Dave Anderson - UBS Ole Storer - Morgan Stanley Geoff Kieburtz – Weeden & Co. Michael LaMotte – J.P. Morgan Alan Laws – Bank of America Bill Herbert - Simmons & Company International Jim Crandell - Barclays Capital Dan Pickering – Tudor Pickering & Co. Mike Irvin – Deutsche Bank Waqar Syed – Tristone Capital Robin Shoemaker - Citigroup

Welcome to your Halliburton fourth quarter 2008 earnings call. (Operator Instructions) I would now like to turn the conference over to Christian Garcia, Vice President of Investor Relations. Mr. Garcia, you may begin.

Good morning and welcome to the Halliburton fourth quarter 2008 conference call. Today's call is being web cast and a replay will be available on Halliburton's website for seven days. A pod cast download will also be available. The press release announcing the fourth quarter results is available on the Halliburton website. Joining me today are Dave Lesar, Chief Executive Officer; Mark McCollum, Chief Financial Officer and Tim Probert, Executive Vice President, Strategy and Corporate Development. In today's call Dave will provide opening remarks. Mark will discuss our overall financial performance and liquidity position and Tim will provide comments on our operations and business outlook. We will welcome questions after we complete our prepared remarks. Before turning the call over to Dave, I'd like to remind our audience that some of today's comments may include forward-looking statements reflecting Halliburton's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2007, our Form 10-Q for the quarter ended September 30, 2008, and recent current reports on Form 8-K. Please note that we will be using the term international to refer to our operations outside the U.S. and Canada, and we will refer to the combination of U.S. and Canada as North America. The company issued a separate press release announcing its prospective settlements with the Department of Justice and the Securities Exchange Commission with regard to the SCPA investigations. As a result, the company recorded an additional charge for discontinued operations of $303 million or $0.34 per diluted share. We refer you to the press release for details about the content and status of the prospective settlements. Due to the sensitive nature of these settlement discussions, we will not address the press release or take any questions related to this matter. Now I'll turn the call over to Dave Lesar.

Good morning everyone. Our fourth quarter results demonstrated our relentless focus on delivering solid performance despite the prospects of a weakening market environment. We set quarterly operating income records for all of our international regions. I am pleased to share with you the highlights of our fourth quarter performance. Total company revenue grew 17% from the fourth quarter 2007. Despite a 14% decline in the U.S. rig count from the beginning of the fourth quarter, our North American operations were essentially flat sequentially. Our Latin America region grew 37%. We have been successful in our growth strategy for this region and continue to see expansion opportunities for growth in 2009. International revenue grew in excess of 15% year-over-year for the quarter with margins of 24%. For 2008, International revenue grew in excess of 22%. Our total company operating margins were 24%, the highest we have seen throughout the year. These results show why we believe our strategy of protecting our strong U.S. market position and continuing to grow our international operations continue to be very successful. Let me now turn to the results for North America and discuss our prospects for the coming year. North America revenue for the fourth quarter was essentially flat from the third quarter despite the 14% drop in rig count I mentioned earlier. We saw a drop off of our activity beginning in late November. The Gulf Coast experienced good sequential growth and then recovered from the third quarter hurricane disruptions. This growth came despite some lingering impacts of the shut in production that continued in the fourth quarter. So far in 2009 rig counts have fallen sharply and are now roughly 25% below 2008 highs. We expect activity declines in North America to accelerate further in the first quarter. Capital expenditure adjustments from our…

Thanks Dave. Good morning. I’ll begin with our operational highlights and I’ll be comparing our fourth quarter results sequentially to the third quarter. Our revenue in the fourth quarter was $4.9 billion, up $57 million or 1% from the third quarter led by completion tools which registered growth of 10%. We also benefited from the typical fourth quarter increase in software sales and direct sales of capital equipment. On a geographic basis, Latin America led all regions with 4% sequential growth driven by strong results in Mexico and Columbia. The sequential growth of our international regions was negatively affected by currency movements in certain countries. These movements however did not have a significant impact on our operating income since our locally denominated revenues are designed to cover our locally denominated costs. Operating income increased $112 million or 11% from the third quarter 2008. Our fourth quarter results included a $35 million gain from the settlement of a patent dispute while our third quarter results included a $22 million acquisition related charge for Well Dynamics. Both items were included in corporate and other. Now I will highlight the segment results. Completion and production revenue decreased $21 million or 1% from the third quarter while operating income was essentially flat. The decline in revenue was driven primarily by lower production enhancement results in U.S. land and the North Sea, offset by strong completion results revenue. Looking at completion and production on a geographic basis, North America revenue decreased 1% and operating income declined by 5%. We experienced strong activity in the early part of the quarter including a recovery in the Gulf of Mexico but saw activity drop off starting in late November particularly in the Rockies. Canada also suffered from unfavorable currency movement. In Latin America completion and production revenue decreased…

