Sitio Royalties Corp. (NYSE:STR) Q4 2024 Earnings Call Transcript

Sitio Royalties Corp. (NYSE:STR) Q4 2024 Earnings Call Transcript February 27, 2025

Operator: Hello, and welcome everyone to the Sitio Royalties Fourth Quarter 2024 Earnings Call. My name is Becky and I’ll be your operator today. [Operator Instructions] I will now hand over to your host, Alyssa Stephens, Vice President of Investor Relations to begin. Please go ahead.

Alyssa Stephens: Thanks, operator. Good morning and welcome our fourth quarter and full year 2024 conference call. By now it is our hope that you have been through our materials. You can find our recent news release and some supplemental slides on our website under the Investor Relations section. I’m joined this morning by our CEO, Chris Conoscenti; and our CFO, Carrie Osicka. After our brief prepared remarks, Chris, Carrie and other members of our leadership team will be available to take your questions. Before we start, I would like to remind you that our discussion today may contain forward-looking statements and non-GAAP measures. Please refer to our earnings release, investor presentation and publicly filed documents for additional information regarding such forward-looking statements and non-GAAP measures. I will now turn the call over to Chris.

Chris Conoscenti: Thanks, Alyssa, and welcome everyone. I want to publicly welcome Alyssa Stephens to the Sitio team. She joined us earlier this year, as our new VP of Investor Relations. Many of you may have met her already, but she is a great addition to Sitio. This has allowed Ross Wong to take on additional leadership responsibilities on our finance team. Well, let’s get started. We will divide today’s call into three segments. First, I will review our 2024 highlights and how we strengthened the business through accretive acquisitions and active management of our minerals. Second, Carrie will summarize our recent financial results and our 2025 outlook. Lastly, we will review our key priorities for the year. 2024 was a strong year of execution for Sitio and we have a solid list of accomplishments.

I’ll hit the highlights. First, we delivered against our full year projections. We had record fourth quarter production of about 41,000 barrels of oil equivalent per day, a 14% year-over-year increase and averaged over 39,000 barrels of oil equivalent for the year pro forma, for the DJ Basin acquisition. We’ve seen at the high end of full year guidance, even after raising guidance twice during the year. Our expenses and taxes fell within or slightly below our guidance range. Our solid results were due to the exceptional work of the entire team at Sitio, the quality of our land positions in the most prolific US basins, strong activity and well performance from our industry-leading operators, accretive acquisitions and our differentiated asset management capabilities.

Second, we continue to develop innovative efficiencies. This is one of our core competencies that differentiates us from our peers. Throughout 2024, we refined our proprietary custom built asset management applications, which allow us to process and analyze significantly more data per person. We can now automatically process more than 99% of the revenue check data we receive from our operators, reducing approximately 21 million rows of data down to 100,000 records for our staff to review annually. Taking this a step further, we use AI models to interpret contracts that enable us to identify revenue payment discrepancies, producing a dashboard for further analysis by our team. In 2024, we captured $19 million of missing revenue payments, offsetting over two-thirds of our cash G&A.

We have invested in our future, both in terms of highly skilled people across the company and new technologies. Our relatively small investments in asset management systems will be returned many times over and we expect meaningful reductions in cash G&A costs per BOE as we continue to scale our minerals position. Next, we closed 16 high value acquisitions throughout the year. These were immediately accretive to discretionary cash flow per share and represented some of the highest return investments in our history. It was a standout year for consolidation of high return, small and medium-sized deals. Sitio has demonstrated its ability to negotiate deals outside of normal broad auction processes. Our practices are repeatable and deals we’ve executed are impactful in the aggregate.

It was a healthy year of deal flow for us with acquisitions totaling more than $350 million, including fourth quarter deals of approximately $140 million. The fourth quarter deals added 3,300 net royalty acres to our portfolio, primarily in the Delaware Basin. Number 4, we are committed to a strong balance sheet and our capital structure is solid. In December our borrowing base was increased to $925 million, an increase of $75 million. Year-over-year, our annual interest expense on a per BOE basis was down over 17% as we refinanced higher cost notes in late 2023. Our balanced capital structure, high quality assets and a robust coverage ratios helped ensure financial flexibility, ample liquidity and access to future capital at attractive rates.

