Neal Dingmann: Agreed times, and seems even better next year. Thank you all.
Travis Stice: Thank you.
Operator: Thank you. And one moment for our next question. Our next question comes from David Deckelbaum with TD Cowen. Your line is now open.
David Deckelbaum: Thanks for taking my questions, Travis, Kaes, and team. I appreciate the time.
Travis Stice: Thank you, David.
David Deckelbaum: I was just curious, Travis, if you could provide an outlook. I know when you announced the Endeavor deal; I think you said that you weren’t going to sell anything, obviously, until the deal closes, which makes plenty of prudent sense. But I’m interested just with all of the minority interest that you have in various pipeline investments. How should we think about just where that pipeline cycle is right now relative to investing versus harvesting? Is that something that we might see if we think about the risk for probability around 2024, seeing some of those investments being harvested? Is the market kind of ripe for that right now or you kind of expect these to be more long-term investment harvesting Endeavor?
Kaes Van’t Hof: Yes, Dave, I mean, some are — some are able to be harvested today. Some are probably further down the line. I mean, we’ve done a pretty good job selling some of these non-core, we call them non-core, but equity method investments over the last 12 months. We sold the Gray Oak Pipeline interest. We sold our interest in the OMOG oil gathering JV. I think it’s logical that some of our assets that we can control the sale of will likely pursue a sale, but there’s others that we’re probably someone who would tag along with a bigger sale, and I can’t control when those happen. But it’s certainly an asset that we are assets that we have on our side of the ledger that will be used to reduce debt quickly on a scale basis, or through the indefinite merger.
So I think that’s certainly on the table. I think Travis’ point on not having to sell significant assets is important, right? When we structured the cash stock mix of the deal, we didn’t want to be a forced seller of assets to pay down debt. And I think we’ve done that with the mix we presented last week.
Travis Stice: Yes, I can’t emphasize that point enough, David that we’re not going to be forced sellers of any of our assets. We’re going to be very thoughtful as we move forward post close in looking at monetization strategy for these minority interests, particularly relation to debt reduction. So we’ll be very thoughtful and do the right thing.
David Deckelbaum: Appreciate that. And just maybe a little bit in the weeds on this one, but the 2024 plan, when you lay out the Midland Basin development, this year maybe coincidentally or not, there’s a more — a little bit more on the margin going to Wolfcamp D and some of the other zones. Is that just more coincidence of geography where you’re developing this year and presumably years beyond? Or are there some things that you saw in 2023 that are sort of increasing your confidence of wanting to allocate more capital there and if there’s any color you could provide?
Travis Stice: Yes. I mean I think both from our drill bit and from others drill bit, we’ve seen really good results in the Wolfcamp D. I think it makes sense to put it into the stack today, maybe not in every situation, but in more and more situations. So more Wolfcamp D in the plan, and then in the other bucket, we have more Upper Spraberry in the plan. So I think generally, if we’re able to add these zones to our development plan and see similar productivity per foot, that only extends the inventory duration that we have both on a standalone basis and pro forma with Endeavor. They’ve been developing a lot more Wolfcamp D than us and we talked a little bit about that last week, but I think it just shows the beneficial nature of the Midland Basin and stack bay that we’re adding zones like the Upper Spraberry and the Wolfcamp D that we didn’t talk about three, four, five years ago and now becoming core development targets.
Operator: Thank you. One moment for our next question. Our next question comes from Neil Mehta with Goldman Sachs. Your line is now open.
Neil Mehta: Yes. Good morning, team. Thanks for doing this. I guess I have a couple pricing related questions, and the first, would love your perspective on just hedging as standalone and then also pro forma once you roll in the Endeavor assets. Historically, you talk about trying to maximize upside exposure while protecting extreme downside. Just curious what that means for you as you think about hedging in 2024.
Travis Stice: Neil, I mean I think we need to protect our side of the ledger through the period between signing and closing, so we can generate free cash that reduces the cash portion of the purchase price. I think we’ve done that. We’ve historically bought funds in the kind of $55 WTI range. We now kind of stepped it up to kind of that $60 range. And we’ll probably be a little more hedged on our side between sign and close than we have been in the past, closer to — I don’t know, two-thirds, three quarters hedge, so that we can make sure that, that, that cash is there to reduce the cash portion of purchase price. I think longer-term, it all depends on the strength of the balance sheet and the break-even that we have with our base dividends.
We’ve always kind of tried to buy hedges at kind of 50 to 55. And that protects free cash flow, balance sheet doesn’t blow out and the dividends well protected in that extreme downside scenario. So I don’t expect us to move to a non-hedging company because we just believe that it’s prudent to protect the balance sheet and our base dividend which we see like debt.
