Q2 2024 Sitio Royalties Corp Earnings Call

Operator: Hello everyone, and a warm welcome to the Sitio Royalties second quarter 2024 earnings call. My name is Emily, and I'll be coordinating your call today. After the presentation, you will have the opportunity to ask any questions, which you can do by pressing start followed by the number one on your telephone keypad. I will now turn the call over to our host, Ross Wong, Vice President of Investor Relations and Finance. Please go ahead. Thanks, operator. And good morning, everyone.

Operator: Hello, everyone, and a warm welcome to the Sitio Royalty second quarter 2024 earning school.

hello everyone and a warm welcome to the city royalty second quarter two thousand and twenty four earnings school

Emily: My name is Emily, and I'll be coordinating your call today. After the presentation, you will have the opportunity to ask any questions, which you can do so by pressing Start, followed by the number one on your telephone keypad.

Emily: My name is Emily and I'll be coordinating your call today.

Emily: After the presentation you will have the opportunity to ask any questions which you can do so by pressing start followed by the number 1 on your telephone keypad.

Ross Wong: I will now turn the call over to our host, Ross Wong, Vice President of Investor Relations and Finance. Please gather ahead.

I will now turn the call over to our host, Ross Wong, Vice President of Investor Relations and Finance. Please go ahead. Thanks, Operator. And good morning, everyone.

Ross Wong: The next operator, and good morning, everyone. Welcome to the Sitio Royalty second quarter 2024 earning school. If you don't already have a copy of our recent press release and updated investor presentation, please visit our website at www.cityo.com, where you will find them in our Investigative Relations section.

Ross Wong: Welcome to the Sitio Royalties second quarter 2024 earnings call. If you don't already have a copy of a recent press release and an updated investor presentation, please visit our website at www.sitio.com, or you will find them in our Regressive Relations section. With me today to discuss second quarter 2024 financial and operating results is Chris Conosenti, our Chief Executive Officer, Carrie Osicka, our Chief Financial Officer, and other members of our executive leadership. Before we start, I'd like to remind you that our discussion today may contain forward-looking statements and non-GAAP measures. Please refer to our earnings press release, investor presentation, and publicly filed documents for traditional information regarding such forward-looking statements and non- And with that, I'll turn the call over to Chris.

Ross Wong: Welcome to the Sitio Royalties second quarter 2024 earnings call.

Speaker Change: If you don't already have a copy of our recent press release and updated investor presentation

Operator: Please visit our website at www.sitio.com, or you will find them in our Resting Relations section. Before we start, I'd like to remind you that our discussion today may contain forward-looking statements and non-GAAP measures. Please refer to publicly filed documents for additional information regarding such forward-looking statements and non-GAAP measures. And with that, I'll turn the call over to Chris.

Please visit our website at www.sitio.com or you will find them in our Registered Relations section.

Ross Wong: With me today to discuss second quarter 2024 financial and operating results, is Chris Conoscenti, our chief executive officer, Carrie Osicka, our chief financial officer, and other members of our executive leadership team. Before we start, I'd like to remind you that our discussion today may contain four looking statements and non-gat measures. Please refer to our earnings press release, investor presentation, and publicly filed documents for additional information regarding such four looking statements and non-gat measures.

Speaker Change: With me today to discuss second quarter 2024 financial and operating results is Chris Conoscenti, our Chief Executive Officer, Carrie Osicka, our Chief Financial Officer, and other members of our executive leadership team.

Christopher Conoscenti: In the second quarter, production from our mineral and royalty interests reached record high volumes of 39,231 BOEs per day, up 3% compared to pro forma first quarter volumes, which included a full quarter of production from the previously announced TJ Basin acquisition. As you can see from the maps in our earnings presentation, the acquisitions we closed in the second quarter materially enhanced our position in the DJ Basin and expanded our footprint on the New Mexico side of the Delaware Basin, an area that has seen robust operator activity in recent years.

Speaker Change: Before we start, I'd like to remind you that our discussion today may contain forelooking statements and non- GAAP measures .

Please refer to our earnings press release, investor presentation, and publicly filed documents for additional information regarding such forward-looking statements and non-GAAP measures.

Chris Conoscenti: And with that, I will turn the call over to Chris.

Christopher Conoscenti: Thanks, Ross. Good morning, and thank you for joining Sitio's second quarter 2024 earnings call. The momentum from our strong start to the year continued in the second quarter as the company set several operational and financial records, closed on acquisitions of approximately 15,000 net royalty acres, and announced a return of capital of 71 cents per share, a 45 percent increase relative to the first quarter. In the second quarter, production from our mineral and royalty interests reached record high volumes of 39,231 BOEs per day, up 3% compared to pro forma first quarter volumes Several other production milestones were also achieved, with an all-time oil production high of 19,747 barrels per day and record Delaware Basin and Eagleford production of 20,991 BOEs per day and 4,061 BOEs per day, respectively.

Chris Conoscenti: Thanks, Ross. Good morning, and thank you for joining Sitio's second quarter 2024 earning school. The momentum from our strong start to the year continued in the second quarter. As the company set several operational and financial records, closed on acquisitions of approximately 15,000 net royalty acres, and announced return of capital of 71 cents per share, a 45% increase relative to the first quarter. In the second quarter, production from our mineral and royalty interests reached record high volumes of 39,231 B.O. East per day, up 3% compared to pro forma first quarter volumes, which included a full quarter of production from the previously announced DJ Basin acquisition.

Chris: and with that i'll turn the call over to chris

Chris Conoscenti: Thanks, Ross. Good morning, and thank you for joining Sitio's second quarter 2024 earnings call.

Chris Conoscenti: The momentum from our strong start to the year continued in the second quarter as the company set several operational and financial records, closed on acquisitions of approximately 15,000 net royalty acres,

Chris Conoscenti: and announced return of capital of $0.71 per share, a 45% increase relative to the first quarter.

Speaker Change: In the second quarter, production from our mineral and royalty interests reached record high volumes of 39,231 BOEs per day, up 3% compared to pro forma first quarter volumes, which included a full quarter of production from the previously announced TJ Basin acquisition.

Chris Conoscenti: Several other production milestones were also achieved, with an all time oil production high of 19,747 barrels per day and record Delaware Basin and Eagle Ferd production of 20,991 B.O. East per day and 4,061 B.O. East per day respectively. These impressive operational results benefited from the flush production from 14.3 pro forma net wells turn in line in the first quarter and 8.5 net wells that commence production in the second quarter, which was 6% above our 2023 quarterly average. The majority of second quarter operator activity came from the Permian and DJ Basin, which accounted for approximately 94% of all net turn-in-line wells.

Chris Conoscenti: Several other production milestones were also achieved, with an all-time oil production high of 19,747 barrels per day and record Delaware Basin and Eagleford production of 20,991 BOEs per day and 4,061 BOEs per day, respectively.

Christopher Conoscenti: These impressive operational results benefited from the flush production from 14.3 Proforma net wells turned in line in the first quarter and 8.5 net wells that commenced production in the second quarter, which was 6% above our 2023 quarterly average. The majority of second-quarter operator activity came from the Permian and DJ basins, which accounted for approximately 94% of all net turn-in-line wells. As of June 30th, we had 44.1 net linosite wells on our acreage, which included 25 net spuds and 19.1 net permits.

Emily: Hello, everyone, and a warm welcome to the Sitio Royalty Second Quarter 2024 Earning School. My name is Emily, and I'll be coordinating your call today. After the presentation, you will have the opportunity to ask any questions which you can do so by pressing Start, followed by the number one on your telephone keypad.

Chris Conoscenti: these impressive operational results benefited from the flush production from fourteen point three performance net wells turn in line in the first quarter and eight point five net wells that commmenced production in the second quarter which was six percent above our two thousand and twenty three quarterly average

Ross Wong: I will now turn the call over to our host, Ross Wong, Vice President of Investor Relations and Finance. Please gather ahead.

Chris Conoscenti: the majority of second quarter operator activity came from the permian and dj basins which accounted for approximately ninety-four percent of all net turn in line wells

Ross Wong: The next operator, and good morning, everyone. Welcome to the Sitio Royalty Second Quarter 2024 Earning School. If you don't already have a copy of our recent press release and updated investor presentation, please visit our website at www.cityo.com, where you will find them in our investigative relations section.

