Unidentified Analyst: Great. Okay. Well, I think me and I think many of the unitholders are very happy with the strategy you guys have done and we see it as creating a tremendous amount of value for the unitholders. So please keep it up and thanks for doing a great job.
Craig Nunez: Well, those are kind words. Really appreciate it. I think that there needs to be equal thanks that go back to our unitholders. We don’t have a lot of turnover, so most of our unitholders have been with us a long time. And you all know that this has been a very long-term strategy. This has been going on since 2015 where we turned over a — turned to a new page in our book. And we have been steadfast resolute in this strategy. We do believe that given the commodity exposures that we have in our business, given the fact that we are nonoperators in the assets we have so we have limited levers that we can pull to enhance performance, et cetera. And given the pressures that face capital sourcing for fossil fuels in general, but in particular companies that have large exposures to thermal and/or met coal, we think this is the most prudent approach.
We derisk, delever the balance sheet and then we have commodity price exposure and we have volume exposure. And we think that in that situation, we’re going to receive the best valuation in the market. We also think we’ll have the most stability of free cash flow that we possibly can. And all the free cash flow will essentially be attributable to common unitholders and available for common unitholder purposes. So thanks for the kind words but also thank you to all on this call that have been with us and patient with us all these years.
Unidentified Analyst: Great. Thanks.
Operator: We do have another question from the line of [indiscernible]. Please go ahead. Your line is open. Please go ahead.
Unidentified Analyst: Can you hear me? Hello, can you hear me?
Operator: Yes.
Unidentified Analyst: This is actually Andrew Shirley [ph]. Thanks for taking the question. If you pay down your entire preferred and have less than 1x leverage, I mean is there any reason why you can’t reinstate a more full payout ratio in the first half of 2024 prior to taking debt down to zero?
Craig Nunez: There’s no legal reason. There’s no contractual reason that we could not do that, but that is not our strategy. Our strategy is to eliminate all of these obligations we have the preferreds, the debt and settle our warrants before such time as we begin to raise the distributions or look at consider raising the distributions. And the reason for that is that we have learned firsthand that it would be imprudent for a company such as ours with our business profile to rely at all on sourcing capital from banks or from capital markets to fund our business in the future. So when you can no longer rely on rolling forward or refinancing your credit obligations, you have to assume that you operate with no permanent debt in your capital structure.
So we want to clean everything up, stay on the same path we’ve been on now for quite a while. And once we have the capital structure fully clean, then we will evaluate capital deployment strategies. It’s not going to be too long in the grand scheme of things, we see light at the end of the tunnel. But early 2024, is too soon. Because remember even when we take out those preferreds, we’re simply switching the obligation from preferred units to debt. So that’s our philosophy. And when we look at it, we think in the long run on a risk-adjusted basis this is going to maximize value for common unitholders.
Unidentified Analyst: Okay. Fair enough. And I mean I guess I assume that over the next couple of quarters the preferred — the remaining balance of the preferred could get taken out by free cash flow even after the distribution you’re already paying. But I don’t mean to split hairs on that so that there wouldn’t be any incremental debt. But just a question on the warrants. Is there any mechanism to settle the warrants and — or even at the expiration of the warrants? How do you expect to settle those warrants?
Craig Nunez: Well, the warrants are basically — the fate of the warrant is in large part in the hands of the warrant holders. They get to choose when they want to exercise. Now, once they make that election then we have a choice of how to settle those warrants. We can either settle them by delivering them units or we can settle them by paying them the value of the in-the-money options of those units. So to the extent the market price of the unit is higher than the exercise price of the warrants we can pay that differential in cash, if we want to. If we — and so our decision on that will be — when we are given a notice to exercise warrants by the warrant holders, our decision on that will be to determine number one, do we have the liquidity to pay in cash versus issuing units; and number two what do we believe the intrinsic value of the units are?
And is the intrinsic value of the unit materially higher than what the market value of the unit is? And if it is, then we would want to settle in cash as well. So if the units are less than the intrinsic value in our view and if we have the liquidity, we’ll settle in cash. If both of those items are not satisfied then we would settle by issuing units. Just for frame of reference, we did have an exercise of one tranche of units back in 2021 end of 2021. We chose to settle those units with the payment of cash.
Unidentified Analyst: Okay. One last question. Thank you for that detail. If I — regarding your CO2 efforts, you signed a couple of agreements and had some upfront payments I think. And is there a time when you expect that you have visibility to receive recurring revenue from those CO2 deals?
