Good morning, and welcome to the FMC Technologies' Third Quarter 2011 Earnings Release Teleconference. [Operator Instructions] In the event of technical difficulties during this call, we will post updates at www.fmctechnologies.com/earnings. Thank you. Your host is Brad Alexander, Director of Investor Relations. Mr. Alexander, you may begin your conference.

Thank you, Jamal. Good morning, and welcome to FMC Technologies' Third Quarter 2011 Earnings Conference Call. Our news release and financial statements issued yesterday can be found on our website. I would like to caution you with respect to any forward-looking statements made during this call. Although these forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and our outlook based on currently available information, these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by these statements. I refer you to our disclosures regarding risk factors in our SEC filings. I will now turn the call over to John Gremp, FMC Technologies' President and CEO.

Good morning, and welcome to our third quarter 2011 conference call. With me today are Bill Schumann, our CFO; and Bob Potter, our Executive Vice President. I'll share with you some highlights from the quarter, Bill will provide specifics on our financial performance and expectations for the remainder of the year, and then we'll open up the call for your questions. First, the results for the quarter. Earnings were $0.50 per diluted share. We recorded $1.3 billion in orders during the third quarter, of which $731 million was for subsea systems and included 31 subsea trees. Subsea backlog now stands at $3.8 billion. For the quarter, total company revenue was $1.3 billion and subsea revenue for the quarter was $824 million. Subsea sales increased 33% over last year and 4% sequentially. While this volume was a record, it was below our expectations. Margins were also below our expectations due to both volume and execution. We continue to expect our subsea sales will reach $3.3 billion for the full year as our fourth quarter subsea revenue should approach $1 billion. This expectation is consistent with the fourth quarter typically being our strongest of the year. Surface Wellhead revenue was up 16% from the third quarter of 2010, driven largely by North American activity. We're starting to see some of the international timing and execution issues we've experienced in prior quarters improve and believe results going forward will continue to reflect this improvement. While we won't be able to fully recover from these issues in 2011, they will positively impact our 2012 results. Fluid Control continues to see record demand, driven by North America pressure pumping activity, as orders for both our WECO/Chiksan Flowline Products and our Well Service Pumps are at unprecedented levels. We're continuing to expand our capacity in these…

Thanks, John. Energy Production sales for the third quarter was slightly above $1 billion, an increase of 32% from last year's third quarter and 5% from the second quarter of 2011. Our third quarter subsea sales of $824 million were up from the second quarter, but as John said, below our estimates. We're still optimistic we can deliver a fourth quarter that reaches our target of $3.3 billion for the whole year. We're now in the stages of subsea projects that drive large revenue increases. However, we are facing some headwinds from the impact of a stronger dollar. Surface sales were 16% above the third quarter of 2010 and increased 7% sequentially on the strength of North American activity. The delayed international orders that impacted the first half of 2011 have now been received, and we now have backlog to support continued growth. Energy Production generated operating profits of $115 million in the quarter, an increase of 8% from the prior year quarter as sales increased. Sequentially, profit increased 18%. Production margins at 11.3% in the quarter were below our estimates. Subsea profitability improved sequentially but fell short of our expectations. While we did gain the benefits of leveraging our SG&A spend in the quarter, we suffered some delays in projects and incurred increased project costs as we ramped up subsea volume to record levels. Surface operations' profitability improved sequentially, but we are not where we expected to be here either. We anticipate further progress in the fourth quarter in both these businesses. We now expect Energy Production margins to be between 10.5% and 11.5% for the full year with fourth quarter margins coming in around 12%. Inbound orders in Energy Production were $934 million in the quarter, including subsea orders of $731 million. Backlog now stands at $4.1 billion,…

[Operator Instructions] And your first question comes from David Anderson. John David Anderson - JP Morgan Chase & Co, Research Division: How much do you think economic concern is playing a role in the subsea market? You mentioned that a lot of these projects are just going to get pushed out because of normal delays. But with Brent prices where they are, most of your projects are priced up with Brent, I'm just wondering if it's just -- it doesn't seem to be so many project [ph] economics. I was just kind of curious your thoughts in terms of the economic uncertainty and how that plays a role in here.