Chris Conoscenti: As of June 30, we had 44.1 net line of sight wells on our acreage, which included 25 net spuds in 19.1 net permits. During the second quarter, we evaluated dozens of acquisition opportunities, totaling more than 150,000 NRAs in aggregate. The minerals AMD market remains competitive, and we're still seeing many minerals deals of all sizes transact at prices that don't meet our underwriting criteria. Despite that market dynamic, we continue to identify and successfully close multiple transactions each quarter, which demonstrates the benefit of our ability to invest capital in assets that are in different basins and are operated by a diverse set of EMP companies.

Chris Conoscenti: As of June 30th, we had 44.1 net linosite wells on our acreage, which included 25 net spuds and 19.1 net permits.

Christopher Conoscenti: During the second quarter, we evaluated dozens of acquisition opportunities, totaling more than 150,000 NRAs in aggregate. The minerals AMD market remains competitive, and we're still seeing many mineral deals of all sizes transact at prices that don't meet our underwriting criteria. Despite that market dynamic, we continue to identify and successfully close multiple transactions each quarter, which demonstrates the benefit of our ability to invest capital in assets that are in different basins and are operated by a diverse set of E&P companies.

Chris Conoscenti: During the second quarter, we evaluated dozens of acquisition opportunities, totaling more than 150,000 NRAs in aggregate.

Ross Wong: With me today to discuss Second Quarter 2024 financial and operating results, is Chris Conoscenti, our chief executive officer, Carrie Osicka, our chief financial officer, and other members of our executive leadership team. Before we start, I'd like to remind you that our discussion today may contain four looking statements and non-gat measures. Please refer to our earnings press release, investor presentation, and publicly filed documents for additional information regarding such four looking statements and non-gat measures.

Chris Conoscenti: the minerals andd market remains competitive and we're still seeing many mineral deals of all sizes transactve prices that don't meet our underwriting criteria

Chris Conoscenti: despite that market dynamic we continue to identify and successfully close multiple transactions each quarter which demonstrates the benefit of our ability to invest capital in assets that are in different basins and are operated by a diverse set of emp companies

Chris Conoscenti: After closing the previously announced DJ Basin acquisition in early April, we closed another six acquisitions during the quarter for an aggregate purchase price of $38.5 million. These six acquisitions added over 2,100 NRAs to our portfolio, of which approximately 61% are in the Permian Basin and the remainder are in the DJ Basin. As you can see from the maps in our earnings presentation, the acquisitions we close in the second quarter materially enhanced our position in the DJ Basin and expanded our footprint on the New Mexico side of the Delaware Basin, an area that has seen robust operator activity in recent years.

Christopher Conoscenti: After closing the previously announced DJ Basin acquisition in early April, we closed another six acquisitions during the quarter for an aggregate purchase price of $38.5 million. These six acquisitions added over 2,100 NRAs to our portfolio, of which approximately 61% are in the Permian Basin, and the remainder are in the DJ Basin. As you can see from the maps in our earnings presentation, the acquisitions we closed in the second quarter materially enhanced our position in the DJ Basin and expanded our footprint on the New Mexico side of the Delaware Basin, an area that has seen robust operator activity in recent years.

Chris Conoscenti: After closing the previously announced DJ Basin acquisition in early April , we closed another six acquisitions during the quarter for an aggregate purchase price of $38.5 million.

Chris Conoscenti: And with that, I will turn the call over to Chris. Thanks, Ross.

Chris Conoscenti: Good morning, and thank you for joining Sitio's Second Quarter 2024 Earning School. The momentum from our strong start to the year continued in the second quarter. As the company set several operational and financial records, closed on acquisitions of approximately 15,000 net royalty acres, and announced return of capital of 71 cents per share, a 45% increase relative to the first quarter. In the second quarter, production from our mineral and royalty interests reached record high volumes of 39,231 B.O.

Chris Conoscenti: These six acquisitions added over 2,100 NRAs to our portfolio, of which approximately 61% are in the Permian Basin and the remainder are in the DJ Basin.

Chris Conoscenti: as you can see from the maps in our earnings presentation the acquisitions we closed in the second quarter materially enhanced our position in the d basin and expanded our footprint on the new mexico side of the delaware basin and area that has seen robust operate activity in recent years

Chris Conoscenti: While we have generally focused on larger acquisition opportunities since becoming publicly traded in June of 2022, ultimately our M&A decisions are driven by risk-adjusted returns regardless of the ill size. In addition to our strong production volumes and continued success on the acquisitions front, we are raising our full year 2024 Performa Average Daily Production Guidance range to $36,000 to $38,000 B.O.E. per day, which represents an increase of 500 B.O.E. per day at the midpoint. Approximately 200 B.O.E. per day of this increase is from the sixth small acquisitions we completed in 2Q, and the remaining 300 B.O.E.

Christopher Conoscenti: While we have generally focused on larger acquisition opportunities since becoming publicly traded in June of 2022, ultimately, our M&A decisions are driven by risk-adjusted returns regardless of deal size. In addition to our strong production volumes and continued success on the acquisitions front, we are raising our full year 2024 pro forma average daily production guidance range to 36,000 to 38,000 BOEs per day, which represents an increase of 500 BOEs per day at the midpoint.

Chris Conoscenti: While we have generally focused on larger acquisition opportunities since becoming publicly traded in June of 2022, ultimately, our M&A decisions are driven by risk-adjusted returns regardless of deal size.

Chris Conoscenti: East per day, up 3% compared to pro forma first quarter volumes, which included a full quarter of production from the previously announced DJ basin acquisition. Several other production milestones were also achieved with an all time oil production high of 19,747 barrels per day and record Delaware basin and Eagle Ferd production of 20,991 B.O. East per day and 4,061 B.O. East per day respectively. These impressive operational results benefited from the flush production from 14.3 pro forma net wells turn in line in the first quarter and 8.5 net wells that commence production in the second quarter, which was 6% above our 2023 quarterly average.

Chris Conoscenti: In addition to our strong production volumes and continued success on the acquisitions front, we are raising our full year 2024 Proforma Average Daily Production Guidance.

Chris Conoscenti: range to 36,000 to 38,000 BOEs per day, which represents an increase of 500 BOEs per day at the midpoint.

Christopher Conoscenti: Approximately 200 BOEs per day of this increase is from the six small acquisitions we completed in 2Qube, and the remaining 300 BOEs per day is due to an increase in organic activity relative to our previous guidance. Now I'll turn the call over to Carrie to provide an update on quarterly financial results, return of capital, and cash tax guidance.

Chris Conoscenti: approximately two hundred bee per day of this increase is from the six small acquisitions we completed in two q and the remaining three hundred boe per day is due to an increase in organic activity relative to our previous guidance

Chris Conoscenti: per day is due to an increase in organic activity relative to our previous guidance.

Christopher Conoscenti: Approximately 200 BOE per day of this increase is from the six small acquisitions we completed in 2Q, and the remaining 300 BOE per day is due to an increase in organic activity relative to our previous guidance. Now I'll turn the call over to Carrie to provide an update on quarterly financial results, return of capital, and cash tax guidance.

Carrie Osicka: Now I'll turn the call over to Kerry to provide an update on quarterly financial results, return of capital, and cash tax guidance. Thanks, Chris, and good morning, everyone. Didio-generated record-high adjusted EBDA of $161.6 million in discretionary cash flow of $129.3 million in the second quarter, driven by historic high production and hedge realized oil prices of $80.21 per barrel, an increase of 3% over first quarter prices. Our board approved our return at capital of 71 cents per share for the second quarter, comprised of 30 cents per share, cash dividend, and stock repurchases equating to 41 cents per share.

Chris Conoscenti: The majority of second quarter operator activity came from the Permian and DJ basin, which accounted for approximately 94% of all net turn in line wells. As of June 30, we had 44.1 net line of sight wells on our acreage, which included 25 net spuds in 19.1 net permits. During the second quarter, we evaluated dozens of acquisition opportunities, totaling more than 150,000 NRAs in aggregate. The minerals AMD market remains competitive, and we're still seeing many minerals deals of all sizes transact at prices that don't meet our underwriting criteria.

Chris Conoscenti: Now I'll turn the call over to Carrie to provide an update on quarterly financial results, return of capital, and cash tax guidance.

Carrie Osicka: Thanks, Chris. And good morning, everyone.

Carrie Osicka: thanks chris and good morning everyone

Carrie Osicka: Sitio generated record-high adjusted EBITDA of $151.6 million and discretionary cash flow of $129.3 million in the second quarter.

