Jeff Robertson: In terms of infrastructure, Mark, I know there’s — you all would share, I believe, any infrastructure costs related to the production, can you just talk about what’s in the area that you can move oil into? I know it was developed initially with vertical wells.
Mark Bunch: Yes, the plan right now is really not to use any of the vertical well facilities because the wells — the horizontal wells are much more prolific than the vertical wells. So, the costs that we’re with — the capital costs that we’re looking at are actually involved putting in new infrastructure, putting in new tank batteries also. And we’ll optimize that for being horizontal wells.
Jeff Robertson: Mark, from what I’ve read about Horizontal San Andres wells, it’s not a unconventional formation in most areas. So, the initial line rate is not as steep as more as a shale formation. Is that true in this area as well?
Mark Bunch: Yes, I would say that typically in a Wolfcamp — say like in the Delaware part of the Permian where you have the Wolfcamp, those decline rates are probably above 95%. Here, it’s going to be less than that.
Jeff Robertson: Okay. And then just lastly on funding, Kelly, you mentioned in your remarks — or maybe Ryan in terms of funding the capital program, funding the program the drilling program with available liquidity and it appears you still have — will have the flexibility or could have the flexibility to continue to fund the dividend. And so that really shouldn’t be at risk at this point.
Kelly Loyd: Yes, look, dividend is first. So, I don’t want to put that in the opposite order. So, yes, for sure.
Jeff Robertson: Okay. I just wanted to make sure that was after. Thank you.
Operator: The next question comes from David Locke of Old Mammoth Investments. Please go ahead.
David Locke: Hey Kelly and Ryan, how are you guys doing today?
Kelly Loyd: Been better.
David Locke: Hey, so I think you’ve kind to answered these questions, but I just want to answer — I just want to ask them again for clarity. So, as it related to the downtime, particularly at Delhi, but also in the Barnett, would you expect that those compression issues being fixed would get production in those particular areas back to where they were in March as we go forward?
Kelly Loyd: So, listen, we do expect as those compression issues get better, you will see better results. So I’ll say that.
David Locke: Okay. And then for some clarity on the Permian assets, I’m just trying to triangulate a few things that you said. So, four gross wells a year is the expectation and you think you can — sorry?
Kelly Loyd: The eight gross wells, yes, four net.
David Locke: I’m sorry. Did I say four? My apologies. So, four to you.
Kelly Loyd: Yes.
David Locke: So, you expect that you can fund that and the dividend out of free cash flow under, sort of the, if we look at the forward curve for oil and gas today?
Kelly Loyd: That’s right. Yes, no, that’s right, David. I mean, we — when we look at where pricing is, like you said in the forward curve, obviously, assuming oils already increased from what we saw in the fourth quarter, so have NGLs and just kind of in the side, right, NGLs in the fourth quarter were about a long time and so that certainly impacts us too. But when you take prices into consideration, free cash flow that our other assets generate plus cash that we’re going to get from drilling the PEDEVCO, right, there is some delay there, but we do think this asset become self-funding pretty quickly. We don’t see any issue covering that have been plus funding our proportionate share of eight wells per year.
Ryan Stash: Just to reiterate, I mean, that’s one of the things that we’re excited about with this deal is the money we’re spending goes into the ground and drills wells. We’re paying for acreage to get in on a block-by-block basis, but that’s a relatively small number. The rest of the money goes into the ground and starts producing oil again, probably within about March 60 days.
Kelly Loyd: Yes, longer than that, but somewhere — very reasonable, maybe three months.
Ryan Stash: For when the money gets spent to when you start getting revenue from the oil — from the wells you drilled, it’s not a huge multiyear payback. You get a pay upfront and then you get payback. We and PEDEVCO are excited about the fact that the money going into this goes into the ground and starts making oil for both of us.
David Locke: So under the understanding that there’s a delay between when you spend the money and when the oil starts coming, would you expect that the expenditure of this capital on a pro forma basis would at a minimum offset the declines in the other assets in the portfolio?
Ryan Stash: So, I’m not sure I’m prepared to go into that level of detail, but look, we’re certainly not on the wrong track.
David Locke: Okay. And then, if I could sort of cycle back to the Williston assets, which I guess you guys have owned for the better part of 18 months now, or maybe that’s the date of announcements and not the date of closing.
Kelly Loyd: That’s pretty close.
David Locke: We had talked several times on previous conference calls about maybe putting development capital into those assets. And — well, again, we’re sitting here 18 months later and that really hasn’t happened. So, why has development capital not gone there? What’s holding it up? What makes these Permian assets look superior to you because if I didn’t misunderstand, you said a few minutes ago that they’ve kind of jumped to the line.
