Wayne Wasechek: Yes. So that say, which was 34,000 acres in total was split roughly 80% Arkansas, 20% Alabama. As I mentioned, the trees were less than four years old. I think 3.8 years old and they were in a traditional southern yellow pine plantation type forestry. They’re going to have virtually — have we kept those trees, they would have virtually no impact to our harvest profile for the next 22 years. There would have been some thinning along the way at aged 14 or 15, but given where pulpwood prices are, I don’t think there’s much margin to it. So virtually no impact for 22 years. And then if you look out to when those trees would reach maturity, the impact is about 300,000 to 400,000 tons per year for about six years. So no impact really for 22 years, and then it’s 300,000 to 400,000 tons per year for about six years and then it drops to zero. So that was the trade-off here. Does that make sense?
Kurt Yinger: Yes, that makes sense. Thanks for that. And then a second question, we talked about kind of the solar opportunities for a couple of quarters now. You had one decent sized sale around that. Just sort of curious how you think about that opportunity with some of these deals in the pipeline in terms of timing and whether you think 2024 could be the year where the rubber really hits the road and we see some more material impacts from that?
Eric Cremers: Yes, that’s a great question, Kurt. We did get another solar deal just signed up here, as Wayne mentioned earlier. Our pipeline is big. The outlook for solar has never been greater. If you look at what NextEra Energy says, which is a huge solar developer or RWE, a big German solar developer, everybody is talking about solar tripling between now and the end of the decade. Now that being said, to put together a solar farm is a very complicated process. And that’s why you — when you go to enter into an agreement with one of these developers, the first step for them is getting land under option. They need to know that they’ve got a home for their farm and it needs to meet the certain attributes like close to high-power transmission lines and whatnot.
But they’ve got to then go find the equipment. They got to find the panels, which and all that. Now you’ve got supply chain issues coming from China, you’ve got a negotiated offtake agreements that takes time from utilities. Just a lot of work goes into it. I don’t expect 2024 is going to be the year for a lot of solar farms to have those options get exercised in our portfolio. I think 2025 is going to be a great year for us. But we’ll see where things are at as we get to the end of the year, and we’ll give guidance then. But I think our view is that those developers are going to pull the trigger starting in ’25.
Kurt Yinger: Got it. And is it fair to say that your preference would still be to primarily lease in those deals as opposed to sell? Or I guess, as you kind of look across the agreements and what that might entail. Which way would you lean or which way, I guess, would the economics point view?
Eric Cremers: Yes, we would definitely prefer to lease. We like the long-term income stream. We like the — those things are index back to inflation, CPI, what kind of whatnot. But I will tell you that there are some of those developers that refuse to enter into leases, they have to buy. And certainly, given the price is $10,000 an acre, what have you, we’re happy to be a seller if they refuse to lease. So either way, it’s a great outcome for us, but our preference is to lease.
Kurt Yinger: Got it. Okay. Make sense. Appreciate the color. Good luck here in Q1 guys.
Eric Cremers: Yes, thank you.
Operator: Your next question comes from the line of Mark Weintraub from Seaport Global. Your line is open.
Mark Weintraub: So first on the solar since we just talking on that. A couple of follow-ups. So first, on the solar since we’re just talking on that, you kind of — you threw out find equipment, offtake. Is there a permitting process that needs to happen? And does that tend to happen first? And then I would imagine you do the offtake second and then find equipment third. Is that sort of the order things would normally take?
Eric Cremers: Yes. I can’t answer that, Mark. We’re not in the development business, but I think certainly getting a permit is part of the process.
Mark Weintraub: So do you know if it’s on any of the situations where you’ve got options in place where things might stand on the permitting side? Is that our first window?
Eric Cremers: Yes. I don’t know where they’re at with their permits. They tend to be a little quiet with that stuff. What I do know is that when they get a property under option, let’s say, they get under option for four years, as they get closer and closer to the end of the four years. Now bear in mind that they’ve been making option payments all along the way, right? It’s they’re having to write a check every year to have the property under option, and what they don’t want to have happen is they lose that option, because somebody else might pick it up. And in fact, at a higher price. In fact, that happened this past year. We have one expire and we went out and found another partner for the track, and they put the land under option at a meaningfully higher price.
So I think what happens is the pressure builds as you get to the end of the option period, and that’s when they want to get all their ducks lined up to pull the trigger. That’s typically how it was. But we don’t have great insight as to what their plans are.
Mark Weintraub: Fair enough. And since we’re kind of on the carbon type of topic here, do you guys have anything on the CCS side, which obviously both Weyerhaeuser and Rayonier have talked about a fair bit or because of location and such like is it likely a less bigger factor for you?
Eric Cremers: No. Well, it may be a little bit of a less bigger factor for us given where we’re at in Arkansas as opposed to Weyerhaeuser has got ground down in Louisiana, Texas, whatnot. But we definitely have projects underway in CCS, but we’re under an NDA, so we can’t really talk about them. But there’s certainly a lot of work going on in that area. And I would expect over the coming quarters, we’ll have more to say as things come to fruition.