So far, what we've heard from the operators is that the projects that they've launched a year ago and put in motion, they're not factoring in any of the economic uncertainty in their decisions. They're proceeding, I think, with confidence on the long-term oil price that, at today's levels, supports their developments. So we're not hearing -- and it's not to say that it couldn't happen, but we're not hearing any concerns. The delays in projects are the normal delays. These are large complex projects, usually involving or oftentimes involving national oil companies. And that's the kind of delay that we're seeing. Nothing about, that I've heard anyway, about revising their economic models based on economic uncertainty. John David Anderson - JP Morgan Chase & Co, Research Division: Okay. And you talked a good bit about the Gulf of Mexico in the outlook. You had 20 rigs drilling in there now. Most of them are drilling on development work. Of the 31 trees you've got this quarter, were any out the Gulf? And can you just kind of give me a -- can you give us a kind of a roadmap as how you see that progressing over the next 12 months? So would it mostly be onesies and twosies? Do you see some big projects in there? Can you kind of just help us understand how do you think that's going to develop?

Yes. Let me just go to the Gulf for a minute because it is encouraging. The pace of permitting is clearly picking up, we're getting close to Macondo levels. The rig levels are -- in the next -- probably by the current rate by the middle of next year, will be at pre-Macondo levels. I think I mentioned in earlier calls that the major operators were generally proceeding with their big developments in the Gulf of Mexico kind of despite the slow pace of permitting. It was the independents that I was a little more concerned about. And quite frankly, over the last quarter, we're seeing the independents start to move out, get permits approved and proceed with their projects. In the third quarter, we booked about 3 subsea trees related to the Gulf of Mexico. But the Gulf of Mexico was strong, particularly in -- we had a good aftermarket business in the Gulf of Mexico in addition to the 3 trees. And you're right, I think typically the Gulf of Mexico is more onesie, twosies because they have the infrastructure. They're tying back to it as opposed to, say, West Africa, where you're going to have much larger, complex projects. So yes, smaller orders in the Gulf. And I'm encouraged and we have to be somewhat cautiously optimistic about the Gulf. But it looks like it's starting to come back. John David Anderson - JP Morgan Chase & Co, Research Division: How does the margin mix look on the kind of onesies and twosies? Is it the -- should they have higher margins because they're sort of your off-the-shelfs and should require engineering projects, should require more engineering on it?

Yes, that's correct. If they're going to be off-the-shelf and more of our standard design, particularly if they're an alliance partner or a frame agreement partner, we're going to have better margins than if there's a $500 million West Africa project that's competitively tendered, at least in today's environment, the onesie, twosies in the Gulf would probably have a little bit better margins.

And your next question comes from Bill Herbert with Simmons & Company. William A. Herbert - Simmons & Company International, Research Division: John, so what was encouraging about your opening commentary here was the continued optimistic outlook regarding the subsea tree award scape, or Seascape [ph] in this matter. And what I'd like to do is maybe to juxtapose where you stood on the Q2 call when you pretty much revealed that you thought that subsea tree awards would be up 50% industry-wide in 2012 and major project awards would double. You didn't specify on this call, but certainly the commentary was affirmative. How would you juxtapose your outlook on the Q2 call versus today? Has it changed? Is it more optimistic? Or is it still the same, which is constructive?

Bill, it's the same. And let me kind of give the statistics again. It looks like in 2011, major projects over $100 million, there'll be somewhere between 8 and 10 awards in 2011. When I look at the project list for 2012, it is 20-plus and perhaps just as importantly, it's more evenly distributed over the year. More than half of those 20-plus awards are at least scheduled to be awarded in the first half of the year. So even if they move out a quarter or so, they could still stay in the year. The second thing with regard to the 20-plus projects, many of them are well into the tendering process. And so they're at a stage where the bids have either been submitted or they're under evaluation. So that gives us confidence that not only is the number of projects over $100 million for 2012 larger than 2011, but the likelihood of them being awarded is strong. The other thing is that in 2011, there was very little Petrobras activity. If you'll remember, 3 years ago, Petrobras came out with multiyear contracts. Those multiyear contracts would largely be completed or consumed, and we believe that Petrobras in 2012 needs to start ordering trees and manifolds, not only for the conventional equipment but also for pre-salt. So you kind of put that together, plus maybe some improvement in the Gulf of Mexico, and you get a very strong 2012 for subsea awards. William A. Herbert - Simmons & Company International, Research Division: It certainly sounds like it. And Bill and John, with regard to -- so let's take subsea tree -- or sorry, Energy Processing -- Energy Production margin is at 12% in the fourth quarter. And then if we can just talk about, not necessarily specifying what the number is, but the margin roadmap for 2012, the launch point is more favorable certainly than the yearly average. You're going to go into the year with a higher level of backlog than you came into 2011. I don't know about mix, maybe you could add that commentary. But certainly, margins should be up versus the fourth quarter in terms of the 2012 average. Is that a fair comment, Bill?

