Good day and welcome to today's teleconference. At this time, all participants are in a listen only mode. Please note this call may be recorded. I will now turn the call over to Doug Fears. Please go ahead. Douglas E. Fears – Chief Financial Officer and Vice President: Thanks Kevin and good morning everyone. Welcome to Helmerich & Payne's conference call and web cast to discuss the company's first quarter earnings. With us today are Hans Helmerich, President and CEO, Executive Vice Presidents John Lindsay and Alan Orr, and Director of Investor Relations Juan Pablo Tardio. As usual, I want to remind you that much of the information provided today involves risk and uncertainties that could significantly impact expected results and discussed in our most recent intake. We will also be making reference to certain non-GAAP financial measures such as segment operating income and operating statistics. You may find the GAAP reconciliation comments on page nine of today's press release. This morning, Helmerich & Payne, Inc. reported net income of $107 million or $1.02 per diluted share for its first quarter ended December 31, 2007 compared with net income of $110.8 million or $1.06 per diluted share during last year's first fiscal quarter. Included in this year's first quarter net income are aftertax gains from insurance proceeds and the sale of drilling equipment of $0.03 per diluted share. Last year's first quarter net income included $0.16 per diluted share of gains from the sale of portfolio of securities and drilling equipment. The company's U.S. land operations were over 80% of our rigs reside continued to record sequential increases in segment operating income, rig activity, and profitability. Rig activity has measured by total revenue days per U.S. land rigs increased due to more new builds being deployed. Revenue per rig day…

Good morning. We are pleased with the operational and safety performance the company has been able to achieve during the quarter. Drilling performance and rig uptime have been catalysts for many achievements. The offshore and international segments are under some transition during the second fiscal quarter with the mobilizations of three offshore rigs, and four existing international land rigs. This should act as a spring board for a strong third quarter in each segment. The U.S. land segment should continue to demonstrate strong results and contribute over 80% of total segment operating income in the second quarter as in the first quarter. The uncertainty in the market continues to be natural gas prices, the direction of rig activity, and the magnitude of downward pricing pressure on day rates. I will give you some details of the activity and trends as we discuss our three operating segments, and first of all, we will have an overview of US land. Today we have 93% activity with 156 out of 167 rigs working, up 5 working rigs since the last webcast. Our active rig count is of 32 rigs or 26% since the webcast a year ago. All 128 existing FlexRigs are contracted today. With the latest announcement of four more new build FlexRigs, we now have 7 FlexRigs remaining in our current new build order book for U.S. land that will be completed by the end of the third fiscal quarter of 2008. The 11 idle rigs are primarily designed for deeper well depth. They are 2000 and 3000 horsepower conventional rigs, and the market that these rigs target has remained soft and therefore we don’t expect these rigs to contribute in the second fiscal quarter. Of our currently active fleet of 156 rigs, 60 are in the spot market and the…

Thanks John. We now want to open the call to questions please.

(Operator instructions). And we will go to the site of Ian McPherson. Please go ahead.

Good morning. Congratulations.

Thank you.

Hans, I think I captured that you were budgeting now for about 25 more new builds this year and going into early next year and you have 14 remaining contractually supported new builds and the other rigs that you are sort of building ahead of contracts, do you envision that being more towards the international side of the business or domestic or how do you see that split going forward?

Well, I don't think the math is quite that simple when we talk about some of the uses for the $620 million of revised CapEx. So we really are not trying to get in front of the scheduled rigs that we mentioned, but just as we look forward into what the opportunities might provide us, we would like to see some mix like we did on this last order of international and domestic, but we don't have specific projection for that.

Okay.

Ian, this is Juan Pablo, of the 25 that you mentioned do include 10 FlexRigs that have already been delivered through today in fiscal '08.

Got it. Thanks for clarifying that. Okay. I guess my follow up would, for John, I don’t know, if I missed this, if you’ve mentioned, do you expect your domestic revenues per day to stay pretty flat throughout the balance of the year. Did you indicate anything on the cost side and what you expect the cash margins to do as well?

