John Turner: Yeah.
Bud Brigham: It’s not a very complex project in terms of the construction of the Dune Express.
John Turner: I mean, there’s like — as far as that equipment goes, I mean there is the opportunity to make sure that it comes in on time and making sure that it comes in meeting our specs. And so we’re reaching out to a lot of our vendors right now. We’re actually doing these vendor audits. We do this pretty periodically to make sure that the equipment we’ve ordered it making sure that it will show up on time and on spec. We’ve taken — like I said, we’ve taken — we’ve already having, so — so we’ve already — the number of the equipment are starting to arrive. You’ve got — concrete sleepers are starting to arrive. That’s what the Dune Express will sit on. We’re starting to take delivery of like a lot of fiber optic cable. So I mean there’s, a number of things that we’re currently working on. And as we currently continue to construct it. I think what we can do it in the interim is just to make sure that the Dune Express comes on time and on budget.
Ati Modak: Got it.
Bud Brigham: Did that answer your question?
Ati Modak: Yeah. Thank you so much. Appreciate the answer. Just on a follow-up. You mentioned in the press release that there were some quarterly price resets on certain contracts. Maybe help us understand that a little better. Like what does that exposure look like on your overall contracted volumes? And how does that actually work?
Bud Brigham: Jeff, do you want to take that?
Jeff Allison: Yeah. As we — depending on the market and how it’s working the quarterly resets have been a part of pricing strategies and portfolios for a long time. Within some of the pricing agreements that we have now, we have some quarterly resets. And you can see some of our pricing is in this third quarter and moving into the fourth quarter an effect of the pricing. Roughly, — we have roughly 25% to 30% of our pricing historically on quarterly resets probably moving to more of a 50% as we move into 2024. And the quarterly resets really adjust to the market pricing not only with regard to numerically but with regard to the trend. And so we feel that with that up-tick in the activity moving forward in the back half this should yield some positive results for us.
Bud Brigham: Yeah. I mean, our view is — and I think everybody can see it — that we moved through a trough, in the rig count and the frac spreads. And I think, we certainly — and I think most of the industry’s anticipating a pick-up in activity in 2024. So I think — I mean the quarterly resets give customers and us comfort. We have great relationships with these guys that we’ll be able to adjust to changing market conditions. And in my view is it sets up very well for 2024.
Ati Modak: Thanks. I’ll turn it over.
Operator: Our next question is comes from Saurabh Pant with Bank of America. Please proceed with your question.
Saurabh Pant: Hi. Good morning Bud and John. Maybe I’ll just start with a quick one on the Dune Express. Clearly you’re making a lot of good progress on that, including on the ground. Just want to ask in terms of how customers look at it and they see that progress. Are you seeing more interest customers coming to you asking on the project getting familiarized with that and showing interest in contracting volume through that? Just talk to how your customers are responding to the progress that you’re making on the ground.
Bud Brigham: Well, I mean, — I think, clearly the customers are excited about the Dune Express coming online. And so I do think that those — and Jeff can talk about — of course we have our existing customers. But we have a number of new potential customers that we’re in discussions with that we think it’s obvious that the Dune Express is very attractive to them and compelling. So we’ll be having those discussions over the next three to four months and we expect to grow our customers. Jeff, I don’t know if you want to …
John Turner: Yeah. One thing though is this — if the Dune Express is just over a year away. And so any contracting that we’re doing right now in the Delaware basin is going to — it’s contemplating taking sand off the Dune Express. And yes, there is a lot of interest from some operators that are out there in the Permian, especially the — I mean, the Delaware that are looking for that size and scale.
Bud Brigham: And both side [ph] you get the trucks off the road. That’s a real issue out there.
John Turner: Yeah. The efficiency that’s coming with this is you know with the Dune Express. So Jeff, do you want?
Jeff Allison : Yes. As John stated earlier, it’s not a race to get to 2024 volumes contracted, but more of an effort to align with high-quality clients both EMPs as well as pressure pumpers that are sustainable on a go-forward basis. Current contract discussion are not just sand and logistics supply agreements, but a more complex and long-term conversation about revolutionary infrastructure-based solution for the Permian. And let me define infrastructure solution based — infrastructure-based solution. It means a compilation of sand production expansion to meet the needs of our large scale high efficiency customers. A unique logistics solution that Chris alluded to earlier with three to four times transit capacity was a phased interface of multi-trailer delivery from the drop depot model to the eventual Dune Express delivery solution, but just approximately a year out.
This all leads to security and reliability of supply for years to come. So it’s a journey and we’ve had tremendous amount of attraction early on. So we’re working these — we’re just taking these ideas and putting them to paper right now with the customer.
John Turner : I mean, this is something we’ve been talking to these customers for about a long time three or four years now. And now it’s just within a year. And so…
Saurabh Pant : Yes. It’s become very [indiscernible] yes, yes, yes. Now that the project is within a year of completion right customers see progress on the ground. There should be more traction right? And it sounds like there is more traction. So that’s encouraging. Okay, perfect. And then a quick follow-up or more of a housekeeping question on CapEx, cash CapEx particularly. John maybe you can remind us how much of CapEx associated with the Dune Express has been spent at this point? How much more is left? And then just for the fourth quarter, how should we think about CapEx and the residual CapEx related to the Kermit expansion that’s coming online this quarter?
John Turner : And Brian has those numbers. I’m going to let him answer those.
Brian Leveille : Yes. We’ve spent $180 million on the Kermit expansion. So there’s $20 million, $25 million left. And on the Dune Express, we’ve got $132 million behind us. So another $268 million over the course of the next five quarters.
Saurabh Pant : Okay, okay. Okay, guys. Thank you. Yes, I got that. Okay. Thank you. I send it back.
Bud Brigham : Thank you.
Operator: Our next question comes from Geoff Jay with Daniel Energy Partners. Please proceed with your question.
Geoff Jay : Hey, guys. Just a quick one for me. This is about — it’s actually M&A question a little bit. Obviously, as companies get together, or I guess rumored to get together in the future and lateral links increase, I’m just curious what that does in your mind to overall sand demand and what that kind of means for you guys in your business.
Bud Brigham : Yes. This is Bud. I’ll start and these guys may want to add to my comments. But I did touch on it earlier. I think first that’s hit or miss is the acquiring company. Is it an existing customer or not? But generally, the larger customers — the larger operators are customers of Atlas Energy Solutions, because we match up really well to provide the scale and reliability that they need. So I do think long-term it is very beneficial for Atlas. That’s more difficult for mom-and-pop type operators to match up with these large scale operators particularly given increasing pad drilling and completions; increasing simul-fracs, which just require a lot of profit very quickly. And we’re uniquely positioned to provide that. So I think it’s very beneficial. And our scale — and our growing scale is really important in that. I don’t know if you guys want to add to that.
