Travis Stice: And, Jeoff, since I spoke just a second ago on some of the cultural elements of Diamondback, another cultural element is when we combine assets in our history, we’ve done a really good job of checking our egos at the door and finding out what’s really working. And it’s a culture of seeking first to understand as opposed to being understood. And as Kaes just mentioned, when we put the two companies together, we’re really excited about understanding what they do, why they do it, and making — collectively making improvements both on our side and on the incoming asset side.
Jeoffrey Lambujon: Perfect. And then for my follow-up, I wonder if you could just speak to how the philosophy around the balance sheet longer-term will evolve, if at all, once the deal closes. We appreciate the commentary on the path to get to the $10 billion net debt level, but we’re just thinking about how the pro forma math continues to push Diamondback to new levels in terms of weight class within the space.
Kaes Van’t Hof: Yes, I mean that’s a question we got on the road a lot last year, kind of from investors saying, hey, listen, you’re in a different weight class now, and you probably need to reassess your long-term leverage profile. And I think that resonated with us and fits with what we’re trying to do. I think we eventually want to get to kind of a $6 billion to $8 billion net debt number, keep real cash on the balance sheet. I think the concern that Diamondback is going to go do every deal and use all cash to do deals has probably been removed with this merger. And in my mind, that leaves us flexibility in terms of capital allocation to lean into a buyback in a down cycle or lean into an acquisition in the down cycle and be — be pro cyclical — not be pro cyclical in how we look at allocating capital on the repurchase side or the deal side.
So long-term, $6 billion to $8 billion would be a good number. If it gets to zero, that’d be great. But I think generally running in that half a turn at strip is a pretty good place to be.
Jeoffrey Lambujon: Great. Appreciate the time. I have to turn it back.
Travis Stice: Thanks, Jeoff.
Kaes Van’t Hof: Thanks, Jeoff.
Operator: Thank you. [Operator Instructions]. One moment for our next question. Our next question comes from Paul Cheng with Scotiabank. Your line is now open.
Paul Cheng: All right. Thank you. Good morning, guys.
Travis Stice: Good morning, Paul.
Paul Cheng: Last week when you announced the deal, you gave the 2024 and 2025 CapEx pro forma and also the [indiscernible]. It was 2005 the pro forma compared to 2004 with the above say call you wrong number $700 million lower. Can you breakdown that how much relation because you think the antipathy will be lower or that asset because you’re not going to grow as fast and how just truly is just —
Kaes Van’t Hof: Yes. Sure, Paul, you kind of cut out a little bit, but I think I get your question. Question is, how do we bridge the gap between the combined 2024 CapEx guide with us and Endeavor separately, and the combined business in 2025, which is down $700-ish million? I would say most of it is running our cost structure on the Endeavor DMC. And so that’s basically 175 wells at $1.5 million, $2 million cheaper, it gets you to about $300 million. I think combined business is not going to need as many wells to hit the production number. Endeavor was growing last year. They started slowing down mid-year, but their decline rate is shallowing. So that’ll help. Our decline rate continues to shallow. That’ll help. I think we’re going to allocate capital to the best combined resource probably in North America, which will help.
And so that kind of gets you to needing probably 50 less wells at $6 million, $6.5 million a pop. That’s about another $300 million. And I think generally we’re spending some dollars this year, probably about $50 million on environmental CapEx. That is kind of one-time in nature and will be reduced on our side as well. So you put all that together and that’s a very, very capital efficient business in 2025, assuming existing well costs, and that can move around. But that’s how we’re thinking about 2025. We might have lost Paul. So we’ll go to the next question.
Operator: Thank you. One moment for our next question. Our next question comes from Leo Mariani with ROTH MKM. Your line is now open.
Leo Mariani: Hi, guys. Wanted to just ask about the Endeavor FANG combination here. Do you guys see any tax benefit for the combined entity where you might be able to defer some of the cash tax payments as a result of combining these two companies? Have you had any preliminary look at that?
Kaes Van’t Hof: I mean there obviously be some benefit with the cash portion of the transaction and the associated interest expense, but we’re continuing to do our combination work. I mean we’re a full cash taxpayer, essentially. I mean they’re pretty close as well. So I don’t think there’s going to be too much to do there, Leo, but certainly, the cash piece is going to shield a little bit of taxes on our side.
