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.
Tom Curran: So John, it sounds as if, if I’m hearing you correctly, that you would expect to be able to achieve this next chapter of development organically, you know, via R&D with the existing platform in place, technologically.
John Lindsay: Yes. Yes, that’s a good way to summarize it. I think we have the skill set and I think we have the capability in-house for what we’re doing. Obviously, there are always opportunities to go out and do, you know, do things with other third parties. But I don’t think that requires necessarily M&A in order to do that. I think that can be done with the relationships that we currently have.
Tom Curran: Got it. Thanks for taking my questions.
John Lindsay: All right, thank you.
Operator: And we’ll take our next question from with Ati Modak with Goldman Sachs. Please go ahead. Your line is open.
Ati Modak: Hi, good morning team. You mentioned some cost acceleration of equipment that was less visible and you gave some color there, so really appreciate that. But curious if that changes or is baked into your normalized margin expectations at 50% longer term? How should we think about that?
Mark Smith: I’m sorry, could you repeat that question?
John Lindsay: You broke up on us just a little bit. Can you try that again?
Ati Modak: Yes, for sure. Hopefully this is better. Just on the cost acceleration of equipment, is that baked into your normalized margin expectations at 50% or does that change that expectation in the near term, longer term, how should we think about that?
Mark Smith: I think you’re talking about something in the international segment. That’s the only thing that was accelerated that we mentioned, not North America. Is that what you’re talking about?
Ati Modak: I thought you mentioned some FlexRig equipment acceleration and inflation. I thought that was in North America.
John Lindsay: Yes, your – we got it. I’m sorry for that. It’s the service intensity. Yes, it is built in. It is very hard to determine exactly how that continues to progress because, you know, costs do continue to increase, not only because of inflation but because of service intensity and equipment running harder and longer and delivering more volume. So yes, there is, but that is baked into our margin.
Mark Smith: It is, yes.
Ati Modak: Okay thank you, that’s helpful. And then you mentioned some tenders ongoing and I understand the color might be difficult there. But as you think about accelerating some of these deployment plans in the international markets or the international segment, how should we think about the cadence of the margin in ’24?
Mark Smith: Well, that’s, it’s just going to be – we don’t know yet. You saw the guide for this quarter’s international expectations. And if the countries hold flat, that’s the level of margin we would anticipate throughout the year, notwithstanding the successful outcomes of any of these bidding processes, which would cause us to incur expenses for final re-commissioning and shipping charges. So it’s just to be determined based on the processes for bidding, which as John stated earlier really sort of happen slowly and are very unique bid to bid.
John Lindsay: So there – yes, if successful like Mark said, most of that will push into 2025. There are a few countries that we could have some rigs that would deploy in 2024, but it’s going to probably be more towards the back half. So it’s not going to have a large impact on 2024 and others.
Mark Smith: Well, it won’t have any revenue for ’24 but expenses are incurred.
John Lindsay: Incurred, exactly.
Ati Modak: Appreciate that color. Thank you.
John Lindsay: Thank you.
Operator: I’ll now turn the call back to John Lindsay for any closing remarks.
John Lindsay: Thank you, David and thanks again, everybody, for joining us today. As we said earlier, we remain optimistic about the long-term energy fundamentals. We think there’s a lot of opportunities out there that H&P can take advantage of and use to create value for shareholders. So thank you again for joining us today and we’ll sign off.
Operator: This does conclude today’s program. Thank you for your participation and you may now disconnect.
