one full-time drilling rig activity level, spudding three wells. We turned one well in-line during the quarter as we finished completions activities for the year at the end of the second quarter.
Production for the Delaware Basin averaged 31,000 Boe per day, of which approximately 39% was oil. LOE in the basin came in at $6.92 per Boe and is reflective of the increased worked over activity during the quarter.
Moving to Slide 7. I want to take a little more time diving into our Wattenberg field operations and highlight some of the exciting advancements we are working on as we continually improve operations in the field. As of last year, fewer than 10, 3-mile long reach laterals were completed in the Niobrara and Codell formations in the DJ Basin.
Our work on the Wayne Pad is a tremendous accomplishment and is important stepping forward for the industry and our operations with respect to efficiencies in the basin. Though three mile laterals are not appropriate for all acreage, we are trending toward longer reach operations where possible.
As a result of the longer laterals and improved efficiencies, we completed approximately 15% more stages in the third quarter, compared to the previous quarter. And we set two [Liberty Energy Records] [ph] with 808 stages completed in the month and 129 continuous hours of pumping. On the 10 3-mile laterals, wells on the Wayne Pad, I am encouraged by the preliminary results we have seen so far and look forward to updating the market on our production results on further calls.
I want to highlight the 36 well Gus Pad in our newly acquired Range area that we began completing during the third quarter. This is the first Great Western Pad that PBC turned in-line with a mix of 1.5 mile and 2.5 mile laterals, we will develop approximately four-square miles from a single pad. Large number of wells per pad where acreage supports can reduce surface footprint and impact our communities, while driving efficiencies. Our team at PDC is in the forefront of these modern development trends.
On Slide 8, we highlight our long-term visibility of our development of our core Wattenberg Field. With more than 2,000 wells in our current core inventory, our assets generate robust economics that will support the company’s cash flows for years to come. At the current strip price, all of our areas deliver a 100% internal rate returns. and payback on the average in approximately 14 months at current pricing. This short payback period adds to the durability of cash flows in a volatile commodity environment.
To put it in perspective at today’s prices, the wells we turn on in-line this quarter could be adding to our base cash flow available for shareholder returns, as soon as 2023. I also want to give a quick update on our Guanella CAP and our current inventory of permitted projects. On October 2, the 60-day public comment period concluded.
We are encouraged by the feedback and support we’re receiving hosting our community outreach events and look forward to the December 7th hearing date. We are also encouraged by our process of securing additional permits in Colorado. You can see from the representative turn in-line inventory. On this slide, there is good long-term visibility into our economic developments of our assets for years to come.
Between the DUCs, approved permits, and permits in progress, we are poised to materially de-risk more than half of our identified core locations. And also note that the majority of the unpermitted locations today are in concentrated rural Prairie area of our Weld County where we have good confidence in permitting process when it comes time to begin permitting activity there.
On Slide 9, we highlight some of the progress of our Delaware Basin and its stacked pay and oily production mix. Just as we discussed in DJ, our Delaware team is focusing on unlocking value through execution and innovation as well. We currently are drilling three of our first 3-mile lateral tests in Block IV. We have seen great success in our 2.5-mile laterals and are excited about the potential capital efficiency gains by moving to 3-mile laterals.
The team is also testing a batch drilling process on these wells where we drilled the surface of each of the three-wells before moving to the drilling of the intermediate sections, and then finally drilling each of the lateral sections. We anticipate this process may result in reducing drilling days and ultimately costs. Additionally, in our 2022, up spaced production results have outperformed 2021, down spaced tests by approximately 1.75x during the first 150 days.
I will point out that nearly half of the 2022 and all of the 2023 turn-in lines utilize the up spaced design. During the quarter, the team utilized three workover rigs during the quarter to catch up on a backlog of maintenance projects that built-up in the second quarter. And I’m happy to report that the Delaware team has successfully worked through the backlog of projects and we have returned to our steady state activity level with a single workover rig working today.
With respect to activity levels going forward into 2023, we are planning to continue operating one full-time drilling rig and a partial completion crew, which will materially be similar to our 2022 activity level.
