Sitio Royalties Corp. (STR) This autumn 2023 Earnings Name Transcript

Sitio Royalties Corp. (NYSE:STR) This autumn 2023 Outcomes Convention Name February 29, 2024 8:30 AM ET

Firm Individuals

Ross Wong – Vice President of Finance and Investor Relations

Chris Conoscenti – Chief Govt Officer

Carrie Osicka – Chief Monetary Officer

Dax McDavid – EVP of Company Growth

Convention Name Individuals

Tim Rezvan – KeyBanc Capital Markets

Neal Dingmann – Truist

Derrick Whitfield – Stifel

Noel Parks – Tuohy Brothers Funding

Operator

Hiya, everybody. And welcome to the Sitio Royalties This autumn 2023 Earnings Name. My title is Chet, and I will be the coordinator for this name at the moment [Operator Instructions]. I might now like at hand over to Ross Wong, Vice President of Finance and Investor Relations, to start. Ross, please go forward.

Ross Wong

Good morning, everybody. Welcome to the Sitio Royalties fourth quarter and full 12 months 2023 earnings name. When you do not have already got a duplicate of our latest press launch and up to date investor presentation, please go to our Website at www.sitio.com or you will discover them in our Investor Relations part. With me at the moment to debate fourth quarter and full 12 months 2023 monetary and working outcomes is Chris Conoscenti, our Chief Govt Officer; Carrie Osicka, our Chief Monetary Officer; and Dax McDavid, our EVP of Company Growth and different members of our government management crew. Earlier than we begin, I wish to remind you that our dialogue at the moment might include forward-looking statements and non-GAAP measures. Please consult with our earnings press launch, investor presentation and publicly filed paperwork for extra info concerning such forward-looking statements and non-GAAP measures. And with that, I am going to flip the decision over to Chris.

Chris Conoscenti

Thanks, Ross. Good morning, everybody. And thanks for becoming a member of Sitio’s fourth quarter and full 12 months 2023 earnings name. Earlier than discussing fourth quarter outcomes, I need to present an replace on our return of capital framework, which going ahead, will embody dividends and the power to layer in share repurchases, and I wish to share some thrilling information concerning our first acquisition of 2024. Concerning repurchases, our Board has approved a $200 million share buyback program, which offers an extra avenue to maximise long run worth for our shareholders. We stay assured within the outlook for our enterprise and imagine there’s a compelling alternative to repurchase our shares given this outlook. Below this up to date framework, which is efficient instantly and applies beginning with the primary quarter of 2024, we nonetheless plan to return a minimum of 65% of discretionary money circulation to our shareholders and to retain as much as 35% of discretionary money circulation for steadiness sheet administration and opportunistic money acquisitions. Nonetheless, as an alternative of allocating the complete 65% of discretionary money circulation solely to money dividends like we have carried out traditionally, we intend to pay a minimal dividend equal to 35% of discretionary money circulation and allocate a minimum of 30% of discretionary money circulation to extra money dividends, share repurchases or a mixture of each.

Committing to a minimal dividend equal to 35% of discretionary money circulation offers our shareholders with the knowledge of a minimal money dividend that may be a compelling dimension, whereas avoiding the pitfalls of setting a minimal greenback quantity of dividends. Historical past has proven that mounted minimal dividends expressed in a set greenback quantity for a cyclical commodity uncovered enterprise turn into variable in a commodity worth down cycle when corporations inevitably reduce their so-called mounted dividend. This introduces the danger of the corporate shopping for again extra inventory when it has extra discretionary money circulation above the mounted greenback dividend, which is when commodity costs and inventory costs are excessive. Our technique is designed to keep away from having to chop a minimal greenback quantity of dividends throughout cyclical downturns and to keep away from the pro-cyclical and probably worth damaging conduct of allocating extra capital to repurchases throughout a cyclical upturn. If our new return of capital framework had been utilized to the fourth quarter of 2023, our minimal dividend would have been $0.27 per share, which means an approximate 5% dividend yield. This may have been roughly 300 foundation factors larger than the dividend yields for E&P corporations and roughly 350 foundation factors larger than the S&P 500 yield during the last 12 months.

