James Walter : Yes, I mean, I think the kind of lack of rigs in any area today is just driven by our focus on doing some of these larger developments and making sure when we put rigs on it, we’re doing it as quickly, as efficiently as possible and touching kind of all parts of the cube that need to be co-developed. So, but I think macro wise, gas processing constraints, it actually feels really good this year. I think last year we’d mentioned before probably Q2, Q3 timeline there were more challenges on the processing, but even more kind of infield compression and kind of plumbing issues in the middle of last year. But those have all really resolved themselves. I’d say our midstream partners have done a ton of work and spent a ton of money and our gas processing in the New Mexico, Delaware feels like it’s a great spot today and frankly thankful not to have any constraints of that nature or really anything else kind of able to do what we want up there.
Operator: We’ll go next now to Derrick Whitfield at Stifel.
Derrick Whitfield : Congrats on a strong update. With my first question I wanted to lean in on your D&C efficiencies to better understand the rate of improvement you’re seeing. If we were to compare PR to PR on slide six, how do those cycle times in the Northern Delaware compare with your Q4 averages.
James Walter : PR from Q4 to Q1, we’ve got into better, but it’s going to be kind of single digit percent improvement as compared to the big improvement you see if you compare legacy or send to PR.
Derrick Whitfield : Great. And then maybe shifting over to slide nine, the identified location count of 110 gross locations appears conservative to us on the surface. Can you offer any color on the degree of legacy operator development and your general underwriting assumptions for this part of the basin?
William Hickey : I’d say, it’s a good question and very astute. I think answer your second question first. It’s pretty undeveloped in acreage position, if there’s a handful of wells on it. But it’s as undeveloped as any asset we’ve looked at in a long time, which is great ’cause it allows us to come in, take advantage of clean fairways and kind of do what PR does. Best regards to inventory. I think it probably is conservative, I think we’re trying to book locations that we have a very high degree of competence in here and is it more likely to have more zones kind of come into the money here? I think the answer’s probably yes, but we feel good about what we’ve put out is that being a real base case and something that we can stand behind.
Operator: We’ll go next now to Leo Mariani at Roth MKM.
Leo Mariani : I wanted to dig in a little bit to your comments around kind of flattish second quarter production and then kind of slightly lower in the second half. If I heard your comments right, it sounded like a lot of this was just based on working interest changes. I was hoping maybe you could kind of quantify some of that. I mean, I think you guys are talking about 75% average work in interest, but maybe it’s a little higher in the first half and lower in the second. Just any help on that would be great.
Guy Oliphint : I think it’s just kind of normal fluctuations when we’re running a multi rig program like this, especially as you’re kind of stacking rigs to pursue the full field development strategy that we’ve been pursuing for a long time. Like one quarter, maybe 70%, one may be 80% to get back to an average of 75% and just kind of how it is. I think you see this especially kind of overtime as you have more concentration of rig counts on particular developments, but it’s all normal and, and kind of evens out over time.
Leo Mariani : But it definitely sounds like working interest is a little higher in the first and a little lower in the second half. And then how would that translate into CapEx? Would that basically give you a CapEx a little lower in the second half, standalone versus first half?
Guy Oliphint : That’s a good assumption.
Operator: We’ll go next now to Oliver Huang at TPH.
Oliver Huang : Wanted to start on the A&D side. I can’t help but notice you all have been fairly active in this area of Edie County. Kind of looking back at where the Q1 Bolton from the latest two transactions announced last night to sit. Just kind of wondering if you all might be able to speak to, if there’s anything specific that you’re seeing in the area that’s driving an increased focus from an a perspective for you all.
William Hickey : That’s a great question and I think kind of post-closing of Earthstone to today, we just saw a real market window where we were able to go buy four extremely attractive bolt-ons and quite a few grassroots deals at prices that were really attractive to us. And I think the reason we were able to do so, which I touched on a little bit with Neal’s question at the beginning was because we’ve been the most active operator in this part of Eddy County for a long time, and therefore had a lot of really exciting proprietary results both on kind of zones, well performance, and I think most importantly the cost side or we’re doing this cheaper up here than I think anybody would expect. Kind of just the unique, it’s kind of one of those windows that we saw an opportunity and we hit it hard and I think these are some of the best deals we’ve done.
It wasn’t — I didn’t think we’d get all of these deals the way we did, but it’s a great outcome and it adds some really core inventory and what’s our most capital efficient asset.
Oliver Huang : And for my follow up, just kind of wondering if you all could provide an update on your royalty position. It seems like an aspect of the business where you all have been able to pick up some decent interest of the past nine months or so, that’s kind of going under the radar. So any color there would be helpful.
James Walter : Yes, I mean, I think we’re always trying to buy acreage and inventory that competes for capital. And a big part of that is what is the royalty burden. So we target assets that have advantage in our eyes, lower royalties that really just help our capital efficiency. I think today we’ve got a royalty business that we’re really proud of, kind of 75,000 net royalty acres is not insubstantial. I don’t think there’s anything strategic that we have planned with that today, but I do think that’s a big part of our capital efficiency story. We’re getting more fee free cash flow for every dollar of CapEx that we spend as a result. So I think, ultimately it’s something that just makes our widget better and helps our value creation increase over time.