Thanks Mark. Good morning everyone. Forecasting the depth and length of the current recession and its impact on demand is challenging. While comparisons with historical downturns are difficult to make they do provide us clues on cycle characteristics and supply side response. First, in North America we believe the speed of the rig count drop correlates well with the depth and length of past downturns. In the 2001 downturn, which we feel is a closer match than that of 1997, deep to trough drilling activity approximated three quarters. So far we have seen a 25% or over 500 rig drop from the Q3 2008 peak. This percentage drop is consistent with the same timeframe in the 2001 cycle. Second, we estimate base annual production declines for gas in North America to approximate 30%. This decline together with the current trajectory of rig counts suggests to us that supply could begin to show response in Q2. The inventory of drilled and yet to be completed wells is not insignificant however and will, in our opinion, contribute to this lag which should be helpful to us given our strong position in completion and production. Third, and as expected, the secular trend towards horizontal drilling appears to be much less affected by the down cycle. In the 2001 downturn from peak to trough the proportion of horizontal directed rigs increased from 6% to 8%. In this cycle so far the horizontal rig percentage climbed from 31% in the peak in Q3 to the current level of 37%. Neither horizontal rig count nor shale plays have been immune to reductions in activity but their increased proportions should translate to a more favorable service mix of our differentiated offerings. As we have pointed out in the past, horizontal drilling translates to a service intensity of…

Thanks Tim. In summary, our fourth quarter results demonstrate our ability to execute in a weakening market environment. We grew revenue, operating income and margins despite the curtailment of customer activities in the latter part of the quarter. We set revenue and operating income records for most of our product lines and regions. As we have discussed, the industry’s prospects in 2009 are more uncertain but we will take the opportunity to strengthen the long-term health of our franchise. We will selectively cut costs as I said but at the same time we are going to continue to invest where we can expand our competitive position. Our management is ready to meet the challenge in this coming year. Let me just once again reiterate what I think has been a very successful strategy for us of protecting our strong U.S. market position and investing in and growing our international operations. It has been successful in the past and I believe it will be successful going forward. I want to thank all of our employees for their significant efforts in 2008 and we look forward to 2009. So let’s now go ahead and open it up for questions.

(Operator Instructions) The first question comes from the line of Dave Anderson – UBS.

Back in the fall you had talked about the scope of the Manifa project remaining intact with the timing getting stretched out about another year or so. Since then outlook has dimmed considerably. I’m just wondering if you have seen these larger projects continue to get pushed out as the need for capacity expansion, particularly in the OPEC nations, is considerably less now.

Certainly I can talk specifically about Manifa which has been stretched out and I understand they are looking at some of the E&C contracts and potentially [retendering] them. I think that is a symptom of what we are seeing at a number of the larger projects in the international marketplace. Not a cancellation of existing projects but basically drawing them out over a longer period of time so they don’t have a big slug of production coming on in a weakened oil price environment. What we are seeing is a cancellation of projects that were perhaps about to get tendered and move forward. So I think our customers right now really are taking a wait and see attitude toward the supply response to pricing especially those customers that are inside OPEC.

How much longer is that wait?

Your guess is as good as mine. I think that they are really wanting to see whether this last substantial reduction in OPEC quota will have some result in at least stabilizing prices but I think as we have all seen and read there is a view out there that oil prices need to push back up into the $75 range before OPEC will be satisfied with bringing additional production on.

The next question comes from Ole Storer - Morgan Stanley.

I understand the difficulty in giving any type of forecast given the macro environment that we are in but it seems like the debate is this going to be a steep down cycle that troughs in 2009 or is the trough going to be flatter? What is your view here on when we will see the biggest quarterly year-over-year decline?