Turning to the acquisition I discussed earlier. In January, we signed a definitive settlement to amass over 13,000 web royalty acres within the DJ Basin for $150 million, which boosts our general DJ footprint and publicity to areas with larger ranges of exercise relative to our legacy belongings within the space. As with most of our acquisitions, this deal originated by means of a relationship with a vendor we have recognized for some time. The vendor did an excellent job of piecing collectively a differentiated asset base concentrated in one of the best elements of the DJ Basin. This transaction highlights our proactive strategy to portfolio administration and prudent capital allocation by promoting smaller scale declining belongings in Appalachia and the Anadarko Basin at an almost 6 occasions subsequent 12 months money circulation a number of and buying larger progress DJ Basin belongings at a 4 occasions subsequent 12 months money circulation a number of. We proceed to give attention to optimizing capital allocation and producing robust shareholder returns. I might now like to show the decision over to Dax McDavid, our EVP of Company Growth, to debate the highlights of the DJ Basin acquisition and supply an replace on different acquisition actions.

Dax McDavid

Thanks, Chris, and good morning, everybody. We’re thrilled to debate 2024 with a compelling acquisition, which we hope is a signed of a extra transactable center of market. This deal is very accretive on each a close to time period money circulation and NAV foundation and checks all of the bins for what we search for in a beautiful acquisition. The acreage has terrific geology, aggressive effectively economics and is beneath well-capitalized operators with nice line of sight for future growth. The first operators are Chevron, Oxy and Civitas, who in mixture had been accountable for greater than 95% of the manufacturing on these belongings in 2023. Within the fourth quarter, these belongings produced roughly 2,600 BOE a day with 41% oil and generated $8.6 million of asset degree money circulation. As Chris talked about earlier, this acquisition has a extra progress oriented manufacturing profile relative to our just lately divested belongings. From December 2022 to December 2023, month-to-month manufacturing on these belongings grew by 89%, a stark distinction to the approximate 7% decline over the identical interval on these belongings we divested in December 2023. At 12 months finish, there have been roughly 5.1 web line of sight wells and 9.6 web remaining areas. 73% of which had been within the Higher Wattenberg Discipline, offering visibility and operating room for future growth. We had been capable of underwrite future DJ Basin exercise with extra certainty relative to different areas in america due to complete space plans or CAPs and oil and fuel growth plans or OGDPs, that are filed with the Colorado Vitality and Carbon Administration Fee and have to be accredited earlier than growth can happen.

The DJ Basin acquisition acreage has publicity to a number of multiyear CAPs and OGDPs, which include 26% of remaining stock and symbolize a complete of roughly 2,700 NRA and a pair of.5 web remaining areas as of December thirty first. These CAPs and OGDPs do not assure operator exercise however administratively it’s difficult for operators to deviate from these plans as soon as they’re accredited. As you possibly can see on Slide 9 in our earnings presentation, the DJ Basin acquisition acreage is within the core of the play and expands our DJ Basin NRA by 52% from roughly 25,000 NRAs to over 38,000 NRAs. On a professional forma mixed foundation, our belongings cowl roughly 810,000 gross acres or 49% of your entire DJ Basin and 57% of the Higher Wattenberg Discipline, which incorporates one of the best rock and is beneath essentially the most energetic operators within the Basin. These belongings are potential for the Niobrara and Codell, each of that are being codeveloped throughout many of the acreage. Latest public commentary from Chevron, Oxy and Civitas concerning the DJ Basin has been fairly constructive, indicating that their belongings are extremely financial. They’ve additionally emphasised commitments to deploy capital and develop manufacturing in 2024 and past with CAPs and OGDPs.

Chevron has underscored their dedication to the DJ Basin, commenting that their acreage has excessive money circulation margin, low breakeven barrels and has permits that reach by means of late 2029. Oxy just lately highlighted a number of constructive features in regards to the DJ Basin belongings as effectively, together with a 32% enchancment in effectively productiveness from 2022 to 2023 and an 11% implied annual manufacturing progress for the Rockies and different section primarily based on the midpoint of their 2024 steerage. Civitas just lately disclosed that their 2024 DJ Basin growth plan is targeted on the extremely prolific Watkins space, a area that incorporates Field Elder, one of many bigger CAPs on the DJ Basin acquisition acreage. Civitas highlighted a lot improved progress productiveness within the Watkins in 2023 relative to 2022, leading to a ten% larger EURs and 40% larger returns. As of February 19, 75% of the rigs operating in your entire DJ Basin had been on our professional forma place, a rise of three occasions relative to the rigs on Sitio’s legacy asset. The rigs on our professional forma acreage are uncovered to 100% of CDX, Oxy and Merdad complete rig exercise within the basin. Along with the DJ Basin acquisition, we acquired over 500 Permian Basin NRAs in New Mexico in alternate for Class C shares of our inventory in December. This transaction was with one in every of our long-standing relationships and is somebody from whom we have acquired belongings prior to now. Our consolidation technique continues to be centered on executing relationship pushed offers versus broad public sale processes, which we imagine differentiates Sitio from lots of our friends. I am going to now flip the decision over to Carrie Osicka, our CFO, to debate fourth quarter 2023 outcomes.