Carrie Osicka: driven by historic high production and hedged real life oil prices of $80.21 per barrel, an increase of 3% over first quarter prices.

Carrie Osicka: Video generated record high adjusted EBITDA of $151.6 million and discretionary cash flow of $129.3 million in the second quarter, driven by historic high production and hedged real life oil prices of $80.21 per barrel, an increase of 3% over first quarter prices. Our board approved our return of capital of $0.71 per share for the second quarter, comprised of $0.30 per share cash dividend and stock repurchases equating to $0.41 per share. This represents a payout ratio of 85% of DCF and is higher than our minimum 65% of DCF due to the previously disclosed privately negotiated repurchase of 2 million shares for approximately $50 million.

Speaker Change: Our board approved our return of capital of $0.71 per share for the second quarter, comprised of $0.30 per share cash dividend and stock repurchases equating to $0.41 per share.

Chris Conoscenti: Despite that market dynamic, we continue to identify and successfully close multiple transactions each quarter, which demonstrates the benefit of our ability to invest capital in assets that are in different basins and are operated by a diverse set of EMP companies. After closing the previously announced DJ Basin Acquisition in early April, we closed another six acquisitions during the quarter for an aggregate purchase price of $38.5 million. These six acquisitions added over 2,100 NRAs to our portfolio, of which approximately 61% are in the Permian Basin and the remainder are in the DJ Basin.

Carrie Osicka: This represents a payout ratio of 85% of D.C.S. and is higher than our minimum 65% of D.C.S. Due to the previously disclosed, privately negotiated repurchase of 2 million shares for approximately $50 million. In addition to this privately negotiated repurchase, we also bought back over 500,000 shares in the open market during the quarter. Since we started our buyback program in March, we repurchased 3.1 million shares as of June 30th, or 2% of shares outstanding prior to starting the repurchase program. At the end of the second quarter, we added approximately $124 million remaining of our $200 million share repurchase program.

Chris Conoscenti: This represents a payout ratio of 85% of DCFs, and is higher than our minimum 65% of DCFs due to the previously disclosed privately negotiated repurchase of 2 million shares for approximately $50 million.

Carrie Osicka: In addition to this privately negotiated repurchase, we also bought back over 500,000 shares in the open market during the quarter. Since we started our buyback program in March, we have repurchased 3.1 million shares as of June 30th, or 2% of the shares outstanding prior to starting the repurchase program. At the end of the second quarter, we had approximately $124 remaining in our $200 million share repurchase program. In addition to raising our guidance for full year 2024 pro forma production volumes, we are also decreasing our guidance for cash taxes to a range of $9 to $15 million, which is a $21.5 million decrease at the midpoint to reflect our latest analysis from our tax experts. That concludes our prepared remarks. Operator, please open up the call for questions.

Chris Conoscenti: In addition to this privately negotiated repurchase, we also bought back over 500,000 shares in the open market during the quarter.

Chris Conoscenti: Since we started our buyback program in March, we repurchased 3.1 million shares as of June 30th, or 2% of shares outstanding prior to starting the repurchase program.

Chris Conoscenti: As you can see from the maps in our earnings presentation, the acquisitions we close in the second quarter materially enhanced our position in the DJ Basin and expanded our footprint on the New Mexico side of the Delaware Basin, an area that has seen robust operator activity in recent years. While we have generally focused on larger acquisition opportunities since becoming publicly traded in June of 2022, ultimately our M&A decisions are driven by risk adjusted returns regardless of the ill size.

Chris Conoscenti: At the end of the second quarter, we had approximately $124 million remaining of our $200 million share repurchase program.

Carrie Osicka: In addition to raising our guidance for full-year 2024 pro-former production volumes, we are also decreasing our guidance for cash taxes to a range of $9 million to $15 million, which is a $21.5 million decrease at the midpoint to reflect our latest analysis from our tax experts.

Speaker Change: in addition to raising our guidance for full year two thousand and twenty four forma production volumes we are also decreasingour guidance for cash taxes to a range of nine to fifteen million dollars which is a twenty one point five million dollars decrease at the midpoint to reflect our latest analysis from our tax experts

Operator: Thank you. As a reminder, if you would like to ask a question today, please do so now by pressing start followed by the number one on your telephone keypad. Our first question today comes from Leo Dingmann with Tours Securities. Please go ahead.

Operator: That concludes our prepared remarks.

Operator: Operator, please open up the call for questions. Thank you. As a reminder, if you would like to ask a question today, please do so now by pressing. Our first question today comes from Leo Dingmann with Pure Securities.

Speaker Change: That concludes our prepared remarks. Operator, please open up the call for questions.

Chris Conoscenti: In addition to our strong production volumes and continued success on the acquisitions front, we are raising our full year 2024 Performa Average Daily Production Guidance range to $36,000 to $38,000 B.O.E, per day, which represents an increase of 500 B.O.E, per day at the midpoint. Approximately 200 B.O.E, per day of this increase is from the sixth small acquisitions we completed in 2Q, and the remaining 300 B.O.E, per day is due to an increase in organic activity relative to our previous guidance.

Carrie: Thank you. As a reminder, if you would like to ask a question today, please do so now by pressing start followed by the number one on your telephone keypad.

Operator: Our first question today comes from Leo Dingmann with Truist Securities. Please go ahead.

Leo Dingmann: Please go ahead. I'm on against things for the time.

Speaker Change: our first question today comes from lier dimman with juror securities please go ahead

Unnamed Speaker: I'm going to get sick for the time my first time.

Leo Dingmann: I'm going to get sick for the time my first Chris is on your activities specifically. I'm just wondering, and I think I know the answer, but I'm just wondering, given the increased commodity volatility we've seen in the last month or so, have you all seen anything different from operators, notably just on activity? And I guess another way to ask that is your line of sight, well, still as strong as I've

Chris Conoscenti: My first question, Chris, is on your activities mystically. I'm just wondering; I think I know the answer. I'm just wondering, given the increased commodity volatility we've seen in the last month or so. Have you seen anything different from operators, notably just on activity? And I guess another one asked that is your line of sight? Well, still as strong as ever.

lier dimman: i'm only gu think for the time my first question

Chris Conoscenti: Chris is on your activity specifically. I'm just wondering, and I think I know the answer, but I'm just wondering, given the increased commodity volatility we've seen in, you know, the last month or so, have you all seen anything different from operators? Notably,

Carrie Osicka: Now I'll turn the call over to Kerry to provide an update on quarterly financial results, return of capital, and cash tax guidance. Thanks, Chris, and good morning, everyone. Didio-generated record-high adjusted EBDA of $161.6 million in discretionary cash flow of $129.3 million in the second quarter, driven by historic high production and hedge realized oil prices of $80.21 per barrel, an increase of 3% over first quarter prices.

Speaker Change: just on activity, and I guess another way to ask that is your line of sight, well, still as strong as ever.

Christopher Conoscenti: Good morning, Neal. Thanks for the question.

Chris Conoscenti: Good morning, Neil. Thanks for the question. Short answer is no; we haven't seen any meaningful change in activity. We continue to see operators achieving greater, greater, excuse me, efficiency. So what we're seeing is the operator is doing more with less. So the migration of that that's been the larger operator's hand has led to better operational efficiency. It's led to better, better footprint. Configuration so that there's more particular things and operators are able to draw on the bottles and enhance the completion design. So we are seeing sort of a flatish recount a flat downish crack through camp, but it is really meaningfully impacting the number of well getting turned in line, which tells us that operators continue to achieve.

Carrie: Good morning, Neal. Thanks for the question.

Christopher Conoscenti: The short answer is no. We haven't seen any meaningful change in activity. We continue to see operators. Achieving greater efficiency, so what we're seeing is operators doing more with less. So, the migration of assets into the larger operator's hands has led to better operational efficiency, it's led to a better footprint, and configuration so that there is more contiguous acreage, and operators are able to draw longer laterals and enhance completion design. So we are seeing sort of a flattish rig count, a flat and downish crack-through count, but it isn't really meaningfully impacting the number of wells getting turned in line, which tells us that operators are continuing to achieve the efficiencies that we like to see. Um, in terms of the flying sidewells, yeah, we do see a decrease in the net line of sidewells, but gross activity has remained

Speaker Change: short answer is no we haven't seen any meaningful change in activity we continue to see operators achieving greater efficiency so what we're seeing is the operators doing more with less

Unnamed Speaker: So the migration of assets into the larger operator's hands has led to better operational efficiency. It's led to a better footprint, and configuration so that there is more contiguous acreage, and operators are able to draw longer laterals and enhance completion design. So we are seeing sort of a flattish rig count, a flat and downish crack-through count, but it isn't really meaningfully impacting the number of wells getting turned in line, which tells us that operators are continuing to achieve the efficiencies that we like to see.