I think that let’s just sort of talk about North America first and then talk about the international markets. As far as North America is concerned, as I mentioned earlier, we do see a lot of similarities in terms of the pace and rate of change with the 2001 cycle in which case it would suggest to us we would be kind of looking at a 3-quarter cycle. We are obviously already in the second quarter of that right now. So that is kind of obviously it remains to be seen but we are certainly monitoring closely the performance against that cycle and we certainly see similarities to it in present. With respect to the international markets obviously the amplitude of change in the international markets has historically been quite different, more muted and over a longer period of time. I think it still remains to be seen at present how that will play out. Our expectations are that it will probably be somewhat similar to past cycles.

Another company reported last Friday suggested that they were a little bit surprised by the uniform cuts in activity on a global basis compared to previous cycles. It seems to be declining everywhere and how that could be setting us up for a shorter cycle. Are you seeing something similar? Are you taking market share? What is going on?

I think that certainly there are some very large projects which we are going to bring in some significant production as Dave was just describing. Manifa would be a good example. Clearly they are going to be delayed substantially. Those are going to obviously contribute significantly to the overall supply base. I think that any time you see a short and sharp reduction in activity particularly given the fact that the overall decline curves for liquids do appear to be getting somewhat steeper and if we take the case of Russia, for example, as I mentioned it was a major contributor to non-OPEC production over the last decade clearly turning over somewhat here in 2008 and 2009. We think that shortfalls in investment over any kind of period will get some or provoke some supply response relatively quickly and obviously that impacts pricing directly.

The next question comes from Geoff Kieburtz – Weeden & Co. Geoff Kieburtz – Weeden & Co. : You mentioned, Tim, in your comments a 1,200 basis point margin compression and I think you were talking about North America in past cycles, correct?

Correct. Geoff Kieburtz – Weeden & Co. : Are you thinking that is somewhat of a maximum here? As you think about all of the differences as well as the similarities of the current environment with past, help us understand how you are thinking about that 1,200 basis point margin compression.

We were trying to be sort of a little helpful by comparing ourselves to past cycles and obviously that has been an experience in past cycles. I think there are some positives that come into play. Obviously the horizontal component is a significant positive. Overall levels of service intensity are clearly a positive as well. There are obviously presumably some negatives in there as well particularly with respect to the uncertainty relating to the economy. But I think in general terms our feeling is our best guess is that we would pursue a path that is very similar to the 2001 downturn. Geoff Kieburtz – Weeden & Co. : Could you extend that to the international market? How are you thinking of the international market relative to past cycles?

I think that it is probably too early to say at the present time.

Let me add the international markets obviously are a longer term contract market. They did not have the swing up in profitability that we saw in the North American markets even in this cycle. Obviously the push down in pricing and margins if it does come will come at a much slower rate than it would in North America because we do have a good supply of contracts that have fixed prices on them that will mitigate some of the downward pressure right now.

The next question comes from Michael LaMotte – J.P. Morgan. Michael LaMotte – J.P. Morgan: If I could follow-up on the CapEx guidance and in particular try to ferret out what flat means in terms of confidence in expectations for non-North American growth particularly given that you highlighted project related CapEx in technology before replacement in terms of the mix of CapEx. Are we reading too much into it? Can you expand on that a bit?

I don’t know that the order of the way we mention it is necessarily the way we are thinking about it. What we were trying to do is just try to help you understand why we think that it is going to be not that much dissimilar to the 2008 spend. We along the way had given guidance to our spend in 2008 was to be somewhere in the neighborhood of $1.8 billion to $2 billion. As we went through the year we spent a little over $1.8 billion so because we had a number of projects that were coming along the way there is some carry over capital that spills over into the next year. We manufacture the lions share of our own capital equipment for Sperry, for our pressure pumping business lines and so there is an emphasis always to make sure that our plants are efficient, that we keep those things working to maximize not only the amount of equipment we have out there to take advantage of opportunities but to also get new technologies out there and around the globe as quickly as we can and so as we look at this given some of the guidance that Tim suggested in terms of how we are thinking about the cycle we are continuing to make sure we have the right equipment in the right places throughout the world. We are taking advantage of replacing older equipment. We have a fairly significant percentage, about 25% of our fleet that is over 10 years old and so we are going to be upgrading our equipment to make sure we have the very best quality equipment out there when this market environment begins to turn. Michael LaMotte – J.P. Morgan: Will that 25% do you expect to scrap a good bit of that?

