Kaes Van’t Hof: And one last comment on the Diamondback operated piece. It certainly has been beneficial to have that Diamondback Viper relationship for a significant amount of our production. As the business has gotten bigger, and we chased the same decline rates that the E&Ps do. It’s been — it’s harder to find sizable packages under Diamondback that will move the needle for the next 5, 6, 7 years. So I think, generally, we have a great position operated by Diamondback, but the next leg of the stool is going to be undeveloped units, particularly in the Midland Basin, like what we found with GRP that drive growth into the next decade.
Derrick Whitfield: Perhaps actually picking up with where you ended their case, because I think the opportunity that you guys have the deep rights under Spanish Trail could be quite remarkable. But I would love to — if you guys could share what the opportunity you see with the Woodford and Barnett intervals at present? And how soon you could see meaningful activity and that would clearly benefit Viper given the elevated NRIs you have in that area?
Kaes Van’t Hof: Yes. There’s certainly a lot of industry activity in the Barnett and Woodford. And traditionally, our mentality has been to be a fast follower. But I think there will be some tests, particularly operated by Diamondback in the next 12 to 24 months. I don’t think it will move to full-scale development until kind of 2025, 2026. But all indications are pointing to those zones being very productive covering a lot of the basin. And it works at a price, right? It’s going to be a little more expensive to the operator wearing my Viper hat, we don’t really care as long as there’s a lot of resource. And I think all indications are pointing towards significant resource in those deeper zones.
Derrick Whitfield: Thanks, Kaes. Thanks for your time.
Kaes Van’t Hof: Thanks Derrick.
Operator: Thank you. One moment for our next question. Our next question comes from Paul Diamond from Citi. Please go ahead.
Paul Diamond: Hi, thank you. Good morning, thanks for taking my call. Just a quick one on the Delaware corp conversion. You talked about currently 2% of the public float is held by index funds versus about 30% by peers. Just wanted to get a big a bit deeper on that to see how you guys are envisioning any trend towards that higher rate post conversion?
Kaes Van’t Hof: Yes, great question. We’ve done a little bit of work on it. The deals — the conversion is supposed to close next Monday, and then we’ll be a corporation. There’s some details in there for shareholders so they know what’s going on. But from what we can tell, there’s a couple of indices that we could be eligible for even before the end of the year. And those are pretty significant indices. I think Vanguard related indices as well as then eventually some of the S&P related indices. And as the market knows, that’s a lot of buying for a company that has a lower public float. And so we’re going to start working with them right away after getting this thing closed and getting as many indices as possible and kind of follow the path of hopefully, what Diamondback followed years ago as that business grew and got more exposure to large index funds. And you add anything he Austen?
Austen Gilfillian: Yes, Paul, the main pretty benchmarks are kind of your S&P Chris and Russell. S&P and Chris [Ph] do quarterly rebalance this. So they’ll both do one middle of December. So the conversion will be done by then. So we’ll be in communication with them and see if that’s something that can happen this year. And then Russell does the rebalance annually in June. And then additionally, you’ll have something that’s more criteria based or subjective like the S&P 600, where we’ll have to have some communication with them. But all signs point to being eligible right away and hopefully getting included pretty soon. But certainly, we meet the criteria now as being a corporation as opposed to being a partnership.
Kaes Van’t Hof: Yes. And the strategy there is also exposure, right? There’s a lot of other investors that I think, are limited in their exposure to minerals. And we’ve already had some success converting some shareholders, potential shareholders on the road to look at the story. I mean, I envision and Travis envision a world where this mineral space and this business is competing with the likes of some of the mid and the smid and mid caps on the E&P side. And this business certainly shows as a safer way to play the Permian Basin or oil exposure with no capital requirements and just upside.
Paul Diamond: Understood. I appreciate the clarity there. Just one more quick follow-up, just more on the lease bonus payments. How are you guys envisioning that going forward? Is it more tend to be chunkier or do you see it as just a consistent growth over time?
Kaes Van’t Hof: Well, Spanish Trail’s unique, right? I mean this was a unique asset that a generational asset that doesn’t come around very often. So this was certainly the big one. I think it’s logical that a lot of the deep rights throughout the basin are going to get leased up over the coming 12 to 24 months. But for us, they’ll all be smaller than this large payment, which was a pretty significant amount of acreage.
Paul Diamond: Understood. Thanks for the clarity.
Kaes Van’t Hof: Thanks Paul.
Operator: One moment for our… Our next question comes from Leo Mariani from ROTH MKM. Please go ahead.
Leo Mariani: Hi guys. I wanted to ask whether or not you see any kind of material change in the tax rates for Venom following this kind of corporate conversion. I did see you had this kind of soft sort of not really guidance, but just kind of the numbers that you kind of rolled out for 2024 outside of production where you talk about kind of an effective tax rate. But I know you’ve got kind of multiple classes of units historically. I know you’re going to have maybe more than one class of shares. But just trying to get a sense, are we going to see any material difference in kind of cash taxes in 2024 versus 2023?
Kaes Van’t Hof: No, nothing should change at all for the public unitholders that will become public stockholders. So tax position didn’t change. And I think they’ll just provide them more flow, more liquidity.
Austen Gilfillian: That’s why the conversion made so much sense is that we became a tactical partnership back in 2018. And in there for a couple of years, Diamondback is effectively shielding us from corporate taxes and that agreement ran out end of last year. So here in 2023, we have a partnership with paying full corporate income taxes and getting all the downside effectively being a corporation, but you don’t have any of the upside. So it just made a lot of sense to do that today given in large part, the kind of tax situation that we’re in.
Leo Mariani: Okay. That’s helpful. And then just wanted to kind of ask on a couple of other sort of numbers here. So I think you guys are kind of expecting production to come down a little bit in the first quarter. I’m assuming that’s all just kind of timing related, but just wanted to maybe get a little color around that. And then also just noticing that your cash G&A per barrel guidance also came down nicely as well. Is it at a function of spending kind of less than you expected there? Or maybe just perhaps production results have been better than with the acquisition, you’re seeing the BOEs go up and you’re just able to spread the cost out over more barrels?