Carrie Osicka

Thanks, Dax. Our belongings proceed to carry out persistently with manufacturing from our royalty curiosity producing a mean of 35,776 BOE a day within the fourth quarter and 36,338 BOE a day for the second half of 2023, which is simply above the midpoint of our second half 2023 steerage vary. Our reported outcomes included 82 days of contribution from our Appalachia and Anadarko belongings as a result of the divestiture closed on December twenty second. Reported fourth quarter manufacturing was 47% oil. Nonetheless, when excluding prior interval changes, fourth quarter manufacturing was 49% oil. On a professional forma foundation, our fourth quarter manufacturing was 36,623 BOE a day, together with a full quarter of manufacturing from the DJ Basin and December Permian acquisitions and excluding the manufacturing from the divested belongings. Horizontal rig rely within the Permian Basin and the general US in the course of the fourth quarter was down by 4.2% and three.8% respectively. We estimate that 7.7 web wells had been turned in line on our acreage in the course of the fourth quarter, down from the estimated 9.5 web wells turned in line in the course of the third quarter. We ended the 12 months with an all-time firm excessive of 53.4 professional forma web line-of-sight wells, together with roughly 5.1 web wells from the DJ Basin acquisition. The variety of web spuds as a % of complete web line of sight wells shifted from 59% on the finish of third quarter to 64% at 12 months finish, which is normally an indicator of elevated close to time period exercise.

We reported professional forma fourth quarter discretionary money circulation of $124 million, which included $8.7 million of incremental put up October 1st efficient date money flows from the DJ Basin and Permian acquisition and benefited from a 21% lower in curiosity expense versus the third quarter in 2023. Our Board declared a fourth quarter money dividend of $0.51 per share of Class A typical inventory primarily based on 65% payout ratio of professional forma DCF, which included an uplift of roughly $0.04 per share for DJ Basin acquisition and Permian acquisition money circulation within the fourth quarter. Much like the dividend calculation for the fourth quarter of 2023, we count on to incorporate put up efficient date money circulation from the DJ Basin acquisition in our calculation of first quarter 2024 DCF. We ended 2023 with an $850 million borrowing base revolver and liquidity of $588 million. Because of the enhancements to our capital construction made throughout 2023, we’ve got higher entry to capital and are a lot better place to finance acquisitions going ahead. Included in yesterday’s earnings press launch, we launched our full 12 months 2024 steerage. Our 2024 outlook is underpinned by the file variety of line-of-sight wells on our precedence. Contribution from the DJ Basin acquisition properties and the cap and ODGPs that Dax talked about and a few larger curiosity wells are in means of being accomplished. We’re off to a improbable begin to the 12 months with the introduced extremely accretive DJ Basin acquisition and I am optimistic about enhancing developments within the minerals M&A marketplace for 2024. That concludes our ready remarks. Operator, please open up the decision for questions.

Query-and-Reply Session

Operator

[Operator Instructions] Our first query at the moment comes from Tim Rezvan from KeyBanc Capital Markets.

Tim Rezvan

My first query, I wished to ask with the DJ Basin acquisition. While you have a look at issues outdoors the Permian, is there the next hurdle fee given form of much less trade exercise or is that this a easy form of arbitrage you noticed with the ability to purchase it at 4 occasions money circulation?

Dax McDavid

No, there’s not. We underwrite the returns and we’re capable of technically underwrite rather a lot in all of the basins on the market, there’s not [Technical Difficulty] about that. We do see enhance really from the operations I discussed earlier within the DJ Basin. We see a rise in exercise and we do see them benefiting capital to that basin. We see that basin proceed with returns in comparison with our different basins there and that chance to go on.

