Chad Stephens: Yes, I don’t think that math is possible. The reality of it is — because a working interest PUD may be a probable — probable in the same section maybe a probable mineral reserve because I don’t have the timing schedule from the operator. So you’re mixing in so many variables that trying to back into that. From a relational standpoint, just not — I don’t think it’s possible €“
Donovan Schafer: There’s a good amount of room to air, but okay. I got it. Thank you. Appreciate you guys. I’ll take the rest offline.
Chad Stephens: Thanks, Don.
Operator: Thank you. Our next question is coming from the line of Jeffrey Campbell with Alliance Global Partners. Please proceed with your question.
Jeffrey Campbell: Good morning and congratulations on the strong year. I want to kind of the shift questions to the divestment of the non op working interest that you referenced in the press release as a major 2023 event. First, can you outline the cadence of the sell off? I mean, is it going to be more of a first half €˜23 front loaded thing or will it be sort of more pro rata over the year? Do you have any color on that?
Ralph D’Amico: Hey, Jeff, it’s Ralph. I think it’s going to be — so two things. One is, after at the end of the day yesterday, after we put out the press release, we actually did execute on a purchase and sale agreement for our (ph) working interest assets in Oklahoma, right? So we have a PSA on hand to sell those assets for proceeds. I think the deal size is $5.1 million closing on January 30, right? So there’s definitely some front end loading there. And I think there’s some other pieces that we can hopefully get under PSA sooner rather than later. We’ve already had some discussions around valuation. And then the remainder is, I will personally be disappointed if we don’t find a buyer at a reasonable price in the second half of ’23. So, it’s probably evenly split with the first half happening here very quickly and then the second half happening towards the mid part of 2023.
Chad Stephens: And importantly and it’s been our good fortune in late ’21 and ’22 as we were selling the non op working interest assets that we sold back then, we were — and Ralph and I were mindful of this, we were trying to manage our volumes and cash flow quarter to quarter. And as we were selling those non op working interest assets, we were quickly ready to redeploy those into deals that we have signed up and we use — quickly redeploy those proceeds into actual deal closings for minerals in our core areas. And the same dynamic is in play here, we’re pretty optimistic that we closed late January on this deal that we just signed up, we’re going to be able to redeploy those cash proceeds into minerals that will flow through to our royalty volumes and cash flow.
So that’s been the dynamic at play. We didn’t want to completely sell everything all at once. But non op working interest into producing minerals and cash flows. So that’s what’s at work here and what’s in play. And we’ve been very fortunate to be able to methodically manage that dynamic.
Jeffrey Campbell: Okay. Thank you. And I don’t want to try to get too far ahead of guidance . But just kind of at a high level, if we take what the press release said at face value, which is greater than 90% of the working interest production that is going to get sold in 2023. And then we have the growth in the minerals that Ralph talked about earlier. Is it fair to think that year over year €˜23 will be somewhat flattish relative to €˜22. I mean, this is assuming — we’re not assuming any more acquisitions and any acquired production or an acceleration of drilling beyond what you’ve revealed now. Just that’s kind of the way it looks to me based on what we have to look at right now. Just kind of want to get .
Ralph D’Amico: From a total corporate production standpoint, I think that’s fair, right? But keep in mind royalties have a much higher margin than one molecule of royalties, volumes has a higher margin than working interest, right? So theoretically, if you have the same — even though if you have flattish corporate volumes, assuming in commodity price environment, which is a big assumption. But if you assume the exact same commodity price environment, you would theoretically see higher cash flow come out of those same volumes because of the difference in lower cost, higher margins of minerals relative to the interest?
Jeffrey Campbell: Yes. Well, I mean, I think that’s sort of the core argument for minerals versus an E& P to begin with, right? It has very attractive defensive characteristics and expect we have one of those Black Swan deals and also it’s higher margins. So I think that’s a fair point. I wanted to ask the final one on the working interest part. The press release said that that greater than 90% of the production volumes would come from royalties, which doesn’t imply that the entirety the non op working interest are expected to be sold in 2023. So therefore, I was wondering, are we still going to see some LOE and some AOR numbers and future financials like carrying into 2024?
