David Marsh: Got it. Got it. And then I guess as my follow-up, could you just — Keefer, could you just give us a refresh on the credit facility? Where we’re termed out to you right now? And any activity around that, that you guys might possibly pursue in terms of the extension. And with regard to the cash, I mean, are you — do you guys look for opportunities to perhaps pay down that ABL a little bit to reduce interest expense in the interim? Or is there something particularly positive about holding cash, you guys able to earn more interest income from holding cash than when you’re paying an interest expense.
Keefer Lehner: Yes, good question. Happy to jump in here. I’ll address your second question first, go a little bit out of order. As it relates to cash and uses of free cash flow, clearly, we think through optionality there. We’re continuing to focus on reduction of net debt and building free cash. We’re going to continue to evaluate opportunities to use cash in both organic and inorganic initiatives as we think about growing the business, and we’ll continue to evaluate opportunities to pay down the ABL. At this point in time, we’ve elected to build cash. You can see from the face of the income statement, we are generating pretty substantial interest income today on our cash balance. So we’re kind of more than offsetting the ABL cash interest cost based on the cash balance that we have today.
But that is something that we do continue to evaluate. As it relates to the broader capital structure, we’ve got two pieces of debt paper out there. The ABL and the notes, both mature in the Fall of 2025. The ABL has a springer inside of the notes, but they mature roughly two years from today. So I think we’re in a really good spot based on Q3 annualized results, LTM results. The business is performing exceptionally well. We’ve kind of more than grown back in the capital structure. Our net leverage ratio today is 1.3x. Moody’s came out last week and upgraded our outlook to positive. So everything in that regard continues to head in the right direction but we still have two years of tenure left. Our call premium just dropped down to 102 and 78 as of November 1.
And so I would expect over the next year or so, we’re going to start to look harder around opportunities to refinance the capital structure of the business but we’re just going to be patient and make sure that we execute a refinancing opportunity that makes the most sense for KLX and best positions us to continue to execute on our growth strategy going forward.
Ken Dennard: Thanks, Keefer. Thanks, David. So we’ve gotten a couple of questions since the call started via e-mail from some folks. Chris, you mentioned numerous benefits from the Oracle SRT. So can you elaborate more on that? I think people are interested there.
Christopher Baker: Sure, Ken. Appreciate the question. Look, our vision from the outset was to develop a next-generation smart tool that not only had performance benefits, but also inherent safety benefits as well as the potential to reduce string fatigue in coiled tubing as well as wear and tear on other asset components. The economic benefit of drilling and completion efficiency gains has largely accrued to the benefit of the operator while the increased cost of equipment wear and tear is candidly accrued to the detriment of the service company due to equipment cycle times, et cetera. And so the reality is it’s paramount that OFS companies find ways to share in the efficiency gains to benefit margin across every service line that we operate in.
And as we look at Oracle SRT, it really has the potential to extend coiled tubing string life, which is inherently margin-enhancing while also simultaneously bringing technology benefits to bear for the customer. And so we’ll provide more benefits on the technology down the road, but we’re really excited about the opportunities ahead.
Ken Dennard: That’s good. We got another one talking about the — longer laterals is kind of a buzzword today. What’s your experience and expectation of continued adoption of the four-mile laterals?
