Luca Zanotti: Yes. Good morning. On the consolidation, obviously, we don’t provide sensitive information, but what I can say, Joseph, is that our presence with our redirect model in the large operators is very strong. So we have been benefiting from the consolidation, and if further consolidation is going to happen, we’re going to be continue benefiting from this consolidation on this segment. Now, bear in mind that in some cases, we are already on both sides of the transaction in terms of supply, so you wouldn’t need to take this face value, because this would be misleading. But certainly, consolidation has benefited us, and if further consolidation would happen on this side of the market, this will continue benefiting us.
Paolo Rocca: Yeah. Thank you, Luca. To some extent, the consolidation may be one of the reasons why the rig count is stable in spite of relatively high level of price on oil. I’m not saying gas, in which is more understandable. But in my view here, the companies are taking the time, because also these consolidations are announced, but are not really executed in some cases, because still they need authorization. So let’s take time, and we will see. Logical thing will be for us, the Pipe Logix rig count, over time to reflect deployment of this consolidation in a more active level of activity, especially as I was saying before, interest rates go down to some extent.
Joseph Charuy: Okay. Thank you. Well understood.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Luigi De Bellis from Equita SIM.
Luigi De Bellis: Good morning. Thank you for taking my question. The first one is on the South America. So you mentioned the political and economic volatility affecting the activity. So can you elaborate on the expected trend for the coming two quarters in Argentina and Mexico, even in terms of rig count expectations? And the second question on the pricing. So what is your pricing evolution, your margins outlook for the coming quarters? And when do you expect the bottoming out of the Pipe Logix prices? And you performed very, very well in terms of cost in Q1, how much room do you have to improve the cost structure in the coming quarters? Thank you.
Paolo Rocca: Thank you, Luigi. The first point on South America. Well, Argentina, after the change in the government, the stabilization plan underway is successful in terms of reducing inflation, reducing the country risk substantially, almost halving the country risk. Now, the government is in the process of asking for approval of very relevant set of laws in the Congress. If they succeed in this, this set of law includes specific treatment for large projects and in hydrocarbon law that, in my view, will stimulate investment in the sector. We are in a kind of standstill, while everybody is waiting for understanding if the government is able to get approval for transformation law like the one they are proposing today in the Congress.
Once this is done, and I think it will be done, I think that the company will move on. It will take time, I would expect, in a positive environment starting in the beginning of 2025, we will see actual action, because today the rig count is probably slightly lower than last year. There are marginal rigs that are not operating, but there are new equipment coming in into Argentina, moved from the U.S., so in preparation of a rising level of activity, but we will see this in my view full during 2025. At the same time, there are activities for the evacuation of oil and transportation of gas, these are projects that in the case the law for a large project is approved, will also be put in motion. Now, to put in motion the project, find the financing, private financing, organizing all of this, will take time.
So, again, I think this we will see, let’s say, real activity and acquisition of key inputs in the beginning of 2025, so not so much during in the coming quarter. Brazil is growing, Brazil is moving on, has a program for developing resources. Resources are rich, so I see this is more predictable with gradually moving on in developing deep water reserves and increasing the level of rigs. Venezuela is what it is, only Chevron will be allowed to continue the operation, and we are serving, in fact, Chevron in Venezuela, but it is relatively limited set of operation. Colombia is going down, because of the policy adopted by Vitro, still the number of rigs must be 10% below the level of rig last year, and may be reduced even further. For Mexico, the level of rigs operation in Mexico is basically going down slightly, in waiting for the change in the government.
The new government will have to define the policy for Pemex, probably refinancing, the restructuring, the depth of Pemex and deciding after the construction of the refineries that is being almost completed in those workers will decide which will be the next stage of development for Pemex. Also this, I expect in 2025 we will see a stable or increasing activity in 2025. It would be very logical with this price of oil and the need of oil and gas development in Mexico. The new government will assume in December of 2024. This is the overview for Latin America. The second question is the bottoming up of the Pipe Logix. It basically depends on the import. Import some of this in unfair trading conditions has been getting in this quarter. I don’t know if going on, we will see similar volumes of import, but I would expect the Pipe Logix to level up, to level, let’s say, by the middle of the year, because if there is, let’s say, a slight reduction in import, the level of inventory could go down slowly, and this will allow the level of the Pipe Logix to level up.
In terms of cost, you are right that we had a positive quarter. In cost, we are considering the reduction in Pipe Logix, we are launching specific action all around our system to contain a variable direct and indirect cost. We expect that this will help us to contain the reduction in the Pipe Logix and to defend our margin, especially in the second part of 2024.
Luigi De Bellis: Thank you, Paolo.
Operator: Thank you. At this time, I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.
Giovanni Sardagna: Well, thank you, Gigi, and thank you all for joining us at our conference call, and see you soon. Thanks.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
