They can model their current costs going forward because they have the AFE, they have the actual well costs to model that. So we’re, again we’re being kind of double conservative there because we’re holding lower price from a commodity standpoint, but then we have to use higher well costs, higher LOE than what we’re kind of expecting on a go forward basis.
Donovan Schafer : Yeah, okay. Okay. Moving on, just a mess and more follow up on that afterwards, but for now, the other one, just as a quick modeling question, With Q1 with a freeze and the Williston in Q1 having an impact on production there. Is that going to have an impact on the oil mix? When I kind of triangulate that with full year guidance, is that something where we can see oil mix come down a bit or higher, like, in a way that would material at all? I’m just trying to think I want to avoid a situation where, somebody just models a slight production dip in Q1. But you end up under estimating the impact because it is that more weighted towards oil or change in the oil mix or something? And then does that mean, in Q2 Q3 Q4, you could have a higher oil mix and what isn’t necessarily in the guidance for the full year?
Adam Dirlam : I mean, I think I would expect — I think from a guidance standpoint, we feel pretty confident in the numbers that we put out there. We put out both total production and oil. So you can kind of infer an annual oil cut there. Yes, in the in Q1, most of the shutdowns were in the Williston, which is a higher oil cut. So you could potentially see lower oil cut in Q1 and then it rise as we go throughout the year. And so Midland Petrol project is a very high oil cut. And so that will also improve your oil cut throughout the year there.
Nick O’Grady : And I don’t think I mean, I don’t think it’s I mean, I don’t think it’s going to be materially — I don’t think it’s going to be material. Because there were also some mild curtailments in the Permian as well. So I don’t — I mean, on the margin, none of that I don’t think it’s going to be. You’re talking about a 10 point difference between the — 7 point difference between the Permian and the rest of our oil base. And so I don’t think it’s going to be massive in any material way.
Operator: We’ll move to our next question from Paul Diamond at Citi.
Paul Diamond : Good morning. Thanks for taking my call. Just a couple of quick ones. Talking about some of performance on Forge and you just talk a bit more about that. You guys assuming that as an assumption of the trend, I guess what you’re expecting out of that this year?
Jim Evans: Yeah, thanks, Paul. This is Jim. Yeah, we’re seeing the same thing, Tide Oil [ph] announced yesterday. They’re seeing about 30% to 35% outperformance on the new wells versus kind of the legacy Forge assets. We’re seeing the something similar versus what we underwrote? It’s around 30% outperformance. I think it’s around optimization on spacing completion design, production uptime on artificial lift that is now baked into our go forward plan. We’re still modeling based on what we originally underwrote for the acquisition. So we do see potential upside there as we continue to go throughout the year. We think we’ll see that. And we’ll adjust as we get more data, typically, we like to see six to nine months of, of history before we feel confident in adjusting our assumptions. But so far, we’re very encouraged with what we’re seeing out there.
Nick O’Grady : Yeah. And then also just on one of their main initiatives, when they bought the asset was really to work on the BVP [ph] itself, was really the work on lowering costs at the actual LP on the existing assets. And I think we’ve done a good job cleaning that up.
Paul Diamond : Got it understood. And I just do have a quick follow up. You guys talked about having a lot of conversations with the small and midcap operators. You talked about scale being similar to prior deals, but just dig down a bit more on that because there pretty wide range to that scale you’re seeing or is that pretty much locked in similar to Mascot, Forge, Novo thing of that sort, where it could be bit smaller, a bit larger? What do you guys seeing?
Nick O’Grady : You mean, just in terms of the partners?
Paul Diamond : Yeah, historically.
Nick O’Grady: [Multiple speakers]. Yeah, I mean, I think a lot of the stuff from the mega transactions, we have a lot of conversations with the largest of the large. Certainly, we have a lot of interest from small scale people as well, because they always need money just like everybody else. But I think in terms of the asset rationalization, we’re also seeing the conversations from very large and midcap and upper midcap companies as well. So I think it runs the gamut. I think what I would tell you from our perspective, and I’d rather lead out and talk about this than me is that from our perspective, it’s not a one, not one size fits all. Our methodology is going to change depending on what type of counterparty it is, meaning that we’re going to adjust our structure based on what type of party it is. It’s probably going to become more mean spirited depending on who we’re dealing with.
Adam Dirlam : That’s right. But I’m just, I guess, put it in perspective in terms of deal size and partners. I mean, on a ground game level, we’re doing this on a unit-by-unit basis. We’ve also got for example, private equity groups that have just raised capital that are looking to participate in both $100 million to $200 million transaction size levels that are looking for a partner, so that they can use some of their dry powder for development on a go forward basis. And then you’ve got obviously the ones that we prosecuted last year that were significantly larger than that. So it runs, it runs the gamut, like Nick was saying.
Paul Diamond : Understood. Thanks for your time. And I’ll leave there.
Operator: We’ll go next to John Abbott at Bank of America.
John Abbott : Hey, good morning, and thank you for taking our questions. Sticking with the $4 billion to $6 billion of opportunities that you’re seeing out there. And you look at the balance sheet, you look at your share price. I mean, what are your thoughts on potentially financing transactions at this point in time?
Nick O’Grady: Yeah, I mean, John, we’ve raised $290 million last fall for a reason, which was that we felt that we saw a great opportunity in front of us. And we wanted to be prepared to act, we’ve got over a billion dollars of liquidity. Frankly, with all of them transactions that have happened, I think something like 10% of the revolvers have been recalled across the board. Chad is the most popular girl at the prom right now. He is has banks begging him to take money? And so we certainly have capital available to us. I don’t think that’s the case for everybody. But I think for scaled companies like ourselves, the ability to raise additional capital is there. Certainly we’ve — so my point being that I think we have the capacity, on balance sheet for upwards of a billion dollars without raising any additional capital.
