And so that’s the focus. And I think that’s the focus somewhat mutually exclusive to CCS. Robin and her team, and we’re happy to take questions around that or executing that, and there’s a process around monetizing and bringing some value forward on that business as well. I would call those separate. I think broadly from an enterprise perspective, how do we make sure the upstream business is generating the right levels of free cash flow, knowing that this was a year where we were going to really accelerate capital to some developments. We don’t have to do that next year. You’ve got a rising rig market. How do we want to manage all that and make sure that we’re putting our shareholders in a place where we can be opportunistic as we were in some moments this year on buybacks and things of that nature.
Subhasish Chandra: Just one final one, if I can. So the number one question out there onshore is M&A. So we would like to give you an opportunity as well or to comment what the offshore outlook at that.
Timothy Duncan: Look, we get it. We understand how people are thinking about it. It starts with that free cash flow generation comment. And I mean we want to have a business to generate material amounts of free cash flow. We want, as we grow that business to have, as we add assets to be accretive to that goal, we know we want to scale and size. It’s going to deliver capital back to shareholders. I mean I think we all as executives understand what the model is. And M&A ultimately fits into that model if they can add the appropriate types of scale and diversity. Our skill set is conventional geology, it’s offshore operations. It’s a life cycle, and if you step back from that and you think about our basin, we think our basin is filled with sellers ultimately.
They may not be sellers in the next 6 months, but the majors may not want to own some of their assets across the life cycle. They may want to decarbonize. They may not be reinvesting at the rates they did 10 years ago. And so we actually think the Gulf is a great roll at play. And they’ve got to have a trusted counterparty. And we think we’ve passed that test. These guys are partners with us in our wells. We just can’t predict when that’s going to be. We’ve talked about looking outside the Gulf of Mexico because again, I think there’s other companies think this the same way we are. And so I would say when you look at our skill set and you look at where we can transfer that skill set, I think it’s in a pretty broad and diverse set of opportunities that are sustainable over the long run versus being in one unconventional play where you can see the ceiling of what’s available for you to roll up.
So I’m bullish long term on how we think about M&A relative to our strategy and relative to our skill set from quarter-to-quarter and year-to-year. You just can’t predict exactly how that’s going to go.
Operator: Our next question comes from Jeff Robertson from Water Tower Research.
Jeffrey Robertson: Tim, a follow-up question on the Repsol joint venture. I think Talos is contributing about 97,000 acres to the 400,000-acre joint venture. Is Repsol contributing acreage? Is it an AMI in the area you all identify prospects you’ll go and try to get the acreage? Can you talk about the mechanics of that?
Timothy Duncan: Right. It’s a combination of really more our acreage and more of an AMI concept. That’s exactly right. That’s how you should think about it. So we put a big halo around where our acreage is and where our key facilities are. And we say, look, amongst this area, let’s go out and think about generating inside that . And then let’s think about finding new opportunities around that broader AMI. So it’s a simple concept. I don’t believe I should double check they’re contributing acreage. But really, it’s — we have close to 100,000 acres. We put a halo around that. And part of that’s commensurate with how you think about reprocessing seismic data, so you got the appropriate coverage from just — from an imaging perspective. And then how do we want to kind of develop inventory around that entire kind of area of mutual interest or AMI for those that aren’t familiar with concept. So that’s how this comes together, Jeff.
Jeffrey Robertson: And with respect to M&A, are you seeing things? Or do you not necessarily seeing things today with some of the consolidation that’s taking place in the industry. Do you think that opportunities will present themselves in the Gulf of Mexico that Talos wants to have the strongest possible to just have options?
Timothy Duncan: Yes. Yes, for sure. I mean, look, I mean, part of wanting to make sure that we keep the leverage that where it needs to be, we try to have the appropriate levels of liquidity. I think even next year, I think what’s the first use of proceeds on free cash flow. It’s going to make sure we pay down debt. And then we can think of all the other capital allocation ideas of reinvesting in the business, having liquidity available for M&A. And look at some of these combinations, they’re speaking to it directly. And so we don’t know where that plays out. I think, for example, Chevron and is a fascinating combination. I think they certainly, the Gulf of Mexico is a core area for Chevron. But ultimately, what is the right asset mix for a company like Chevron or a company like Exxon.
You don’t know the answer to that, but you do know that if and when they might want to think about M&A, particularly on the asset side, they’re probably going to want cash and they’re going to need a counterparty that they trust. And what we have to do is be available to pass that test. While we look at other M&A idea that M&A ideas that might have more flexibility on sources and uses. So we’re thinking about it. Look, we certainly understand why you see the current trends. We’re not rushing into anything, but we have to be prepared to be thoughtful on how we build out the firm and get to where we have a platform that’s got more scale and diversity and ultimately leads to a shareholder return model that’s sustainable.
Jeffrey Robertson: And a question on the CCS business. Does Equinor add anything that makes that project more marketable to potential anchor customers? And can you just, or maybe, Robin, can you just provide an update on where commercial discussions are with potential emitters?
Timothy Duncan: Well, let me — yes, look, I’m going to hand over to Rob. I think real quick on the conversation around Equinor, and then Robin will take it and provide her thoughts. When we set this up. I think the initial idea was setting it up in a way that it attracted the strategics, if you will. Not too different from what we just did in acreage. We can put together an ex-position but we’re not going to go drill that $100 million all well. We want a strategic involved in that with us to share that risk with us. And so Chevron came in now, we’re going to work came in. So it’s great to have the strategics there. And Robin can talk about the benefits they bring when we think about conversations with emitters and execution.
Robin Fielder: Yes. Both partners have projects that are ongoing in the world. I mean Equinor is one of the pioneers in CCS there in the Northeast. So certainly bringing that long-term experience and expertise to the project is a really great and encouraging thing. Both of our large partners, too, have the ability to go and invest in some of these other blue commodities as well. So I think that’s exciting. The announcement of the Department of Energy grant to the high velocity hub, which is surround the Southeast Texas and Southwest Louisiana region is very encouraging as we think about the counterparties here, the customers, what that grant will do is basically providing that integrated hydrogen ecosystem where we’ve got more investment coming into not just green hydrogen, but also being able to retrofit existing, gray hydrogen facilities and encouraging additional investment in new blue hydrogen facilities where the CO2 capture is actually designed on the front end.