Our senior notes continue to trade well above par and we are one of two minerals companies currently accessing the public debt markets, which advantages our cost of capital. Lastly, we prioritize capital return to shareholders and delivered value on a per share basis. In 2024, we returned $330 million to owners or over 70% of our discretionary cash flow, since becoming public in mid-2022, our cumulative return of capital to shareholders is nearly $850 million, including dividends and share buybacks. This represents nearly 30% of our current market capitalization. At current commodity prices, we expect that number to exceed $1 billion in 2025. This was a great year for us. We had winning combination of execution, efficiency gains and acquisition activity that allowed us to maintain our strong balance sheet, and return capital to shareholders.

Importantly, our results underscore the repeatability of our business model. With that, I’ll turn it over to Carrie to summarize our recent financial results in 2025 outlook

Carrie Osicka: Thanks Chris. For the fourth quarter our results beat consensus estimates for production, adjusted EBITDA and discretionary cash flow. Adjusted EBITDA was $141.2 million, which was 4% higher than the prior quarter and reflected strong production and lower than expected cash G&A. Production was up 6% quarter-over-quarter, averaging nearly 41,000 BOE per day. We had a 9% increase in net turned-in mine wells in the quarter, which was driven by increased operator, drilling and completion activity. We closed on approximately $140 million of acquisitions late in the quarter. We are committed to returning capital to shareholders through cash dividends and opportunistic share repurchases. Our board declared a fourth quarter cash dividend of $0.41 per share payable on March 28th and during the fourth quarter, we repurchased 643,000 shares for $12.9 million, equating to $0.08 per share in repurchases.

Importantly, this represents a total return of capital of $0.49 per share. At year end, we had about $80 million remaining under our $200 million repurchase authorization. Turning now to the balance sheet, we had $1.1 billion of debt outstanding with $437.2 million of availability under our revolving credit facility at year end 2024. Our borrowing base was increased by $75 million to $925 million and despite our $114 million of cash acquisitions in the fourth quarter, liquidity only decreased by $15 million. As we look to 2025, we expect activity levels to remain consistent with last year and have good visibility via 45 net line of sight wells, and commentary from operators and their activity levels. We expect our oil production at the midpoint will be 18,500 barrels per day and total production will be just under 40,000 BOE per day at the midpoint.

This represents a 3% increase over reported full year of 2024 production. As a reminder, we do not forecast acquisitions are published guidance. However, history shows that we consistently create value through blocking and tackling with high return acquisitions and our pipeline remains strong. Please reference our materials for additional details. I’ll hand it back to Chris.

Chris Conoscenti : Thanks, Carrie. Before taking your questions, let me quickly discuss how we define and measure success at Sitio. Number one on the list is healthy deal flow. We have a proven team with relationships and technical experience across all the major US basins. We maintain strong relationships with large mineral owners and smaller mineral aggregators. Today we continue to see consistent deal flow and attractive opportunities that meet our criteria for risk-adjusted returns. The continued market interest and M&A activity in the mineral space is increasingly drawing the attention of long-term mineral owners, some who have held their minerals for more than 20 years and now appear more open to selling. Many have been holding for yields but are recognizing that basin maturity, along with development activity levels suggest favorable timing for a sale.

We are very selective and the deals we consider must clear a high bar. In 2024, we evaluated more than 160 transactions and ultimately executed if not just 10% of those. From a net royalty acre standpoint, we acquired just 4% of what we screened. As a result, our 2024 deals had a weighted average unlevered IRR of more than 15% and next 12 months cash flow yields exceeding 25%, well above our underwrite thresholds. We will remain disciplined in our underwriting assumptions and will continue to look for the right deals to create value. Second is growth per share. We are focused on adding value on a per share basis. Our fourth quarter production was up 14% year-over-year, while our share count dropped 3%. Since becoming public, we have increased production for debt-adjusted share by more than 50%, representing a 20% compound, annual growth rate.

We will continue to use free cash flow to maintain our balance sheet and return meaningful cash to shareholders. Third on the list is efficiency as measured by cash G&A per BOE, EBITDA margins and capturing missing revenue. We are in the early innings of realizing the full potential of our proprietary automation tools and applications that underpin our asset management system. Automation increases the value-add of our professionals and maximizes the value of our assets. With this platform in place, we’re positioned to seamlessly tack on additional assets supporting our margins and cost-effective growth in the future. Over the last three years, we’ve been very selective in how we have grown our business. Today, we have scale that could be leveraged to the advantage of our owners, recent investments and people and new technologies will create sustainable efficiencies in the years ahead.

