Sitio Royalties Corp. (NYSE:STR) Q1 2024 Earnings Call Transcript

Tim Rezvan: Hey, it’s John Mardini on for Tim. We want to ask about the second quarter distribution maybe in a little different way. As we try to model it, how should we think about the negotiated repurchases as a component of your cash return framework? Are they a portion of that 65% cash return payout or are they one off spending events like opportunistic M&A?

Nathaniel Pendleton: Well, I think it’s both really. You have, an opportunistic, repurchase of a large amount of shares at once, but it is by definition a return of capital to shareholders. So we look at it through the lens of other return capital framework. So our framework has never been strictly 65%. It has been at least 55%. And as you heard Carrie talk about earlier, at least 35% of our discretionary cash flow is going to be in the form of a dividend. So when you do the math based on the guidance we’ve provided and you overlay some pricing that you want to use, whether it’s first call consensus or strip pricing, you’ll get to the number for discretionary cash flow as you deduct the expenses. And you can come up with a 35% that would be the minimum dividend and then you can layer in what we’ve done for repurchases already in the second quarter.

You get to a number above 65%. So I think it’s fair to assume that the second quarter could be above 65% in terms of return to capital.

Tim Rezvan: Okay, great. Thanks for framing that out. Our follow-up is on it’s just a housekeeping question on modeling. So when you make that $0.41 dividend, will it include the 2 million shares that were repurchased in early April or will it reflect the post repurchase share count?

Nathaniel Pendleton: The post repurchase share count, so it’s going to be, shareholders of record in May.

Tim Rezvan: Okay. Got it. That’s all I had. Thanks for your time.

Operator: [Operator Instructions]

Operator: We currently have no further questions. [Operator Closing Remarks].