Well, Bill, we're not going to give guidance at this point for 2012. We can talk about what happened in the third quarter and what happened -- what we expect to happen in the fourth quarter. But I mean, year-over-year, we would expect some improvement. I don't know about the exit. I don't know about the margin in the fourth quarter versus full year 2012 at this point. William A. Herbert - Simmons & Company International, Research Division: But the narrative with regard to higher volumes, higher backlog going into the year, certainly helps absorption, correct?

That's right. William A. Herbert - Simmons & Company International, Research Division: Okay, fine. And then do we have any -- can you at least shed some light with regard to the mix that's in the backlog today and how that perhaps may influence margins in 2012? Is it an uptick, a downtick or is it flat?

As we've gone through the year, our margin in backlog, which I think is what you're asking about, has increased slightly. And that's more due to executing lower margin projects than pricing increasing. So we should have a slightly better mix going into 2012 than we had coming into 2011.

And your next question is from Joe Hill with Tudor, Pickering, Holt. Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: John, just thinking about the backlog and the time it will take to consume, can you give us an idea as to -- we're at $3.8 billion or so today, I think, how long it will take us to work through that for subsea?

Well, the $3.8 billion backlog that we have has kind of been in backlog for 6 months. So we're starting to get deeper into the manufacturing cycle. So we think it will start to ramp up in 2012. And I think typically, we are, beginning backlog, we consume about 60%. We convert about 60% of that in a year in which that backlog exists. So I don't think the $3.8 billion we have in backlog is unusual, it's not. We had pretty good inbound in the first half of the year. So I'd say it's evenly distributed, not one cup where it's going to affect that conversion rate that's been our historical rate. Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. And then how much was the nonmanufacturing subsea order number in the quarter, the installation, service, et cetera?

We actually had -- in the quarter, we had a fairly strong installation number. It represented a little over 30% of our subsea inbound. It was unusual because we booked 2 extensions to our Statoil Light Well Intervention orders, and so that drove that number up. Typically, the number is between 20% and 25% is our aftermarket or installation services versus the subsea inbound number. And it was higher in the quarter because of this unusual multiyear extension to 2 Light Well Intervention contracts with Statoil. Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. And just to follow up on that, what do you think the prospects are for getting another Light Well Intervention unit signed up with an operator in the next year?

Well, there's a lot of interest. Our 3 Light Well Intervention systems, 2 for Statoil and 1 for BP, are performing extremely well. The utilization numbers are quite high. We've been successful in actually using the onetime [ph] contract with BP for Shell and some other operators. So the interest is growing. The trigger for an additional Light Well Intervention stack will come when we're convinced that we have enough commitment for the operators to support a good level of utilization. And we don't have that yet. Right now, we've got interest, we've got other people, other operators that are actually using the system and pleased with it but haven't put together enough commitment to trigger a fourth stack. But we're hopeful that, I mean, as interest grows, that will eventually happen. Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. And then finally for me, we've had some commentary out of some pressure pumping contractors over the past few days that would suggest that market is perhaps peaking at least in the gas basins around the country. What's your current order visibility for Fluid Control? And what's your game plan if that market does soften up a bit?

Well, as you know, Joe, the Fluid Control business is kind of the opposite of subsea, in that we refer to it as a shorter-cycle business. So if there were a downturn in North America pressure pumping activity, we'd see it fairly quick in Fluid Control. But in the quarter, we had record levels of inbound for our Fluid Control business. And the operators are continuing with a strong order rate for that equipment. So we haven't seen any kind of a decline. And certainly, the shift from gas to liquids makes North America activity a little bit more sustainable. But I'll let Bob make some additional comments.

Well, I think John's comments are right on. And the shift to liquid-rich shales is certainly a major factor in terms of bolstering our confidence about the path forward in North America. Quite honestly, our best measure, though, is active dialogue with the pressure pumpers. And we stay in constant contact with those guys, assessing their -- not only their CapEx plans, but also where they're operating and how actively they're operating. And all indications are right now, that while they are somewhat less optimistic about the natural gas part of North American drilling, the liquid-rich shales are certainly picking up the pace. And then there's other variables that are hard to predict, leasehold drilling, gas fields where they have hedged contracts, so there's lots of moving parts. But all in all, we remain reasonably optimistic about the North American market.

And your next question is from Bill Sanchez with Howard Weil.

