John Abbott : Understood. Maybe just a quick follow up on that. So if you got a second. So the goal, not the goal, but one of the thresholds you talked about is getting up to 0.5 times leverage. If you got a strategic partner, would that be a situation where you could possibly take leverage up to one times? Or would that not qualify that?
Luke Brandenberg: It could. I think we really view though, going up to one times being more of a consolidation opportunity. So maybe a larger format transaction where we take it up to one times if it had a clear pathway back down to our half turn target.
Tyler Farquharson: Luke, the only thing that I would add on is that if you think about adding a rig, just picking up a rig, you get a negative cash flow for a period of time and you get to be cash flow neutral. And so just depending on timing of those two partnerships or three, I think you could paint a picture where you certainly would go over half a turn, but you’d want to have real clear line of sight frankly you’ve heard us talk about it on calls or in some sort of press release. So how we talked about half a turn, we are going above that. Here is the line of sight to getting back to that comfortable level. And the other piece of it too, a neat thing about the non-op space is because we have control over these, but we’re still non-op.
And then if we get to a point where we’ve got more concentration and more capital that we’re comfortable with, you can always sell down a piece of that. That’s one of my favorite things about non-op is it’s infinitely divisible. If I want to go set on 20% in a well that we’re about to spud, there’s a great market for that and we know those folks well. We compete with them day in and day out. It’s a great way to lay off some capital to make sure that we’re right-sizing our exposure in a quick way.
John Abbott : Appreciate it. Very, very helpful. Thank you guys. You got it. Thank you. Have a great weekend.
Operator: Your next question comes from a line of Jeff Robertson from Water Tower Research. Your line is open.
Jeff Robertson : Thanks. Just to follow up on the discussion around partnerships, Luke, why do you think Granite Ridge’s capital is a better source of capital for some of the people you all are discussing opportunities with and some of the alternatives they have?
Luke Brandenberg: Yeah, it’s a great question because look, I talked about the characteristics of a good strategic partner and most private equity firms would probably chomp into this to get to partner with these folks as well. So it’s really good question that the few things that Granite Ridge really offers when we think about how we can be a better partner to these folks are. One, if you think about a partnership with a private equity firm, a lot of times the private equity firms, they not only control the assets, but they also control the company. And most importantly, that means they control when to sell. With our partnerships, everything’s at the asset level. And so while we control the asset, we can never make the group sell.
They can sell when they want to or they can hold on to the asset forever, which for a lot of these folks that, again, are proven money makers that really created some value, they want to build a long-term oil and gas company, we’re a differentiated group for them. The other thing that we do that we really think is important and different to teams really stands out is when we talk about a deal with a group, it’s really almost a drilling unit by drilling unit basis. And each of those drilling units are their own project. And so the management teams have the opportunity to create value to get into the incentive piece of it on a unit-by unit-basis versus having to wait for an exit for an entire vehicle. That’s a real differentiator. And I think something that separates us and management teams really like is that they can effectively get funding on a project-by-project basis.
