I’d say we are relatively under hedged compared to our historical averages, we typically lay off about 50% of our equity production, just given the backward dated market, we were not able to get hedges in place this year in 2023. I’d say as we start looking into 2024, we will begin laying off a portion of our commodity price risk at this point in time. I think strip levels are generally becoming more attractive at this point in time. And so start, probably inching towards that 50% level between now and the end of the year. Once we have more definition around exact volume levels for next year. I would just add that we do have roughly 35% of our production this year, hedged at a little less than $4 per MMBtu. And about 10% on the crude side, at about $85 per barrel.
So we’re not totally unhedged this year, but we did not get up to the typical level that we have gotten to historically.
Operator: Next question comes from Ned Baramov with Wells Fargo. Please go ahead.
Ned Baramov: Hey, good morning. Thanks for taking the question. Could you provide some more color on the shift in the completion of 10 wells in the Delaware into 2024? Is this related to recent M&A higher production from wells that have already been drilled or maybe something else?
Robert Halpin: Yes, Ned. It’s Robert. I think it’s really more the first thing you mentioned. We’ve obviously — people running tab on expected completion activity with all of our customers. And as we’ve seen two of our operators Novo through the Earthstone acquisition, and then Callon buying Percussion. And those asset integration processes have kicked off. We just have seen a little bit of slippage in timing as the new operators get those assets under their operating teams. I think all-in-all, both of those acquisitions, I think bode very well for our outlook for the basin. Additional commentary directly to us and public commentary from both those operators, I think is highly supportive of this acreage and how they view it in their stack from a capital allocation standpoint, I think a lot of good things to come. But it’s probably going to cost us a little bit in the short-term here in ’23.
Ned Baramov: That makes sense. Appreciate that. And then maybe a quick question on your fixed forward sale agreements. I guess that bodes well for the reversal of mark-to-market and stronger margins in the second half. Could you maybe go over some of the factors that could drive results in your S&L business below your expectations if any?
Robert Halpin: I’ll speak to that one again. Ned, I think from a margin standpoint, there’s pretty good visibility to that, again, given the fact that we hedged 100% of that inventory position. And while there’s accounting nuances, quarter-to-quarter with where we have to mark the physical inventory, that spread is fixed. I would say what could drive, some variation to the higher low-end of the range is that business operates, as you’ll appreciate, on really a q1-to-q1 type timeframe, as we build inventories in the summer, and sell throughout the winter. And so while that margin is fixed, what is not entirely fixed is exactly the timing of when that realized gain will be recognized, as physical product gets delivered in the wintertime.
And as we continue to have to mark-to-market our inventories, every quarter end between now and then. So, zero risk for the cash flow profile, I think, higher end, midpoint to high end or even materially above high end is more a function of when we take those realized gains.
Operator: [Operator Instructions] Next question comes from Charles Bryant with Citi. Please go ahead.
Charles Bryant: Hi, I just wanted to follow up on the potential redemption of the Niobrara press. And just kind of want to get your thoughts on how that might impact capital allocation as you move into 2024? Would that have any implications for reducing leverage to that sub- 3.5x target, and any sort of implications and how you balance that with potential distribution increases in the future, just want to get some more color there. Thanks.