Are you addressing the U.S. land portion?

Yes.

Yes. We expect our margins to maintain relatively flat, at least revenues to maintain relatively flat. I think there is going to continue to be cost pressures. We had a good quarter on costs, but there is a chance that it's still up slightly by a couple of 100 bucks, but again we’ve got a great focus on the cost effort. We’re going to try to achieve that same margin production that we’ve done in the last couple of quarters.

Okay. Thanks and nice quarter.

Thanks Ian

We will now go on to the site of Arun Jayaram. Please go ahead.

Good morning, guys. Nice result.

Thank you.

John, I was wondering, if you could maybe elaborate on some of the technical specs on some of the international rigs, new build you plan to deploy and just maybe comment on, maybe give us a range if you include spare parts, camps, completion tools, how much you plan to spend on a per rig basis?

Arun, we really are not in a position where we can give any details on the technical specs other than to say that they are FlexRigs and with that meaning they are AC drive, but we really cannot share anything in addition to that. On the cost side, we were looking at a cost that’s similar to what we’ve had here in the U.S. in the announcement that we have made previously.

But, are they going to include camps and such or just the cost similar to what you see in the U.S?

No, there is no camps included.

Okay. Fair enough. In the current quarter, you guys sighted rising labor cost, in Venezuela, cost for lower margins and I guess you guided the flat margin. Are those cost going to continue or what?

Well our expectation and we are hopeful that we’re going to be able to maintain the current cost structure that we just reported. Again when you take into account the number of rigs that are mobilizing in this current quarter, it's kind of hard to nail down the cost side as you can imagine. And, again we’re hoping, we are thinking it's going to be similar to the quarter that we are reporting now.

Okay. Last question is for Hans. Obviously, a very nice success with these LOIs in Latin America. I think you guys did participate also in the T N KB P tender and were not successful. I was just wondering if you could may be give us some comments about that. I think neighbors and weatherford were successful there and may be frame the bidding activity in your international opportunity set?

Sure, you are correct in the outcome of that Russian bid, and that's not the first one we've participated in and I think that on the technical side, our offering is still very attractive to the customer. It really got down to matter of price and they, I believe, took a price level that for us was clearly not attractive, and when we look at international work, we're going to be motivated by attractive returns. We don't really at this point consider loss leaders just to establish beachhead particularly in an environment of $90 plus oil. So, that's what caught us in that particular bid. Having said that, Russia is still a large market. I think it's going to be an attractive market over a long period of time that we would hope to participate in. We're also looking, as we've talk before, about North Africa, Indonesia, and there are other places in the Middle East that we're also interested in. So, I think we have a nice swatch of international opportunities that we're continuing to look at, and hopefully that will lead to additional opportunities.

Okay. And the final question, can you comment on which country these seven rigs are going to?

We are sworn to secrecy on that, so we can't give you anymore details we would like to, but we have been understandably by the customer not to share additional details.

Alright, thanks a lot guys. I'll turn it over.

Thank you.

We'll no go on to Alan Laws. Please go ahead.

Good morning guys.

Hi Alan.

I would like to say congratulations on the new orders too. It's pretty impressive actually. The first question is on international and you just sort of covered it a bit there on what the bid flow might look like for international, and then for the rigs that you've just inked, or got the LOI on, how long have you been working on this?

Well we’ve have said before Alan how and of course you know the face of international projects unfold more slowly. And so, this has been a several-month effort. We have other bids outstanding that represent months of work, as well. So that's just a feature of international work. In terms of bid flow, we continue to see international interest. I wouldn't say that it's overwhelming or so robust. I would say that it just is steady ahead, and we're encouraged by that. I'm trying to think if there was another part of your question?

No, I think that pretty much covers it. Go back to the domestic market, and your North American market share gains have been pretty impressive, and one of you could talk about your experience to date on penetrating the market service, primarily by the conventional rigs in the vertical drilling market. You eluded to in this your comments, suggesting that maybe you've already seen some gains here. I wondered if it's as impressive as the unconventional plays?