In closing, Sitio is in a strong and advantage position today in the minerals industry. Consolidation will continue and minerals assets will continue to migrate to bigger and more efficient companies like us. We will continue to employ our proprietary practices to prudently manage our assets, maintain financial strength and create long-term value for our shareholders. Operator, we are now ready to take questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is from Neal Dingmann from Truist Securities. Neal, your line is now open. Please go ahead.

Neal Dingmann: Good morning, guys. I would guess my first question is just, can you talk about your various marketing deals in this just one how those compare? There’s been a lot of market deals out there how that compares to the Chris, the number of deals that you are able to complete?

Chris Conoscenti : Hi, good morning, Neal. It’s great to hear from you. Just a couple comments on the M&A environment that you noted that the deals evaluated and the deals we did there was a – it was a robust year from deal flow standpoint. The important thing to highlight really is the consistency of how we’re delivering on the acquisition program. So you look at just the last couple of years, quarter in quarter out, we continue to make these small and medium size acquisition. Our capital – our policy is to allocate to this capital most efficiently is flowing to the highest rate of return opportunity. So, as you can tell by the statistics that you mentioned in the call, we looked at hundreds of thousands of net royalty acres during the year and acquired 20,000 throughout the entire year, that’s because those are the highest rate of return opportunities.

And but we talk about IRRs around because that is our North Star in terms of What guides us on all of our investment decisions. It’s hard for people on the outside of the company – to they don’t have all the data we have. So, perhaps it helps to share some more information around where that shows up in in the company. So it manifests itself in a couple of ways. One is when you look at the highest cash flow yield on yield this year as I mentioned in the call, cash flow yield over 25% on a next 12 months basis for the deals we did in 2025. The other point that shows up is in production for debt adjusted share, since the time we went public, just since June of 2022, our production for debt adjusted share has grown by a compounded annual growth rate of about 20%.

So, when we look at the 2024 program two of the deals we did out of the 16 were actual auction processes. That remaining 14 were based on relationships, we have and its relationships with the mineral owners and then it’s supported by relationships we have with the operators who occasionally share some information with us on – activity which helps underpin our underwriting. So a great – great job by the team this year at Sitio. I’m really proud of everybody has accomplished here on the acquisition program. And, the more important thing for us looking forward is, is 2025 looks every bit is promising. The opportunity set in front of us is enormous, not just the sort of the art of possible, but the actual canceled pipeline in front of us is large.

So we’re working our way through it and we’ll continue to healthy capital towards the highest rate of return opportunities.

Neal Dingmann : And then, this is the second, just most operational had plans on. Just wondering what does activity look like for the remainder of the year versus what you all were expecting? Thanks.

Chris Conoscenti : I’m sorry. I had trouble hearing the question, Neal.

Neal Dingmann : I’m just wondering, most operators have the plans out and I’m just wondering, Chris, based on sort of expectations whether it’s in term DJ you name it where your minerals are, is activity about as you were expecting sort of start up the year and the way that it looks for the remainder of the year?

Chris Conoscenti : Good question. Yeah, so, we’ve been watching our operator announcements closely and that does inform how we look at our guidance for 2025. The good news is the bulk of our guidance almost all that is underpinned by the spuds and permits. So, activity that’s already commenced by the operator. So we don’t have to leave a lot about what they’re going to do with remaining inventory on our on our footprint. So, and in most of the cases, they’ve already spent some capital dollars to initiate some kind of activity on our minerals. So the guidance that you come out that shows about a 3% growth year-over-year at the midpoint of our guidance is informed by, not only the operator comments they are making, but also by the actions they have taken on spudding wells and permitting new wells.

And if you think about how it relates to our acquisition program, we don’t guide or include in our guidance any contribution from acquisitions. So anything we do with our acquisition program in 2025 will be over and above that that organic growth rate. I hope that addresses your question now?

Neal Dingmann : Thank you.

Operator: Thank you. Our next question is from Derrick Whitfield from Texas Capital. Your line is not open. Please go ahead.

Derrick Whitfield : Thanks and good morning all and congrats on a strong year-end closing update.

Chris Conoscenti : Thanks, Derrick.

