Marc Bianchi: End of the quarter.
Chris Wright: Oh, sorry about that – end to the first quarter, beginning of the second quarter. I misspoke, not for the first time today.
Marc Bianchi: Good clarification there. Thanks Chris. I’ll turn it back.
Chris Wright: Thanks.
Operator: The next question is from Ati Modak with Goldman Sachs. Please go ahead.
Atidrip Modak: Hi, good morning team. Just to understand the thought process in case we do see a strong drawdown in the number of active fleets and pricing does come under pressure. At what level would you say it is better to stack a fleet than accept lower pricing? And then what would you think that the industry on the whole would be willing to do in terms of pricing concessions?
Chris Wright: Ati, that’s a great question hard to give much of an answer to that. The market – we don’t see any signs of weakening right now. The market is strong. Of course, someday, the market will weaken. Don’t know when that is or how it will fall. Our relationships are one-on-one with particular customers. So look, and you see a softer market, there’s also efficiencies. There’s other ways to drive well cost down then lowering our net price if the market as a whole to supply we get other materials and run operations. But you know we’ve – as I mentioned in our intro, we’ve gone through sort of eight tough years in frac with the giant track fleet overhang, even when activity bounced back strongly in 2017 and 2018, there was just dozens of surplus equipment parked all around.
So that was just a different dynamic than we are today. And we were a younger company, establishing relationships, proving ourselves very early on in developing and rolling out our new technologies. We’re just simply in a much different place today that I can’t predict – future swings up or down in pricing. But I don’t think you’ll see anything dramatic in the foreseeable future there.
Ron Gusek: Yes, I’ll just add Ati – from a general perspective, if you talk to other players. As Chris said, the market has completely changed, right? It’s not this access sort of equipment that was made to be reactivated at any given time. So any swing down will be a smaller percentage of the total fleets available. You’ve got a much more consolidated market across the board for frac. And we are, as an industry, one hell of a lot more disciplined, right? And so yes, I think you’re going to see a lot more disciplined effect with net pricing kind of not moving, nowhere near in anyway the shape that you’ve seen over the last seven, eight years in these small cycles that were well oversupplied, comparative to what is going to happen in the next five years. That’s just my personal view.
Atidrip Modak: Thank you, I appreciate – the answer there. And then Michael, maybe can you talk about the free cash flow and working capital changes this quarter? And how should we think about that in 2023?
Michael Stock: Yes, I mean we had a small build in working capital this year. That’s mostly driven by sort of year-end prepayments and inventory. Next year, obviously, working capital will be a slight build as it follows revenue, Ati kind of really just you can model it with revenue. I think that’s a relatively reasonable number. I’ve given you the cash tax number for next year is sort of around 10% of pretax net income. And other than that, really, CapEx is the main sort of next main deduction has got very low debt, obviously very low interest.
Chris Wright: Michael, can you repeat some of that with the years by right next year ’23 or ’24?
Michael Stock: Next year I mean ’23 sorry.
