Kelly Loyd: Okay. So, yes, I mean, when — again, this was primarily like first and foremost, the Williston acquisition was evaluated primarily in a large, large way purchase because it was a great PDP purchase. We really liked the existing assets and how they were producing. It also had drilling locations, which at the time when we evaluate them, there was a — the drilling and completing cost was, I don’t remember what it is, but let’s just say it was a certain number. Very shortly after that number moved up 20%, 30%, which again, it makes the returns pretty good. But the risk associated with drilling them and in the return you’ve got, it’s still something that we think is attractive. It just it didn’t jump out at us that we need to go do now.
If you see some — there’s been plenty of inflation across the service sector. So, if we could see those prices abate some, then that project becomes certainly more attractive. But at this point in time with the current drilling costs that are out there in the world today and a very modern AFE, which we reviewed, the returns here are just like I said, superior to the wells there.
David Locke: Okay. So, would you consider that those wells, the Williston development opportunity, to still be in sort of like a theoretical backlog subject to some combination of oil price and service costs then?
Kelly Loyd: Absolutely. Yes.
David Locke: Okay. And then again, it’s been the better part of 18 now since you guys have done any acquisitions, you kind of implied. So, I guess I’ll try to get you to-date it outright. That PDP acquisitions feel a little bit too expensive to you still, and that’s why you’re looking at some more organic stuff?
Kelly Loyd: Well — okay, so let’s be clear, it was never either or, right? It was — we were always going to look to have the potential for us to be able to put some money into the ground. And when there are years like this past year, when the criteria that we require to make sure that acquisitions are really highly accretive to us, just aren’t there. I mean, just so you know, we use the same proven screening and processing and evaluation sort of process we have for years. We screen, evaluate it, even offered on many candidates. But like I said, the seller’s expectations just weren’t in line with what we required to make it a good acquisition for us. That strategy has never gone away. We’re still doing it as we speak, we’re evaluating several deals.
So, it’s something we very much still want to do and we think this complements those very well and, anyway. So, I want to make sure I’m not leading with the impression this is all we’re going to do. We — our goal is to go find highly accretive PDP acquisitions as well.
David Locke: Okay. So, — go ahead, Ryan.
Ryan Stash: Yes, I think it’s fair to say that the acquisition market has been choppy maybe as a way to describe it. We look at — we try to source deals through connections, through negotiated, and also through marketed processes. And there was probably a lull towards the beginning of this year of really quality deals that we saw come out. We have seen that pick up to be honest. We have seen a lot more deals that might fit us pick up here in the near-term, but there was a portion of we didn’t just see as much deal flows as we would have liked too.
Kelly Loyd: I’d like to follow-up with what Ryan just kind of on top of it, we look at this as a way to flatten out our adds. I mean, it’s a low risk area. We know there’s oil there. And the problem with acquisitions, if you just 100% rely on those, it’s tends to be kind of lumpy because they come kind of in groups. And this way, it kind of helps flatten out our production profile as we go just because we’re developing organically, we’re not having to go out and bid for it every year.
Ryan Stash: Yes, I mean, when you’re — especially for the oil asset, right, if you’re in a backwardated commodity curve in oil, you’d much rather drill now to accelerate your cash flow than have to pay — then sort of buy on a curve that’s declining, right? It makes it a little bit easier and we’d rather accelerate that right now when we see those prices.
Kelly Loyd: Yes. And with current prices, we would really love to drill these wells as soon as possible because obviously the prices had picked up lately.
David Locke: So, is stuff happening in the A&D market and you guys as I don’t think I’d be insulting you by calling you value buyers just sort of aren’t there. Is there still like a big differentiation between bid and ask and deals just aren’t happening?
Kelly Loyd: Well, it’s a little early to say. So, like I said, we haven’t stopped that process. So, I don’t want to say too much because I don’t know who is listening on the phone. I would just say, we are excited about our opportunities that are out there, we think the market has become a little more realistic from the seller’s perspective. How about that?
Mark Bunch: And we’ve actively gone after equity. We had — even while we were developing this Permian Basin opportunity, we were actively looking at other acquisitions and making offers on them. And I don’t feel like we were like wildly out of the market. So, I’d expect us to still be able to do those type of things too. We’re just trying to like make it so we’re not totally dependent upon acquisition work.
David Locke: Okay. And then we’ve talked on a couple prior conference calls about just like the general notion that growth CapEx would come from internal cash flow and acquisition probably gets funded through the credit facility to then be paid down over the course of the next couple of the following years. Is that still sort of like an accurate high level description of the strategy?
Kelly Loyd: Yes, that’s our base plan for sure.
Mark Bunch: You are dead on.
David Locke: All right, gentlemen. I’m sorry for monopolizing time and I’ll turn it over.
Kelly Loyd: No, appreciate the call. Thank you.
Operator: The next question comes from Bruce Brown of Brown Capital. Please go ahead.