With that, I will turn the call over to Scott Meyers.
Scott Meyers
Thank you, Dave. As Bart and Dave highlighted, the third quarter has been operationally solid and in-line with expectations we laid out with our second half guidance. This execution has translated into a tremendous financial quarter for PDC, highlighted by our robust free cash flow and shareholder return programs. Before jumping into results for the quarter, I want to take a moment to reaffirm our guidance.
We expect total production for the fourth quarter to again be in the range of 245,000 to 255,000 Boe per day and oil to be in the range of 80,000 to 84,000 barrels per day. For the full-year 2022, we reaffirm our production guidance range of 230,000 to 240,000 Boe per day of which approximately 73,000 to 77,000 barrels is expected to be crude oil.
Our planned 2022 capital investments in crude oil and natural gas properties are expected to be approximately $1.075 billion, which is at the high-end of our previously reported full-year guidance range. This is a result of the continued operational efficiencies and the ultimately increases the number of stages and spuds that Dave highlighted, as well as continued cost pressures.
Moving to Slide 11, we received a pre-hedged realized price of approximately $52 per Boe, while operating expenses again came in under $9 per Boe. Our G&A came in as expected at $1.75 per Boe inclusive of the $0.22 per Boe cost associated with the Great Western acquisition. This allowed us to generate approximately 700 million of adjusted cash flow from operations and after taking into account 260 million of CapEx, we generated more than 440 million in free cash flow, the highest level of quarterly free cash flow in PDC history. This equates to an annualized free cash flow yield of more than 25% among the highest in the industry.
Moving to Slide 12, I’d like to highlight a few details on our shareholder return program. In the third quarter alone, we returned approximately 295 million through share buyback and quarterly dividend. We remain committed to returning 60% of our annual post-dividend free cash flow to shareholders via systematic share repurchases and a special dividend if needed.
For the first nine months of the year, we have generated nearly 1.2 billion of free cash flow. Of that, we’ve paid up 90 million in the form of regular dividends and bought back 560 million shares – 560 million worth of shares. For the full-year, we are on track to generate 1.5 billion in free cash flow. After paying 125 million for the base dividend, and accounting for a 60% plus shareholder return target, we anticipate at least 825 million to be available for share repurchases, and a special dividend.
As we continue to use the share repurchase as our primary tool in our shareholder return program today, as we spend more on the share repurchases, our anticipated year-end special dividend may decrease. However, the total returns are still hold. We are on track to return approximately 1 billion through our base dividends, share repurchases, and the potential year-end special dividend.
On Slide 13, we illustrate our progress on the share buyback. In the third quarter alone, we spent [260 million] [ph] to repurchase 4.2 million shares or approximately 4.5% of the outstanding shares. Through the first nine months of the year, we’ve invested 560 million to repurchase 8.5 million shares.
We ended the quarter with approximately 93 million shares outstanding, which is less than our share count prior to issuing the 4 million shares in the second quarter for the Great Western transaction. Again, look for the fourth quarter to be another strong share buyback quarter for PDC.
Finally, on Slide 14, I want to draw your attention to the quality of our balance sheet. During the quarter, we reduced our debt by approximately 300 million, exiting the quarter with approximately 1.4 billion in long-term debt and a leverage ratio of 0.5x, which is where we estimated our leverage ratio was going to be at year-end.
In October, as part of the credit facility, semiannual redetermination, our borrowing base was increased to 3.5 billion from 3 billion as a result of reserves from the acquisition of the Great Western. As we continue to see opportunities to reduce our overall indebtedness in 2023, we maintained our elected commitments at 1.5 billion.
To summarize our call before we move to Q&A, we are at a very exciting time in PDC’s evolution as we continue to build a company of scale. We have long-term visibility into developing our world-class assets, a low cost structure and a healthy balance sheet that all supports our model of delivering sustainable free cash flow and material shareholder returns for years to come.
I will now turn the call over to the operator for Q&A.
Question-and-Answer Session
Operator
Certainly. [Operator Instructions] Our first question will come from [Oliver Huang of TPH] [ph].