And I think that would say she is quite easily, you know, for the time being. Obviously, beyond that, we’ll see. But as you do those that and, we haven’t really done much more than a billion dollars in a year. So I think we’re in pretty good shape for 2024.
John Abbott : Very, very helpful. And, I mean, there was a lot of conversations earlier on accrual accounting. But I guess the real question here is, looking beyond the noise as you sort of think about the exit rate for this year. Nothing that’s super specific. What do you kind of see the exit rate for 2024 in terms of production?
Nick O’Grady: Yeah, I mean, I, as a non-operator, Jim Evans will stab me with a large knife. If I talked about that. Because, we just talked about how the timing can really vary. And the truth is that if we see acceleration of projects, and we see everything come on early, in the third quarter, we’ll produce a lot more barrels, and our guidance will be raised for the year. And so if we see our production peak in the third quarter, that would be a great thing. And so theoretically, we’d see peak production in the third quarter. And your quote, unquote, exit rate would be lower. Of course, we would find ways to redeploy capital and exit higher. So I’d be hesitant to see that, but I would say, as we described in our release, we obviously, believe we’ll be down modestly in the first quarter, we would expect the material jump in the second quarter and other jump in the third quarter, and then a mild jump in the in the fourth quarter.
So I think that I would just leave it at that for now. But I would say that, obviously, based on our guidance that is substantial, and I’m sorry, to plan on that —
Jim Evans: It’s February.
Nick O’Grady: It’s February, but —
Jim Evans: But things can change —
Nick O’Grady: Yeah. So I’m sorry, but as an operator, that’s just that’s the best I can do for you. But I would say this that, like we’re in the business to grow our company. And there’s a reason in our business. Look, there are great things about being a non-operator, a lot of great things. But the timing of it, you know, is the part of it. And honestly, to the extent that it gets accelerated, we’re going to produce a lot more barrels this year. So that’s a good thing. But the exit rate is, we’re not a laundromat, right? So this is something, right, that it’s not a machine, the exit rate is sort of one of those things that people like to hang on to. But it’s really about, it’s not about a moment in time, it’s about the number of barrels you produce over the life. And so I just say this that we are in the business to grow the business overtime. And I think that that’s the most important thing.
John Abbott : Very helpful. Thank you for taking our questions.
Operator: And we’ll take our final question from Noel Parks at Tuohy Brothers.
Noel Parks: Hi, good morning. Just had a couple. You talked a little earlier about you can’t really do one size fits all in terms of just how you look at different acquisitions. But is it fair to say that you’re pretty agnostic between private operated versus publicly traded operated non-op interest right now either for the ground game or for larger A&D?
Nick O’Grady : I wouldn’t say that. I mean, I think it depends. It depends on the quality of the operator. I mean, there are great privates, but it’s the largest, there are really large operators that are bad. I mean, I think it just, it really goes operator specific. There are really good operators, and they’re really bad operators that are big and small, right out of my meter.
Adam Dirlam : You need to differentiate what private means? Are you talking about private equity or you’re talking about true private, right? And those business models are run very, very differently. You’ve got one that’s renting an asset, one that’s had it and will continue to have it for a very, very long time. And so their viewpoint short term or long term basis can be very, very different.
Nick O’Grady : Yeah. I mean, Mewbourne is a private company. And it’s one of the finest operators in the world. And I can think of many private equity backed operators that are renting the asset and looking to flip it.
Adam Dirlam : Yeah. So I’d say typically, we’re looking at people who have a similar view as us in terms of the long term. But that’s not to say that there aren’t great private equity operators that are out there as well, that we’d be willing to partner with.
Nick O’Grady: Absolutely.
Noel Parks: Great. Well, thanks for clarification. And I guess, I was wondering a bit, talking about the Williston and we have seen a deal there, the first one may be in quite a while of any size. And just wondering, I have not paid a lot of attention to the state of sort of the land management out there. Leases some of those leases, probably 15 years old, if not longer at this point. So as wonder you’ve been there so long, are things pretty cleaned up there? Or is there still stuff to do? Just in terms of, I don’t know neglected books or absent non-op positions that you can still —
Nick O’Grady : It’s pretty blocked. It’s pretty blocked up, Noel. But there are still things to do. I mean it’s just going to be more about people when they’re ready, there are things that are owned that when people are ready to sell will be sold. But I don’t think it’s like the Wild West where there’s lots of open land ready to be sold. Is that fair, Adam?
Adam Dirlam : Yeah, I think that’s fair. The other thing that I would add to that is just the evolution of the completion methodology, right? You’ve seen a lot of operators, refine those techniques and step out. And so the rate of return and the economics on some of those projects that you wouldn’t even look at, call it two, three years ago, are things that are certainly viable now. And then that changes the landscape from a land standpoint. So you can do some of the blocking and tackling in terms of picking up some whitespace acreage and bringing in appropriate operators that you know are going to do a good job. And as a non-operator, you know, we’re not beholden to one particular area, right. So we can get in to the core day in and day out and continue to grow so far working interest as we get 100 AFEs a quarter, as we did in 2023. So there’s always more to chop. It’s a different dynamic.
Operator: And that concludes the question-and-answer session. I would like to turn the conference over to Nick O’Grady for closing remarks.
Nick O’Grady : Thanks, everyone, for joining us today. We’ll see you on the next one. Appreciate your time. This is the way.
Operator: And this concludes today’s conference call. Thank you for your participation. You may now disconnect.
