Mark Smith: I might just add to that, Keith that the way I – another way to think about it is if you – I can’t speak to our competitors. I can only speak for H&P. But if you go back to the beginning of calendar ’22, we said we were going to limit the amount of rigs we were putting out. We were going to focus on our pricing so that we could get the returns John just mentioned. And the reverse has happened this year. We’ve been focused on the pricing and we’ve taken the decision to idle rigs to maintain that. So that is really a different way of operating the last couple of years, both in the scenario of rigs going up and then this year with rigs going down, but the same laser focus on what we need to do to generate returns for our shareholders.
Keith Mackey: Yes. I appreciate that. Just secondly on the international tenders. Now I know you’re not going to want to disclose too much here, but is there anything you can share with respect to the magnitude of tenders, what potential amount of rig activity in terms of a range you could see from the amount of tenders you’re participating in or whether the amount of tenders are – appear to be speeding up or slowing down? Any commentary around that would be helpful.
John Lindsay: Steve, I think – you know, I was thinking through this last night, not an exact number. But I mean there – there’s, you know, 15 to 20, 25 rigs worth of tenders that we’re aware of. And I know there’s probably more, but we also know firsthand that growth internationally tends to be pretty slow. So we’re sure not putting any number out there on a percentage of that rig count or the number of rigs that we might be successful with. There’s a lot of work. Our teams are working really hard to make this to make this happen. So hopefully more to come in the upcoming quarters, we’re announcing some success. But at this stage, there’s really not a whole lot more than that I can say, Mark, unless you have any other?
Mark Smith: No and what you’re referencing is just current thing that we’re in active discussions —
John Lindsay: Active discussions with multiple countries. So it’s not just one country, it’s multiple countries. And the bid processes take quite some time. And then the rigs actually go to work is another 6 or 12 or 14 months even past that. So just – it’s very hard to put any sort of a number to it.
Mark Smith: So to that last point, John, I would just footnote that we would expect to see this positively in our P&L in more likely fiscal 2025.
John Lindsay: ’25, yes.
Keith Mackey: Got it. Okay, that’s it from me. Thank you very much.
John Lindsay: All right, thank you.
Operator: We’ll take our next question from Marc Bianchi with TD Cohen. Please go ahead. Your line is open.
Marc Bianchi: Thanks. I think Mark, in your remarks, you mentioned that there were some lower-priced rigs in the backlog of your current contract book. Could you help us understand what the opportunity is to reprice those maybe if we were to mark everything to the leading edge today, what that would mean for revenue per day?
Mark Smith: No. But there is some – I think in the tables at the back of the press release, you can see a bit about what’s under term and get some indication of that. We have some pricing now which will help us more in fiscal Q2, frankly. Then I think we have another batch of rollovers in Q2.
Marc Bianchi: Okay. And the press release made a comment about not taking much of an increase for utilization to get really tight. And I think, John, you had sort of thought that the 40 to 60 rig add for 2024 is reasonable. It would seem like less than that number would be required for utilization to get really tight and we could start to see some pricing power. Any thoughts on more specifically how many rigs it’s going to take and when we might start to see some upward movement in leading edge?
John Lindsay: Marc, again, I would argue that the market is pretty tight right now. And again, we tend to got be focused only on the super-spec fleet. That’s the rig fleet that we have working, and so that is already really tight. So I agree with you. The 40 to 60 reference is really not necessarily super-spec, that’s kind of an industry rig count increase. Although we continue to see as an industry more and more super-spec capacity requirement, less of the non-super-spec. So we think that’s going to trend. So I would – quite frankly, I would say there’s pricing power in the market right now just based on what we see. So any additional net adds is just going to make that a tighter, a tighter market. Which is again why we had that, just to make that clear.
Marc Bianchi: Yes. Okay, that’s great. If I could just sneak one more in for Mark. The cash tax outlook implies quite a bit higher than what it looks like your book tax ought to be. Is this level of cash taxes something we should be assuming going forward or should we be assuming that your cash tax is quite a bit above your book tax for several more years here?
Mark Smith: No, I think we have – it’s around $25 million or so of 2023 taxes that are going to be actual payable in ’24.
Marc Bianchi: Okay. So that was driving —
Mark Smith: So that cash tax amount is not purely related to ’24. We’re expecting the same – as you saw from the range, we had 27% effective tax rate this year and that’s really, that’s the midpoint of next year’s range as well.
Marc Bianchi: Right. Okay.
Mark Smith: Just timing differences as to when we actually make the payments.
Marc Bianchi: Yes. Okay, thank you. I’ll turn it back.
John Lindsay: Yes. Thanks, Marc.
Operator: We’ll take our next question from Tom Curran with Seaport Research. Please go ahead. Your line is open.
Tom Curran: Good morning, guys. Just one left for me, but it’s kind of a bigger open-ended one. So as you endeavor to remain the industry’s technology and innovation leader, what role do you foresee M&A playing over say the next year or two? In the scale up cycle you did four acquisitions over 2017 through 2019, MOTIVE and MagVAR, AGC and Drill Scan, just what is your appetite and approach to M&A now and what specific capabilities or themes would you be prioritizing for a bolt-on, be it drilling optimization, software automation advancements, some other topic?
John Lindsay: Tom, that’s a great question and I feel really good about the acquisitions that we made and the value that we’re delivering – helping to deliver for customers. And I don’t really see a gap in our portfolio on what we have. I feel really good about it. There are lot of things that we continue to make advances on, the automated directional drilling is continuing to progress. There’s other things that we’re working on to automate and those skill sets and capabilities really lend themselves to being able to do more, not only downhole but also on the rig itself. So I feel really good about where we are and what we have and the team that we have. We’ve been very fortunate to retain a lot of that brainpower from the acquisitions that we made. So I feel really good about that and I don’t know of any other gaps that we have.
