So that’s first, what is happening on offshore. You contrast this with the gas market and a decision that was almost coincidental with the MSC decision, to increase the gas capacity towards 2030 by 60% compared to 2021. This is actually resulting in the total rig activity increase and net rig addition between now and the end of the year 2025 (added by company after the call) of a total approximately 35-40 (corrected by company after the call) rigs across the entire unconventional and conventional, both workover rigs, coiled tubing drilling units, and drilling rigs for the unconventional Jafurah and for the conventional gas. So this switch from offshore to onshore, the switch from oil to gas is actually the execution of strategy of Saudi Aramco, I believe.
And it happened that we have market exposure that is long on land, very long on land and it’s balanced and actually long on gas. So as a consequence for us, while this is an activity that has changed and a mix that wasn’t anticipated six months ago, this will not have a natural impact on our ambition for growth for Saudi, this will not change our guidance for Middle East sustained growth. And this will continue to support our ambition to grow international and hence, the full guidance directed this morning.
Arun Jayaram: Great. That’s helpful. And just my follow-up, Olivier, could you just characterize the rest of the spending picture in the GCC and the Middle East outside of Saudi?
Olivier Le Peuch: Yeah. I think that’s a very good point. Actually, it’s very broad growth and activity uptick in almost all the country with possible exception of Egypt these days, considering the cash and the valuation situation. But almost every other country is having a very significant growth and I have been citing a few countries this morning, and I could not stop listing all of them. And it includes Qatar that is starting to now remobilize for addition of the West North field. Obviously, Kuwait, as we commented earlier that is coming now very well structured to execute their capacity expansion, UAE on both gas and oil. Oman is very steady. Iraq, as you have seen, we have had some nice contracts also in that region. So we are very comfortable about the breadth, the diversity of the activity growth, rig activity growth, in the region.
And actually, a couple of rigs or more could actually be redirected from the offshore Saudi contract to supplement and to help accelerate some activity in the region, while some others are already being retained to some extent for future activity here in the Southeast Asia. So I believe that the Middle East, as we said earlier, last year broke and had a total market spend that was record high. I think this record is just extending this year and with a very good breadth of oil and gas onshore and offshore activity despite a slight change of mix in Saudi.
Arun Jayaram: Great. Thanks a lot.
Olivier Le Peuch: Thank you.
Operator: Next, we move on to Neil Mehta with Goldman Sachs. Please go ahead.
Neil Mehta: Yeah. Thank you for all the strategic comments. I had a couple of more financial questions. The first, just the second quarter commentary, if I look at Q1 EPS was $0.75, and I think The Street’s got moving to $0.84 in the second quarter. So just would love your perspective on how we should think about the 2Q versus 1Q build as you have pretty good visibility at this point into the second quarter?
Stephane Biguet: So Neil, as we have mentioned Q2, we always see the reversal of seasonality, if you want, and very strong margin expansion. So we just guided to 75 to 100 basis points of incremental EBITDA margin in terms of basis points. And the rest is below the EBITDA, you can very well assume to go down to EPS, but non-operating expenses and just about all the rest is about the same as in the first quarter, if that helps.
Neil Mehta: That helps, falls in pretty well with The Street. I guess the follow-up is just on EBITDA margins. It did come in a little bit softer than maybe where The Street was on digital and integration, to a smaller extent, on Well Construction. Just love your perspective as we work our way through the year, how we should be thinking about EBITDA margins and your conviction on the recovery there? Thank you.
Stephane Biguet: So as Olivier mentioned, it has been 13 consecutive quarters that we increased EBITDA margin year-on-year. So it was the case in the first quarter as well, and it will be the case in each and every single of the remaining quarters of the year. So this year-on-year growth of EBITDA and EBITDA expansion is with us for the year. Now you mentioned the D&I margins. As you know, we are typically the lowest in the first quarter of the year, this is mostly the seasonally lower digital sales. This year, it was made worse by a lower APS revenue due to two kind of related effects, actually. The lower gas pricing in our Palliser, Canada assets and higher amortization expense per unit of production. So this resulted in a year-on-year drop in the total digital and integration margin, but this is entirely due to APS, the digital margins are intact.
And as the rest of the year unfolds, as Olivier mentioned, digital sales will increase quarter-after-quarter and this will be at high incremental margins for digital considering that most of the costs are fixed. So we clearly continue to shoot for overall D&I margins above 30% on a full year basis.
Neil Mehta: Thank you so much.
Stephane Biguet: Thank you.
Olivier Le Peuch: Thank you, Neil.
Operator: Our next question is from Scott Gruber with Citigroup. Please go ahead.
Scott Gruber: Yes. Hello. I wanted to just circle back on the Saudi comments because a few investors have asked for some clarification. Olivier, did you mention that the rig growth was the net 60, 60, even with the losses of 20 jackups?
