Brian Cree: Absolutely, John, this is Brian. I’ll take a first crack at that and let anyone add in if they want. But these are different than what we did last fall. Last fall, many of the acquisitions that we completed were more very developed in terms of the timing of when those wells were going to come online. They were wells that were ducks at the time or were just shortly ready to come on. These are more kind of traditional in nature. They span the entire basin, some in Williams, Mackenzie, but they’re with operators that we have a lot of confidence in. But these are wells that are going to get drilled over the summer and the fall. And so there’s really no production coming with these. Unlike the last time, where we had a lot of wells that were just about ready to start producing.
These will start producing kind of, like I said, fall sometime into the fourth quarter. And so they’re a little bit different in nature than what we did last year, but very economic from our standpoint. Again, with some of our favorite operators in areas of the field that we have a lot of confidence in. They are higher working interest wells. Typically, our average working interest is in that 3%. If you look at our entire portfolio, these are working interests that are north of 20%. And so they’re deals that we’ve been working for a long time. And just luckily, they came together in April, and we’re able to move forward with them.
John White: Okay, great. And Bob used the term self sourced. Does that mean this was not a bid situation?
Bob Gerrity: Yes, the operators will come out to several different companies. These were not like investment banking, bid processes, or anything else. So these are — this is just kind of part of our pipeline. We’ve been doing this for, like I said, over 10 years. We’ve developed relationships with all the different operators and sellers of this, and it is a process where we have to put in an offer. So unlike maybe the deal we did last year with Marathon, where it was more negotiated. But these are still deals that have very few eyes on them, from the operators. They send them out to their kind of their favorite potential buyers, and we go from there.
John White: Thanks again. And net acreage involved.
Bob Gerrity: Most of these are wellbore deals. So there’s not really much additional new acreage. This is all wells that are really wellbore AFEs that are again being drilled over the course of the summer.
John White: Thanks a lot for the extra detail.
Bob Gerrity: You’re welcome.
Operator: Thank you. Our next question is come from the line of Michael Schwartz with Jefferies. Please proceed with your questions.
Michael Schwartz: Hey, guys, congrats on the acquisition. My first question is, given that these wells are going to be killing [ph] at the end of the year, how should we be thinking about production and CapEx in 2025?
Jimmy Henderson: Yes, it’s a little early, Michael, to be thinking about giving any guidance of any sort for 2025. But clearly, we’re confident, as you can tell with increasing the dividend that will increase production and cash flow as we exit 2024 into 2025. And so I think you should see, be pretty happy with the change year-over-year. But we don’t want to get too far ahead of ourselves, but we think we can, although it’s not our objective necessarily, I think you will see some production growth as we go into next year. And then I think you think about CapEx sort of returning to a maintenance mode as we go into 2025.
Michael Schwartz: Makes sense. I completely understand that it’s early. So, I just also wanted to ask about the decision to raise the dividend. From your comments, it sounds like it’s tied to kind of deals and this kind of growth you’re seeing, what do we need to see to grow the dividend further? Is there kind of any metrics that we should be thinking about for that?
Bob Gerrity: Well, it’s really a function of the economics of our drilling. We’re capital allocators. And when we can allocate capital in a way that gives us a very high rate of return, well, we’re going to return that money to the shareholders. So that can happen in a lot of different ways. If we continue to find the deals we’re finding in the last nine months, that’s very constructive to the dividend. Obviously, we hedge those acquisitions to the degree that we can, and stable oil price will certainly be supportive to the dividend. But, Michael, this is what we live for. And so the calculus of this is very dense. Ben, you want to add something to that?
Ben Messier: Yes. Hi, Michael. Yes, we like to think about our dividend coverage in a flat production environment, really. So when we set this dividend level, we’re thinking about sort of a maintenance mode CapEx level of, call it $90 million to hold production flat in the mid-to-high 13 MBoe per day range. So, if you look at our business model in that environment, we’re generating more than enough operating cash flow at current commodity prices to current to conservatively cover the dividend and the maintenance CapEx. And so we look at that and feel really good about where we are from a dividend standpoint. And then, as Bob said, we’ve been lucky enough to find really attractive acquisitions since we’ve spun-off, that have allowed us to grow production more than maybe we originally thought we could.
And we’re happy to draw our RBL to fund those. We’re still 0.6 times levered. We have — we’re 40% drawn on our revolving credit facility. So a ton of capacity there to drive growth at these really attractive rates of return. And it obviously comes with the short term hit of more CapEx, but that’s to the benefit of longer term production and free cash flow growth. And so we’re not as concerned about the optics of looking like we’re covering the dividend in the short term, because we know that having more free cash flow over the next 30 years is, in the end, that’s for the dividend. So that that’s some of the calculus that goes into how we set it and when we raise it really.
Michael Schwartz: Sounds good. Makes a lot of sense to me. Thank you, guys.
Operator: Thank you. Our next questions come from the line of Stephen Richardson with Evercore ISI. Please proceed with your questions.
Stephen Richardson: Hi, good morning. I was wondering if you could talk a little bit, appreciate the comments in the prepared remarks about the in process wells and permitted wells, could you talk a little bit about what you’re seeing in terms of operator activity on your lands, particularly relative to how you guided earlier in the year and how things were playing out? Just acknowledging that you had weather impacts in Q1. But could you just talk about what you’re seeing from the operators at this point?