Well, I did refer to that, and the point is that I think that the FlexRig continues to perform better and better, and when we see situations where we're competing in just vertical well type situations, the FlexRig again performs very well, and is gaining ground. I think the customer sees that at some point, the conventional rig, even with a good crew, even with everything they can kind of throw at the effort there is a technical limit of what they can achieve. When they launch the FlexRig, they are seeing incremental gains that are continuing and they are very encouraged by that and encouraged by the collaboration between H&P and the customer to push that performance further and further. And so really it just addresses the notion that while the non-conventional gas, more challenging gas drilling is very well suited for the FlexRig, we are not pigeonholed or limited just to that area of work. I think as the entire spectrum of work is available to us and I'll let John add to that if there is something he wants to mention.

Yeah Alan, you probably seen our presentations and where we talked about the best value proposition where we compare a conventional rig versus a Flex3 and this happens to be in East Texas. That's all the vertical work that goes back to 2002. If you look at, again it's not just in East Texas but there are several areas where we are drilling vertical holes with FlexRigs, and we're outperforming. To use that example, when we started there, the wells were being drilled in 21 days. That was the average of the 20 best wells. And today we're drilling those wells in an average of seven, eight or nine days, and again those are straight holes. Interestingly enough even in that field they are occasionally now beginning to do directional work and looking at horizontal work even in these much harder formations. You just can't get that done with a conventional rig and that's really what people are saying. So I agree with Hans, it's not just limited to directional. It just a lot of times becomes much more evident as you try to tap these older conventional rigs with some of this more directional harder, more torque related problems.

And more importantly your customer is acknowledging that. Is that fair?

Yes that's right and I think what we are encouraged by is that, it's a current customer base as well as new customers. And so again we’re going to continue that effort, and I think every quarter, every year, it seems there is more people that kind of get the message.

Alright, I think I'll leave it at that and re-queue up and let others ask some other questions. Thanks.

Thanks Alan.

We'll now go on to Doug Becker. Please go ahead.

Thanks, I just wanted to clarify the increase in CapEx. Is that solely related to the 11 new rigs that were announced or there are some other things included?

No Doug. There are some other things included and in my comments we talked a little bit about capital spares. We've got some international projects ongoing, tubulars, so yeah it’s a mix of things.

Okay. So so what's the rough average cost of the new rigs, I know for the Flex 3 and Flex 4, I think last time you were talking about something on average around $15 million. Is that still an accurate number?

That still is an accurate number.

Okay. And, I know you were talking about the new rigs coming in, I guess seven by the end, I guess over the next two quarter. Can we get a little more granularity on the upcoming quarter, the current quarter, just the delivery schedule?

I might let Juan Pablo handle the granularity.

We expect to deliver a total of seven new FlexRigs there in the second fiscal quarter.

And should we be assuming that's evenly spaced? It just seems like you have a little bit more available rigs than we were thinking.

You know, part of that is driven by rig type and how we schedule and kind of batch those together. And so there's a little more complexity to it then what you suggest. Just to give you a little more detail there, Doug, for fiscal year '08 the expectation for the 22 rigs that were mentioned is seven completed in the first fiscal quarter, seven in the second, five in the third, and three in the fourth.

Okay. And then maybe a question for John. Are you seeing a lot of rigs from Canada come down? I know there has been a handful but is that increasing or decreasing and what are your expectations there?

You know, personally I haven't seen then but I have heard that there's rigs coming down, at least right now I wouldn't classify it as a lot of rigs, but I do know that there's a few in the Barnett, there's a few of course, in the Rockies, and that just seems to make sense. And, you know, it’s not that we haven't assigned a lot of time to it. We recognized they are coming in and recognize the situation after going through in Canada and then looking for opportunities. So, I think it’s just going to be a part of the competitive landscape as we go forward and the best rigs are going to work.

You are well positioned there. Thank you very much.

Thanks Doug.

Thank you.

