Good day, and welcome to the Helmerich & Payne first quarter earnings conference call. All lines are currently in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. And please note the call is being recorded. It's now my pleasure to turn the conference over to Juan Pablo Tardio, Vice President and CFO at Helmerich & Payne, Inc. Please go ahead.

Thank you and welcome, everyone. With us today are Hans Helmerich, President and CEO, John Lindsay, Executive Vice President and COO, and Mike Drickamer, Director of Investor Relations. I will make some general introductory comments and will then turn the call to Hans for his and John's comments. As usual, all forward-looking statements made during this call are based on current expectations and assumptions that are subject to risks and uncertainties as discussed in the company's annual report on Form 10-K and quarterly reports on Form 10-Q. The company's actual results may differ materially from those indicated or implied by such forward-looking statements. 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 and calculations on the last page of today's press release. Income from continuing operations during the first fiscal quarter resulted in approximately $104 million or $0.96 in diluted earnings per share, representing a 25% increase in earnings as compared to the immediately preceding quarter. The significant improvement was primarily driven by a 33% increase in operating income corresponding to our US Land Operations, which sequentially reported a 6% increase in quarterly revenue days and a 15% increase in average rig margins per day. Although, we expect market conditions in the US to remain strong and perhaps even continue to improve during the second fiscal quarter, we also expect to experience a decline in our International land segment in terms of both activity and margins. Given the increased number of customer commitments that we have for new FlexRigs to be completed this year and the level of rig component orders that are required to ensure our ability to effectively respond to additional new FlexRig demand, our capital spending estimate for fiscal 2011…

Thanks, Juan Pablo, and good morning. We are encouraged by the progress we posted during the company's first quarter. Our US domestic business was stronger than we had expected, achieving both increases in revenues and declines in expenses. We're also pleased to announce eight additional new build orders. Before John takes us through the operating detail, allow me to make a couple of comments on general market conditions. Strong oil prices and the ability of our customers to shift their drilling targets to oil and gas liquids rich plays has been a very positive driver for the service providers in the US market. For at least 30 years, the fortunes of the domestic oilfield service business were closely tied to the ups and downs of natural gas pricing. While natural gas will be critical to the future of the domestic energy picture and to our business, we now have nearly 60% of our US fleet drilling for oil and gas liquids versus a more traditional dry gas target. As the oil count marches toward the 800 rig level, customers are incorporating much of the new technology and complex well designs that have made the gas shale plays such a game changer. Not long ago, a shift to oil drilling would have been considered a negative for us since so much of the activity used to be shallow, vertical, bread-and-butter type drilling. Well that has changed today; with the strong emphasis on directional and horizontal drilling, the new mix plays to our strengths. Consider the Permian Basin and activity there since the peak of October 2008. We've seen our rig count more than double in that market as customers favor the higher performing rigs to match their more complex well designs. At the same time, our two largest competitors have seen…

Good morning. As Hans described in his comments, our customers continue to move toward oil and liquid rich plays and along with that transition, the intensity of more complex wells has increased. One example of increasing complexity is the length of laterals and horizontal wells drilled today versus 2008. A recent report suggests that average lateral lengths have increased approximately 40% to over 5,000 feet and leading edge laterals have increased in some cases 100% to 150% to 8,000 to 10,000 feet in unconventional plays like the Eagle Ford, Marcellus and Woodford. These trends favor FlexRigs, and it is more likely that older, less capable rigs will continue to be replaced by new build AC-drive rigs like FlexRigs. The following operation summary will describe the first fiscal quarter 2011 results and the second fiscal quarter 2011 outlook for our three operating segments, and I will start with the US Land segment, where first fiscal quarter 2011 US Land results benefited from a combination of higher activity levels, improved pricing and lower average rig expense per day given reduced spending on rig activations. Total US Land segment revenues increased 9% sequentially to $476 million. During the first fiscal quarter, we completed the construction of seven new build FlexRigs and had another three FlexRigs return to the US from Mexico. Considering these rigs plus the full-quarter impact of previous new builds, the average number of rigs working increased by 10 to 187 rigs, including an average of 129 under term contracts and 58 in the spot market. Average rig revenue per day increased sequentially by over $500 per day to $24,950 as the average dayrate for rigs in the spot market increased $1500 to approximately 23,500. Average rig expense per day decreased by over $1,100 per day due in part to a…

Thank you, John. And operator, we will now open the call for questions, please.

(Operator Instructions). Our first question will come from Robin Shoemaker with Citi. Please go ahead.

