Jeff Robertson: Thank you. Good morning. Anthony, as the churn maybe slows down in the Permian basin, do you expect at that point that day rates will start to firm up and margins start to improve as you put rigs back to work late this year and heading into ‘24?
Anthony Gallegos: Yes. I think it’s going to be a little a quarter later than what people may expect, Jeff, and the reason is the rigs laid down. Look, the big players in the business have maintained good discipline in pricing. As there are opportunities presented for people to step into the batter’s box, they are going to be aggressive in trying to get their rigs out. The good news is, I think it’s a relatively limited number of rigs that we are talking about. So, because of that dynamic, the margin probably lags the uptick in utilization by a quarter. And that’s why we are kind of laying out for you guys a slight decrease in the third quarter and then sideways for the fourth quarter, but very optimistic about 2024.
There has only been a 100 rig decline throughout the United States over this year, as you know, and very few of those have been in the Permian. So, the inflection to get back to pricing increases, I think it’s probably sooner than people may realize, but it’s going to be a little longer, a little later than we would like.
Jeff Robertson: Do you get the sense that any customers are starting to worry about how they might get a rig back to the Haynesville if they start to look at the back half of ‘24 and maybe more optimistic view of gas markets then into ‘25?
Anthony Gallegos: Yes, absolutely. Jeff, we have had guys actually have that conversation with us as they are starting to think about 2024. It likely becomes a challenge for them. I think one of the biggest reasons is we talked, I think on the last call about how activity in the Haynesville is drifting south and west. And what’s important to note from an equipment standpoint is as it does, it’s typically deeper. Of course, all the laterals are getting longer, and that just requires a bigger rig. And if you want to look at some extreme examples, look at what – I think it was Comstock that made an announcement earlier this week and what they are doing in the extreme western edge of the Haynesville, this is a stuff over in Texas and Robertson County in that area.
The well results that were published earlier this week, I think it was 34 million cubic feet a day of gas. That’s very similar to what a lot of the E&Ps are seeing in the Haynesville. And then as exciting as that, now they are going to test the deeper Bossier batch over there as well. And the reason I point that out is, like I said, remember, the Haynesville as it moves West, it gets deeper, the hook loads get higher. You are talking big equipment. And there is a limited number of those in the industry, 1 million pound type rigs, big setback capacities, things like that. And I think that bodes – that dynamic along with just the general Haynesville picking up is going to bode really well for contractors that have that kind of equipment. And of course, we are one of them.
Jeff Robertson: So, that play is migrating towards your rigs in terms of the specifications needed?
Anthony Gallegos: Absolutely, the 300 Series, yes, sir.
Jeff Robertson: Philip, you mentioned that you anticipate that the lenders will accept the redemption offers. So, that really drives or should allow ICD to naturally de-lever between producing the principal amount of those convertible notes, which also I guess ultimately decreases the refinancing burden, but also it appears you should still be able to add cash on the balance sheet. So, your leverage profile is that refinance window opens up, like you mentioned late next year, the company’s just natural leverage ratio starts to look a lot better and maybe have more opportunities. Is that a fair way to think about it?