Carrie Osicka: Our board approved our return at capital of 71 cents per share for the second quarter, comprised of 30 cents per share, cash dividend, and stock repurchases equating to 41 cents per share. This represents a payout ratio of 85% of D.C.S, and is higher than our minimum 65% of D.C.S, due to the previously disclosed, privately negotiated repurchase of 2 million shares for approximately $50 million. In addition to this privately negotiated repurchase, we also bought back over 500,000 shares in the open market during the quarter.

Unnamed Speaker: So, the migration of assets into the larger operator's hands has led to better operational efficiency. It's led to better footprint.

Unnamed Speaker: configerations so that there's more continuous ator

Unnamed Speaker: and operators who are able to control water bottles and enhance completion design.

Unnamed Speaker: We are seeing sort of a flattish rig count, a flat and downish crack-through count, but it isn't really meaningfully impacting the number of whales getting turned in line, which tells us that operators are continuing to achieve the efficiencies that we'd like to see.

Chris Conoscenti: So we are seeing the efficiency that we like to see.

Carrie Osicka: Since we started our buyback program in March, we repurchased 3.1 million shares as of June 30th, or 2% of shares outstanding prior to starting the repurchase program. At the end of the second quarter, we added approximately $124 million remaining of our $200 million share repurchase program.

Chris Conoscenti: In terms of the site, well, yeah, we did see a decrease in the net line side well, but growth activity has remained relatively constant.

Unnamed Speaker: and

Speaker Change: In terms of the line-of-sight wells, yeah, we do see a decrease in the net line-of-sight wells, but gross activity has remained relatively constant.

Leo Dingmann: Great details.

Christopher Conoscenti: Great details. And my second question is just on M&A. Just wondering if there's any one area that's, you know, more, more active right now than others? Thank you. The most active areas for us continue to be the Permian Basin.

Chris Conoscenti: And my second question, just on Ivane, just wondering what, you know, when you look at deals out there right now, is there any one area that's, you know, more active right now than others? Thank you.

Carrie Osicka: In addition to raising our guidance for full-year 2024 pro-former production volumes, we are also decreasing our guidance for cash taxes to a range of $9 million to $15 million, which is a $21.5 million decrease at the midpoint to reflect our latest analysis from our tax experts.

Speaker Change: Great details. And my second question is just on M&A. Just wondering what, you know, when you look at deals out there right now, is there any one area that's, you know, more active right now than others? Thank you.

Chris Conoscenti: The most active areas for us continue to be that the Permian basin and the DJ basin. From a rate of return standpoint, we're seeing a factor of opportunities and both. I would say that the permeant basin is still very, very competitive. And there's still a large number of middle companies pursuing the same opportunity to have a differentiated approach relationship-driven approach. And in the DJ Basin, there's some really good collection of assets there that we've been able to acquire. And we're still seeing a lot of success on the ground there too.

Unnamed Speaker: The most active areas for us continue to be the Permian Basin and the DJ Basin. From a rate of return standpoint, we're seeing attractive opportunities in both. I would say that the Permian Basin is still very, very competitive, and there's still a large number of mineral companies pursuing the same opportunity. So you have to have a differentiated approach, a relationship-driven approach. And in the DJ Basin, there are some really good collections of assets there that we've been able to acquire. And we're still seeing a lot of success on the ground there, too.

Christopher Conoscenti: The most active areas for us continue to be the Permian Basin and the DJ Basin. From a rate of return standpoint, we're seeing attractive opportunities in both. I would say that the Permian Basin is still very, very competitive, and there's still a large number of mineral companies pursuing the same opportunities. So you have to have a differentiated approach, a relationship-driven approach. And in the DJ Basin, there are some really good collections of assets that we've been able to acquire. And we're still seeing a lot of success on the ground there, too.

Unnamed Speaker: The most active areas for us continue to be the Permian Basin.

Unnamed Speaker: The most active areas for us continue to be the Permian Basin and the DJ Basin.

Speaker: That concludes our prepared remarks.

Unnamed Speaker: From a rate of return standpoint, we're seeing attractive opportunities in both. I would say that the Permian Basin is still very, very competitive, and there's still a large number of mineral companies pursuing the same opportunities, so you have to have a differentiated approach, a relationship-driven approach.

Operator: Operator, please open up the call for questions. Thank you.

Leo Dingmann: As a reminder, if you would like to ask a question today, please do so now by pressing Our first question today comes from Leo Dingmann with pure securities. Please go ahead. I'm on against things for the time.

Unnamed Speaker: And in the DJ Basin, there's some really good collections of assets there that we've been able to acquire. And we're still seeing a lot of success on the ground there, too.

Chris Conoscenti: My first question, Chris is on your activities mystically. I'm just wondering, I think I know the answer, I'm just wondering, give them the increased commodity volatility we've seen in the last month or so. Have you seen anything different from operators, notably just on activity? And I guess another one asked that is your line of sight? Well, still as strong as ever.

Unnamed Speaker: Next question comes from no box with two brothers investment. Please go ahead. Hi, good morning. Just had a couple. I'm just wondering general terms as you look at what is available out there for deal flow. What's your current thinking on evaluation of gas optionality and I'm thinking in particular in the Permian. Sort of heading further south in the Delaware, for instance, where, well, the philosophic tend to be gasier and, you know, the sort of pro LNG narrative seem a little distant right now compared to just the tough time that.

Operator: Our next question comes from Noel Parks with Kiwi Brothers Investments.

Unnamed Speaker: Our next question comes from Noel Parks with Kiwi Brothers Investments. Please go ahead.

Noel Parks: Hi, good morning. I just had a couple.

Chris Conoscenti: Good morning, Neil. Thanks for the question. Short answer is no, we haven't seen any meaningful change in activity. We continue to see operators achieving greater, greater, excuse me, efficiency. So what we're seeing is the operator is doing more with less. So the migration of that that's been the larger operator's hand has led to better operational efficiency. It's led to better, better footprint. Configuration so that there's more particular things and operators are able to draw on the bottles and enhance the completion design.

Speaker Change: Hi, good morning. Just had a couple. I'm just wondering, general terms as you look at what is available out there for deal flow.

Speaker Change: What's your current thinking on valuation of gas optionality and I'm thinking in particular in the Permian

Unnamed Speaker: sort of heading further south in Delaware, for instance, where, well, the prolific tend to be gassier and, you know, the sort of pro-LNG narrative seems a little distant right now compared to just the tough time that the

Noel Parks: I'm just wondering, in general terms, as you look at what is available out there for deal flow, what's your current thinking on valuation of gas optionality? And I'm thinking in particular of the Permian sort of heading further south in the Delaware, for instance, where, well, the prolific tend to be gassier and, you know, the sort of pro-LNG narrative seems a little distant right now, compared to just the tough time that the gas markets have had. So I'm just curious about your current thoughts.

Unnamed Speaker: sort of heading further south in the Delaware, for instance, where, well, the prolific tend to be gassier and, you know, the sort of pro-LNG narrative...

Speaker Change: seems a little distant right now compared to just the tough time that the gas markets have had. So I'm just curious about your current thoughts.

Unnamed Speaker: The gas market that had some curious what your current thoughts. Thank you.

Christopher Conoscenti: Yeah, thanks for the question. We remain commodity agnostic and really returns-driven. So we're not opposed to acquiring more gas assets if we can do it at the right price, and as you noted, our assets have a fair amount of embedded gas within them, so it's not like we have to go to a pure gas basin to have gas exposure. We do have the virtue of associated gas with our existing assets, so we are not opposed to picking up more assets in the areas where we already have exposure, like the Southern Delaware Basin or the DJ Basin, and we're also not opposed to going to other places like Hainesville if the opportunity presented itself at an appropriate rate of return for us.

Chris Conoscenti: So we are seeing sort of a flatish recount a flat downish crack through camp, but it is really meaningfully impacting the number of well getting turned in line, which tells us that operators continue to achieve. So we are seeing the efficiency that we like to see.