John, I wanted to talk just a little bit about pricing on subsea and how you see that unfolding. I know the commentary previously has been for you that pricing has been relatively flat here. And just curious as we move through 2012, given the exceptional order rate you see for the industry as a whole, at what point do we see our competitors filling up enough backlog here, where the industry as a whole starts to see some sort of pricing traction, I guess, first? And then second, can it come soon enough kind of given an even spread rate you see next year for orders to impact 2012 at all, perhaps in the back half? Or is that more of a 2013 margin impact as you see it?

I think to see a material increase in pricing, we need to see some of these major awards being distributed over the other subsea suppliers. As you know, Bill, we rebuilt our backlog with almost 60% market share in 2010, and now it's like another 60-plus percent market share in 2011. So we've rebuilt our backlog. We're going to be selective going into this very strong market in 2012 to be sure that we preserve our margins, if not improve our pricing. So we're going to be selective. But the key to a material price increase in subsea will be those other suppliers who have not rebuilt their backlog. And I'm sure they need to do that. So we need a couple of awards for each supplier so they -- where they start feeling that their backlogs are sufficiently rebuilt and then we'll start to see, at least I hope anyway, that we'll start to see some pricing change as the other suppliers realize that they're starting to fill up their capacity. So I don't want to necessarily predict the timing and the calendar. But I think it's safe to say that we're going to have to see a handful, maybe 4 or 5 major awards left next year and then distributed over the remaining subsea supplier before we see some pricing improvement. And I think that sort of means that it'd be later in the year possibly. And then we'd have to be able to convert those orders with better pricing pretty darn fast to get into 2012 revenues. So I think it's better to look at it more as a 2013 situation.

Okay. My follow-up, I know you touched briefly on kind of the fluid end business and its relationship to North America. I was curious if you could talk a little bit about your North America plans on the surface side. I know that's a segment that's typically heavily weighted toward international, but you guys have made a conscious effort to grow that business here. Just curious in what's been an uncertain WTI landscape here, has there been more challenges in growing that business than you thought? Or how do you see the North America surface business unfolding for you as we move through next year?

Well, Bill, I appreciate that question. Yes, you're actually right. Historically, our surface business had been more weighed toward the international side, where we have very strong positions. But because of the North America activity, we've seen substantial growth. And in fact, the Surface Wellhead inbound increase has come almost exclusively from North America and that's because of our success in participation in the shale plays. In particular, we've had a lot of success in frac rental equipment. And throughout the year, we've increased our investment in these assets. So I think it's been very, very positive for us. It's allowed us to increase our market share in North America because we've been able to respond to the growth, especially in this frac rental equipment. So I think -- I mean, I don't necessarily want to predict North America activity, but I think quarter-over-quarter, we saw a big improvement in Surface Wellhead.

Sure. I guess, whatever you believe the rig count is going to do next year, that business should grow at a faster clip for you.

Yes, I just wouldn't want to comment necessarily on what the rig count is. I'll let Bob comment on the outlook for...

Just a couple of points. Quarter-over-quarter, North America Surface Wellhead increased 45%. So it's a big jump. And the other change that has really happened in North America shales are the makeup of our customer base. Increasingly, we see more majors and NOCs in the shale plays that we think plays well for us. And that's really more dead center for our kind of customer base, and so that's working well for us. And as John said, we're continuing to invest aggressively, not only in the equipment to be utilized on the drilling applications but also in facilities. We're continuing to expand our footprint particularly in a liquid-rich shale environment.

And your next version is from Brad Handler with Credit Suisse. Brad Handler - Crédit Suisse AG, Research Division: Can we please come back to the Energy Production Systems margins? I guess, I just want -- I know you basically addressed it in your comments, but maybe we can flesh it out a bit more. You had expectations of improvement in the third quarter, which were not quite realized. And you're dampening your expectations for the fourth quarter margins, if I understood the guidance correctly. Can you confirm that? And then is this about -- have projects fallen on back of each other and so there's still delays in getting what you expected out the door? It sounds like there was a little of that. Or can you talk about these execution issues that you are describing as such?

