Derek Podhaizer: Got it. That’s all helpful. My follow-up, so you talked about the accelerated attrition to the equipment from the market over the past years. Can we get a sense like what the current market equipment mix is. I mean I think this is probably underappreciated by the Street. Would you say those 50 frac to 60 frac spreads there move or all Tier 2 diesel? It appears the market was high-graded rather quickly over the past year to me, this provides structural support to profitability. I mean just could you just expand on your thoughts around that? Just how should we think about the overall equipment mix of the market today?
Chris Wright: Yes. So, I think as we’ve talked about a little bit, there is sort of a bulge at the moment. You think about 10% attrition every year, right, sort of an annual 10-year life cycle with fleet. I mean that’s a rough number. But there’s a bulge of equipment that was built in that sort of 2013, 2014, nothing much, nothing was built in 2015 and 2016. Some stuff was built in 2017, 2018, sort of into beginning part of 2019, nothing was built through COVID. So, if you look upon that, if you think about the distribution, right, there is a bit of a bulge of equipment in that sort of eight year to 12-year old age group, and that’s all Tier 2 diesel, right? So, I think what we’re going to see is you can see some accelerated sort of number of fleets leaving the market over time, because of that fact, right? So, I think that’s what’s happening. And then as you say, people are high-grading fleets as we go through the year.
Derek Podhaizer: Got it. I mean, just quick follow, that 50 to 60, how much do you think could come back? Or how much they get sidelined permanently?
Chris Wright: We’re not sure. Roughly half maybe.
Derek Podhaizer: Got it. Great. Thank you. Send it back.
Chris Wright: Thanks.
Operator: [Operator Instructions] Our next question comes from Marc Bianchi, TD Cowen.
Marc Bianchi: Hi, thank you. Just first off, to clarify, Michael, you mentioned the maintenance CapEx number. That was included in the $500 million to $550 million. Just wanted to clarify that if it’s all right.
Michael Stock: That is correct.
Marc Bianchi: Great. Thank you. In terms of the flat EBITDA for the year, so you guys mentioned 50 fleets have come off out of the market. It’s over 100 rigs have come off. How much of that needs to come back for you to achieve the flat EBITDA that you’re talking about?
Michael Stock: We’re not baking in meaningful amount of that to come back. I suspect a little will. We have our own sort of Liberty frac fleet count across all basins, all players. Look, there’s going to be more active frac fleets in Q2 than there was in Q1. It gets harder when you look out further that Q2 level most likely continues on. But I think that depends what commodity prices did, who is running the fleet? What kind of acreage is getting drilled? So, we’re not baking in a big macro rebound at all. We don’t foresee that. We don’t bet on that. We’re basically saying it’s more self-improvement. We’re making our own business more efficient, more desirable to our partners. And so yes, we’re not baking in a macro, the macro to go back. We can make more money in a weaker environment, each successive year.
Marc Bianchi: Yeah. Okay. And if we take the first quarter implied if you’re going to be flat, call it, $250 million of EBITDA, you need to be averaging like $320 million per quarter in the remaining three quarters. It probably not how you guys see that playing out, it would grow throughout the year. But is the right way to think about it at this point that it’s just a straight line of growth? Or is it really fourth quarter weighted? Or any way you can just describe what the shape of that looks like a little more?
Michael Stock: In general, sort of like most years, you’re going to have a fourth quarter four, right? So comparative to the third quarter. So it’s always relative. Again, the ramp out of COVID [ph] that didn’t happen. But in general, in a flattish – in a more sort of like steady environment like we’re in now, fourth quarter will generally be lower than third. It doesn’t necessarily mean there will be a low on general market activity as this past fourth quarter was compared to third. But yes, there’s always that kind of drop off. So yes, that’s generally the shape of the arc, so to speak. And so yes, as we said, flattish it’s going to be growing as we go through the year, you can probably have a little bit of roll-off in Q4 unless macro changes, right? I mean there’s a lot of changes there’s a lot of potential macro puts and takes as we go through. So that will become clear as we go through the year.
Marc Bianchi: All right. Okay, super. Thanks so much. I’ll turn it back.
Operator: Our next question comes from Waqar Syed with ATB Capital Markets.
Waqar Syed: Thank you for taking my question. Chris, one for you and one for Mike. Could you talk about Oklo investment? What’s the rationale there? What’s the size of the investment in that venture? And then Mike, in terms of moving the crude to Australia, what’s the cost involved in mobilization? And when will those costs be incurred or reflected in the numbers?
Chris Wright: Yes. Look, what is Liberty passioned about and we have some skills in energy, how to develop and take new energies and commercialize them. Obviously, our focus with Fervo, it’s barely a move at all from our core business. Oklo is definitely more of an outreach. Oklo was a $10 million investment. So it was less than 2% of our CapEx. So smaller investment in that. But we look at what could be changing in the future of energy? What technologies could play a growing role that Liberty could be helpful in? And think of LPI. What LPI’s long-term business. It’s to deliver gas and electricity where it’s needed. And today, that’s in the oilfield, that’s running our frac fleets for the start, then it’s going to grow to other oilfield applications.
But we’re doing things on a policy front. It’s making electricity more expensive and a little bit less stable grid. If we had LPI in Europe, we could make a mint just keeping the lights on, it’s having high thermal efficiency, mobile addressable power needs. So that will expand, LPI will ultimately provide providing power solutions in the oil and gas industry outside the oil and gas industry. What else could play a role in that sort of shorter-term operate smaller grids, Oklo is small modular reactors. The interest in the technology is tremendous. We held an event in Midland, Texas. Oil and gas companies, Liberty and Oklo. Interest absolutely tremendous for everyone that’s looking at these larger companies building their own grids maintain, building grids.
What are you going to run those on. Natural gas, maybe natural gas and nuclear.
Michael Stock: So on the Tamboran, the Australia, basically, it is one fleet’s worth of work for about two months in the latter half of this year, late Q3, early Q4, and the cost of sort of mobilizing is basically covered. So yes, it’s really not going to change the numbers, particularly we’re going to be running on extra fleet. One extra fleets with the profitability for about two months. That’s kind of the effect on the income statement.
Waqar Syed: Thank you.
Chris Wright: Thanks, Waqar.
Operator: Our next question comes from Keith MacKey with RBC Capital Markets.
Keith MacKey: Hi good morning. Just wanted to start out with LPI. And Chris, I know you just mentioned there’s broader and more longer-term ambitions for that business as a delivery of natural gas and power generation. But if this year plays out as you expect with your doubling LPI’s capacity and you get to 90% of your fleets on next-gen technology, what approximately will be the coverage or how many LPI fleets or how many LPI kits or however you want to call it, will service your Liberty fleet? So just trying to get a sense of the opportunity going forward. Is it going to be like half of your fleet will be served by LPI or more or less than that?