Chris Conoscenti: Thanks for the question. We remain commodity agnostic and really return-driven. So, we're not opposed to acquiring more gas assets if we can do it at the right price. And as you know, our assets have a fair amount of embedded gas within them. So, it's not like we have to go to a pure gas basin to have gas exposure. We do have a virtue of the associated gas with our existing assets. So, we are not opposed to picking up more assets in the areas where we already have exposure, like the Southern Delta Basin or in the DJ Basin.

Speaker Change: Thanks for the question. We remain commodity agnostic and really returns driven, so we're not opposed to acquiring more gas assets if we can do it at the right price.

Speaker Change: And as you noted, our assets have a fair amount of embedded gas within them, so it's not like we have to go to a pure gas basin to have gas exposure. We do have it by virtue of the associated gas with our existing assets.

Chris Conoscenti: In terms of the site well, yeah, we did see a decrease in the net line side well, but growth activity has remained relatively constant. Great details.

Unnamed Speaker: we are not opposed to think more asseset in areas that we already have exposure like the sevendden delaware basin or in the gj basis and we'realso oppos to other place plan a h fill if the opportunity presented itself at the appropriate rate of return for us

Chris Conoscenti: And my second question just on Ivane, just wondering what, you know, when you look at deals out there right now, is there any one area that's, you know, more, more active right now than others? Thank you. The most active areas for us continue to be that the permeant basin and the DJ basin. From a rate of return standpoint, we're seeing a factor of opportunities and both. I would say that the permeant basin is still very, very competitive.

Chris Conoscenti: And we're also not opposed to going to other places like the Hingville, if the opportunity presented itself at the appropriate rate of return for us.

Unnamed Speaker: Great, fair enough. And also, as you mentioned a little bit earlier, just operators doing more with less and that general 10th of greater capital efficiency.

Christopher Conoscenti: Great, fair enough. And also, as you mentioned a little bit earlier, just operators doing more with less, and that general trend of greater capital efficiency. If that trend hadn't gone on for as long as it has, do you feel like operators pretty uniformly in your basin are sort of headed in the right direction with that? Or I wonder if, for instance, you're seeing much in the way of... Private operators, you know, are being more aggressive, ramping up production, potentially with an eye to a sale.

Speaker Change: great fair enough and also as i mentioned a little bit earlier just

Speaker Change: operators doing more with less and that general tend of greater sort of capital efficiency. And I just wondered if you had...

Chris Conoscenti: And there's still a large number of middle companies pursuing the same opportunity to have to have a differentiated approach relationship driven approach. And in the DJ basin, there's some really good collection of assets there that we've been able to acquire. And we're still seeing a lot of success on the ground there too.

Chris Conoscenti: And I just wondered if you had, if they're, you know, with that trend hasn't gone on as long as it has. Do you feel like operators pretty uniformly in your basin are sort of heading in the right direction with that, or I wonder if, for instance, you're seeing much in the way of private operators, you know, being more aggressive. That ramping up production, potentially within an eye to a sale, we've seen some very long held on the operated sides, very long held, PE based assets, that have a period of finally be transacting. And I just just wondering if you sort of see the ripple effects of that, in terms of what's on the market, what, you know, what people might be paying, and so forth.

Speaker Change: with that trend hasn't gone on as long as it has, do you feel like operators pretty uniformly in your basin are...

Unnamed Speaker: sort of headed in the right direction with that, or I wondered if, for instance, you're seeing much in the way of

Unnamed Speaker: Private operators being more aggressive, ramping up production, potentially with an eye to a sale. We've seen some very long-held assets on the operator side, some very long-held PE-based assets.

Noel Parks: Next question comes from no box with two brothers investment. Please go ahead.

Unnamed Speaker: private operators be more aggressive ramping up production potentially with an i a sale we've seen some very long held on the operated sides and very long held p -based assets

Christopher Conoscenti: We've seen some very long-held assets, on the operated side, some very long-held PE-based assets that have or appear to finally be transacting. And I was just wondering if you sort of see the ripple effects of that in terms of what's on the market, what people might be thinking of paying, and so forth.

Noel Parks: Hi, good morning. Just had a couple. I'm just wondering general terms as you look at what is available out there for deal flow. What's your current thinking on evaluation of gas optionality and I'm thinking in particular in the Permian. Sort of heading further south in the Delaware for instance, where well, the philosophic tend to be gasier and, you know, the sort of pro LNG narrative seem to seem a little distant right now compared to just the tough time that. The gas market that had some curious what your current thoughts. Thank you.

Speaker Change: that have curod of finally d transacting and i just just just wondering if you sort do that rival effects of that in terms of within what's on the market what you know what people might be you re paying and so forth

Chris Conoscenti: Yeah, the, the trend that we see is that with these assets moving the larger operator hands, we're seeing just less volatility in capital programs. The larger operators tend to be less influenced by a $5 or $10 move in the price of oil; they tend to set their capital plans with a, a lower long range price second mind and they don't get rattled by, you know, by some volatility that they can be short term. So we like that stability in the operating base as in our data devolved over time, you've seen our operator next shift from a lot of private, a lot of Smith kept names to really the largest of the large from Chevron, Exxon, Oxy, ConocoPhillips, Diamondback, etc.

Unnamed Speaker: Yeah, the trend that we see is that with these assets moving to larger operator hands, we're seeing just less volatility in the capital programs. The larger operators tend to be less influenced by a $5 or $10 move in the price of oil; they tend to set their capital plans with a lower long-range price deck in mind, and they don't get rattled by it.

Christopher Conoscenti: Yeah, the trend that we see is that with these assets moving to larger operator hands, we're seeing just less volatility in the capital programs. The larger operators tend to be less influenced by a $5 or $10 move in the price of oil; they tend to set their capital plans with a lower long-range price deck in mind, and they don't get rattled by some volatility that can be short-term. So we like that stability in the operator base.

Unnamed Speaker: Yeah, the

Unnamed Speaker: Great. Thanks a lot.

Unnamed Speaker: The trend that we see is that with these assets moving to larger operator hands, we're seeing just less volatility in the capital programs.

Unnamed Speaker: The larger operators tend to be less influenced by a $5 or $10 move in the price of oil. They tend to set their capital plans with a lower long-range price deck in mind, and they don't get rattled by...

Chris Conoscenti: Thanks for the question. We remain commodity agnostic and really return driven. So, we're not opposed to acquiring more gas assets if we can do it at the right price. And as you know, our assets have a fair amount of embedded gas within them. So, it's not like we have to go to a pure gas basin to have gas exposure. We do have a virtue of the associated gas with our existing assets.

Speaker Change: by some volatility that can be short term. So we like that stability in the operator base as our assets evolve over time, you've seen our...

Christopher Conoscenti: As our asset has evolved over time, you've seen our operator mix shift from a lot of private, a lot of Smithcat names to really the largest of the large from Chevron, Exxon, Oxy, ConocoPhillips, Diamondback, et cetera. So those are folks that don't whipsaw around their capital plans with the commodity. To address your question about the mix of private versus public or large operators, the phenomenon you described still exists where you have some of these small private equity-backed companies that are ramping up production to build a production profile so that they are capable of selling to a public independent. There's just far fewer of those left. So while we do still see that, it's just a very, very small fraction of our portfolio today.

Christopher Conoscenti: Great, thanks a lot.

Speaker Change: Operator makes a shift from a lot of private, a lot of smithcat names to really the largest of the large from Chevron, Exxon, Oxy, ConocoPhillips, Diamondback, etc.

Chris Conoscenti: So, we are not opposed to picking up more assets in the areas where we already have exposure, like the Southern Delta basin or in the DJ basin. And we're also not opposed to going to other places like the Hingville, if the opportunity presented itself at the appropriate rate of return for us.

Chris Conoscenti: So those are folks that don't whistle around their capital plans with the commodity to address your question about the mix of private versus public or large operators.

Unnamed Speaker: So those are folks that don't whistle around their capital plans with the commodity.

Unnamed Speaker: to address your question about the mix of private versus public or large operators.

Unnamed Speaker: The phenomenon you described feeling this where you have some of these small private equity back companies that are ramping up production to build a production profiles and they are capable of selling to the public independent, there's just far fewer those left. So, while we do still see that, it's just a very, very small fraction of our portfolio today. Great.

Speaker Change: The phenomenon you described still exists where you have some of these small private equity-backed companies that are ramping up production to build a production profile so that they are capable of selling to a public independent. There's just far fewer of those left.