Sure, Brad, this is Bill. Let me see if I can address your question. First of all, you're right. Our guidance had implied about a 13% margin in the second half of 2011, Q3 and Q4. And our current results in Q3 plus our guidance for Q4 would imply about 11.5% margin. So we have reduced our expectations. We've talked a fair amount about the surface issues that we've had. We've had some execution issues in our international business. Those have reduced in magnitude, but we're still suffering a little bit on the international side of the surface business. We expect that by the end of the year that will be remediated. Then comes subsea. And in subsea, I want to be pretty specific here. Let's talk about the top line first. It wasn't pricing. The projects we're executing today were generally priced a year ago. It has been entirely our execution. And we had some unplanned expenses in the quarter and we expect those expenses to continue at least through the fourth quarter associated with increased volume. We had revenues of $683 million in the first quarter. We expect $1 billion in the fourth quarter. That's a 45% increase, I think, in activity from the first quarter to the fourth quarter. We've hired 1,500 employees in subsea, about 20% increase in our population. And we haven't executed as well as we anticipated. And that's largely the reason for the reduction from kind of the 13% area to the 11.5% area. And we expect those added expenditures to go away based on increased efficiency of the workforce as we get used to operating at this higher level. And that's kind of the -- what happened in the second half of the year. Brad Handler - Crédit Suisse AG, Research Division: Okay. That's very helpful. So if I stick with the subsea margin topic then for a sec, I guess, on a constant volume basis -- I know one of the prior callers was asking about this in a way. But if 4Q represents something of a base level and might be a little higher, I suppose, than your average expectation for '12. But if it represents something of a base level, all other things equal, you'd expect margins to go up just because of the increased efficiency as this new labor force gets more in sort of traction, if you will.

Yes. Brad Handler - Crédit Suisse AG, Research Division: That's a fair statement?

Right. Brad Handler - Crédit Suisse AG, Research Division: Okay, interesting. If I could just get one more. John, you expressed that the confidence about still getting to $4 billion in orders, it does sound like it's kind of hinging on 1 large project. Am I reading that correctly? And maybe you can give us a little bit more color about that one. I'm sure if it's what I'm thinking, then I know there's some controversy about around that project moving forward.

Well, let me -- and we're saying approaching $4 billion, but we think we can get pretty close in part because really throughout the year, we've had pretty good inbound from call-offs and smaller awards. And I think the third quarter is a good example, in that we entered $731 million without a project over $150 million. So assuming that we stay in that range of small call-offs, and then we add the remainder of Prelude, which was not entered in the third quarter, and we definitely expect the remainder of Prelude, which is the manifolds which they need for that project, that being entered into the fourth quarter. And then we add a major award, which I'll talk more about, you get to over $1 billion, and that starts to get closer to the $4 billion that we've been talking about. Now what is that major award? Well, there's 3 that could potentially be awarded in the fourth quarter. Gazprom Stockman project, the bids have been submitted, it's under evaluation. It has a chance to get into the fourth quarter, probably maybe the lower probability just because it's Gazprom and they haven't done a lot of subsea projects. INPEX Ichthys in Western Australia, that project has been tendered. It's been under evaluation for 3 or 4 months. I know the target was originally for that to be awarded in the fourth quarter. So that's still a possibility. And then there's Chevron Wheatstone, where the bids have been submitted. It's been under evaluation. Recently Chevron announced their approval of the go-ahead for that project. And I have a lot of confidence that the Wheatstone project, in particular, will be awarded in the fourth quarter. We're in good positions on all 3 of those projects, so we're hopeful that one of those results in a large order that we need to get closer to $4 billion.

And your next question is from Rob MacKenzie with FBR Capital Markets. Robert MacKenzie - FBR Capital Markets & Co., Research Division: John, I wanted to explore a little bit the Fluid Control segment and try to get a better handle on, given the shift in the kind of U.S. frac-ing business, how much of your orders do you think in that business are for capital equipment versus how much of that is for maintaining existing equipment as the plumbing wears out?

Typically, the mix is 75% consumable, 25% capital. Also typically, it's in the third and fourth quarter where the pressure pumping companies start. They finish their budgets and they start to release some of the CapEx. We actually saw a couple of capital orders in the third quarter. We'd expect maybe some more in the fourth quarter. But typically, it's 75%, 25% consumable CapEx.

This is Bob. I think that's correct particularly as it relates to flowline Products. But our capital-spending component is larger now because of the Well Service Pump element of what we do for the pressure pumpers as well as the big articulated frac arm manifolds that we've been providing, both of which are more CapEx-related side. So I'd say we're moving more towards in total a 50-50. Still 75%, as John said, expendables when you're talking flowline. But overall, probably closer to 50-50. Robert MacKenzie - FBR Capital Markets & Co., Research Division: Okay. And notwithstanding, I guess, the capital orders you mentioned, what are you hearing from your customers or seeing in terms of order flow for new equipment? Is it starting to tail off yet? Or is it still strong?

