Mark Smith: Thanks Derek.
Operator: And we will take our next question from Jeff LeBlanc with TPH. Your line is open.
Jeff LeBlanc: Good morning, John and Mark. Thank you for taking my question. The question I have is, we’ve noticed that two of your largest customers on the Permian have yet to deploy any more rigs in 2024. Could you provide some color on the expected operator mix and basin mix for your incremental deployments moving forward? Thank you.
Mark Smith: I’m sorry. If you can get closer to your microphone, we literally couldn’t hear you at all.
John Lindsay: Jeff, did you hear us? We couldn’t hear the question.
Jeff LeBlanc: I’m sorry. The quick question was, we’ve noticed that two of your largest customers on the Permian have yet to deploy incremental deployment in 2024. Could you provide some color on the expected operator mix and basin mix for your incremental deployments?
John Lindsay: Jeff, I don’t have any of those details and really wouldn’t be in a position to share those. I’m not certain who those customers are, but I think in general, again, for us at H&P, we’re pleased with our customer mix. We’ve got very strong customers and some have been, well, first of all, they’re all being very disciplined in their approach. I think that’s — as I’ve said before, that’s great for the industry. So I think several have maintained their rig counts pretty flat through the course of the year. There’s a few that are planning on adding a rig here or there. And of course, that’s what you’ve seen with our rig count, just a very modest rig count increase in our Q1, and we’re forecasting that for Q2.
Mark Smith: I would just put a note that, we’re now, as John mentioned, good customer counterparties, and we’re up to 80% of our U.S. fleet with public companies, and three-fourths of that is with large public companies. And with many of our top customers, we’re their largest provider and in half-term coverage, so we just add those little footnotes. Jeff, any other questions?
Jeff LeBlanc: No, that was it. Thank you very much, and I’ll hand it back to the operator.
Mark Smith: And operator just real quick, I want to correct something for Derek a minute ago. I said $200. I mean $2,000 today in that delta between spot and term. That’s what we’re down to. Back to you, Chloe.
Operator: Thank you. We’ll move next to Doug Becker with Capital One. Your line is open.
Doug Becker: Thanks and congratulations on the international contracts. I know that’s been a long time in the works.
John Lindsay: Thank you, Doug. It has been.
Doug Becker: I was hoping just to get an update on the costs around the conversion, contract prep, and mobilization costs for those seven rigs, and really kind of thinking about it in the context of, does this mean like the CapEx probably in the upper half of the guidance range, or is the midpoint still the best point estimate at this point?
Mark Smith: Well, we’re still leaving it at a range, Jeff, because as you know, the timing of procurement items always varies from quarter-to-quarter. Having said that, if you take the original guidance we had in our October capital allocation press release and then November call in the associated release at that time for the end of fiscal ’23, looking forward to this fiscal year we’re in, we said a third of that would be related to the international. So if the midpoint is 475, you have a number there, and then if you add to that what I just mentioned in my prepared remarks, another 32 million in fiscal ’25, you add all that up all in, you’re at about 25 million to 28 million per rig investment. And again, that covers a myriad of things as you just alluded to, the conversion to walking, basically recertifying all equipment on the rigs to like new, so they have full recertification run rates for API standards, et cetera., buying certain equipment incremental for the contract needs and certain rig modifications as well for those contracts.
But all in, that’s the number we’re looking at, which is from our understanding quite a significant delta less than what would be required for any such new build to go to the region.
Doug Becker: Okay, and kind of putting that together, does this imply that the initial free cash flow outlook of say $235 million for the fiscal year, and I know there’s a lot of moving parts here, but it sounds like that will be a little bit lower than initially expected, just given the this spending?
Mark Smith: Now all of our guides related that since we have not changed the capital expenditure guide, I can’t really foresee an overall implied guide either related to cash in the supplemental dividend plan, with the potential exception of rig commissioning and preparation operational expense in international segment, I mentioned four million that we’re planning for this Q2. I think that might be a good run rate for the rest of the rest of the fiscal quarters moving forward, but to be determined we have we’ll be back to you with more guidance as we move through the year on that.
Doug Becker: Got it. Mark, I appreciate it.
Mark Smith: Thank you, Doug.
Operator: And we’ll take our next question from Waqar Syed with ATB Capital Markets. Your line is open.
Waqar Syed: Thank you. So, John, you’re picking up between three to eight rigs in the quarter. Do you think you’re getting market share or if we apply like a 25% mark, 25% market share, if you maintain that, then that means the industry’s rig can’t go up by between 12 and 30 rigs by the end of the March quarter. So how do you see the industry’s rig changing through the course of the quarter?
John Lindsay: Good morning, Waqar. I don’t have a good feel for the overall industry. I mean, your numbers are accurate as you’ve described them. I do think there are a couple of cases where there’s some high-grading that’s going on with some of the rigs that were picking up, but I don’t have a sense for how the rest of the fleet, in terms of the super-spec fleet and our competitors, my assumption is that they’ll be adding some rigs as well, but I don’t know that. I do know that, as I said on the replacement, the super-spec, pardon me, the non-super-spec fleet rig count is down, and a larger percentage actually doubled the percentage of the super-spec over the course of the last year, and really a lot of that has happened recently.
