That was an 18 month or a good 12-to-18-month lag. I don’t think it’ll take that long on Cox, because everyone’s known that this was coming. You could see some work begin late this year, but I think most of the work, it’s going to take them the rest of this year to figure out what properties they’re getting back, how they want to handle the contracting and then go out for the tendering and then to negotiate contracts. I think all of that takes until the fourth quarter to occur. We haven’t included anything from Cox. Of course, Apache has decided to shut down their operations for this year as they reassess the way they were doing it and they don’t expect to begin again until later on this year or early next year. Really that’s what’s driving the expectations that ’24 was going to be slow, but then that’s just sort of pulling back the rubber band and everyone is talking about ’25 just an over-the-top demand here.
Don Crist: Okay. Can you remind us how many wells you believe are being put back through the Cox bankruptcy?
Owen Kratz: It depends on how you count wells. I know that sounds like a dodge, but the number I’ve heard is 1860 wells coming back from Cox, but I have not seen the exact list of what’s being put back. I’ve heard estimates on the duration of the work requiring anywhere from 7 to 20 years. Of course, that depends on the capacity in the Gulf to do the work and the pace that the producers execute the work at. But it’s going to be a long multi-year, demand-driven cycle.
Don Crist: Right, exactly. Switching over to the deepwater side, I know in past conference calls you had said that, we were several vessels short, given the current demand. But as Guyana and other kind of basins that are fairly new start to age, how do you see that as we progress? Do you still think we’re a couple of vessels short today and that could grow, as we kind of move into the ’25 and ’26 seasons?
Owen Kratz: We mentioned the need to bring back the Q4 to the Gulf of Mexico because of the demand we’re seeing in the Gulf of Mexico than the Q7000 leaving the Asia Pacific market for the demand in Brazil. That leaves us without an asset, a floating asset to cover West Africa and Australia. Last year we did add two new intervention systems and our thinking at that time was that rigs were going to be required to do some of the work that we can’t cover, but the rig market is also very, very tight. We do have one system that is working on a rig off of Australia, so that strategy was starting to pay off. Now we’re looking at the fact that the rig market is continuing to tighten further, the pricing, the rates are going up and we’re still short basically an asset to cover West Africa and another asset to cover Australia. We are starting to explore our options as to how to do that if the rig market is this tight. We don’t have any conclusions right now to share though.
Operator: Your next question comes from the line of Sean W. Mitchell with Daniel Energy Partners. Please go ahead.
Sean Mitchell: Thanks for fitting me in here. You guys have done a ton of work on the balance sheet. You currently sit in a net cash position, have kind of taken out the convert. We’ve seen where offshore drilling rig rates are and with respect to Intervention, there seems to be a multi-year runway for that business with significant improvements in profitability coming in ’25. Just maybe take a minute, how are you thinking about returning capital to shareholders outside of the repurchase as we move into a period in the next couple of years, where free cash flow generation should be significant?
Owen Kratz: Right now, we do have the $200 million facility that we’re working on doing share repurchase. Our plan is to continue to do at least a minimal level of share repurchase with a priority of the cash targeting some of the areas, where we’re really tightened in the market and could add capacity. I’d say, our first priority would be to deploy cash for growth in areas, where it was immediately accretive to shareholder value and the EBITDA contribution sustainable long-term. That’ll be the first priority and to the extent that we don’t see the opportunities or the value isn’t able to be achieved, then we would revert to the share repurchase. Beyond that, I think we would like to grow the cash balance on our balance sheet a little bit to borrow a phrase from Warren Buffett. ”If you’re going to go searching for fast moving white elephants you better carry a loaded gun.”
Don Crist: Maybe one more for me. Just kind of outside of day rates continuing higher, Owen, with where rig rates have elevated to, how are you thinking about growing the Well Intervention business over the next few years? Are there assets you could be interested in? It seems like new assets would be a non-starter just given the economics, but just kind of how do you think about growing that business outside of day rates moving higher?
Owen Kratz: I think new build is sort of out of the question right now. If you work back from the available day rates or even what the projected day rates are going to be, and you combine that with the cost to build and the cost of capital, we’re a long way from new building assets being commercially viable. I’d say that, that’s sort of off the table for consideration. When you’re talking about adding floating assets in this market, it’s a very tight market right now. The value propositions have soared, they’re few and far between, but there are a couple of things that might be of interest. Beyond that, you’re looking at the wind market, which I think there’s been a lot of talk about how it’s hard to derive returns in the wind market and you have seen some of the economics have caused some delays.