Not yet, still strong. I mean, I think that if you look around basin by basin, there's still some major basins out there, particularly in the liquid-rich environments that are still undercapitalized, if you will, in terms of equipment to be able to -- for the pressure pumpers to meet the demands that they're faced with. Now on the other hand, there's some of the more gas-rich shales where they probably have access equipment, they're looking at moving things around. But quite honestly, we're still continuing to see strong order flow, admittedly, a short-cycle business. And again, as I said that earlier, most of our market intelligence comes from just active dialogue on an ongoing basis with all the major pressure pumpers and our other customers. And that continues to hold up pretty well. Robert MacKenzie - FBR Capital Markets & Co., Research Division: Great. And how would you characterize the duration of your backlog there?

Well, we've got a record backlog in Fluid Control. We turn that product pretty quickly out of there, though, I'll tell you, particularly on the flowline side of the business. Now on the on the pump side, obviously those are longer lead times. And most of our backlog, I might add is the longer lead time type of product. The other stuff just flows through very, very quickly. So that backlog we'll be consuming over the course of the next 12 months. Robert MacKenzie - FBR Capital Markets & Co., Research Division: Great. And then shifting back to subsea. One of the things apart from Marlim that I wanted to explore is other subsea processing projects. Any kind of update on what you see on the horizon there, either incremental stages to Marlim or other operators around the world?

Well, let's start with Petrobras and Marlim. Petrobras is very, very interested in the Marlim pilot project. They're going to get the system in the water within the next couple of weeks. Exactly how long they run the pilot, I'm not sure. But I know that they're going to obviously want to monitor and make sure it's performing. But then they'll be very anxious to start expanding the application of that technology to their 70 other wells. And I can't predict when that will happen. But assuming the pilot goes well, we should expect that to happen. So they're very interested and it's very important to them. And again, we should expect that once the pilot is complete, that they'll move ahead and apply that technology to their other fields where the application is similar. On non-Petrobras processing opportunities, in 2000 -- there's 1 or 2 that could possibly be still awarded at the end of this year. But looking forward to 2012, there's almost 10 named processing projects split evenly between brownfield and greenfield. Maybe the majority is boosting, but there's at least 4 or 5 that have separation components to it. These will move around a lot, and I'm not sure all 10 will survive in 2012. But that's a big jump from the 3 or 4 projects that were typically on our horizon for any given year in the past. Robert MacKenzie - FBR Capital Markets & Co., Research Division: Is that very geographically diverse as well?

Yes. There's 3 in the Gulf of Mexico and a couple in West Africa and a couple in Brazil. So yes, geographically diverse. Robert MacKenzie - FBR Capital Markets & Co., Research Division: Okay. And just one quick follow-up on the Petrobras. You said 70 wells that Petrobras can apply this to. Is that within the Marlim fields? Because I believe there's 83 producing wells there. Or is that their whole portfolio?

I thought it was their whole portfolio. Well, maybe that's wrong, maybe it's just Marlim then.

And your next question comes from Doug Becker with Bank of America Merrill Lynch.

I just have sort of a housekeeping item. For the corporate expense of $10 million, are there any assumptions regarding foreign exchange?

Yes, Doug, this is Bill. No, I've gotten out of that business. Any gain or loss in foreign exchange would be -- is not included in the guidance or the $10 million.

And your next question comes from Kurt Hallead with RBC.

John, in the past, we've had certain conversations, you had suggested that of those -- you mentioned those 3 large projects: the Wheatstone, the Stockman, the Ichthys. And then obviously there's still the Egina project that's out there. You had made some suggestion in the past that once maybe 3 of those projects get booked, that you start to see some pricing improvement predicated on the other competitors going up their backlogs and so on and so forth. Would you still characterize it in that same context? Or do you think that it's going to take more than that to see some pricing improvement?

Yes, no, it's the same. I mean, I don't know if it's exactly 3 years or 4, it depends on how it's distributed. If we pick up more than our fair share, then that would still leave another supplier maybe without their backlog where they want. But I think we've got -- I think for many of them to launch -- and this would even be, may be, true for us, but to launch multiple big EPC contracts simultaneously is a pretty big strain on an organization. And so if a supplier were to win 2 major EPC contracts in the same quarter, they'd probably have to scramble. And that might influence their decision on pricing. So yes, I think it will be about a handful of early big projects and how to distribute it to the subsea suppliers will start to shape when pricing will start to improve.

Now do you think, of the 3 projects, the major projects you just referenced, is there the capability of FTI to take on more than one of those major projects in the same context of what you just mentioned?

Yes, we could, we could. We simultaneously run half-dozen or more major EPC contracts, so that would -- we could do more than one, sure.

And of those 3, if you were to roll them all together, what would be the dollar value of those 3 as you know it right now?

