John White: Hi. Good morning gentlemen. My questions were on M&A and CapEx and they have all been answered. Congratulations on the strong results and good luck for 2024.
Bob Gerrity: Thanks John. Thanks for your support.
Operator: [Operator Instructions] Our next question comes from Jeff Robertson with Water Tower Research. Please state your question.
Jeff Robertson: Thanks. Bob, you started off the call, referring to Vitesse technology company, can you – when you think about the M&A landscape and the luminous system that Vitesse uses, can you just talk about how that – how you can leverage that in the M&A market as you may see assets move from hands where there are not – where there is not a lot of drilling to hands where there is drilling activity or could be?
Bob Gerrity: Yes. Thanks a lot, Jeff, and thanks for referencing luminous our database. We take great pride in it and it develops generationally every month. So, we have over 7,500 – we have interest in over 7,500 Bakken wells. And we scrape every piece of information about those wells. So, when technology changes, in frac technology, we see it immediately. And the data team is part of our deal team. So, when we have our weekly AFE acquisition meetings, data participates and said, well, no hold on a second, Marathon in this area is completing wells in a different fashion and they are getting really good early results. So, we will lean into a situation like that. So, it’s – look, the technology here changes incrementally every month. And we just want to be a little bit ahead of that and see if we can take some informational advantage.
Jeff Robertson: Are you seeing – from the data you will collect, are you seeing rates of return in general improving markedly in the Bakken, or is it just maybe operator-specific where some operators have figured out an answer in the area that they work in and they boost their returns?
Bob Gerrity: Yes. So, the big trend is the three-mile laterals. And we were skeptical initially. I think I am on record of saying we just don’t know about the results yet. But we are believers in it now, and we are thrilled to have core takeover of Enerplus. How technically and operationally, they clean out the plugs from three miles away is just an amazing technological advance. So, we are big believers in the three-mile laterals. We think that those economics are kind of under-loved at this point and where – we believe that the basin will move more towards three-mile laterals. So, we see Bakken wells getting better and better pretty much every month. Just as an anecdote, XTO had a three-mile lateral that was just completed.
And in their first 30 days of production, they had over 108,000 barrels of oil alone. So, again, the first well I was in, the [indiscernible] well produced 85,000 barrels in the first year. And that was a great well at the time, economically. So, it’s – we love the Bakken. We think that technologically, it will continue to improve, and we are very happy with the load of undeveloped locations we currently have.
Jeff Robertson: And then just on a philosophical note, the dividend at $2 a share annually is right around a 9% yield on the current stock price. Can you just talk about how you think about the fixed dividend levels and managing the business overall as you look at acquisition opportunities and cash flow reinvestment and ultimately, the potential for a dividend increase at some point, or maybe what would be a catalyst for that?
Bob Gerrity: So, we are a dividend-paying company. We have the $2 fixed dividend, and that’s a healthy dividend. I believe that, that 9% yield is very attractive. And the calculus that goes into our setting the dividend is really complex, what the price of oil is, what our debt level is, how far out in the future we can hedge, what our opportunity set is, and what our ability is to make acquisitions that are accretive. So, it’s a fixed dividend, it’s at $2, and I let you know, Jeff, we do this calculation every week. So, it’s something that we are keenly aware of and focused on, so.
Jeff Robertson: Well, I know there is very few securities with exposure to oil that have a dividend that is higher than Vitesse. So, it’s not that not that the dividend rate is low right now, but I think it’s interesting for your thoughts on how you think about it overall in the context of managing the business.
Bob Gerrity: So, dividend is our life, Jeff, so yes. Thanks for your questions.
Operator: Thank you. And our next question comes from Noel Parks with Tuohy Brothers. Please state your question.
Noel Parks: Hi. Good morning. I just had a couple of questions. I was – and I apologize if you touched on this already, but could you just talk about the state of service cost inflation in the Bakken? It’s interesting over earnings season, we are hearing different things kind of in different basins. So, any thoughts there would be great.
Brian Cree: This is Brian. I will take the first crack at that. I think our view is that from what we have seen over the course of ‘23 and now into ‘24, is costs are just moderating. I mean costs were a little higher at the beginning of 2023. I think they moderated over the course of 2023. And we haven’t really seen a lot of significant changes one way or the other. Obviously, service costs are going to be impacted the amount of drilling activity. Rig count is up just slightly in the Bakken from where it was for a good chunk of 2023. That hasn’t translated for us yet into higher service costs. I know that there have been some comments about service costs coming down. Obviously, we would love to see that. But at this point in time, we don’t really have a view on where that is. We are just continuing to watch the AFEs and the actual costs as they come in, and they seem pretty consistent over the last six months to nine months.
Noel Parks: Great. Thanks And it’s interesting, you were talking in this quarter or in the fourth quarter about just having some wells come online sooner than expected sort of advancing. And that’s also been something that has been somewhat common with frame. I am sort of more used to things getting pushed off into the upcoming year just as companies try to be mindful of capital discipline and just watch their spending. So, I was just wondering is – for the wells that you saw that helped your volumes, were those largely just at the operators’ discretion the timing of those, or is there any other else – anything else going on there that you are aware of?
