Stephan Tompsett: Yeah. Repurchases provide flexibility in capital return to shareholders because you can match free cash flow timing with the repurchases themselves. One of the considerations we have, of course, relative low float, which impedes trading day-to-day. So if you go take a large amount of shares out of the market, it could have some negative impacts there. But given where we’re trading right now from a valuation standpoint as Bill mentioned earlier there’s tremendous upside in value in the stock right now. So it’s going to be a tool that we’ll look at alongside dividend growth for long-term shareholder returns.
Noah Katz: Thank you.
Amanda Brock: Thank you.
Operator: Thank you. Next question comes from the line of Praneeth Satish with Wells Fargo. Please go ahead.
Praneeth Satish: Thanks. Good morning. Maybe just to follow-up on that prior question on buybacks, I guess the way I think about it is, you’re going to look to do M&A and to the extent you can’t get deals done, it sounds like maybe you’ll consider buybacks, but I don’t want to put words in your mouth. So, one, is that true? And then as a follow-up, it sounds like based on your comments on the M&A market from a previous question there is a gap between where you’re valued and where assets are selling for. So if I read into those comments, it sounds like maybe we need to wait a little bit of time here for the bid-ask spreads to narrow on acquisition. So putting that together, it feels like if you may or may not do M&A this year, which maybe does that open the door to doing buybacks in the second half of this year?
Bill Zartler: I mean, I think all of that is on the table. And we’re very patient with our capital. And if it means, we continue to improve the balance sheet for a couple of quarters, we continue to improve the balance sheet for quarters. We’re in no rush to do anything that doesn’t make any sense. So, if we evaluate steady long-term dividend growth, which we believe will be a core part of the strategy. As we indicated two years ago, we started off with a low dividend to the IPO and we’ve continued to now, this will our first increase in probably the first of many over the next several years, and we’ll evaluate where the — what we do as Stephen alluded to, we don’t have a ton of flow today. So that is a consideration with buybacks.
That said, we will have excess cash beginning to build on the balance sheet or at least lower our leverage covenants to well below market averages. I don’t think — as you said where deals were getting down. I don’t think anything is really getting done. So, there is a realization and it’s sort of a relative value thing that will come into play over the course of the next, who knows whether it’s a quarter or a year or two. But eventually, we believe these assets do consolidate in some form or fashion because it does make sense to operate them efficiently. There is a tremendous opportunity in the Delaware Basin today and where we act and there’s continued growth. We’ve seen announcements by some of the larger players, on their continued growth and interest level in there.
And I think one of our large midstream counterparts called it the permanent basin, rather than the Permian Basin. And I think that — that is a very accurate description of what we see the length of inventory and the economics of our customers, which at 2:4 to 5:1 water oil ratio continues to grow our business quite rapidly over time.
Praneeth Satish: Got it. No, that’s helpful. And then when I look at the guidance for Q2, it seems like it implies a sequential decline here in produced water volumes between Q1 and Q2. Can you help explain what’s driving that? I mean I know you mentioned, that you pulled forward some produced water volumes from Q2 into Q1. But I would imagine that that would continue into Q2. So I’m just trying to understand that decline there.
Amanda Brock: Some of that Praneeth, is the pull forward with 20 well pads flowbacks and that flowback is sort of your highest volume of water. So that decline is actually sharper as you — as time goes on. So that does have an impact, which is why we’re sort of guiding lower in Q2. Obviously, we’re going to do everything we can as we always do, to reverse that. But a lot of this is just a function of what our customers are doing and what we’re seeing in terms of either steady-state production or flow backs.
Bill Zartler: And we see some of our larger customers that have acreage outside of our area either in the Texas, Delaware or in the Midland Basin and they do move frac crews back and forth. And so I think we’re seeing a little timing of that from the second and third quarter, which is why you talk about a ramp, this is effectively a ramp based on the movement of frac crews back and forth across the acreage that we have visibility into. So it’s — there’s just a little bit of a quarter-on-quarter noise on that, but this growth continues to be steady.
Praneeth Satish: Got it. Thank you.
Amanda Brock: Thank you.
Operator: Thank you. Next question comes from the line of Sean Mitchell with Daniel Energy Partners. Please go ahead.
Q – Sean Mitchell: Good morning. Amanda. Thanks for taking the questions. Congrats on the quarter. Quickly just skim oil recoveries were up significantly. I’m kind of not very smart on this, but what drove that? And like it looks like you have that coming back down in Q2? And how impactful is that from a profitability standpoint, in terms of your outperformance for the quarter?
Amanda Brock: So Sean, good to hear from you and yes — skim oil was a surprise in Q1 in the early part of that quarter. There were some flowbacks in a particular area and there was some outside production of skim oil. The operator, then made some changes and that skim oil declined. So, how much we get is always just a function of what our customers are doing. So, we do guide over the year, but we do have some lumpiness depending on activity area whether it’s recycled and whether it’s sort of flow back.
Q – Sean Mitchell: Got it. Okay. And then maybe remind us any color, you can provide around your inflation escalators on your long-term contracts. Obviously, that’s very impressive. Can you give us any color around the inflation escalator?
