William Hendricks: That’s a great question. I think we’ve been having those discussions ourselves, but there’s not any one particular area that you can call it out. It’s a mixture of publics and mixture of privates that are both being cautious and inflecting at the same time. So even our rig count adds that we’re looking at going into year-end or a mixture of publics and privates. So it’s really kind of across the board. I think in the natural gas plays, we’re still seeing a little bit of hesitation to pick up drilling rigs, and I can understand that. But I think that — when you look at the forward strip, that’s going to work itself out. So maybe a little bit later than we initially thought. But again, when we’re talking about our rig count at 218 now and then possibly exiting the fourth quarter at 220, this is an inflection in our rig count.
And I think that you’ll see the overall rig count kind of move higher a little bit later as well. I think a lot is going to depend on how the overall commodity outlook is. And also, I think you’ve got a lot of publics that are really kind of waiting for some signals from their own investors to say, “Hey, are you going to take advantage of these higher commodity prices, especially on gas and the forward strip?” So I think those discussions are probably happening for our customers with their investors. And — but I’m still optimistic about ’24. When we talk about natural gas and increases in activity in ’24, I’ve said this before, I still think it holds true. It’s really kind of a two-step function. You’re going to see an initial step-up just kind of based on the forward strip, be some moderate growth there.
You’ll see another step up towards the end of ’24 getting ready for ’25 and LNG takeaway.
Operator: We’ll go next to Kurt Hallead at Benchmark.
Kurt Hallead: Thanks for all the color and info and insight on how you guys pull this thing together. A lot of hard work in short period of time, for sure. So I’m kind of curious, as you look at the drilling products business, Andy, what kind of baseline growth should we be thinking about for that business, right? The vast majority of the business is U.S. directed so we can kind of kind of map that out to rig count, right? And it sounds like you got some growth opportunities international. So question, net-net, is really kind of geared toward outside of North America, what kind of growth you expect in Drilling Products for 2024?
William Hendricks: Yes. Thanks, Kurt. So their growth is really going to be tied to the overall rig count growth as we go forward into ’24. Roughly about 70% of their activity is tied to the U.S. rig count onshore. And so it’s really going to follow that trend. We’re really excited about their performance. They’re doing really well. Even with the softness in the market, the slowdown in the rig count, when you look at it on a revenue per rig basis, they’re still holding up well. And so the team is doing a great job. The market is what it is, but we are optimistic about the rig count in ’24. And so you’re going to see growth from their business tied to that U.S. rig count growth in ’24. On the international front, roughly 30% is tied to international growth, and we’re excited about that potential there.
There’s countries outside of North America that they’ve been in, and they’re still increasing their footprint. And so that 30% could grow to be a bigger percentage of that slice of the pie through ’24 and into 2025. And we’re excited to see how that’s going to play out.
Kurt Hallead: Great. Really appreciate that. And so it sounds like you reiterated a lot of your few points that you had back in early September about an improvement in U.S. land drilling related activity. I think back then, you kind of gave an indication that you thought the U.S. land rig count would get back above 700 sometime in the latter part of 2024. Given how slow things have been progressing through the end of this year, do you still have a lot of conviction in the rig count getting back to 700? Or is it recent activity levels kind of pulling that back a little bit?
William Hendricks: Yes, it has been a little bit slower on the uptick than I thought it was going to be for the end of this year. I think a lot of that has to do with budgets and our customers trying to work out exactly what their plans are, but I’m going to stick with that. I think that if you look at the forward strip on natural gas and the way oil has behaved in general across ’23, we’ve had a couple of dips. But in general, oil commodity prices have been at a healthy level. And I think that trend is going to continue. So yes, let’s go with that. I think it’s — we’re going to be close to 700 towards the end of ’24 as an industry rig count.
Operator: We’ll move next to Keith MacKey at Calgary.
Keith MacKey: Can we just first talk about the potential, I guess, cross-selling revenue synergies between drilling and pumping? Certainly, that’s been a potential benefit of the recent transactions. But Andy, how is that playing out relative to your expectations? Are there any notable wins or activities you could point to on that front as yet?
William Hendricks: Yes, that’s a great question. We’ve been in both businesses for a long time now in decades. I wouldn’t characterize it as cross-selling per se. But what I do characterize is strengthening the partnerships that we have with our customers. And when we announced these transactions, we received nothing but positive feedback from customers. We had long time partners who have been our customers for decades, who called me up and said, look, a stronger Patterson-UTI is good for us. And so having the strength to be able to address their needs across all these services has allowed us to have those conversations. And I wouldn’t necessarily, as I said, characterize it as cross-selling. But when you have those strong partnerships at a high level and now you have more capacity to service their needs, that’s the bonus.
