Kevin Neveu: I can tell you a funny story about this Waqar. I was in Mechanical Engineering school back in 1982. And my fourth year graduation — fourth year senior year project was a request by a drilling contractor to find a way to automate the racking board. So back in 1982 the biggest challenge of drilling contracts could bring to a Technical Engineering school was how do you automate the racking board to make — to take that person out the racking board. It has taking 42 years, but I think we have a solution. And we’re pretty happy about this. It looks really good.
Waqar Syed: Yeah.
Kevin Neveu: It’s not — the cost isn’t zero, there’s going to be incremental cost, but it moves everybody from that red zone on the rig floor and the racking board, bolts on to our super-spec rig class. It doesn’t require a rig redesign. And we’re supported by NOV. So the software and the programming, is not — it’s not Precision Drilling trying to write software. This is industrial-grade robotics software being performed by the company which is also designed the same software for the offshore industry. So we feel really good about this relationship.
Waqar Syed: Yeah. Great. And then, just on the capital spending $195 million Carey, could you provide a breakdown of how those dollars are going to be spent Domestic, International and US.
Carey Ford: Sure. I would say less than 10% would be International. And then, based on activity levels that we’re currently seeing today, we’d probably have a pretty even split between Canada and the US. I think, it could shift if we see higher activity in the second half of the year. We could see more CapEx in the US because that’s probably where we have a few more higher dollar upgrade opportunities, if we see a big jump up in the rig count.
Kevin Neveu: And Carey the portion of that capital that’s long lead will actually just be for nowhere until we have an identified target.
Carey Ford: Correct.
Waqar Syed: Okay. And just a final question. Kevin congrats on raising the capital return to shareholders for 2024 this 25% to 35% number, how do you think about that? Is it exclusively or return in the form of share buybacks? Or when should investors be start to expect some dividend as well?
Carey Ford: Yes. I think this year Waqar, it’s more than likely going to be all share buybacks. And then I think we’re positioning the company and our cash flow profile to introduce some other ways to return capital to shareholders. But I think it’s too soon to say exactly what format that’s going to be.
Waqar Syed: Okay. Well, thank you, very much.
Carey Ford: Thanks, Waqar.
Operator: Our next question comes from Keith MacKey with RBC Capital Markets. Your line is open.
Keith MacKey: Hi there. Just curious first, can you talk a little bit about what you’re seeing in terms of the old leading-edge rate question in the US. Are things still in that $30000 to $35000 a day range? Or has it moved one way or the other from there?
Kevin Neveu: Keith, I think that’s a favor to categorize the market broadly is that $30000 to $35000 a day range. I think the discipline that we’ve been talking about for several quarters now remains intact. I would believe that there are some small contractors that might try to bid at lower rates than that, but we really don’t see that come across our bow very often.
Keith MacKey: Yes. Okay. Got it. And just sticking with the tendering activity. Can you just maybe speak a little bit to any trends you might be seeing in terms of rig spec in tenders, whether it’s digital or physical is the required rig changing at all from what we would have been considered a super-spec rig in recent years particularly I’m thinking as some of the larger integrated in the Permian look to drill longer and longer wells. Are you seeing a change in what rig they’re looking for in these bids? And does that match up with kind of what you’ve got available in your fleet or at least what’s within your upgrade capital spending for the next little bid?
Kevin Neveu: The easy answer to the entire question is yes, but a little more detail. So all of our rigs that are available in the US right now are pad walking AC digitally controlled triples. So the rig itself is fully capable. There might be a handful of rigs that require minor upgrades to handle the racking capacity of a long reach well, but for Precision that’s a couple of hundred thousand dollars per rig. It’s really a minor upgrade to the rig to add 5,000 or 6,000 feet of rocking capacity. The second upgrade to be required is likely going from 5,000 psi operating pressure to 7,500 psi. That’s probably about $1 million upgrade for a rig that’s not equipped with 7,500 psi. And then typically, if you’re going to 100-psi for a long reach well, you mind you to bolt on a third mud pump and a fourth generator.
And that’s more like a $1.5 million upgrade. We have title rigs right now that are full spec. They have the racking capacity. They’ve got the fourth generator third mud pumps 7,500 psi. As we get deeper down the batting order, probably when we get the next — after the next five or 10 rigs we’d be in some of those incremental upgrades. And some of that’s in our planned capital and some of us are long lead time capital.