Derrick Whitfield : For my – for my first question, I wanted to build on Neal’s question on guidance. As outlined, your 2025 guidance implies maintenance level activity versus Q4, while your line of sight activity implies growth, how would you frame your production trajectory? And were there any outsized contributions from missing revenue or M&A that led to a stronger than expected Q4?

Chris Conoscenti : Yeah, thanks. So the missing revenue that we have is really to collect payments that we are already owed and we already show in our revenue line. So that doesn’t result in incremental revenue. But that doesn’t result in incremental cash recovery that we are owed. And often times requires some extraordinary effort to recover. When we think about – when we think about the 2025 production, we do see contribution from primarily the Permian, some from the DJ Basin, as well. A lot of the activities we’ve done in recent years in the DJ Basin has been skewed more towards line of sight development. So, when we think about longer term in more duration is really is the Permian is where the activity largely come from.

And as we look at our footprint there, if you just exclude New Mexico, we had a lighter footprint. That has some specifics that we can share with you on our percentage coverage. Now we talked about the entire Permian Basin, we cover about 36% of the entire Permian Basin. But then when you narrow it down to where our asset concentration is within that that can give some statistics for us.

Jarret Marcoux : Yeah, our acreage – starts more in the Texas [Indiscernible] basin up to – around 56% and around 15% in New Mexico, and a traditional total basin covers around 36%

Derrick Whitfield : Terrific. And then, maybe leaning in on your commentary on the robust field flow for 2025. Your M&A focus in recent quarters have been, as you noted on the Permian and DJ. First kind of part of this question is, does the more constructive natural gas backdrop change the size of the opportunity set where your teams are focused? And then, more broadly and speaking about the value of your differentiated AI-driven asset management system, does that system change how you think about buying diversified packages where the market opportunity could be greater for the machine you build?

Chris Conoscenti : Yeah, thanks. So, I think the market opportunity for the investments we’ve made in people and systems really lends itself to scale. I don’t think it’s any particular advantage for greater geographic diversification. It really is just an advantage of scale. So the investments we’ve made will pay off significantly as we continue to scale this business. It’s really remarkable we can just layer in more ones and zeros into our system that we’ve built this in almost infinitely scalable. When I think about the natural gas backdrop I got this question over email from a shareholder, as well, it’s pretty feasible when you look at the gas macro. So global gas demand and then you have domestic gas demand from increased power generation needs for the electrification of everything.

And then the obvious buzz word lately is data centers. And that’s not a near-term. That’s probably several years away but it’s a great macro tailwind for perpetual assets like ours. And so, when we look at our portfolio, we don’t we don’t look at ourselves that that light on natural gas because we do have quite a bit of natural gas exposure in the Permian and to a lesser extent in the DJ Basin just given the relative size of those footprints. Jarret has some specifics that he might find interesting on a trend in natural gas in the Permian, but not a lot of people are talking about, but it’s a reality. So hope Jarret is there.

Jarret Marcoux : Yeah, Derrick, one thing that we’ve been looking at recently is trends in present oil across the Permian over time. So we run these numbers internally and you also can find them at the short-term energy outlook at the EIA. If you go back to around 2021, the Permian was around 63% oil and today it’s around 60% oil. So you’re seeing nearly 1% year – a year of oil dropping in the Permian and it’s more pronounced in the Midland Basin. So that’s something that we’re looking at but not a lot of people are seeing. And with us having around half of our revenue from the Delaware Basin, which has less of this effect, compared to the Midland. That’s good for us, but we obviously have exposure to the Midland Basin. So we’re looking at that not only from an asset management perspective, but also how we think about our guidance.

So that’s why this year you’ll see a little bit less of an oil percentage for the year and that’s underpinned by the line of sight of wells as well as what we’re seeing on the PDP base that we already have. And I think your other question you mentioned, I’ll just kind of jump in here on the – on AI and how it affects acquisitions. Our acquisition underwriting is not explicitly exposed to the tools that we built that utilize AI. But the great news about that is, probably one of the funnest parts of our business is, once we acquire something, we’re able to go back and recover revenue and barrels and dollars that the previous owners who were not actively managing it. Miss. So, the asset management tools that we have are really great way to improve the management of the acquisitions that we already have.

So, that’s something that for every single acquisition that we do that we enjoy working on.

Chris Conoscenti : And Derrick one other comment, I’ll make just on the natural gas pricing part of your question. Yeah, we are really encouraged that the midstream company is really staying ahead of the propensity for Permian industry wider base of differentials. So we’re thrilled to see Blackstone and Warrior projects underway and expected to be more announcements like that that as we strengthen that Jarret just walked through continue to manifest themselves in the reality.