We'll now go on to Mike Drickamer. Please go ahead.

Hey good morning guys.

Hello.

Hi.

Alright I maybe stating the obvious here but your comments about the new FlexRig commitments today discussed that you see similar returns to what you've announced previously. Can I take that to mean that even though the industry has seen day rates falling. You haven't day rates falling on this flex rigs you're putting into service?

No, I think you're looking it correctly that we're able to continue with the economic model that you become used to in terms of attractive financial returns and the same goes with the level of terms contracts. And so, yeah, I think we're able just to forward that same model.

Okay. And then you talked about comparable returns. Are the returns internationally, materially different than the returns domestically?

No, not, really.

Okay. And then a last one, the international rigs, some of them could be on five year contracts. And what's the thinking behind the five year contract? Is that something that you guys wanted moving into that market, is that something the client wanted? What's going on there?

Well I think the client was interested in that and their mobilizing that effort. And so they see the visibility of lots of work. So they were interested and Mike we were happy to accommodate.

Okay, great guys. That’s it for me.

Thank you.

(Operator Instructions). We'll now go on to (Waqar Syed). Please go ahead.

Congratulations on the great quarter and on these new contracts. Doug, I've question on modelling side. You mentioned that international rigs are going to be mobilized in the fourth fiscal quarter. When do you expect them to be on the payroll and how would mobilization costs be treated the expensing and all? How's that treated?

Waqar, our mobilization policy on long term contracts like that to call for amortizing the profit or loss on mobilization over the life of the contract. So we'll see whatever financial gain we have there in mobilization, amortized over the life of those contracts. So, I think in terms of the timing of the -- we'll see that really just begin in the fourth quarter as I recall for those new rigs internationally. And as you might recall the international accounting is actually a month ahead, in other words our fiscal year ends, end of August internationally. We'll see some effect in the fourth quarter. Is that right, one probably just very little, and then we will see a good chunk of a start in the first quarter of '09.

Okay, great. And then John, could you share with us the experience of FlexRig for in the Sonora field in West Texas. I understand that you have the FlexRig force there competing against the very standard or mechanical rigs in a basin that you've not worked before. Now you've some experience working there. What is the experience so far going against standard rigs in kind of simple straightforward wells?

Well as you said Waqar it’s a new area for us. We put our first rig in the field in January of '07, and I think we had our fifth one there by mid year or so. So there's been a pretty steep learning curve, and the first rig that was delivered will make, I don't know the exact number, but it’s close to 400,000 feet of hole in the first year. If you take the average of the -- if you average -- if the rig would average what it averaged in the second half of the year it would be well over 400,00 feet of hole. So I think the rigs are competing well, and I think there is evidence of some of the older rigs not working in the field. So again, we're the new kid on the block and we're learning a lot of things. But I think overall the performance is going along pretty well. Does that answer you're question?

Yeah, it does. I think that’s all I have. Thank you very much.

Thank Waqar.

We'll now go on to Mark (Inaudible). Please go ahead.

Good morning gentlemen, again my congratulations. The additional CapEx, would you expect to, It would seem to me that you're going to need to have additional funding of somewhere between 115, 117 million, would you expect that to come from new debt or asset sales?

This is Doug. If, in fact, we have more need, we would have debt facility available and of course, portfolio sales to help supplement that.

So you haven't made a decision on which it would be then.

No, not yet.

Okay.

But more likely, we will just make room in our line of credit and then sell portfolio as we have in the past, just opportunistically.

Okay. Thank you.

We will now go on to Mike Breard. Please go ahead.

Yes, excellent quarter. You mentioned in Russia that you lost some jobs because of price on the new rigs. On the U.S. contracts that you have won, are you finding that you are able to win contracts even offering a higher price, because your rigs are just flat out better than the other people or is price major sticking point with the operator.