Chris Conoscenti: Great fair enough. And also, as you mentioned a little bit earlier, just operators doing more with less and that general 10th of greater capital efficiency. And I just wondered if you had, if they're, you know, with that trend hasn't gone on as long as it has. Do you feel like operators pretty uniformly in your basin are sort of heading in the right direction with that or I wonder if, for instance, you're seeing much in the way of private operators, you know, being more aggressive.

Speaker Change: So while we do still see that, it's just a very, very small fraction of our portfolio today.

Unnamed Speaker: Thanks a lot. Thank you.

Speaker Change: great thank ful lot

Tim Redspan: The next question comes from Tim Redspan with KeyBank. Please go ahead.

Operator: The next question comes from Tim Redfan with KeyBank.

Operator: The next question comes from Tim Redfan with KeyBank. Please go ahead.

Tim Redfan: thank you

Speaker Change: The next question comes from Tim Resban with KeyBank. Please go ahead.

John: Hi, this is John on for Tim. Thanks for taking our questions. So, in the absence of large scale on the day, do you think this pattern of small acquisitions you've done in the quarters is repeatable? We're just trying to understand whether you have a line of sight on more acquisitions around this side. Thank you.

John: Hi, this is John on behalf of Tim. Thanks for taking our question. So, in the absence of large-scale M&A, do you think this pattern of small acquisitions you've done in the quarter is repeatable? We're just trying to understand whether you have a line of sight on more acquisitions of this size.

John: Hi, this is John on behalf of Tim. Thanks for taking our question. So, in the absence of large-scale M&A, do you think this pattern of small acquisitions you've done in the quarter is repeatable? We're just trying to understand whether you have a line of sight on more acquisitions of this size.

John: oh

John: Hi, this is John on for Tim. Thanks for taking our questions.

John: So in the absence of large-scale M&A, do you think this pattern of small acquisitions you've done in the quarters is repeatable? We're just trying to understand whether you have line of sight on more acquisitions of this size.

Chris Conoscenti: That ramping up production, potentially within an eye to a sale, we've seen some very long held on the operated sides, very long held, PE based assets, that have a period of finally be transacting. And I just just wondering if you sort of see the ripple effects of that, in terms of what's on the market, what, you know, what people might be paying and so forth. Yeah, the, the trend that we see is that with these assets moving the larger operator hands, we're seeing just less volatility in capital programs.

Christopher Conoscenti: Hey, good morning, John. Thanks for the question. We do still see a number of opportunities of all sizes, and so we're evaluating a lot of small acquisitions every day, and then we're working to make progress on some of these larger acquisitions all the time. But we just know that these larger acquisitions are going to be more episodic, and they tend to be years in the making instead of a quick one or two-week turnaround, as we've seen with the smaller deals.

Chris Conoscenti: Good morning, John. Thanks for the question. We do still see a number of opportunities of all sizes, and so we're evaluating a lot of small acquisitions every day, and then we're working to make progress on some of these large acquisitions all the time. We just know that these larger acquisitions are going to be more episodic, and they tend to be years in the making instead of the quick one or two we turn around as we see with the smaller deals. So our visibility on the smaller deals is canvously better, and we're still working on a number of those.

John: qu

Speaker Change: We do still see a number of opportunities of all sizes and so we're evaluating a lot of small acquisitions every day.

Speaker Change: and then we're working

John: Adam.

Speaker Change: to make progress on some of these larger acquisitions all the time and we just know that these larger acquisitions are going to be more episodic and they tend to be years in the making instead of a quick one or two-week turnaround as we see with the smaller deals.

Chris Conoscenti: The larger operators tend to be less influenced by a $5 or $10 move in the price of oil, they tend to set their capital plans with a, a lower long range price second mind and they don't get rattled by, you know, by some volatility that they can be short term. So we like that stability in the operating base as in our data devolved over time, you've seen our operator next shift from a lot of private, a lot of Smith kept names to really the largest of the large from Chevron, exon, oxy, conical phillips, diamond back, etc.

Christopher Conoscenti: So our visibility on the smaller deals is candidly better, and we're still working on a number of those. So I do expect to continue to make a number of those, but the predictive capability on the larger acquisitions is just not as good because they take longer to develop. But we're working on transactions of all sizes, and really, it's just going to depend on where we can allocate capital to get the best rate of return.

Speaker Change: so our visibility on the smaller jalals is cananbly better and then we're still work onanumber of so i do expect to continue to make a number of those but

Chris Conoscenti: So I do expect to continue to make a number of those, but the predictive capability on the larger acquisitions is just not as good because they take longer to develop. But we're working on transactions all the time. It's really just going to depend on where we can allocate the capital with the best rate of return.

Speaker Change: The predictive capability on the larger acquisitions is just not as good because they take longer to develop, but we're working on transactions of all sizes. Really, it's just going to depend on where we can allocate the capital to get the best rate of return.

Unnamed Speaker: Okay, that makes sense.

John: Okay, that makes sense. Just to follow up on that, these acquisitions in the quarter push net debt over $1 billion, and leverage is ticked higher. You've talked before about wanting to have leverage of one axe. Do you think that's still reasonable? And, you know, we just want to see how the board's currently thinking about this.

Christopher Conoscenti: Okay, that makes sense. Just to follow up on that, these acquisitions in the quarter push net debt over $1 billion, and leverage is ticked higher. You've talked before about wanting to have leverage of one axe. Do you think that's still reasonable? And, you know, we just want to see how the board's currently thinking about this.

Unnamed Speaker: Just to follow up with that, these acquisitions in the quarter, they push that debt over one billion and leverage it to take higher. You've talked for about wanting to have leverage of one X. Do you think that's still reasonable?

Speaker Change: okay that ma sense just to follow up at that these

Speaker Change: acquisitions in the quarter of they they push not death over one billion and leveragjust takeick higher

John: talked before about wanting to have leverage of one axe. Do you think that's still reasonable? And, you know, we just wanna see how the board's currently thinking about this.

Chris Conoscenti: So those are folks that don't whistle around their capital plans with the commodity to address your question about the mix of private versus public or large operators. The phenomenon you described feeling this where you have some of these small private equity back companies that are ramping up production to build a production profiles and they are capable of selling to the public independent, there's just far fewer those left. So while we do still see that, it's just a very, very small fraction of our portfolio today.

Chris Conoscenti: And you know, which one to see how the board's currently taking it about this? Yeah, but the thinking around debt has not changed one bit. We still have the objective of having a very strong balance sheet using our routine cash loads to pay down pre-payable debt and to preserve maximum balance sheet flexibility so that we can take advantage of cash acquisition. So we do retain more of our discretionary cash flow than our peers, and we use that to make a creative cash acquisition and to pay down our pre-payable debt. So you'll see, like we did this quarter, where we brought some money to make some creative cash acquisition, and then we'll continue to work towards our goal with getting that culture to one times so that we have the balance sheet flexibility to make a large cash acquisition in the future.

Christopher Conoscenti: Yeah, the thinking around debt has not changed one bit. We still have the objective of having a very strong balance sheet, using our routine cash flow to pay down prepayable debt and to preserve maximum balance sheet flexibility so that we can take advantage of cash acquisitions. So, we do retain more of our discretionary cash flow than our peers, and we use that to make accretive cash acquisitions and to pay down our prepayable debt.

Speaker: Great. Thanks a lot. Thank you.

Speaker Change: yes the think on debt has not changed one bit we still

Christopher Conoscenti: have the objective of having a very strong balance sheet, using our routine cash flow to pay down prepayable debt and to preserve maximum balance sheet flexibility so that we can take advantage of cash acquisitions. So, we do retain more of our discretionary cash flow than our peers, and we use that to make accretive cash acquisitions and to pay down our prepayable debt. So, you'll see, like we did this quarter, where we borrowed some money to make some accretive cash acquisitions, and then we'll continue to work towards our goal of getting that closer to one time so that we have the balance sheet flexibility to make a large cash acquisition in the future.

Christopher Conoscenti: have the objective of having a very strong balance sheet, using our routine cash flow to pay down prepayable debt.

Christopher Conoscenti: and to preserve maximum balansheet flexibility

Christopher Conoscenti: so that we can take advantage of cash acquisitions. So.

Christopher Conoscenti: We do retain more of our discretionary cash flow than our peers, and we use that to make accretive cash acquisitions and to pay down our pre-payable debt.