Tim Rezvan

I suppose, visibility and actions is what issues. If I may pivot, I do not know if that is extra for Chris as a Board member or for Carrie. I used to be curious with this gorgeous vital change in your money return framework, I don’t know if you happen to may discuss engagement with shareholders in the previous couple of months as you got here to this determination. Because the Board, do you assume shareholders form of wished this or was this extra an concept of the Board feeling compelled to step in with shares the place they had been to assist the fairness? I am simply curious form of what finally bought the board to conform to make this variation?

Chris Conoscenti

I might say this isn’t a commerce we’re attempting to make simply because we predict the inventory is reasonable. It is actually essentially underpinned by our outlook for the enterprise going ahead. We did have interaction with a number of shareholders. Each time we meet with shareholders we ask them questions in regards to the capital return framework. So this was an ongoing dialog with shareholders and on the Board degree it’s been going out for months and incorporate a number of [thoughts] [indiscernible]. We’re enthusiastic about it as a result of once we have a look at the best way the enterprise is coming collectively for this 12 months, as Carrie talked about, you have a look at exercise [indiscernible] within the DJ, you have a look at our file degree of [indiscernible] wells general after which recovering developments in exercise within the Permian within the fourth quarter, notably in October onwards that provides us a number of consolation leaning into 2024. The opposite factor that we like about 2024, too, in contrast to 2023, is we’re seeing some elementary shifts within the acquisition market, and you’ll see that evidenced by the acquisition we introduced this morning. So we’re hopeful that there will be extra of these this 12 months as effectively.

Tim Rezvan

If I may sneak one final one in, simply possibly extra for Carrie. As we form of baked this final acquisition within the mannequin, you see web debt a little bit shy of $1 billion, leverage nonetheless form of north of 1. Given the profitable refinancing of your debt, what are your up to date ideas heading in the right direction debt goal leverage and the way do you consider that 65% payout and possibly closing the hole with public friends that pay the next fee?

Carrie Osicka

We proceed to focus on low leverage. You are proper, we’re sitting at above, a little bit bit above 1 occasions leverage. However we goal that low leverage to protect our monetary flexibility and our potential to be opportunistic on money acquisitions. On the money acquisitions, we will proceed to pay down that pre-payable debt to keep up that flexibility. So far as the 65% payout goes, I am going to let Chris converse a little bit bit extra about this. However we do not intend to vary that payout proper this second aside from the best way our capital return goes to work. We’ll proceed to pay down that debt and maintain that opportunistic flexibility on the debt.

Chris Conoscenti

I am going to simply add that I am going to go away it to our friends to touch upon their payout philosophies for us. We simply felt at our firm aspect it is acceptable to have the amount of money to retain that we do to handle the steadiness sheet by means of a cycle and to guard this firm. So different corporations going to make their very own selections. However at our aspect, we really feel that 65% is an acceptable amount of money circulation to return to shareholders. As we develop, that quantity might develop, however we’re nonetheless far too small to name that proper now.

Tim Rezvan

After which do you might have a leverage goal, is it 0.75, do you simply need to be sustainably beneath 1 occasions, attempting to consider what a gradual state form of degree could be?

Chris Conoscenti

Carrie is true, we need to have low leverage so we could be opportunistic when alternatives current themselves. And so it is not a hard and fast quantity, Tim. It is actually simply — we’ll tackle a little bit little bit of leverage on the steadiness sheet and the revolver for money acquisitions after which we’ll pay it down after these acquisitions, and we’ll construct it again up and pay it down and repeat.

Operator

The following query on the road is from Neal Dingmann from Truist.

Neal Dingmann

Chris, my first query is on the anticipated exercise. Particularly, I am simply questioning, given your nice line of sight you talked about all the road of sight wells. After which if you happen to have a look at type of the present rig rely on the market and possibly conversations you all having along with your operators, I am simply questioning if you happen to — possibly in broad phrases [indiscernible] [Dax] may simply converse to your confidence within the continued stable exercise, I might name it effectively into subsequent 12 months, if you happen to’re anticipating that?

Chris Conoscenti

I am going to make a few feedback and switch it over to Dax. So simply at a macro degree, we did see the rig rely decline in the course of the 12 months on our asset and broadly throughout the US. However that decline for us within the Permian began in June and continued [indiscernible] in October the place it began to rebound. So we noticed that exercise on our belongings proceed to rebound by means of the tip of the 12 months and that is how we entered 2024. I am going to flip it over to Dax for a number of extra particular feedback.

