Phillips Johnston: Great. Thanks guys. Appreciate it.
Luke Brandenberg: Okay. Thank you.
Operator: Your next question will come from the line of Jeff Grampp with Alliance Global Partners. Please go ahead.
Jeff Grampp: Good morning, guys. Thanks for the time. Maybe building on the last topic on the acquisitions, any detail you guys would be comfortable sharing in terms of the location of the assets, any production or kind of near-term development expectations, anything you guys could €“ would care to share would be helpful?
Luke Brandenberg: Yes. I’d say most of our acquisition dollars €“ and good morning by the way, look forward to seeing you in California next week. Most of our real burgers and beer strategy, you’re going to see us active where the rates are, and so most of that will be in play in West Texas, specifically in the Delaware basin. And really what we’re targeting, Jeff, is assets where we anticipate development within the next couple of years. One of the challenges about non-op, just difficult for us to get proved reserve credit for any inventory and must be on one year, but certainly beyond two. And so that’s really our focus is where can we get high quality and near-term inventory. Most of that’s in the Delaware. Another place we put a little bit of capital is really the DJ basin.
You have less competition up there. The competition is very high quality, and so it doesn’t mean you’re stealing things up there. But we are seeing some opportunities that are maybe shorter in terms of cycle time. So whereas in the Permian, we may be buying acreage from wells, we hope it’ll be online in 12 months. And the DJ basin occasionally, you may be buying inventory under units that are €“ have a rig onsite, and so shorter cycle time there. Really the biggest driver for us though is again, buying in front of the drill bit. And so while we’ve done some smaller production acquisitions, that’s not really a primary focus going forward especially these hydrocarbon prices on the oil side.
Jeff Grampp: Got it. That’s really helpful. And sticking on the Delaware, I think the slide deck referenced a strategic partnership. Can you discuss that a bit more? I mean, it sounds like that’s kind of part of the broader acquisition strategy. But maybe just give us some more details to the extent €“ you guys can share any details there? Thank you.
Luke Brandenberg: Yes. You got it, Jeff. That’s really our €“ I’d say a primary growth focus for us is the strategic partnerships. So really what that looks like is finding a capital partner, an operator that we’re excited about that we know and have known for a long time, that is looking for a different source of capital or maybe a more flexible source of capital. And really the goal is, can we provide a creative constructive solution for them. And so what we did is we found a group out in €“ based out of Midland, a really high quality team that’s been doing this for a long time. They were historically private equity backed and had a lot of success. They were looking for a bit of a different source of capital. The private equity fundraising has really fallen off a cliff over the past five years.
And on the strategy shift, well, we still have some fantastic assets and private equity backed companies. But the strategy has been more of a €“ build larger businesses and there’s still folks out there that are focused on the smaller unit-by-unit development. This was really an opportunity to partner with one of those. And so what it looks like for us, you pick the team, you are side-by-side as you’re evaluating opportunities and then you work together to come up with a drilling plan. And so from a non-op perspective, we’re really able to mitigate a lot of the historical challenges with non-op, we’re able to have more control over the timing, more control over the development pace and also the zones that we’re drilling. So look, we can’t do a lot of those, but they’re really strategic bets that we’re making with teams we like and areas we like.