I think there are different ways to look at that. Some of it may be cold stacked for a period of time if that is necessary. We will continue to maintain that if we need to. Some of it may go into other markets like some international markets that have a better environment for some of the used equipment.

Let me just add to this I think a couple of things that Mark touched on are important points to take away. One, I don’t think a lot of people realize just how intensively everyone’s equipment new and old has been used in this up cycle because of the pinch that was on the service industry’s ability to supply into this marketplace. So equipment was used much more aggressively, much harder and with much higher up times than we have seen in the past and frankly I think there is a lot of equipment throughout the entire service industry that could use an upgrade. Second of all, as Mark has said, since we have our own plants we have the ability to sort of modify our build rates to suit our own needs and to suit the level of demand that we see up there. Also because of that we are now being able to take advantage of a cheaper input price to a number of our key product lines. The prices for diesel engines, transmissions, for electronic components, all of those things where our vendors had plenty of pricing power with the worldwide economic crisis they don’t have that pricing power. We want to take advantage of some of that and we think that by continuing to build through this down cycle we actually can build more for less than we would have been able to do a year ago. We also have not been able to catch up to demand for some of the newer technologies that we had brought out especially some of our drilling and logging tools and there still is a very high demand for those high end, high tech, brand new types of products that we have brought out. So we want to continue to invest in those products which are generally going into our international marketplaces. I think the combination of sort of refreshing the fleet of tools that we have and building up the supply in the redundancy in those pieces of technology that still remain in high demand and because we can do all of this cheaper than we would have been able to do a year ago we really believe that as long as we can live within the cash flow we have it really is the best thing to position us to come out of the other end of this thing in a better relative position than we went in.

The next question comes from Alan Laws – Bank of America. Alan Laws – Bank of America: I have a couple of questions. One is kind of a high level one and the other one on North America. The first one, is it fair to say that you and your peers are preparing for an extended slow down? Sort of when you look at the changes in the array of indicators and customer discussions versus other periods are there material differences in this one?

If you look at our customers in three buckets I think we are seeing sort of a different response from each group. Our national oil company customers which are an increasingly larger piece of our total customer base clearly are looking at their cash flows. A lot of their revenue stream that they generate actually goes to fund their host government operations so although they are carefully looking at their spending, I think the announcement from Petrobras this weekend about sort of reaffirming a fairly large capital build going forward is indicative of where the national oil companies will go over time. So I think they are looking at commodity prices. They are slowing things down but we are not seeing a substantial reduction in our business opportunities with the NOC’s. The IOC’s are having the typical response to lower prices. You are seeing some capital budget reductions, deferral of projects getting started, continuing projects they have going but we have been down that road a number of times with the IOC’s and we are pretty good at sort of ramping our business with them up or down. I think the one thing that has changed and certainly bears some watching in this marketplace is the big U.S. independents. So many of them were basically funding their cash flows out of leverage and out of borrowing and with the corporate credit window being shut I think we are seeing those customers try to come up with a way to live within their cash flow. However, as Tim has indicated these are the ones that are U.S. gas denominated and I think they will see a supply response, i.e. either production will go down if they don’t continue to at least do some maintenance drilling. So that is the group we see to be the quickest hit and the one where we are seeing the most pressure in terms of our business opportunities with them. I also believe that is the group that as production goes down and their own revenues go down they will have to start to drill so I think we will start to see that group actually respond more quickly. That is sort of a lay of the land with our general customer base. Alan Laws – Bank of America: You just came off of a record rig count in North America before this large drop and you noted in your comments there is a backlog of completion work to carry you through into 2009 for awhile. How far do you think that will carry you and is there any evidence that producers will just curtail completing these wells altogether?

I don’t think that once drilled they are not going to complete it. Certainly having sunk cost of the drilling in they are certainly going to complete them at some point in time. Of course you don’t want your well bore stability to deteriorate so you can’t just leave them out there forever. So I think that is going to be the first slug of business opportunity that we see when our customer base decides that the time is right to move forward with bringing these on but I don’t see they are going to be permanently curtailed.

The amount of wells in inventory varies from customer to customer and area to area so it is a bit difficult to sort of give you a really sort of broad generalization. There are a meaningful number in inventory and it will have an impact on two things. Obviously service delivery being one of them. The second being the sort of lag we are going to see between the significant drop off in activity and the overall production response. That is why I think we commented a little earlier in the call that we expected to see some sort of production response show up in Q2.