Of those of 3, it's over $1 billion.

Okay. In the context on your Fluid Control and in your business exposed to frac equipment market, can you just give us an update? What percentage of revenue is that running at right now as a percentage of your Energy Processing business?

I'm sorry, Kurt, this is Bill. It's a little bit more than 50% of the segment.

Okay. And then Bill, you referenced in Energy Processing, you expect the margins to come off the 21% level going third to fourth quarter. Why would that be?

Well, it's really a mix issue. We've assumed that the non-Fluid Control businesses grow faster in the fourth quarter than Fluid and they carry a lower margin with them. So it's entirely mix.

Okay. And then just one last one here. I think I've heard in certain circles over the past few quarters, some critique on FTI, just from a context about you guys are in a leadership position in the business, that some of your competitors are suggesting that you haven't, as a leader, taken enough to maintain pricing in the subsea arena. How would you address that?

Well, we would -- yes, as the market leader, we think just the opposite. We are showing leadership on the pricing side. And I think I referred to that earlier. By building our backlog, to a large extent through our frame agreements and our suppliers, we're in a position to be selective on these certain projects that are coming up and to demonstrate that leadership as we've done on a number of projects that we walked away from last year because we weren't satisfied with the pricing, while others picked that up. Some of the more notable ones are in Petrobras' multiyear award, where although we're the market leader in Brazil, we chose to focus on the higher-end technology projects rather than the more price-sensitive conventional equipment. So I think we've demonstrated strongly our leadership by walking away from certain projects that don't meet our pricing expectations and focusing on where we're strong, on the high technology side, where we can earn better margins. So I think Marlim is a wonderful example of that. We're supporting Petrobras on the high-end equipment where we can get better pricing.

Okay. And sorry, I lied, this is my last one. In terms of the total market size, I think in the past, you made a reference, maybe $8 billion in 2011. Can you give us an update on what you think the total subsea market size was in '11? And then what you -- based on those 20 projects north of $100 million for next year, what's your guesstimate as to the potential market size for 2012?

Well, we just have to be a little bit careful in the sense that it's a lumpy business. And what's happening in 2012 is we've got a sort of queue of subsea projects that rolled out of 2011 into 2012. So I'm not sure 2012 is necessarily going to be representative. But with 20-some projects, the project alone could be valued at $6 billion, $7 billion or $8 billion. And then you've got the call-offs, which go on top of that, and then you've got Petrobras. So you're right, I think we're headed to north of $8 billion in 2012. But I just want to caution you that there's a sort of -- there's been a queue of projects that are all landing in '12. So I don't know how representative it is. But it's definitely north of $8 billion just by adding up the 20-some projects and then the smaller stuff.

And you say '11 was kind of in that $8 billion range?

Yes.

Your next question comes from Collin Gerry with Raymond James. Collin Gerry - Raymond James & Associates, Inc., Research Division: Just a couple of quick follow-ups on the P&L. Bill, can you remind us how currency exposure flows through the income statement? In the past, I remember, there had been some sort of mark-to-market on the backlog. Is that still the case?

Right. As a matter of fact, in this quarter -- well, first of all, we carry our backlog in multiple currencies. Almost 1/2 of it, frankly, is in Norwegian krona and about 25% is in Brazilian reais. And I'm talking about subsea backlog now. And so during the quarter, with the strength of the dollar, those projects that were in backlog declined by, I think, $308 million. So if you took our beginning backlog at the end of Q2 and added our inbound and subtracted our sales, you'd still have to take $308 million off to make it all fit to the $3.8 billion that we ended the quarter with. Now that's backlog. When it flows through our income statement, for instance, in a Norwegian krona contract, we've got costs in dollars, euros and pounds. And so we hedge all of those back into NOKs, so that the contract itself has NOK revenue and NOK costs. So we don't have any margin exposure to currency. But when it does flow through the income statement, if the dollar strengthens, it comes through as lower sales and lower earnings but the same margin as a percent. And that impacted backlog in the third quarter. Some of that has already reversed. The dollar has weakened, given about half of what they took in the Norwegian krona in the third quarter. Collin Gerry - Raymond James & Associates, Inc., Research Division: Yes, that was my question. It looks like kind of just right as the quarter ended, it looked like that was the peak in kind of currency, and then we've almost redirected it back.