Unidentified Analyst
Good morning, everyone. Congrats on a solid quarter and thanks for taking my questions. On the shareholder returns front, good to see the buyback pace coming along better than expected, guessing it’s probably as simple as seeing shares as undervalued, which we would agree with, but hoping you all might be able to provide bit more color as if there were any main drivers behind accelerated pace we’ve seen moving through the year versus initial expectations?
Bart Brookman
Yes. I mean, again, we’re looking at an annual program. When we look in, we’re projecting our free cash flow and hitting that 60% target. Clearly after the second quarter earnings and the little bit of softness, we were pretty aggressive in the share buyback. Now, as we get closer to year-end, I’d expect to see something similar because the 60% is our goal and we’re going to achieve that. And if we don’t do it through share repurchases, we would then add it to the special dividend. And to your point right now, we really see the company still shares is undervalued and a great value to buy back.
Unidentified Analyst
Awesome. And for a second question, just wanted to focus on the range area in the Wattenberg, any key observations to, kind of highlight with respect to the Gus Pad, just kind of given it’s the first one that you all have turned in-line and also maybe the size of the pad, just kind of given how big the size of the pad is as well? Thanks.
Bart Brookman
Yes. So, I can give a little more color on that. We’ve completed the first eight wells. We’ve got them online and they’re looking astronomically up to our expectations at this point. We will move back into the pad to frac the additional 24 wells here coming up on the schedule probably in December. When we had the Raindance pad, we had some issues with having to move back into do some gas lift operations. With this pad, we will install gas lift immediately upon clean out and tubing the wells up. So, really encouraged about this pad so far and look forward to turning all the wells online at this point.
Unidentified Analyst
Thanks for the color.
Operator
One moment. Our next question will come from Bertrand Donnes of Truist. Your line is open Bertrand.
Bertrand Donnes
Good morning. Don’t want to [belabor] [ph] the point, but just going right back to the shareholder returns, I just wanted to – that maybe last quarter, I would have thought that hitting the 320 million or so remaining for the buyback target would be a stretch, but it sounds like the pace has, kind of picked up and you’re more comfortable with that higher level. I guess my question is, is the special dividend starting to become a more integral part of the program or do you still see it purely as just, kind of the catch up mechanism to use at the end of the year?
Bart Brookman
Yes. It’s always really been meant to be the, I would say, the top off feature or the rounding, we really looked for at this point in our company the share buyback to be the main engine for delivering our returns. And so, I would say that and then during the third quarter with the activity we had, we felt very comfortable that there was no material movement in our price as a result of our program. So, we’re really comfortable being able to purchase that many shares again a day.
So, I would say that’s kind of when you look – when we look at it. And if you just go back, remember the first quarter, there were some time that we couldn’t purchase because we are going through the Great Western acquisition. So, it was kind of always leaned towards the second half plan because of that, but again, just look for the fourth quarter to be another strong share buyback quarter for us.
Bertrand Donnes
Sounds good. I only asked because some of this, another E&P has slowly transitioned from a special becoming a regular special. So that was just a point of that. And then maybe moving over to the Guanella CAP, the multi-day process, I guess, is just a little new to me. Is it purely due to the extensive size of the CAP or is there something else you’re expecting that might stretch out the process? I mean, I’ve listened to a couple of these and it seems like at one point the director will, kind of call a vote even if everything’s not agreed upon. So, I was just trying to understand if could it go past two days or two days of the CAP or is there a reason that it might take two days to [indiscernible]?
Bart Brookman
So, [our Guanella CAP] [ph], we have this, the hearing is scheduled for December 7. The CAP consists of 450 wells. It’s 2022 locations, and the reason we put a tentative date for the next day is as we go through each individual site, we’re not sure how long the explanation and how long the CAP hearing will take. So, that’s why we put that for a tentative second day as well. We’re hoping with all the involvement that we’ve had with the local municipalities with the COGCC that we’re going to be able to conduct that in one day and get that approved with high confidence at this point.
