Dave Storms: That’s perfect. Thank you. And then on those export constative movement, how sticky do you view that just going into 2024 with the 40 million ton gap that Russia laps?
Joe Craft : We believe that, that will continue to be there. There’s a lot depends on several decisions that they make. We do think that as you move towards the end of ’24, end to ’25, there may be opportunity for them to get more LNG. But then into their country, they’re trying to move to renewables, but they’ve opened up their own coal facilities. They’ve opened up coal plants. So if you look at in addition to the Russian supply, we think there’s like 8 million to 10 million tons of added demand in 2023 for coal plants that they’ve opened to meet their energy needs. How long those stay online? It is hard to know. But based on our 4.4 million tons or so that we’re going to sell in the export market, we believe that there is more than plenty of opportunities for that to sustain itself if not grow.
If you go back before the pandemic, we were shipping at a 12 million-ton rate. So I think not sure we’ll get back to that level, but there is opportunity for us to grow just with the demand that we’ve seen over the last six years or so. And so we don’t need a lot of growth. We just need stability and we believe that with our low-cost operations, we can compete in that global economy in the 4.5 million, to say, 7.5 million to 8 million tons over the next three to four years if there’s not alternatives in the domestic market.
Operator: The next question is coming from David Marsh of Singular Research.
David Marsh: Congratulations on the quarter. Also, Brian, congrats on the retirement and Cary, congrats on the promotion. So just quickly one housekeeping question. Brian, are you going to be staying on through the 10-K filing. And do you have kind of a targeted date in mind when you’ll get the K filed?
Brian Cantrell : We should be filing the K toward the end of February. And yes, I will be here through that. My targeted date is March 31, and Cary steps in on April 1.
David Marsh: Got it. Got it. And then just — I was intrigued by the acquisition activity and the comments regarding another one. I was wondering if you guys could perhaps kind of highlight some of your high-level criteria. I’m very encouraged by the fact that it sounds like you’re going to be cash flow accretive immediately on this one that you just closed. And I just wanted to know if you could give us a little bit more color on your criteria when evaluating acquisitions.
Joe Craft : We have certain underwriting standards not only for oil and gas, but then we are very focused on having results that will give us risk-adjusted returns that will be more longer term in nature for our unitholders. So our return thresholds for this particular acquisition, probably, obviously, have been consistent with the past. We’ve committed to the oil and gas group, royalty segment that we will allow them to reinvest whatever cash flow they generate on an EBITDA basis the prior year. So they have capacity for another 50 million or so beyond the investment we made that we announced today. I’m hoping that some people will want to sell their gas at what current prices are. So that could give us some opportunities there.
I don’t know if people will. So I think that we’re very focused on those products or services and solutions that are needed for the long term. And that’s what we’re looking for and then are — right now, a challenging part of acquisition is just where it is the cost of capital. Interest rates are moving and all kinds of mixed signals as to whether the Fed is going to be right or the market is going to be right on where interest rates are going to be or where they are. So I think that obviously, in order to have those attractive long-term investments, you have to have a significant level of return above your cost of capital and our cost of capital is probably moving right now that could make 2023 evaluations maybe a little bit more conservative than what they would have otherwise been had we not been in a higher cost environment.
In other words, we’re going to make damn sure that we get a nice return above our cost of capital, and we may hedge a little bit on a higher cost of capital in ’23 than what possibly it will turn out to be. Those higher interest rates will obviously be impacting the seller’s perspective. And so that just depends on what will be in the market from an acquisition standpoint as they look at their needs for cash and/or their strategic options that they’re looking at.
David Marsh: That makes a lot of sense. I guess the acquisitions announced so far really are more oil and gas. Is there anything on the coal side where things could potentially become compelling?
Joe Craft : There’s — as far as opportunities, there haven’t been many in the coal space. I think from a strategic standpoint, the only thing that could potentially be an opportunity, is met coal potentially that we’ve had on our list, which we’ve been able to get from our Mettiki operation. And so that’s an area that I could see is possible, but it’s not highly probable. It’s probably the best way I’d put it. So most of our focus is outside the coal sector on acquisitions front. In other words, there’s nothing going on right now.
Operator: The next question is coming from Abe Landa of Bank of America.
Abraham Landa: Just a couple of questions on the balance sheet. So I’m sure you’re aware fixed income markets are beginning to fall a little. We have seen some other coal companies take up some notes early. And then in your capital allocation discussion, you did mention you could potentially redeem a portion of your bonds which I’m sure you know your bonds, the call price kind of steps down to par this May 1. Maybe kind of more holistically, what are you thinking about your capital structure and even more specifically about your bonds?