Dax McDavid

No, that is why we’re enthusiastic about our DJ acquisition. I imply, particularly on the again of all of the latest constructive commentary from the DJ operations within the basin. The exercise is pushed by a 5.9 web line of web site 5 wells operating among the most energetic operators in that basin, Civitas, Oxy and Chevron. So once more, we’ve got 9.6 stock wells in that deal 2.5 of that are [indiscernible] [located in these] CAPs and OGDPs, which provide you with line — you might have higher line of sight to exercise on these stock wells. So no, we’re enthusiastic about that.

Neal Dingmann

After which simply my second fast one on M&A. Particularly that possibly for you or Chris, simply questioning, we do not see close to such as you all do the deal circulation. Simply questioning primarily based on what you are seeing on the market, is mineral deal circulation nonetheless as energetic as ever? And because the worth remains to be — once more, clearly, a improbable worth in your DJ. So I am simply questioning are there rational different form of priced belongings on the market that you just probably see?

Chris Conoscenti

That is the important thing query for 2024, Neal. The optimistic signal we noticed in This autumn had been broad public sale processes failing and we wish to see that as a result of, primary, we’re actually by no means profitable at broad public sale processes. However quantity two, what it does is it tends to reset expectations from sellers. And so to see a number of broad actions fail within the fourth quarter is de facto rising for 2024. As I stated, we, as an organization in our historical past, have executed on in all probability lower than 10 of our 193 plus acquisitions by means of broad public sale processes. Most of what we do is thru negotiated transactions like we did with the DJ Basin transaction that we introduced this morning. We are likely to have extra success partaking with folks immediately and discovering options, and people conversations take years to evolve [Technical Difficulty] precisely when these will culminate in a transaction, however we’ve got a number of conversations like that ongoing proper now and we’re inspired for 2024.

Operator

The following query on the road is from Derrick Whitfield from Stifel.

Derrick Whitfield

Congrats in your DJ acquisition and return of capital initiatives. For my first query, I wished to focus in your 2024 steerage. As outlined your steerage implies upkeep degree exercise versus This autumn, whereas a number of web site exercise implies progress. How would you body your manufacturing trajectory for 2024, are you guys anticipating heavier [TILs] [indiscernible] within the second half primarily based on Carrie’s commentary?

Chris Conoscenti

So I am going to take that first, and Carrie be at liberty to complement with any feedback you might have. So once we have a look at the road of sight wells, as I stated, clearly, is at file ranges for the corporate. However the secret’s going to be simply conversion to [TIL] [Technical Difficulty] and what we noticed within the fourth quarter about 7.7 web wells turned in line, down a little bit bit from the final 12 months. As I stated, exercise on our belongings rebounded by means of the fourth quarter and we count on that to begin to roll by means of the primary a part of this 12 months. We’ve got a line of sight on a number of wells, for instance, coming in line simply in March right here. So there are particular cases the place we’ve got some potential to mannequin in particular timing on particular curiosity that we’ve got. However for essentially the most half, we have a look at 2024 and it is actually [Technical Difficulty] you have heard on the decision protecting on the place operators actually guiding to flattish to low single digit sort of progress in Permian. And since our asset covers about 35% of the Permian Basin, you must count on our belongings to reflect fairly intently what the Texas aspect of the Permian Basin does. And that isn’t rising at double digits nevertheless it’s nonetheless exhibiting good sustainable manufacturing and a few in circumstances some modest progress and that is what we count on ours to do as effectively.

Carrie Osicka

And Chris, the one different factor I am going to add to that — I might simply add one different factor. The one different nuance to recollect to you is simply web growth on our asset can have an effect on annual manufacturing charges. Whereas exercise could be fixed, it simply is determined by which NRIs get developed.

Derrick Whitfield

And possibly it a little bit bit long term in perspective, given the appreciable M&A we have witnessed throughout the Permian during the last six months with Exxon, Oxy and Diamondback. Needed to ask in your ideas on the web affect you may have on your small business and tempo of growth as these transactions had been Texas heavy?

Chris Conoscenti

The operator combine for our enterprise has actually modified during the last a number of years if you happen to simply rewind the clock a few years, you’d have seen [indiscernible] [Cowen], PDC, [Novel], Pioneer, Anadarko in our prime 10, and now it is constructing with Exxon, Chevron, Oxy, Apache, Diamondback and others who’ve been energetic within the consolidation of the enterprise. And actually what it is carried out is it is the impact of placing our minerals being operated within the arms of larger, higher capitalized operators who’ve extra sustainable packages by means of cycle. So I believe affect primary is barely much less volatility in exercise over time. And what we hope too is by way of engagement with operators, hopefully altering the dialog between operator and mineral proprietor over time as we’ve got fewer operators to handle these relationships with would hopefully simply have a extra direct relationship with them and get higher info as we develop.