Yes, the krona was down 9%, actually a little over 9% in September. And that's already back almost 6% in October. So we've recovered much. We probably recovered $100 million, $150 million of the $300-odd million that we lost in backlog in September. Collin Gerry - Raymond James & Associates, Inc., Research Division: Okay. And then last one for me, again kind of nitpicky. But on the tax rate, I think you mentioned 29% for the fourth quarter. Is that a fair baseline tax rate kind of on an ongoing basis? Or is that more of a special kind of year-end scenario?

No, that's pretty much a run rate. I mean, it will move around depending on where our income is. And that's largely what happened in the third quarter. We estimate full year income and which country, and that moved around a little bit. And consequently, the 27% really represents trueing up to a run rate of about 29% for the full year.

Your next question comes from William Conroy with Pritchard Capital.

Really just wanted to ask a question, and Bill, this is probably aimed at you. On your expense side, can you give us just a little bit of color around maybe what pushes that you're seeing there? So this really is not a backlog question, it's the current level of cost. And to the extent that is labor a factor into this? I'm really kind of thinking along the lines of labor rates and availability. And ditto on materials, to the extent various grades of steel that you guys are using, forgings, et cetera, and also related then the logistics side.

Yes. Quite frankly, we haven't seen much push on the material cost side. We are expecting some next year and we're preparing for that. And most of our budgets will reflect that. But year-to-date, we haven't seen much. And I can say kind of there probably is a little bit more labor inflation than we anticipated. We're having a hard time finding people, and that's part of what's caused the problem in subsea is we haven't been able to hire engineers fast enough. And consequently, we've fallen a little bit behind. And when that happens, costs begin to accumulate. And that's part of what happened in the second half of 2011.

And your last question comes from Robin Shoemaker with Citigroup.

John, as you well know, one of your competitors here recently announced a major manufacturing problem in Brazil with delays and liquidated damages and all of that. So my question for you is as several oil service equipment companies have talked about cost pressures in Brazil and efficiency factors, and how do you feel generally about your manufacturing operations there?

Well, I feel pretty good especially after the Marlim success. We've been in Brazil 50 years. We have almost 1,500 people in-country. Over the last few years, that business for us, anyway, has ramped up dramatically, maybe 2 or 3x its size, 5 and 10 years ago. And we've made a lot of changes so that we can execute out of our Brazilian facility at a much higher activity rate than we could historically. And I think we're seeing the results of it, that now when our on-time delivery performance to Petrobras, despite our high activity rate, is one of the best we've ever been at. And then I think Marlim again, not to harp too much on that, but that's a really good example. Here's brand-new technology, the designs are new, the manufacturing was all new and it's delivered on schedule and on budget. And so I think what's happened is that we've devoted a lot of effort to execution in Brazil. We've been there a long time. We've made a lot of changes so that we could perform at very high levels in a highly active market. And I think we're starting to see that, especially in our performance to Petrobras. I think Petrobras is so pleased with our performance on Marlim and as well as our other projects we're doing for Petrobras. And it reflects the investments that we've made over the years. I'll tell you the one thing that we do worry about, and that's the supply chain in Brazil. We've taken a lot of action to shore that up, including insourcing and removing things that were out in the supply chain back into our own facility to ensure that our execution is what Petrobras expects. Now I'm not suggesting we will never have a slip-up in Brazil because it is a challenging environment and Petrobras will impose liquidated managed damages. But right now, our performance level is very high.

Yes. So you were suggesting earlier that you see a pretty significant step-up to Petrobras as well. So I guess, that makes it even more challenging. Do you think that the local content requirements in Brazil will increase or perhaps be relaxed if this additional increase in activity for subsea processing occurs in Brazil?

Well, I can tell you they're not going to be relaxed. I met with Director Estrella a couple months ago, and he was -- most of the conversation was about local content. So I think there's a lot of pressure from Petrobras to increase local content. The challenge is that some of it, it's already at very high level, 60-plus percent. Our level of local content, I think, is one of the highest in the industry. We're the only company I know of that actually assembles and tests subsea controls in-country. To get it a lot higher is going to be a challenge for the whole industry because a lot of the stuff that's not currently done in Brazil is because there isn't the capability. So it's going to be a real challenge to take it a lot higher. But there's pressure from Petrobras to try to do that. And I think our company is as well positioned as any to meet Petrobras' requirements.

I'd like to turn the call over to Brad Alexander for closing remarks.

This concludes our third quarter conference call. A replay of our call will be available on our website beginning at approximately 2 p.m. Eastern Time today. We will conduct our fourth quarter 2011 conference call on February 15 at 9 a.m. Eastern Standard Time. If you have any further questions, please feel free to contact me. Thank you for joining us. Operator, you may now end the call.

This concludes today's conference call. You may now disconnect.