Derrick Whitfield : That’s helpful. Thanks for your time.

Operator: Thank you. Our next question is from Jarrod Girou from Stephens. Your line is now open. Please go ahead.

Jarrod Girou : Hey, good morning guys. And thanks for taking my question. My first one is another one in regards to natural gas. Some of the Appalachia operators have provided guidance for increased gas production in the basin, whether it be this year over the next few years. Can you provide any color as if you looked at the mineral deals in Appalachia or what do you see the deal flow in that basin?

Chris Conoscenti : Yeah, thanks for the question. We used to own some assets in Appalachia. The particular assets that we owned were relatively mature in terms of the rest of our portfolio. And we had a pretty unique opportunity to make a high rate of return acquisition. So, again in our position of capital allocators we decided to part with those assets and use those proceeds to fund the DJ Basin acquisition we did that closed on April 4th of 2024. So we we’ve been Appalachia before. We think the world of the region as a geologic province – we are very, very fortunate country to have that resource. And, if the enormous resource in place, there’s very healthy operators and the region, as a mineral owner, there’s a unique set of challenges for owning minerals in Appalachia. Then a lot of it centers around the land situation. I can turn the call over to Britton James our EVP of land to describe some of those.

Britton James: Yeah, I think that’s John’s in the house on the land and trying to guide and share information publicly is that often times the way to operate in some states and put their – showing things in place, make it challenging for us to see what is going to happen in future developments.

Jarrod Girou : Perfect. Thank you for the color. And then my second one is, could you give us some thoughts on strategic priorities for free cash flow allocation in 2025, particularly regarding debt reduction, dividends buyback and investments in growth opportunities? Thank you.

Chris Conoscenti : Sure. Yeah, the first and foremost priority is returning capital to our shareholders. This is a really powerful business model that’s capable of returning a lot of capital to shareholders. In fact, we’ve returned over $840 million to shareholders through dividends and buybacks just in the short time we’ve been managing this company. And I would expect this year with the commodity price environment we’re in today for that number to exceed $1 billion. So, so far we’ve returned approximately 30% of our market cap to our shareholders in a very short period of time. So, it’s a really powerful business model to be able to return that much capital to shareholders. That said, there’s also a very remarkable opportunity to reinvest.

As I mentioned, these acquisition opportunities are in front of us to presents really compelling way to return opportunities for reinvestment. So we do look to use the retained capital for two purposes, one is to reinvest in high rate of return accretive acquisitions. And then, also maintaining our very strong balance sheet is important to note that our cost of capital turn out to be an advantage for us. And as we look at, I look at the bond market and the investors there are speaking with the price actions. You look at our yield on our existing bonds and it’s close to 6%. And that’s a really compelling cost of capital relative to where we were and not too long ago, when our existing notes back in 2022 yielded in excess of 10%.So remarkable improvement in our cost of capital.

We have a tremendous amount of liquidity over $400 million of liquidity. Our cash interest expense per BOE is down 17% year-over-year. So, the maintenance of a really strong balance sheet is very important for us and reinvesting in high rate of return acquisitions is also important.

Jarrod Girou : Thanks for taking my questions.

Chris Conoscenti : Thank you.

Operator: Thank you. [Operator Instructions] Our next question is from Tim Rezvan from KeyBanc. Your line is now open. Please go ahead.

Tim Rezvan: Hey, good morning folks and thanks for taking my questions. First one was a housekeeping one. I was curious if you could provide some color behind the cash G&A increase. It looks like it’s up about 25% year-over-year. I don’t know if that’s just Alyssa doing a good job with contract negotiations or if there’s something more that any color would be helpful. Thanks.

Chris Conoscenti : Right. Appreciate the question sort Alyssa. Now I think you are seeing a couple things. One is, we’ve made the investments and people in systems that will allow us to scale a lot large than where we are right now. But the percentage that you mentioned obviously is a large percentage. But when we look at the actual dollar increase year-over-year, you’re talking about a $6 million or $7 million increase on a $4 billion enterprise. So I think you are talking about lost small numbers. That’s another interesting factoid is that our cash G&A for the entire year is effectively paid for buyers in first three weeks of royalty revenue for the year. So it’s a remarkably scalable business from a G&A standpoint with the investments we’ve made we’re very optimistic about the future.