Bertrand Donnes
That’s great. And then this is just a housekeeping question. I don’t think anyone else was going to ask you, but the 5% 4Q over 4Q growth, kind of hoped in and out of the press releases. I just wanted to see where you guys were at with that and whether that applies, still applies to oil and gas volume or oil and total Boe volume? And then maybe if there’s some sort of color on Wattenberg versus Delaware? That’s all I got. Thank you.
Bart Brookman
Yes. I mean, we’re still going through finalizing our budgeting process as we go through the next several weeks into our board meeting in December. So, it’s still a little premature, but again, I think when we think about, when we put out our second half guide, we were very cognizant to make sure that the market understood that our 2023 expectations were not really being altered.
So that’s where it came out with the 5% because originally our growth was expected to be the 0% to 5% and we don’t see our 2023 material, our plan materially changing. So, if you look at our guidance, I’d still say it’s closer to that 5% range right now for the guidance that we have for the second half to the year, but we’re still finalizing some of the plans and a few other things in 2023 that make it even more challenging are some of these big pads that Dave alluded to when you’re turning on 2024, 36 wells at a time, it can make your production a little bit lumpier.
So, let us finalize our schedule and we’ll give you some more outlook. And as far as the oil mix, we’re still going to be in that 32%-ish, kind of company. Again, from quarter-to-quarter, it could go down 1% or up 1% really when Delaware activity is kicking in. So, we’ll be giving you more flavor on that upcoming in some of our other calls. We just got to finish the budgeting process first, but I still expect to be more towards that 5% on the second half guidance than a [0% or 5%] [ph] that we would have said earlier in the year.
Dave Lillo
And, Scott, Delaware and DJ, we do have growth plans in both basins right now?
Scott Meyers
Yes, we do. Yes, we do.
Bertrand Donnes
Appreciate the color. Thanks guys.
Operator
One moment. And our next question comes from Umang Choudhary of Goldman Sachs. Your line is open.
Umang Choudhary
Hi, thank you and good morning. My first question, wanted to get your thoughts on the inflation expectations next year. Can you help us think – also think through the benefit on CapEx has a shift towards this longer laterals and bigger PADs?
Bart Brookman
Dave, do you want to start?
Dave Lillo
Yes, I think so. So, as we guided to in the last call, our guidance was 1,025 million to 1,075 million. And I think we’re still in that range right now, probably on the high side of the range in 2022. We’re about halfway through our bidding process right now and it looks like we’re looking at probably another 5% increase into next year. It’s the fuel and the profit and the steel and the chemical costs really to pass-through that we’re going to see that. So, as we continue to finalize our bidding process and our budget, we’ll be able to talk a little more on what 2023 looks like at that point.
Bart Brookman
And I would just remember two other key things when you’re thinking about the CapEx for 2023. Number one is, you have to add that 150 million to 200 million because of the Great Western acquisition, we only had it for eight months this year. So, I would take that 1.075 let’s add 200 million to that as your starting point. And then as Dave is saying, the 5% additional cost is kind of where we’re from now.
So, when you’re really comparing to the full-year, it’s probably going to be more the 10% to 12% year-over-year because some of the obviously dollars we spent earlier in the year were a lot less than what we’re spending currently in the fourth quarter. So, hopefully that will provide a little bit more color for you as we’re going through this. So, I’d say annualized for the activity with the Great Western expect about 10%, 12% over year-over-year, including the whole spend and the growth in spend that happened during the year and you’ll get close to our preliminary target for now and clearly more detail to come in a few months.
Umang Choudhary
That’s great color. Thank you. And then I guess on my second question, can you give us an update on the second Bone Spring test result? And then any initial thoughts as to how it impacts your Delaware inventory?
Dave Lillo
Yes. So, I can expand a little bit on that. This was really an effort in the Delaware to expand our inventory and it was an exploratory, [Greenwich] [ph], Second Bone Springs, which is a sand. We saw several operators, one to the north, getting really good results from this zone and there was permitting going on to the east. We drilled the well in January of this year and [frac’d in April] [ph]. Geological model looked good, although we ran into really some complex faulting as we were drilling.
