Kaes Van’t Hof : Yes. I don’t know if sellers are ever reasonable, Leo. But generally, I do think the two larger transactions did happen because Diamondback’s cost structure was differential in the second half of the year and going into 2023, right? We’re drilling wells $2 million, $3 million, $4 million cheaper in the Midland Basin than peers, and that is when you underwrite PUDs, that drives value to the good guys even if you’re not running strip oil pricing. So I think generally, that’s what’s happened. There’s less and less large opportunities like the two that we announced last fall. So it’s relatively quiet at the moment. But some of the smaller things that tend to trend with the large deals like the blocking and tackling, a couple of other deals that Firebird and Lario we’re working on when they sold. That’s the kind of stuff that we’re focused on right now.
Operator: Our next question comes from Paul Cheng from Scotiabank.
Paul Cheng : In your presentation, you show a number of the energy ownership that in the pipeline and gas processing. Just curious that if any of those that you will consider strategically important for you to own their equity ownership? Or that — I mean just trying to see that I mean, whether any of them have that strategic importance to you? Second question is that when we’re looking at your inventory backlog, for those you consider over 10,000 feet, lateral length, you roughly say, call it, 5,500. Just want to see if we can drill a little bit more into that, and what percentage of those wells you can actually do maybe 3-miles? And whether there’s an opportunity for trade and swap that you think you may be able to improve on that?
Kaes Van’t Hof : Great. Thank you, Paul. I’ll take the first one on the JVs. We did highlight all of these JVs. I think generally, these all sat at our Rattler entity before consolidating it. Generally, from a financial perspective, I think they’re all good investments that eventually will be monetized at higher value than what we paid — what we put in. But the strategy behind why we did these things is that we got commercial agreements and benefits locked in with the financial piece. So whether it’s — like the Gray Oak pipeline, right? We got 100,000 barrels a day of space on the pipeline, that’s not changing even though we sold our equity interest in the pipe. On the gas processing side, we invested 20% into WTG. We and our partners decided to build 200 million a day cryo plants immediately after closing the deal, and that is alleviating a lot of the gas flaring and gas processing issues in the Northern Midland Basin.
So we try to drive value through molecules committed to these investments, but generally, at some point, it makes sense to monetize them. On the inventory side, we try to drill 15,000 feet wherever we can. I think most of our land in the Midland Basin is pretty locked up from a lateral length perspective. I think generally, if we had four sections North to South, we would drill through 10,000-foot laterals. If we had five sections North to South, which is rare, we would drill two sets of 12,500 foot laterals. And if we had three sections, we would drill 15,000-foot laterals over two 7,500-foot laterals. So we underwrote the FireBird deal with a lot of 15,000 footers because that is a big contiguous block. And on the other side, Lario, pretty landlocked in the center of Martin County with a lot of competitors around.
So we kind of had to live with the lateral length as they were presented.
Operator: Our next question comes from Doug Leggate from Bank of America.