The next question comes from Bill Herbert - Simmons & Company International. Bill Herbert - Simmons & Company International: I was struck by the fact that you mentioned Russia and U.K. North Sea as two of the more poorly behaved markets in 2009 but no mention of Venezuela. I was just curious as to what your expectations are for that market.

All indications are that from an overall activity standpoint it clearly is a significant requirement, the services in Venezuela. Clearly absent sort of the major issues with respect to the current environment we have all been reading about I think that we will continue to see some expansion there. Bill Herbert - Simmons & Company International: So you expect Venezuela for Halliburton and industry wide will be up year-over-year in 2009?

2008 was certainly up year-over-year. I think the fundamental requirement is clearly there.

The next question comes from Jim Crandell - Barclays Capital.

Dave, if you thought that international E&P spending was going to be down 10% in 2009 versus 2008 would you think in that environment number one you could have up international revenue given all the things you have going on? Secondly, in that environment would you think you could maintain margins?

I don’t obviously have a crystal ball but I think that if you look at the nature of contracting in the international market and the fact that a lot of the spend that will happen is basically on ongoing projects, if in fact spend went down 10% it really would have to be reduction on the front end of projects that had been considered to get started in 2009 and that typically would mean a reduction in exploration drilling. Obviously exploration although we have good products and good technologies there we really draw more of our revenue stream off of the completion and production side of the cycle. So I think to answer your question it is yes, we could grow our international revenue in 2009 even with a 10% reduction in capital expenditures in that year.

Industry wide, not with Halliburton strategy, but industry wide in the U.S. how far would you expect and you can use a range U.S. stimulation prices to come down both on a contract basis and a spot basis from where they were in the third quarter or early fourth quarter of 2008?

I think we provided a little bit of a guidance earlier about our expectations regarding price cycles using them as models for the current cycle. I think what we can say also is that our experience has been that we clearly see a significant portion of that shortfall which we described as 1,200 basis points, we historically have seen a significant portion of that occur in the early part of the down cycle so that perhaps provides you a little indicator there. I’m afraid it is really not possible for us to provide you any detailed expectations here in the present time.

I think that obviously the question mark is where does the rig count end up dropping to and the only thing we can use past down turns to judge from is with the benefit of hind sight knowing what the rig count did from top to bottom and then looking back for some sort of correlation. I think right now the question is where is the rig count going to sort of bottom out and I know that even within the group on this call there is a wide variety of conclusions around that. I think the points that we want you to take away are one; we have a strong position in the U.S. We have the strongest position in stimulation. A lot of rigs that have fallen off so far have been those commodity type rigs drilling in conventional areas for customers that we did not work for anyway. I think that with our differentiated technologies we really do believe we can out perform the market. The question is what is the market going to be. I think the other point that Tim made is an important one. If you look back historically most of the fall off in pricing basically happens in the first quarter or so and then sort of pricing finds a bottom and gets stabilized and sort of creeps back or tends to creep back from that point. As I said, we are going to protect our market share. We typically grow our market share in these kinds of markets and I just don’t see any reason why that is not going to happen again.

The next question comes from Dan Pickering – Tudor Pickering & Co. Dan Pickering – Tudor Pickering & Co. : Could you talk a little bit about obviously this is a fluid market place and how long do we sort of watch the commodity price environment before actions get more stringent whether that means a slower CapEx number or more aggressive cost cutting measures? What is sort of the timing of making decisions around more significant action?

I think it really goes back to we can watch commodity prices. We can watch the rig count but the one thing we absolutely have control over and can watch is our cash flow. So those will be inputs to the amount of cash flow we can go ahead and generate and whatever the market hands to us. It is going to be within that free cash flow that we make our decisions around additional cost cuts or trimming back the capital budget. Since we can watch our cash flow almost on a daily basis I would say that we can make that decision on a real time basis. Dan Pickering – Tudor Pickering & Co. : In an environment where things are slowing last year we took a run at a big acquisition. Do you think acquisition opportunities are going to emerge and where do they fall on your level of interest relative to organic capital spending and share repurchase and the like?