We went ahead and completed the well at a normally high H2S levels and high water volumes. So, after trying to mitigate for short-term, we decided that this well was not going to be commercial. It didn’t really condemn the zone, the teams going back and taking what we learned from this and see if we could apply it to other areas. So, that’s kind of where we’re at this point.
Bart Brookman
And Dave, as far as our inventory in the basin, impacts, we did not have that Second Bone inventory. So, this was truly a single test expiration in an effort to add inventory, but it did not reduce our opportunities.
Umang Choudhary
That’s great. And I guess if I can do a quick follow-up there. Given the results, as you think through your inventory in the Delaware, how are you approaching it? Are you looking at some bolt-on opportunities, which can further increase your inventory in that region? And are you doing further test as it pertains to testing out the second Bone Spring and the Wolfcamp C zone next year?
Lance Lauck
Hey, good question. This is Lance. Let me give you – just a couple of updates on how we’re thinking about our inventory in Delaware. First and foremost, yes, we do look at, sort of what we call blocking and tackling with offset operators and how can we for example, take a one mile section and combine it with our mile and let’s go drill a 2-mile together and gain efficiency from that.
So, that’s ongoing and there’s been also an example of where a party had a lease that was coming up on exploration and we were able to, based on our development plan, get over and drill that. So that added incrementally to us as well. I think as you think about our inventory, keep in mind, the inventory we have currently talked about is it comes from last year when the prices were a lot lower for commodities, etcetera.
So, from where we sit today, there should be an increase just due to commodity price as, sort of a starter. But then there’s a couple of other intervals that we’re looking to test in 2023 that other operators offsetting this have already drilled and producing. And so, we’re going to be in a position to continue to monitor the offset activity and schedule a couple of tests ourselves that we believe will be inventory adding for us in 2023. So, a lot of different things that we’re doing, a lot of good work and just really thankful for the Delaware team and the work that they’ve done to continue to build and grow our inventory there.
Umang Choudhary
Great color. Thank you.
Operator
One moment. And our next question will come from Tim Rezvan of KeyBanc Capital Markets. Your line is open.
Tim Rezvan
Hey, good morning everybody. Thanks for taking my question. I wanted to circle back on the repurchase program. You’ve mentioned 4Q should be a strong buyback quarter. We noticed shares are up pretty sharply quarter to date, almost 30% here. I know, you think they’re undervalued, but all else equal they’re a little less undervalued given the rally. So, I’m just kind of curious on the [indiscernible] intensity of capital returns that you see through this quarter and into 2023, if shares continue to perform well. Are the buybacks more liquidity based or is it really opportunistic? I think you did a good job in the third quarter, but just kind of curious how you’re seeing it going forward?
Scott Meyers
Yes. I mean, I’d love to get to the point where we back off a little bit because our share price performance has continued to perform and – but I don’t think we’re to that point yet. I mean, we still have some headlines out there with Guanella CAP getting approved that we think is going to be a catalyst for us of getting any shares can before that, we think will be a positive.
Again, quarter-after-quarter delivering the free cash flow that we think we can do, I still look at the share repurchase with our multiples where they are as still a great way to use our capital return program. So, I would say look for us to continue into 2023. If we start seeing it, there’s another form that starts really distinguishing itself. We will always be considered and we would consider other ideas, but right now, we’re just big believers in the share buyback and look for that to continue and we hope the share price performance continues as well.
Part of that should be driven by the sheer fact that we have bought shares and there’s less shares outstanding. As Bart said, you know earlier, we could be less than 90 million shares or around 90 million shares by the end of the year with our buyback program. So, look for us to still lean in on that right now, but we’ll still consider other things in the future.
Tim Rezvan
Okay. That’s fair. And then on the subject of Guanella CAP, [indiscernible] got a pretty quick approval from their box [indiscernible], I know it was a lengthy process. They did preliminary sighting that like you all did. Once you get past Guanella, if that gets approved, if you expect, what if any permitting needs do you have going forward? Are you pretty much done or will there always be, kind of smaller, kind of tag on permits you’ll need to get approved?