Tim Rezvan: Okay. Okay. That makes sense. And there’s my follow up, you’ve been pretty successful playing small ball within non-marketing deals. And then what’s been interesting is you’ve had a willingness to go into kind of the DJ Basin recognizing that strong economics there, when you have permitted wells. There’s a large operator. This is the discussion about a potential mineral sale in that area with a chatter around $1billion. Can you provide any comments on that news or your willingness to go that big for the right deal?

Chris Conoscenti : Yes, it’s I think, less about how big the deal is and how more about how big the returns are. So risk adjusted returns that compensate for outlaying the capital. So, we look at large acquisitions all the time in in our existing basins and other basins. But the risk-adjusted returns have just been better on these deals we’ve executed on. So that’s how we’ve done it. The, the small deals that we’ve done in the DJ Basin and particular has been heavily skewed towards existing production and spud wells and then permits that are within the caps that is approved. So it’s from our standpoint, a proper risk-adjusted return and then the Permian program looks a lot like what you see from us in prior years with a good balance of existing production, line of sight wells, and years and years of remaining inventory, a lot more duration than we see anywhere else.

Tim Rezvan: Okay. Okay. Thanks. If I could just sneak a follow-up and just to kind of host a loop on the acquisitions in the fourth quarter. Your oil skew went down a bit. Can you just – it seemed like that was from those acquisitions. Is that’s what’s driving that lower oil skew. You talked about the maturation of the Midland, but is that acquisition kind of the big driver of that?

Chris Conoscenti : Yeah, that was definitely a component of it, but I think the important thing to note is that even without the acquisitions, we would’ve been right around the midpoint of the guidance on oil. So, it’s not like the whole alarm points aren’t coming through without acquisitions. Where we’re exceeding on oil, for the full year from our from our guidance. But we’re exceeding by a wider margin on the natural gas for the dynamics that Jarret walked through.

Tim Rezvan: Okay. Thanks for the comments.

Chris Conoscenti : Thanks. Tim.

Operator: Thank you. Our next question is from Noel Parks from Tuohy Brothers Investment. Your line is now open. Please go ahead.

Noel Parks : Hi, good morning. Just a couple. I apologize if you’ve touched on this already. But with the deal environment if we did have ahead of us a period of sustained higher prices even for oil or gas stay a capital in business persists and demand is good on the macro level and we wind up sure steadily at the higher end of recent creating ranges. Is that helpful or more or more hurtful as far as bid asking and getting people to agreement on deals?

Chris Conoscenti : It’s a really good question, because we’ve looked at this phenomenon of the interplay between commodity price environment or movements and acquisition activity. And so the gap between the paid and you ask on acquisition. What we found is the lead constructive environment for us is a rapidly declining price environment. That’s we find that the sellers tend to hold on to price expectations from just recent history. Stable prices are adequate for us to transact in and rising price environments are adequate, as well. So I think the only one unfavorable is a rapidly declining price environment. But, as you mentioned, for what we’ve seen for quite a period now, what it’s been a healthy stable environment, maybe trending upward on natural gas, more than more than oil, but supportive for M&A activity.

Noel Parks : Great. Thanks. And again, from we’ve seen more on the gas side, it’s such a good environment, seasonally this year for NAT GAS. And as we look at those the gas, the operators reporting year-over-year numbers, it looks like much better comps compared to the tough winter last year. So, we definitely have seen also alongside capital discipline this this greater willingness to use curtailments as a way to address volatility, especially downward volatility, building docks and so forth. And do you sort of see just your diversification by – and by operator being the best defense against even increased lumpiness when operators react to what they see in the price of learning leaderships?

Chris Conoscenti : Yeah, we view the diversification as a strength for a lot of reasons. But if you just look at our revenue for 2024, about 84% of it was oil. So, with the operators with that economic signal there’s almost not a gas price at which they would shut in their oily wells. So, we’re really not exposed to the types of geographic regions where operators would shut in production because of just the gas prices. Clearly we’d like the gas prices to be stable and healthy for operators to produce. But we’re really not exposed to that kind of environment.

Noel Parks : Great. Thanks a lot.

Chris Conoscenti : Thank you. End of Q&A

Operator: Thank you. This concludes our Q&A session and consequently, today’s call. Thank you for joining. You may now disconnect your lines.