I think clearly there are some M&A targets out there that look more attractive at the pricing we are seeing in the market today. I think up until the last 30 days or so I think the expectations of value versus what the market was putting on in terms of value there has been a huge disconnect. I think to some extent that emotional disconnect is starting to contract a bit. But I think that as we have said as long as we continue to see growth opportunities within our ability to grow organically that would be the safest and I think most prudent direction to go. If we do see market opportunity to add to our portfolio in a way we think would add some long-term value and we think we could pick it up on a basis that makes sense we clearly would take a look at it. We certainly have our radar up and working but I think that it is really now that sort of the emotional view of value is now starting to equal what the market place is putting on in value. So those discussions may accelerate and they may go nowhere at this point.

The next question comes from Mike Irvin – Deutsche Bank. Mike Irvin – Deutsche Bank : I realize you can’t speak specifically to the SPCA settlement but more broadly regarding the indemnification with KBR could you remind us kind of the scope and the timing of that? For instance, is there any other potential liabilities out there we should be aware of? I know KBR unfortunately has been in the news again recently with some potential issues on their work. Again, I’m just wondering if there are any taps, the time frame of that and any other things that are on the radar screen?

I’m sorry but we are not going to take any questions regarding the KBR and the indemnification there. What I encourage you to do is go back and look at the third quarter 10-Q which discusses the indemnity and that gives you the specifics about what is left out there. We don’t really have any other update on timing or other issues.

The next question comes from Waqar Syed – Tristone Capital. Waqar Syed – Tristone Capital : My question is on continental Europe there are some reports that activity in continental Europe may be up this year and in coming years. My question is how are you positioned there visa vie your competition there to capture incremental business there? My second question relates to share buy backs. You had no share buybacks in the fourth quarter. What will make you change your stature regarding that in 2009?

I’ll take the first part and then Mark will comment on the share buybacks. With respect to continental Europe you are absolutely correct. It has been a particularly active area for us in 2008. We feel we are very well positioned throughout continental Europe and Eastern Europe and we do expect to see a continuation of activity both in terms of sort of gas activity, storage activity and we expect to see that continue.

One of the advantages of that marketplace is that we [inaudible] plays very well into some of our strong suit. It is directional drilling. It is cracking. It is completions. As Tim has said that is an area that we have been particularly pleased with sort of the direction that market is going. That is one of those markets we are investing in and have invested in 2008 and into 2009. With respect to the question on the share buyback, obviously we were in active negotiations with government officials in Q4 and therefore could not get back into market to purchase our shares back. Obviously with the announcement today and hopefully the prospective conclusion of this effort once we get that behind us obviously that is something we will take a look at.

The next question comes from Robin Shoemaker – Citigroup.

I wanted to pursue a little bit your comment about the restrained nature of your workforce reduction that is ongoing and fully appreciate that in the last two downturns you kind of had a v-shaped bottom and you had a recovering market relatively soon after hitting the bottom of the rig count slide. At what point might you decide that this time might be a different scenario where we stay at a relatively low level of drilling for awhile? I’m sure you have a plan B with regard to this restraint but it obviously has earnings implications for the near-term and I just wonder what time frame you are thinking about to make a decision about the recovery of the market.

Just to reiterate, the strategy we have is basically to minimize the reductions because if you look at the severance cost, rehiring costs and retraining costs of an employee base to handle an upside it almost always is more than or at least equal to the cost of carrying that employee base through a rather sharp downturn. So I would say that what we will do is we will probably want to go a couple of quarters into this year, albeit maybe carrying a few more people than people would think. It is always one of these hindsight kinds of decisions. You look back and say well you should have kept more or you should have cut more people. My view is that we will probably wait until the end of the second quarter, size up market at that point in time and then see whether any further actions are necessary.

In terms of living within your cash flow in terms of capital spending, if the consensus earnings estimate for Halliburton is anywhere near correct you would have and given also your $900 million of DD&A you would have quite a bit more cash flow than your $1.8 billion CapEx budget and yet you are indicating you may cut CapEx if the earnings decline. So to the extent you have free cash flow, an acquisition would be first priority and then potentially share repurchases. Is that correct?

I wouldn’t say that acquisition is first and share repurchase is second. I think they are not mutually exclusive but we certainly would have the ability to look at both of those and weigh them in the balance. You are absolutely right. We are going to live within our cash flow but we expect to be able to spend capital at the level that we indicated to you and still be well within the cash flow we have.

That will do it. Thank you for participating in the call.

Ladies and gentlemen this does conclude today’s conference. You may now disconnect and have a wonderful day.