Robert Eifler: Sure. The customer there announced a break in their drilling plans, which is what you’re referring to. For us, it is, of course, kind of a classic story of the double edged nature of a top performing contractor because we’ve drilled ourselves out of a job, so to speak. But to be clear, despite my last statement, there’s been no contract termination announcement, of course, we would put that out. And so what I would say is it’s too early, really to give definitive answer to what the customer plans to do there. They have announced a drilling break. I can give the color that that contract was signed in a substantially lesser market than we find ourselves today. So the termination clause kind of follows with commercials there.
But on the flip side of it, the rig has performed tremendously well, which is why we kind of finished some of the plans up early. And there is — the customer, we understand does have more work. And it’s a contract signed at a different period of time. So we’ll have to really kind of wait to see what the customer decides to do there. If in fact, we find ourselves marketing that rig, the good news is that the revenue makeup would happen relatively quickly because the market is substantially higher today than the rates on that rig under firm contract, so.
Operator: Our final question comes from the line of Noel Parks with Tuohy Brothers. Go ahead, please.
Noel Parks: Hi, good morning. Just a couple of quick ones. I apologize if you touched on these already, but it was encouraging to hear about the expected improvement in gross margins on jackups. I think you said to 15% from about 10%. So just interested to hear what you think about that, where that stands as a trend going forward.
Richard Barker: Sure. Yes. In 2023, obviously, that was tough year for us, for the jackup contribution, if you will to earnings. So obviously, as we see improvements in the North Sea more broadly, that’s why the 10% increasing to 15%. I think that we’re obviously not providing anything around 2025 at this stage, but I think we would expect to see that contribution continue to increase from 15% upwards once we get into 2025.
Noel Parks: Great. And I thought there was a mention earlier in the call that that sort of a light was flashing green on all sorts of fronts, including some optimism on the supply chain. I think maybe trees were mentioned, but I think in a recent question, there was another reference to supply chain. So I just wondered if you could maybe just characterize what you’re seeing on that side. Is that lessening is a factor in your planning or still a bit of a challenge?
Robert Eifler: Sure. Yes. So the reference to supply chain in relation to the Faye Kozack and some of our other SPSs was around some delays we’ve seen, really just in the Faye Kozack, we’ve seen around procuring some of the long lead items, which is delaying our start ultimately in Brazil. And that’s a function of shipping delays and strikes and everything I’ve mentioned, as well as the number of SPSs happening globally across the jackup and deepwater fleet right now. That is separate from my reference in the script to subsea trees, which we consider one of the leading indicators, particularly well for deep — for deepwater work, where a customer typically orders trees, which is a long lead item for drilling and producing wells before they go into development projects.
So if you look at tree orders, typically you can anticipate that one, perhaps maybe closer to two years after that demand for our services would follow. And so we’re seeing the green, flashing green is around leading indicators. On the procurement side, the only one we mentioned was trees, but then also FIDs and then just straight up OpEx budgets for our customers, excuse me, CapEx budgets for our customers are all up and are all positive and supportive of a multi-year upturn here.
Operator: I would now like to turn the call over to Ian Macpherson for closing remarks.
Ian Macpherson: Thank you, everyone, for joining us today. And we look forward to speaking with you again next quarter. Have a good day.
Operator: This concludes today’s call. You may now disconnect.
