We’ve never done that. So we expect that trend to continue. And in the interim, we’re still looking at deals at Viper. There’s been a few packages out there of size that have interested us. We’ve looked pretty closely, and I think we’ll continue to be in the fight on those deals. But as you think about the next three to five years of the Viper business model, it’s really to be competitive in the 10-figure-plus deals that we tend to be in a league of our own on that size.
Chris Baker: All right. Thanks. Appreciate the call.
Kaes Van’t Hof: Thanks Chris.
Operator: Thank you. Our next question or comment comes from the line of Betty Jiang from Barclays. Ms. Jiang, your line is now open.
Betty Jiang: Good morning, Travis, Kaes. Maybe a follow-up on the Endeavor drop-down opportunity. I guess given the materiality of the EBITDA on that asset you outlined at the time of the acquisition and just a variety types of mineral interest that’s sitting within Endeavor, how should we be thinking about the size of the drop? Would it be one drop or multiple tranches?
Kaes Van’t Hof: Yes. Well, first of all, welcome back, Betty. It’s good to hear your voice and look forward to you continuing to cover Viper. I think I can’t make any promises, right? We’ve got two Boards, we got to have discussions and look at this deal post close. I think our intention is probably given the amount and size is to do this all in one fell swoop. And I think that generally means more exposure to a consistent development plan for a longer period of time. But I guess it’s not completely my decision. So we’ll see what everyone decides, but that would kind of be our preference to tell the cleanest story possible.
Betty Jiang: Right. And then one of the key advantages of the Endeavor merger is the increased visibility on Viper’s activity. Can you remind us what’s Viper’s current exposure to Endeavor’s development program and if you are able to make any headways to increase your exposure to their activity through just organic leasing and other smaller mineral pickups?
Kaes Van’t Hof: Yes. I think it would be hard to do anything material to continue to improve that exposure. High level, right now, about 55% of our production comes from Diamondback. I don’t know, I would probably say less than 10%, probably 7% or 8% of our production comes from Endeavor. I do think deals like the GRP deal had a lot of exposure to both Endeavor and Pioneer units on top of Diamondback. So I think just generally, exposure to ourselves is what we prefer. But second to that would be exposure to good operators like Endeavor, like Pioneer in areas with really good rock and really good line of sight to development.
Betty Jiang: Great, makes sense. Thank you.
Kaes Van’t Hof: Thanks Betty.
Operator: Thank you. Our next question or comment comes from the line of Paul Diamond from Citi. Mr. Diamon, your line is now open.
Paul Diamond: Years have been on the M&A dialogue to kind of the opportunity that you’re seeing in third parties kind of the smaller deals. I know with the volatility, we’ve seen some disparity in the bid-ask spread. Just didn’t know if you could comment on what you all are seeing.
Kaes Van’t Hof: Yes, Paul. I mean, Paul, I missed the first part of the question. I think it was kind of talking about the overall M&A environment, and we’ll let Austen kind of talk about what we’ve been seeing.
Austen Gilfillian: Yes. I think it’s still pretty competitive on what we call a ground game with the smaller deal, you call it, $50 million and below, really especially in the kind of $5 million to $10 million range and below. I think what we’ve seen is an evolution in the minerals market, right? I mean six or seven years ago, a lot of private equity money came into the space, and that’s kind of where the pipe was, and you organically put together a position. But as the industry has matured a little bit, you have bigger funds involved now, and kind of all of that capital is rolling up. So we’re not seeing a ton of deals transact, right, directly to the owner anymore. So it just brings more competition on what’s available. We were able to get a couple of smaller deals done in the first quarter, and that’s kind of the benefit we have of our relationships out here.
But like Kaes mentioned before, I think where we see our strategic advantage going forward on – from an M&A standpoint is going to be on the bigger deals, which can kind of leverage the size and cost of capital that we have.
Paul Diamond: Understood. Thanks for the clarity. And just one quick follow-up. Of the 13.8 wells in active development, if we kind of run rate that out, we’re starting to push the higher end of – higher-end production guidance. Just didn’t know if there’s anything you guys are seeing in timing or cadence that would shift that potentially up or down just given basic run rating it out.
Austen Gilfillian: Yes. I mean we continue to be pretty conservative with the timing assumptions on the third-party side, right? I mean we’ve got great visibility on the Diamondback side, and that’s what kind of drives a lot of growth into the second half of the year. The big bump that we’re going to see from Q1 to Q2 here really is going to come from the third-party side and a lot of the high concentration activity that we had underwritten in the GRP deal. But look, I mean what we have contemplated right now for the rest of the year is third-party wells only being turned to production that have currently been spudded, not making any assumptions on permits. So if activity continues to trend at like normal pace, maybe there can be some upside there. But we really want to guide to what we can see and what we can control.
Paul Diamond: Understood. That makes perfect sense. Thanks for your time.
Kaes Van’t Hof: Thanks, Paul.
Operator: Thank you. Our next question comment comes from the line of Derrick Whitfield from Stifel. Mr. Whitfield, your line is now open.
Derrick Whitfield: Thank you. Good morning, all, and thanks for your time. For my first question, I wanted to focus on your expected 2024 production profile after adjusting for the GRP noncore divestiture. Your second quarter guide suggests modest upside versus consensus. Is this the production profile you were expecting in your initial 2024 guidance? Or is there possibly some upside now based on the efficiencies you’re experiencing in Diamondback?