Christopher Conoscenti: So, you'll see, like we did this quarter, where we borrowed some money to make some accretive cash acquisitions, and then we'll continue to work towards our goal of getting that closer to one time so that we have the balance sheet flexibility to make a large cash acquisition in the future.

Christopher Conoscenti: so you'll see like we did this quarter wherewe've borrow some and ma a create pashacquisions and and then we'll continue to work towards our goal and culture to one times so that we have the balancesheet flexbility to make the large stash acquisition own ficture

John: The next question comes from Tim Redspan with Keybank. Please go ahead. Hi, this is John on for Tim. Thanks for taking our questions. So in the absence of large scale on the day, do you think this pattern of small acquisitions you've done in the quarters is repeatable? We're just trying to understand whether you have a line of sight on more acquisitions around this side. Thank you.

John: Okay, that's great. That's all we have. Appreciate the time. Thank you.

Unnamed Speaker: Okay, that's great.

Unnamed Speaker: That's all we have. Appreciate time. Thank you.

Speaker Change: Okay, that's great. That's all we have. Appreciate the time.

Betty Zhang: Our next question comes from Betty Zhang with Barclays. Please go ahead. Good morning. Thanks for taking my questions. Maybe I'll start with buyback, and that's a good follow-up for on the last question.

Operator: Our next question comes from Betty Jiang with Barclays. Please go ahead.

Christopher Conoscenti: Our next question comes from Betty Zhang with Barclays. Please go ahead.

Unnamed Speaker: Maybe I'll start with buyback, and that's a good follow-up from the last question. Just given the second quarter, we're actually seeing pretty outsized buybacks, including some in the open market. Wondering your thoughts around that buyback against debt reduction for our uses of cash going forward. Thanks.

Betty Jiang: Were they? Maybe I'll start with buyback, and that's a good follow-up from the last question. Just given the second quarter, we're actually seeing pretty outsized buybacks, including some in the open market. Wondering your thoughts around that buyback against debt reduction for our users of cash.

Chris Conoscenti: Good morning, John. Thanks for the question. We do still see a number of opportunities of all sizes and so we're evaluating a lot of small acquisitions every day and then we're working to make progress on some of these large acquisitions all the time and we just know that these larger acquisitions are going to be more episodic and they tend to be years in the making instead of the quick one or two we turn around as we see with the smaller deals.

Chris Conoscenti: So our visibility on the smaller deals is canvously better and we're still working on a number of those. So I do expect to continue to make a number of those, but the predictive capability on the larger acquisitions is just not as good because they take longer to develop but we're working on transactions all the time. It's really just going to depend on where we can allocate the capital with the best rate of return.

Speaker Change: Good morning. Thank you.

Unnamed Speaker: for taking my questions the maybe i'll start with buyback and that's a a good follow up from the last question

Carrie Osicka: Just given second quarter we had to be seeing pretty outsized buyback and including some in the open market wondering your thoughts around that buyback against that reduction for our users of cash. Thank you so much, Scott, for a word. Thank you.

Unnamed Speaker: Just given second quarter, we're actually seeing pretty outsized buyback, and including some in the open market. Wondering your thoughts around that buyback against debt reduction for our uses of cash going forward. Thanks.

Carrie Osicka: Yeah, thanks for the question, but I'm glad you asked. We've actually got an email from Shower asking the same question about the thought process on the allocation between dividends and buybacks and debt pay down. So glad to address that here. As we think about it, we don't have to make the trade-off between buying back stock or paying down debt because we are focused on returning at least 65% of our discretionary cash flow to shareholders. So our decision becomes, how do we allocate that 65% between dividend and buybacks? And when we see opportunities like we saw in this past quarter and in the first quarter to re-purchase stock well below what we believe is massive value and to make it map a creative buybacks, we want to take advantage of that.

Unnamed Speaker: Yeah, thanks for the question, Betty. I'm glad you asked. We actually got an email from a shareholder asking the same question about the thought process for the allocation between dividends and buybacks and debt paydown. So, I'm glad to address that here.

Christopher Conoscenti: Yeah, thanks for the question, Betty. I'm glad you asked. We actually got an email from a shareholder asking the same question about the thought process for the allocation between dividends and buybacks and debt paydowns. I'm so glad to address that here.

Speaker Change: yes thanks thequestion about in let you ask we just actually got an email from ' king the question about the thought process on the allocation between dividends and buy the exc and deb pay down so like to address that year

Unnamed Speaker: As we think about it, we don't have to make a tradeoff between buying back stock or paying down debt because we are focused on returning at least 65% of our discretionary cash flow to shareholders. So, our decision becomes, how do we allocate that 65% between dividends and buybacks? And when we see opportunities, like we saw this past quarter and in the first quarter, to repurchase stock well below what we believe is its net asset value and to make net accretive buybacks, we want to take advantage of that. As you saw in the second quarter, we paid out the minimum cash dividend of 35% of discretionary cash flow.

Christopher Conoscenti: As we think about it, we don't have to make a tradeoff between buying back stock or paying down debt because we are focused on returning at least 65% of our discretionary cash flow to shareholders. So our decision becomes, how do we allocate that 65% between dividends and buybacks? And when we see opportunities, like we saw this past quarter and in the first quarter, to repurchase stock well below what we believe is its net asset value and to make net accretive buybacks, we want to take advantage of that.

Unnamed Speaker: As we think about it, we don't have to make a trade-off between buying back stock or paying down debt because we are focused on returning at least 65% of our discretionary cash flow to shareholders. So our decision becomes how do we allocate that 65% between dividends and buybacks.

Chris Conoscenti: Okay, that makes sense. Just to follow up with that, these acquisitions in the quarter, they push that debt over one billion and leverage it to take higher. You've talked for about wanting to have leverage of one X. Do you think that's still reasonable? And you know, which one to see how the board's currently taking it about this? Yeah, but the thinking around debt has not changed one bit. We still have the objective of having a very strong balance sheet using our routine cash loads to pay down pre-payable debt and to preserve maximum balance sheet flexibility so that we can take a advantage of cash acquisition.

Unnamed Speaker: And when we see opportunities like we saw this past quarter and in the first quarter to

Unnamed Speaker: to repurchase stock well below we believe this math value add to make it have accretive buybackx we want to take advantage of that so you saw in the second quarter we paid out the the minimum passive end of thirty-five percent of discretionary cash flow and

Christopher Conoscenti: So you saw in the second quarter, we paid out the minimum cash dividend of 35% of discretionary cash flow. And then we used the rest of the return of capital in the form of buybacks to take advantage of the NAB accretives opportunity. So we don't look at it as a tradeoff between doing it as a buyback or paying down debt.

Carrie Osicka: So we saw in the second quarter we paid out the minimum cash dividend to 35% of discretionary cash flow. And then we use the rest of the return capital in the form of buybacks to take advantage of the map a creative opportunity. So, you know, we don't look at it as a trade-off between doing it the buyback or do we pay down debt?

Speaker Change: and then we use the th of the return capital in the full of buyback takekenadvantage of the navaccretive opportunity so we don't look at it as a tradeoff between doing and make the buybackcord was paid down de

Chris Conoscenti: So we do retain more of our discretionary cash flow than our peers and we use that to make a creative cash acquisition and to pay down our pre-payable debt. So you'll see like we did this quarter where we brought some money to make some creative cash acquisition and then we'll continue to work towards our goal with getting that culture to one times so that we have the balance sheet flexibility to make a large cash acquisition on the future.

Betty Zhang: Oh, I got it. Make sense. And follow-up practice on the line of set, site activity, a line of set backlog. I understand that the second quarter line of site is down from one queue and that is reflecting the very height number of pills in one queue.

Unnamed Speaker: yes

Betty Jiang: Got it. And the follow-up, perhaps just on the line of sight activity, the line of sight backlog. I understand that the second quarter line of sight is down from 1Q, and that is reflecting the very high number of tilts in 1Q. So looking forward, just wondering how you think about the net line of sight activity across the portfolio against the historical trends that you have. And I really appreciate the additional disclosure on telecoms as well. I'll make it.

Speaker Change: Oh, got it.

Speaker: Okay, that's great.

Speaker Change: Understand that the second quarter line of sight is down from one cue and that is reflecting the very high number of tilts in one cue.

