Question-and-Answer Session
(Operator Instructions). Your first question comes from the line of (inaudible) of Bernstein, LLC.
Unidentified Analyst
Obviously, your debt to cap has come down significantly. It sounded from your commentary as if you are considering or looking at acquisitions. Did I get that impression correctly or is that incorrect?
Larry Nichols
I have no idea how you got the notion we were looking at acquisitions. The debt is coming down because the cash is building up with our oil revenues coming in. There is no change on our attitude toward acquisitions that we’ve had over the last five or six years. It’s difficult to see any change certainly in a major transaction. We continue to look for small add-ons here and there that are consistent with our leasing position. If you look at the acreage portfolio that we have around the company, we are awash in opportunities and don’t see any holes that we need to fill with any acquisitions, which is what we said for a long time.
Unidentified Analyst
On the cost deflation side, obviously there’s been a huge amount of cost deflation in the industry from service costs, drilling costs, particularly fracking costs. Now that the service industries earnings that are operating margin, doesn’t appear – so we ought to take those any lower, where do you see the real opportunity to continue to drive down costs?
Dave Hager
I think the major opportunities we have, I think we’re very effective when we have repeatable play types like we have in the shale plays that we can continue to drive down the drilling cost by just continued improvement opportunities, and we certainly done an outstanding job of that in the Barnett, decreasing the drilling time from 30 days to 15 days, in some cases even less than 10 days on these wells.
We’re continuing that type activity also in the other shale plays, the Haynesville, the Cana, the Woodford where we haven’t drilled as many wells, we’re continuing to drive down those costs and use the experience we had in the Barnett and import that to the other shale plays. So I see that’s probably the biggest opportunity we have.
John Richels
I just add one point as well, if you recall that in 2009 we were essentially drilling with committed rigs that were not at the spot price, and we also had -- we talked earlier about the fact that we had acquired and contracted for a lot of tubulars at the end of 2008, when tubulars were in short supply. With our reduced program this year, we are still working that off. So we ought to see a reduction in cost going forward just on that basis as well in addition to what Dave has said.
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