Derrick Whitfield

Chris, if I may ask yet another. Simply with reference to the 200 million share repurchase program. How would you examine the worth of shopping for your inventory at the moment versus the worth of M&A alternatives which might be accessible or accessible within the foreseeable future?

Chris Conoscenti

It is an train we undergo with each single acquisition analysis we do. We have a look at the sensitivities of the potential return of the acquisitions we’re evaluating and examine it in opposition to our inventory. And so ought to we make the acquisition we’re considering or ought to we make the acquisition of our personal minerals and purchase our personal inventory. And so it is an evaluation we have carried out all through time on our enterprise. And we have a look at it now and say it’s a very compelling alternative primarily based on the dynamics available in the market at the moment and in addition with the outlook we’ve got going ahead. The opposite nuance right here is that this isn’t an both/or determination. We will have compelling acquisition alternatives in entrance of us and we are able to execute on share repurchases and purchase our personal inventory successfully shopping for our personal minerals, as a result of the return of capital [burn] [indiscernible] buyback is occurring throughout the framework of a 65% return of capital to our shareholders.

Operator

[Operator Instructions] Our subsequent query is from Noel Parks from Tuohy Brothers Funding.

Noel Parks

I simply had a few issues. One factor I used to be questioning about since there may be — oil costs have not been too unhealthy recently, however there does appear to be some macro uncertainty and determination on the market about what the 12 months goes to appear to be. I simply questioned by way of visibility on exercise ranges, are you seeing any oil hedging developments amongst your operators both form of uniformly throughout the operators? Or I used to be questioning if you happen to’re seeing any divergences totally different flows form of take a distinct purchase on the apples, you are attempting to determine whether or not to guard in opposition to draw back or attempt to open themselves up extra to a possible upside?

Chris Conoscenti

[Technical Difficulty] [different] operators. Usually, it is pushed by firm dimension and leverage. Simply broadly talking, you may see smaller corporations and corporations with extra leverage and bigger capital packages to [protract], being extra energetic with hedging. And the vital nuance to recollect is that the hedging program that the operators have interaction in had no affect on the realized costs for Sitio. So we get the costs on the supply level than the operator will get any form of monetary hedging they do on their aspect is for his or her account, and we’ve got the power to hedge on our belongings onward down.

Noel Parks

I suppose, I am simply being — as you have mentioned, we have had consolidation happening within the Permian, totally different belongings heading into totally different arms. And I suppose I am within the means of attempting to form of image simply what the basin seems to be like by way of simply operator conduct going ahead. And I suppose I am enthusiastic about the associated fee aspect and capital self-discipline. We actually have not seen anyone actually going loopy with reactivity both with a longtime footprint or the businesses which have been consolidating. And so I suppose I am curious [indiscernible], you get a sense from operators about what they consider the inflation outlook. Simply additionally curious if there’s simply any developments you are listening to and whether or not that is affecting of us’ aggressiveness in any respect?

Chris Conoscenti

The couple of developments we’re seeing. One is simply continued march in direction of larger efficiencies for the operators, they proceed to get higher and extra value environment friendly at what they do. And so I believe even if you happen to see operators announce a slight lower in rig counts put up acquisition, oftentimes that is compensated for and even — and probably elevated by effectivity and acquire and apply all through a bigger program. And I make a comparability again to historical past, there’s good M&A and unhealthy M&A for Sitio once we have a look at our operator base. The unhealthy M&A for us is the place two of our bigger operators get collectively and slash the mixed rig program to a fraction of what it was for both a kind of corporations standalone, and that is what occurred with, for instance, with Oxy and Anadarko a number of years in the past. The kind of M&A is occurring at the moment is kind of good for us the place you might have wholesome corporations getting collectively, simply changing into larger, helps extra environment friendly and extra capital environment friendly. So for us as a mineral proprietor, we wish to see the kind of consolidation we’re seeing at the moment and we’re inspired by it for our enterprise.

Operator

[Operator Instructions] It seems we’ve got no additional questions. So we are going to conclude the decision now. Thanks in your time at the moment. It’s possible you’ll now disconnect your traces, and revel in the remainder of your day.