Yes, thank you. Great quarter. And just wanted to ask about the continued progress on expenses which is such a big part of the margin. So, it sounds like it is more of a sustainable trend, given that you are not reactivating rigs, and you're working, I guess, companywide on some cost reduction initiatives. But a few other companies here that have reported have talked about some inflation in wages, freight, materials, et cetera, fuel. So, what is your expectation about just the general cost per day trend in the US Land?

Robin, this is John. I believe that you are right, in that it isn't a level that is sustainable. Obviously, we reported that we thought next quarter expenses would be flat. Clearly, the last two or three quarters were impacted by the number of reactivations we have. We put 90 rigs back to work in a year, and so that had a large impact. I think if you just look at where our expenses are today, and specifically maintenance and supply costs, they're back in a more normalized range like you would have expected back in a '08, '09 timeframe. And so, again, we think that where we are now is sustainable.

Okay. I know this is kind of a sensitive topic also; on the new contracts, would you characterize these as similar economic terms to the ones that you first reported back in March of '010? Or has the term contract market improved from that time?

Well, Robin, I think we've been pleased from the time you referenced, March of '010, and the type of contracts we have been able to sign in terms of the nice returns that are provided there, and then also we have multi-year terms. So, I think there might have been a slight improvement, but I think we are exactly kind of in the bandwidth where we had hoped to be. So, not a big change.

Okay. So, probably not back at the levels you were signing in late 2007, 2008 if I read you correctly?

Yes, that's correct.

Okay, thank you.

Thank you. Our next question will come from Arun Jayaram with Credit Suisse. Please go ahead.

Good morning gentlemen. Nice results. Hans, I wanted to talk to you about opportunities for the FlexRig technology in European shales and shales outside of the US seems to be, obviously, a very niche market today, but it could be something of some future growth. And perhaps maybe talk about maybe some of the dialogue you're having about that today.

Well, we are hearing from customers that have used FlexRigs and are familiar with what they are capable of. I think there's building momentum and progress in those shales. Part of that is reflected by the JVs and the willingness of some of those players to learn more about the shale plays that we have now in the US So, part of what we said earlier is that we think that continues to move forward in developing '011, but that it really begins to be a little more clear in 2012 for us. John can jump in. We have been having customer conversations and so, I think there is an intention there and a focus and the suitability for what we do, I think, is a great match. So, we are upbeat about that.

Are there any countries, Hans, where you could cite some of the demand or conversations at least?

John, do you want to talk about if there any specific ones? Poland has been an area and again, some of the players are familiar to you, and you know that they are our customers, but what else would you add to that, John?

I think, clearly, at least right now, Poland seems to be the country that there's the most interest, the most acreage positions. I think Romania is another country. I'm trying to think of others. No others really come to mind. Again, I think this is a slower trend rather than a faster trend. The best I can understand, our customers are still in there evaluating and trying to delineate and understand how to complete the wells, drill the wells, all those kind of things. But, I think longer term, again, it does offer us some upside.

Okay. Second question, guys, obviously, there's been a pretty sharp decline in the Haynesville market. What are you seeing with the rigs that have been somewhat displaced? Are you seeing those move out? Does that have any impact on the broader market for higher spec rigs?

Arun we've had, if you're referencing our particular rigs, we've had some of our FlexRigs, most of them Flex3s that customers have moved out of the Haynesville and they have moved them to the Eagle Ford, to the Permian, and I guess in a few cases, they've gone into the Cana Woodford. I don't really know about what some of the other rigs have done. I'm sure, because of the size of the rig fleet there, that some of those rigs are going into the basins I just mentioned and displacing, in some cases, some of their own rigs because some of the other rigs are going to be smaller. Does that answer your question?

That does. But it does seem as though some of the dislocations haven't had a broad impact on the market because rates seem to be going higher, et cetera. And you still see pretty good interest in new builds. Is that fair?

Yes, I think just to that part of your question, when you have that kind of displacement out of a major basin, it becomes a source that, in some way, competes with the new build market, which blends to just a larger point we're making, which is, we think the go-forward is there's going to be steady, and we are encouraged by the progress we're making. But we don't see, we see it being moderate and steady, which we've said for a long time is a more favorable outlook for us than a real strong ramp up and a real frothy new build environment. So, we actually like that as a factor.

Okay. Thanks a lot, gentlemen.

Thank you. Our next question will come from Scott Gruber with Bernstein Research. Please go ahead.

Good morning, gentlemen. You highlighted the trend toward longer horizontals in the US, and arguably the operators in the Bakken led that trend. Are the Bakken rigs drilling these extended laterals, are they all AC rigs? Or is there a mix of AC and SCR rigs drilling those wells?

