Mark Smith: No, there’s no downhole risk at all.
Don Crist: Okay, so they’re still directing you as to where the place and all that sort of stuff. It’s just more of a generally performance based. And if you’re better than a threshold, then everybody makes more money in essence?
Mark Smith: That’s one way to think. Yes, this is not a turnkey type construct contract. But I mean, there is the potential that you’re, for us that we would earn a lower revenue per day. But there’s the upside of the higher revenue per day, and obviously, based on what Mark said, we’re in that $2000 to $4000 a day range for those rigs that are using performance based contracts.
Don Crist: I appreciate the lifting the veil on that some for me. I’ll turn it back.
Mark Smith: All right, Don. Thank you.
Operator: And we’ll move next to a Kurt Hallead with Benchmark. Your line is open.
Kurt Hallead: Hey, good morning everybody.
John Lindsay: Good morning.
Kurt Hallead: Hey, I just wanted to get a little bit clarity on your guidance dynamics for the fiscal year 2024 as it relates to your U.S. land rig count. So if I understood the press release correctly, you suggested that your activity could be moderately higher in fiscal ’24 than it was in fiscal ’23. And if that math is correct, then I think you average something along lines of close to 160 rigs in fiscal ’23. So do you think then in that sense, you’re going to average more than 160 rigs running for all of fiscal ’24? I just want to make sure I was clear on that.
John Lindsay: Yes, it’s we were modestly climbed up in the Q1. We just finished and in Q2 we just guided a little higher, 154 to 159, as we said. And if you look at that and it’s flat for the rest of the year, then it’s we’ll just let you get that average.
Kurt Hallead: Yes, I guess that’s why I was asking, because the average is like 154 or so for the full year for fiscal ’24. It looks like fiscal ’23. If my math is right, it might be wrong. The average 170 rigs in fiscal ’23, so that’s why I just look at it.
John Lindsay: Yes, Kurt, that’s a great point. We’re talking about the back half of 2023, not full 2023. We don’t have that front end. I mean, gosh, our rig count was 187 rigs or something like that during that period of time. So it’s the back half of 2023. And just to be clear also, we’re not giving a full year guidance. We’re just saying this, what we expect in Q2. And then if you just look at historically what happens in Q3 and Q4, we’re trying to match up with that. But we’re not giving any guidance for Q3 and Q4.
Kurt Hallead: Okay. Yes, thanks for clarifying that. Appreciate that. So on the Middle East opportunity set, right, so again big win, big number of rigs, and it looks like it’s coming in a pretty short order. Without given a specific number or whatever, you think there’s opportunities continue to scale that throughout 2025 with additional contracts? Or is it here’s a chunk, let’s see how you do and then we’ll revisit sometime in fiscal ’26?
Mark Smith: Kurt, obviously, we would love to be able to say we believe there will be more. I mean, obviously, it’s hard to say that. We’re going to do our best to participate in opportunities in the future. We’re not finished. We hope, in any respect. So hopefully we’ll see more of these and more success in the future.
Kurt Hallead: Okay, but I guess fair to assume off that, John, that there’s nothing imminent to suggest there’s going to be another immediate pop. It’s going to be some progression over time. But it really was trying to get to was is this a dynamic where you haven’t really operated at scale in the Middle East and probably in this particular country, though you have plenty of track record in what you can do in the U.S. So, it’s not like you’re a startup or anything. But maybe this customer is like, look, we’re going to give you a shot. We’ll give you a chunk of work. Let’s see how you do. And then we’ll kind of revisit at some point time in the future. So I’m just trying to get sense of, if that’s how they’re looking at it, or it’s, hey, man, here’s trunch one and let’s continue discussions and see if we get the trunch two?
John Lindsay: I can’t speak at all about what the customer is thinking. I know from — obviously from our perspective, and you’ve heard us talk about this for quite some time. We have a an opportunity, we think we can we can do more, so hopefully that that will be the case. Hopefully we’ll be able to be successful in the future in this. We’re not finished with this.
Kurt Hallead: That’s all. Fair. Thanks, John. Appreciate it.
John Lindsay: All right, Kurt. Thank you.
Operator: And it does appear that there are no further questions at this time. I would now like to turn it back to John Lindsay for any closing remarks.
John Lindsay: All right. Thank you, Chloe. I really appreciate everybody joining us today. We’ve mentioned several times on the call this morning that we remain optimistic about the long term energy fundamentals and the opportunities that this provides H&P to deliver returns above our cost of capital through the cycles and create value for shareholders. So again, thank you for joining us today and now we’ll sign off. Thank you.
Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time and have a wonderful afternoon.