Chris Conoscenti: So looking forward to wondering how your thoughts about the net line of site activity across the portfolio gets the historical trends that you have been seeing. And I really appreciate that additional disclosure of tell counts as well. Thanks.

Speaker Change: So looking forward, just wondering how your thoughts about the net line-of-sight activity across the portfolio against the historical trends that you have been seeing.

Speaker: That's all we have. Appreciate time.

Speaker: Thank you.

Betty Zhang: Our next question comes from Betty Zhang with Barclays. Please go ahead.

Speaker Change: And I really appreciate the additional disclosure on telecoms as well.

Carrie Osicka: Good morning. Thanks for taking my questions. Maybe I'll start with buyback and that's a good follow-up for on the last question. Just given second quarter we had to be seeing pretty outsized buyback and including some in the open market wondering your thoughts around that buyback against that reduction for our users of cash. Thank you so much, Scott, for a word. Thank you. Yeah, thanks for the question, but in glad you asked, we've actually got an email from Shower asking the same question about the thought process on the allocation between dividends and buybacks and debt pay down.

Christopher Conoscenti: Sure, I'll make a quick comment, and then I'll turn it over to Jarret to add his thoughts. But the comment I would make on the second quarter was very much in line with the 2023 historical average. In fact, it was slightly above the 2023 historical average. In the second quarter, we had about 8.5 net sales per quarter. And I think you're referring to the first quarter, which was a bit of an anomaly. So I'll let Jarret cover the rest.

Chris Conoscenti: Sure, I'll make a quick comment, and I'll turn it over to Jared to add his thought. But the comment I make on the second quarter was very much in line with the 2023 historical average. In fact, it was slightly above the 2023 historical average where second quarter we had about 8.5 net pills in the quarter. And I think you're referring to the first quarter, which was a bit of an anomaly, so let's get Jared to cover the rest.

Unnamed Speaker: Sure, I'll make a quick comment and I'll turn it over to Jarrett to add his thoughts.

Speaker Change: But the comment I'd make on the second quarter, it was very much in line with the 2023 historical average. In fact, it was slightly above the 2023 historical average.

Speaker Change: very second quarter we had about eight point five net fills in the quarter and think you'refering to the first quarter which was and not only saw let arre cover the risk

Jarret Marcoux: Sure. Hi, Betty. A couple comments here. You know, our rig count is obviously what's feeding these line of site wells. And if we look back at the last year, our rig count as a percentage of North America has always run between roughly 18 and 20%. And that hasn't materially changed in recent history. So when you look at our asset given the gross footprint we have, we're really, you know, the overall rig count that we see from big reviews of the other reporting agencies is really a proxy for our activity.

Jarret Marcoux: Sure. Hi Betty.

Jarret Marcoux: A couple of comments here. Our rig count is obviously what's feeding these line-of-sight wells. And if we look back at the last year, our rig count as a percentage of North America has always run between roughly 18 and 20 percent, and that hasn't materially changed in recent history. So when you look at our assets, given the gross footprint we have, we're really, you know, the overall rig count that we see from Baker Hughes or the other reporting agencies is really a proxy for our activity.

Unnamed Speaker: Sure. Hi, Betty. A couple comments here. Our rig count is obviously what's feeding these line-of-sight wells. And if we look back at the last year,

Carrie Osicka: So glad to address that here. As we think about it, we don't have to make the trade-off between buying back stock or paying down debt because we are focused on returning at least 65% of our discretionary cash flow to shareholders. So our decision becomes, how do we allocate that 65% between dividend and buybacks? And when we see opportunities like we saw in this past quarter and in the first quarter to re-purchase stock well below what we believe is massive value and to make it map a creative buybacks we want to take advantage of that.

Carrie Osicka: So we saw in the second quarter we paid out the minimum cash dividend to 35% of discretionary cash flow. And then we use the rest of the return capital in the form of buybacks to take advantage of the map a creative opportunity. So, you know, we don't look at it as a trade-off between doing it the buyback or do we pay down debt? Oh, I got it. Make sense. And follow-up practice on the line of set, site activity, a line of set backlog.

Speaker Change: our rig count as percentage of north america has always run between roughly eighteen and twenty percent and that has ' materially changed

Speaker Change: in recent history. So when you look at our asset, given the gross footprint we have, we're really, you know, the overall rig count that we see from Baker Hughes or the other reporting agencies is really a proxy for our activity.

Jarret Marcoux: And one other comment I can make is that we're obviously really happy about the recent activity we've had. And yes, our line of sight walls are down quarter over quarter sequentially. We do track this metric monthly, and what I can tell you is that it is already partially recovered as of this month. So on a go forward basis, we're not modeling anything that is materially lower than the historical averages we have had. But obviously, you know, the recent activity we have had has been, you know, very high relative to our historical average.

Jarret Marcoux: And one other comment I can make is we're obviously really happy about the recent activity we've had. And yes, our line of sight wells are down quarter over quarter sequentially. We do track this metric monthly, and what I can tell you is already partially recovered as of this month. So, on a go forward basis, we're not modeling anything that is materially lower than the historical averages we have had. But obviously, you know, the recent activity we have had has been, you know, very high relative to the our historical averages.

Unnamed Speaker: And one other comment I can make is we're obviously really happy about the recent activity we've had and yes, our

Speaker Change: Align-the-Sidewalls are down quarter over quarter sequentially. We do track this metric monthly and what I can tell you is it is already partially recovered.

Speaker Change: as of this month. So on a go-forward basis, we're not modeling anything that is materially lower than the historical averages we have had, but obviously, you know, the recent activity we have had has been, you know, very high relative to our historical averages.

Betty Jiang: I appreciate that color. Thank you.

Unnamed Speaker: Thank you.

Speaker Change: appreciate that color thank you

Operator: As a reminder, if you would like to ask a question today, please do so now by pressing start, followed by the number one on your telephone key, who had?

Unnamed Speaker: Got it.

Operator: As a reminder, if you would like to ask a question today, please do so now by pressing start followed by the number one on your telephone keypad. As we have no further questions registered, this concludes today's call. Thank you everyone for joining us today. You may now disconnect your lines.

Unnamed Speaker: Our rig count as a percentage of North America has always run between roughly 18 and 20 percent, and that hasn't materially changed.

Speaker Change: As a reminder if you would like to ask a question today please do so now by pressing start followed by the number one on your telephone keypad.

Operator: As a reminder, if you would like to ask a question today, please do so now by pressing start followed by the number one on your telephone keypad.

Carrie Osicka: I understand that the second quarter line of site is down from one queue and that is reflecting the very height number of pills in one queue. So looking forward to wondering how your thoughts about the net line of site activity across the portfolio gets the historical trends that you have been seeing. And I really appreciate that additional disclosure of tell counts as well. Thanks. Sure, I'll make a quick comment and I'll turn it over to Jared to add his thought.

Operator: As we have met by the questions registered, this concludes today's call. Thank you, everyone, for joining us today. You may now disconnect your lines.

Speaker Change: As we have no further questions registered, this concludes today's call. Thank you everyone for joining us today. You may now disconnect your lines.

Carrie Osicka: But the comment I make on the second quarter was very much in line with the 2023 historical average. In fact, it was slightly above the 2023 historical average where second quarter we had about 8.5 net pills in the quarter. And I think you're referring to the first quarter, which was a bit of an anomaly, so let's get Jared to cover the rest.

Carrie Osicka: Sure.

Jarret Marcoux: Hi, Betty. A couple comments here. You know, our rig count is obviously what's feeding these line of site wells. And if we look back at the last year, our rig count as percentage of North America has always run between roughly 18 and 20%. And that hasn't materially changed in recent history. So when you look at our asset given the gross footprint we have, we're really, you know, the overall rig count that we see from big reviews of the other reporting agencies is really a proxy for our activity.

Jarret Marcoux: And one other comment I can make is we're obviously really happy about the recent activity we've had. And yes, our line of site wells are down quarter over quarter sequentially. We do track this metric monthly and what I can tell you is is already partially recovered as of this month. So on a go forward basis, we're not modeling anything that is materially lower than the historical averages we have had. But obviously, you know, the recent activity we have had has been, you know, very high relative to the our historical averages.

Speaker: Thank you.

Operator: As a reminder, if you would like to ask a question today, please do so now by pressing start, followed by the number one on your telephone key, who had?

Speaker: As we have met by the questions registered, this concludes today's call.

Speaker: Thank you everyone for joining us today. You may now disconnect your lines.