Daniel Brown: Yes. I think maybe I could sum it up, broadly, Scott, by saying we’re believers in consolidation. We’re a product of consolidation. That’s how Chord was formed. We will — we plan to participate in consolidation, as we move forward whether that means we are the consolidator or the consolidatee, either way is okay. We believe in in being part of a larger equity story, and we’ll look for sensible opportunities to do that. I think along those veins, as we think about, participating in consolidation, where we’re consolidating, I think, in-basin consolidation is, obviously a very natural thing for us to look at. We have a very significant acreage position in the Bakken. We really touched all aspects of the basin with that sort of slightly over a 1 million acre position we’ve got.
So, lots of synergies, from an operational standpoint, and from a — whether it be sort of our subsurface knowledge, our operational capability, the routes we run, just converting DSUs from two mile to three mile in-basin consolidation, makes a lot of sense. We are also — we are open and have and look at out of basin consolidation opportunities, but we’re also very clear-eyed and recognize that the risk associated with out of basin consolidation is higher than the risk associated with in-basin and consolidation due to all the factors I talked about a moment ago And so it’s just a higher bar to out of basin consolidation versus in-basin. And so — but thematically, big believers in consolidation and when you’re in a commodity business, I think that’s just an important thing for us to recognize and be focused on.
Scott Hanold: Yes. And then if I could just a little tweak to that question too. Like, when you look at in basin opportunities, how I’ve — like these higher interest rates impact like, some of the PE players, the smaller players to be willing sellers and the price to pay? Does that does that have an influence? Are you seeing any kind of impact from the higher interest rates?
Daniel Brown: Yes. I think maybe too early to say specifically on that, topic because you got to have a number of transaction to see what kind of effect you’re seeing, et cetera. But generally speaking, I’d say, if you’re thinking about cash-based deals where debts on the backside, higher interest rates probably aren’t very helpful to that. And I’d say big swings in commodity price also aren’t very helpful to M&A in general. And so, you know, we’ll see where that goes. And, Michael, I’ll invite you to make any further comments.
Michael Lou: No, I think that’s exactly right. I mean, obviously, the capital markets, the lending markets, all of them are much tighter than they have been across history. And so, that financing cost obviously is increasing for both the buyers and as well as maybe forcing sellers to think about exiting earlier, just because that financing cost is higher. So, it puts pressure on both sides. It also makes obviously buyers a little bit more, disciplined, I would say, with that higher interest cost and how they think about valuations.
Scott Hanold: Yes. No. I appreciate that. And that’s exactly what I was pointing to. It’s more the latter part of that answer where a seller is more motivated and if you have cash, you’re in a better position as a potential buyer.
Daniel Brown: That’s right. Yes, totally agree with that.
Operator: And the next question comes from John Abbott of Bank of America.
John Abbott: Hey. Good morning. Thank you for taking our questions on a — it’s a busy morning.
Daniel Brown: Good morning John. Thanks.
John Abbott: Hey. Recognize it’s still early with the tracer test and you’re looking at three-mile laterals. What do you think the implications could potentially be four miles? I mean, are you ever thinking, are you considering actually testing a four-mile lateral with a sort of similar test?
