But going back to the more there’s a larger M&A question. I said we are basin and fuel agnostic, but convexity of returns does matter. For example, buying assets at $100 oil has a lot more risk, even if you’re hedging it versus buying it at 50. And buying gas last year was pretty unattractive to us on a risk adjusted return because ultimately, there’s a lot more that can go wrong than go right. And that goes back to when we bought the properties in early 2021. And so I would say as it pertains to gas, it appears to us at current that the longer term convexity on gas assets is very attractive. And that would play a role and we’re certainly actively looking at gas properties day in day out.
Operator: Our next question is from Philip Johnson with Capital One.
Philip Johnson: Question for Chad. You mentioned the weak gas realizations that you’re expecting for ’23. That’s pretty similar to what we saw yesterday from one of your Williston operators. You guys are obviously on a two-stream report here. But, obviously the big driver, there’s weak NGL prices. And of course, realize there’s a fixed component that’s coming into play relative to lower NYMEX prices. But I guess the 75% to 85% of NYMEX seems pretty low. So I’m just wondering if you can maybe give us a little more insight as to what the driver is on there. And what’s different about, this year versus last year, in addition to lower NGO prices?
Chad Allen: Yes. I think what we’re currently seeing right now is in — we’re probably down in even below that we’re seeing some pickups from past months that kind of creeped us up to that 92%. But we’re currently realizing at or below those, I guess, with respect to where we currently sit. I think, some of the struggles in the Permian, obviously, with gas takeaway is going to also kind of creep into, I guess 2023. And that’s kind of where we’re being a bit more conservative, I think, with respect to realizations of gas prices.
Nick O’Grady: Yes. I mean, so there’s like, it’s kind of four-dimensional chess, right? You have your fixed gathering cost, getting it from wellhead to pipe that doesn’t move. But as the price of gas goes down, that becomes a larger percentage. And then you have the price of the NGL basket, which swings wildly, because the actual yields from the plants changes depending on where the what the plants want to do, meaning, whether ethane is economic or not to extract it. And some people do it anyway. We will leave them nameless, but some people do it whether it is or not. You get more volumes, obviously. But you then — if you’re a three-stream reporter, but you’re losing money. And I think the thing to think about, though, is that although NGL, prices came down in in the fourth quarter, gas prices really came down in the first quarter.
And so actually, from a ratio perspective, the propane is an example it was about one and a quarter to one versus gas in the fourth quarter, but it’s over two today. So that actually helps the percentage. And so really, the absolute price of the gas versus the NGL impacts that as much and so we tried to be really conservative, because we’re not — we don’t have a crystal ball here in terms of where natural gas is going. I wouldn’t say we’re internally particularly bullish. But we tried to run it. And if you look at our track record in the past, we’ve historically been very conservative in this because these are non-controllable costs that we don’t really want that there’s no benefit to us by doing anything by taking a conservative run at it.
But I do think there as Chad mentioned in his prepared comments, there are some — there is some room for improvement throughout the year. And we’ll update you accordingly.