Scott Meyers
So, when you think about the Guanella CAP, there’s going to have to be individual OGDPs for each of the locations, and the team has really those prepared. We have the alternative location analysis. We have the cumulative impacts ready to go. Just working on the operational plans for each facility right now. So, we’re really confident. We’re going to be able to get approval for our [initial siding] [ph]. And then whatever we’re going to have to do after that, the team is ready to go and we feel like we’re way ahead of that process.
In addition to that, we have several other OGDPs that are still out there that we’re working on. We actually submitted a Whitney 19-well pad in August that’s in our Q now at the oil and gas commission going through the completeness determination. And we have two other ones, the [indiscernible], which are another 46-well package and 18-well package where we’re going to submit in the next couple of weeks. So, we feel like we are in really, really good shape on permitting to support our activity levels in the future.
Tim Rezvan
Okay. Thanks. And just to clarify, is 2023 fully permitted? Are these all longer-term or are some of these in the program for next year?
Dave Lillo
Yes, we have our permits in hand. Takes our turn-in lines into 2024 completion. So, we’re looking at the CAP, we’re not even going to start drilling these wells until mid-24. So, yet we have great line of sight here for our turn-in line schedule for the next several years.
Bart Brookman
Tim, with the CAP approval, we will have our turn-in line schedule being the DUCs plus permits in hand through 2028.
Tim Rezvan
Okay. Yes. So that’s in the [DUCs] [ph]. Great. I appreciate all the color. Thanks everybody.
Operator
One moment. And our next question will come from Charles Meade of Johnson Rice & Co. Your line is open.
Austin Aucoin
Good morning, everyone. This is actually Austin filling in for Charles. First question, the bumpiness that PDC experienced in 2Q with respect to the RainDance pad seems to be behind you. Going forward, should we assume that this is no longer an issue?
Bart Brookman
Absolutely. We acquired that RainDance from Great Western. When they went back in and cleaned out the wells, they installed tubing, but they didn’t install the gas lift mandrels in the well, and that’s why we had to go back to that pad to get the gas lift mandrel [Technical Difficulty] installed at the time we did. That is behind us.
In October, we were able to move back in. We completed our operations in – on the last 10-wells there. The team did a tremendous job running in [sign-ups] [ph]. We brought two rigs in at the time and it took about a week of well worked activity.
Going forward, we’ll do it the way that TDC runs their operations. When we do our cleanouts on these longer laterals, we go ahead and install gas lift mandrels at that time. So, we’re hoping this isn’t going to be a systemic problem.
Austin Aucoin
I appreciate the color. And as a follow-up, I guess more about how you prioritize your free cash flow? PDC has 2023 targets to return over 1 billion through shareholders via the buyback and base dividend, as well as a target to reduce debt by 1 billion by year-end 2023? I guess if oil prices, I guess dip below 80, what would be prioritized more, the debt reduction or the buybacks?
Bart Brookman
Yes. Just before I answer, let me just clarify. Our share return this year is going to be about $1 billion, and we have been – we have a long-term debt goal to get our debt down to about 800 million. So, right now we’re sitting with the 1.4 billion of debt. So, when we look at this, I mean, our framework is our framework. It’s return 60% of our post-dividend annual free cash flow to shareholders.
So that other 40%-ish that’s left is to manage our working capital needs to pay down our debt. And again, we don’t want to be a debt free company. We believe debt is an important part of your capital profile. When you look at it’s a cost effective form to use. So, I think we’ll start paying down that debt. We’ll continue paying down that debt in 2023 based on commodity price environment. We might get to the 800, we might only get to a billion, which then we’d get to the rest of it in 2024. So, we’re very comfortable where the balance sheet sits today, but we’ll continue to work on it as we try to make this company stronger and stronger. Does that answer your question?
Austin Aucoin
It does. Thank you very much. That’s all from me.
Bart Brookman
Thank you.
Operator
And I’m showing no further questions at this time. I would now like to turn the conference back to Bart for closing remarks.
Bart Brookman
Yes. Thank you, [indiscernible], and thank you everyone for joining a terrific quarter for us. Dave, great job on the operations and the rebound that we’re experiencing in the quarter. So, look forward to talking to you in a few months. Thanks.
Operator
Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. You may now disconnect.
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