So we’re seeing that replacement cycle continuing. So, from a market share perspective, you’ve heard us say that’s really not our focus. Our focus is just making certain that we’re getting compensated and getting the returns above our cost of capital is really the primary focus here. So hopefully that helps.
Waqar Syed: It’s helpful. Also, like, the service intensity of drilling in the U.S. continues to increase. You have at least one company saying, they’re looking for formal laterals. Historic definition that we’ve used for super-spec, 15 and horsepower AC, like, 7500 PSI circulating systems. Those definitions still hold up for this high-end kind of drilling? Or do you think that there’s another subset of super-spec rigs that is going to be created to do the next generation of high-intensity drilling?
John Lindsay: Yes, I believe that our current fleet, in fact, we have our FlexRigs today, drilling four-mile laterals. There’s not a lot right now, but we do have rigs, some of our rigs, drilling four-mile laterals. So the rig, the super-spec-based rig, in most cases, there are a couple of depending on hookload requirements and those sorts of things, but in general, we’ve been able to cover with our fleet. I can’t speak to the overall industry super-spec fleet. My assumption would be that, there’s going to be a mix of some of those rigs we’re going to be capable of doing the four-mile laterals. But, again, more to come on that as far as just how much of — how many of our customers actually go to the four-mile.
Waqar Syed: Sure. And just one last question for your international contract, these seven rigs, the eventual contracts are going to be five years or three years, or how long would the duration be?
John Lindsay: There will be more to come on that when we file our press release. It’d be best just to put all that information in there together.
Waqar Syed: And just on the investment, did you say 25? What’s the total investment on a rig? Is it $25 million? But there’s certainly a original cost as well that you’re carrying the books for the rigs?
John Lindsay: I’m sorry, Waqar, could you say that one more time?
Waqar Syed: Well, for the seven rigs in the international markets, when you think about them as an investment, is it like a $40 million type rig investment, or is it the $25 million number that I think you previously said in terms of investment on the rig?
Mark Smith: The previous. We’re looking at the incremental investment from what has been taking long-idled super-spec rigs in the U.S. and putting them back to work.
Waqar Syed: Okay, great. Thank you very much.
Mark Smith: From a return perspective, Waqar, we’re looking to achieve returns through these contracts that are above our cost with average of capital, obviously, in line with our strategy overall related to ROIC for the corporation.
Waqar Syed: Fair enough. Thank you, sir.
Mark Smith: Thanks, Waqar.
Operator: And we will move next to Don Crist with Johnson Rice. Your line is open.
Don Crist: Good morning, gentlemen. I wanted to ask about the performance contracts. To my knowledge all of the only contract out there currently doing these. And just out of curiosity, are you setting kind of days to drill per well and then kind of splitting the spread cost if you achieve better than that? Any kind of parameters you can give around these performance contracts, because it looks like you’re actually making more on these performance contracts for both parties, then you would be in a spot market rate kind of just charging a day rate perspective. Any kind of color you can give around the performance contracts would be helpful?
John Lindsay: Sure. Good morning, Don. The idea, first of all, there is no one size fits all. There is multiple types of performance based contracts with our customers. But the point is to set them up such that we’re delivering what customers are seeking to achieve and there’s a wide range. But at the end of the day, it’s meant to be a win-win. And so, we went in that. We’re getting higher margins per day, but the customer is winning because they’re lowering days and/or other parameters that they’re focused on. And so again, it’s a true win-win. And yes, we are, I think for the most part, making more on the performance based contracts than we are on the standard contracts.
Mark Smith: Yes, one to two thousand per day when averaged across the entire fleet, that’s 50% of the fleet that’s on one. And in addition to those spread cost savings, we have other, as John mentioned, actually no two were alike. Customer to customer depends on what their value driving needs are. And for some of those, it started to spread cost savings. Some of those, it’s now a consistent repeatable cost per foot. For some, we actually have qualitative metrics now related to wellbore quality and placement, which we’ve long discussed as a company on these calls, which is exciting to see those more quality based instead of time based KPIs. But there’s a portfolio approach. And when you average them out, it’s $1000 to $2000 more than spot as I said.
John Lindsay: And we’ve been, as you said, we’ve been at this a long time. This has been a three, four year process. And again, our teams are just doing a fantastic job and continue to find ways to deliver value and work very closely in partnership with our customers.
Don Crist: And just as a follow up to that, I’m assuming you’re not taking additional risk like geologic risk if the rig, if the well doesn’t work or something like that when you’re forming that contract, right? .