Well, I think swinging back to Russia for just a minute what we had hoped is that, that would be all new equipment and it ended up being kind of a mix bag and yes it was, in our thinking, driven by price. In this country, the price is certainly something that everybody is just focused on, but what we are trying as you know is to promote the notion that value trumps price and value is measured by the lowering of the well cost, a lower AFE. And so, I think the customer has bought in and support that thinking, and what they see is the efficiency, and the performance of the rig drives a lower overall well cost and so, the day rate price, and we don't want to suggest, it's not important, but it is viewed in that larger context.

Okay. And there is one quick question on overseas. Halliburton has just gotten the larger order from Pemex it cover somewhat 58 well. Are you finding that Halliburton and slummer Jays of the world are potentially good customers for your foreign rates or you’re still talking to the traditional customer?

We want them to share more money with us and I think that's been -- as those projects have come out of the gate, that's been -- the difficulty is how do you share in the value creation. So, I think some of the earlier projects -- the contractor and we haven't participated in those, the contractor has felt like they’ve gotten lesser value.

Okay. All right. Thank you.

Thank you.

We will now go onto (Byron) . Please go ahead.

Wanted to ask a question about how you think about returns on capital employed for the tax rate that goes into the U.S. market versus the ones you have the LOI force that we’re that we are working in Latin America. Is there a slight trade-off there given that you’ve got five-year terms? Five of the seven that are working in Latin America, just how do you think about trade-off there for future opportunities U.S. versus Latin America.

Well I am going to avoid talking about the specifics of that deal just because we have assured the operator that we will not, but in terms of how we look at return on capital for international work. One of the aspects of it is how it compares to the opportunity set that we have here in the U.S. and our sense is that we need to gravitate to where the returns on capital are the highest for our investors, and at the same time we believe that we won't exclude international work. So it seem as an overall opportunity set and we’re trying to find those deals. The other aspects that come into play are difficulty of operations, cost, geopolitical risk, contractual elements of the projects, so there are host of other things that we pay attention to

Fair enough. Since you started the new build program for the FlexRigs that have gone to work in the U.S. market, to the extent that any of those rigs have rolled off their original contracts, are you able to hold the pricing of those rigs flat as they roll off the initial terms and again, I am not sure if there are any instances where that has been the case since you have generally had three year term contract, but just curious, and day rates for resigning and FlexRigs relative to the original signings?

Byron, this is John. We've not had any of those rigs roll off of contract yet. So we haven't gone through that exercise yet.

And then, just last question relates to kind of you're handful of the larger rigs that serve the deeper market where there still seems to be some softness. What's your bidding strategy with regard to those rigs and do you just keep them on the sidelines or is there a kind of a day rate maintains where you'd like to put those rigs to work?

We'll what's interesting about that is there's really not much to bid on. And so, when you do have a bid on one of those projects as you can imagine, it's highly competitive, and there's a lot of contractors bidding on it. I will say that of the larger rigs that we have stacked several of those are, I mean, there are rigs that are favorites of some of our customers that drill in the area that we’ve drill for in the past. So, I think when the work comes back around those rigs, those rigs will go back work at a fair market day rate. Right now, we're just not seeing a lot of opportunities to even bid on that deep of work.

Thanks guys.

Thank you.

(Operator Instructions). We will now go on to Alan Laws. Please go ahead.

Hi, guys I had a follow up story. Can you talk a little bit about cost to, it seems to us that domestic costs are kind of moderating. Are you seeing kind of roll off of the start up costs of number of the rigs or are you actually seeing easing labour costs? What's going on there in the cost side?

In the U.S land piece, yes. Part of our cost reduction is the factor of putting fewer rigs out and the training cost piece of that has an effect. At least we haven't seen any reductions in labor costs. We haven't seen any labor increases either, but I just don't expect that we will see a labor cost reduction; it's still a very highly competitive environment for the best people. And, I wouldn't expect it to go down if anything, I would expect it to go up. But we're not forecasting that. We've had some success in lowering our maintenance and supply cost and that’s been the other, really the other piece of the reduction.

Okay great, thanks. Appreciate it.

And we currently have no questions.

Okay. Well we'd like to thank everybody for joining us today. Have a good day and good bye.