Scott, I think there's, if you're just talking industry wide, there is a mix. It's AC, SCR. I think there's far fewer AC rigs in that market. But in addition to that, best we can tell, there's quite a few mechanical rigs that continue to work in that basin as well. And again, I don't know the details on the rigs, on whether they're outfitted with top drives or not. But as the laterals get longer, I think, customers experience that the mechanical rigs continue to be challenged to deliver the well cycles that are required. And so I think that it's obvious that those rigs will ultimately be displaced. I think that there's a lot of contractors in the Bakken today that are in the process of trying to upgrade their mechanical rigs. From our perspective, most of what we have in the basin are AC. We do have a few of our SCR rigs that are the FlexRig2s that we've built. And we have I think two of those in there, but the rest of the rigs are all AC-Drive. It seems to be the clear choice, the clear desire, from our customers is to go with the AC-Drive technology.

Right. And clearly it makes sense over the long-term. But are you actually hearing inquiries today from the customer base to displace some of those mechanical rigs and SCR units, particularly on these extended lateral wells?

Yes. I think at least with our customers, most of our customers aren't using mechanical rigs, but we do hear anecdotally that contractors are upgrading mechanical rigs and/or replacing mechanical rigs with upgraded, either an SCR rig, or I'm sure a new build AC.

Okay. And then, on another topic, do you know how many of your rigs today are working on pad operations, in the US?

Scott, I don't have an exact number. If I were going to throw out a number, I would think it would be probably 25 or 30 rigs. We have what, Mike, between 40 and 50 S-type rigs. And so, most of those are doing pad work, so there's about 44 or so S rigs, and most of those are going to be drilling some sort of pad work. It may only be two or three wells. In some cases it may be as many as 20 wells on a single pad. I think that trend, as we've said in the past, I think that trend continues. I think in areas like the Marcellus, in any area that has BLM land, any areas that are near cities, they're going to want to have less surface disturbance; they're going to want to drill additional wells on a pad. And as these wells are horizontal, all you are doing is adding the directional component to the well. But again, that begins to challenge older rigs, conventional rigs, because they had difficulty doing the directional or more difficulty doing the directional and horizontal work.

Right. Now, where could you see that number going in the next 12 months? Could you see that 25 number getting up to 35, 40?

As far as our total fleet?

Yes.

Yes, I think we probably have in the range of 30 to 40 rigs that are doing pad work, just the S rigs. If I said 25, I apologize. I think it's going to be more like 30 to 40, and I'm just thinking of the S rigs. We also have other FlexRigs that have skid packages on them as well. So that's something we will look at as far as our total rig count. Yes, I do believe it will increase. I don't know what the total rig count in the Marcellus is today, but from my impression in talking with customers, the rigs that are working in the Marcellus today, more and more of those are going to go to more pad-type work. So, whatever percentage of that, let's see. Marcellus is, we're I think in the 90 to 100 rigs running in the Marcellus. And so, I don't know what percentage of that fleet today is drilling pad, but I think we would be fairly certain that in the next 6 to 12 months, that is going to continue to increase. They're going to be more and more. So that's something we will talk about and try to report out next time.

Okay, great. Thanks for the color.

Thank you. Our next question will come from Joe Hill with Tudor, Pickering, Holt. Please go ahead.

Great quarter, guys. Hans, you said that you think the new build market is going to be improving moderately and in a steady fashion. What's your rig count expectation around this for the industry?

Well, I think, we've said, Joe, for a long-time, it doesn't have to continue an upward movement, 1700 and beyond because I think there's going to be like you've heard us say, displacement opportunities. And clearly, as you add more AC rigs and better rigs, it's not a one to one offset. You're going to be able to displace more than one lower performing rig. So, we probably don't have a scientific number or range, but I think even if you are in a 1200-type rig count, we're going to continue to be able to build market share in that type of rig count.

Okay. That's very interesting. So, I mean you just announced eight new builds with contracts behind them. If the rig count is relatively flat this year, would you anticipate a similar pace of increase or would it be a little higher, a little lower? Do you have a sense?

Well, we've been encouraged by just the pace and the rig order amount we have, and that's been in the backdrop of an increasing rig count. So, does it dial back a little bit if you have a flat rig count through 2011? It may, but it's hard to see where the customer takes a clear preference and how that directly translates, but we would anticipate that we're going to continue to see those kind of opportunities. It's just hard for me to give you a number.

Okay. And then finally, for John, Argentina has been drilling a few things in terms of granting concessions and potentially trying to test up some shales, maybe the Neuquen basin. Do you have any particular opinion on whether or not that results in better activity for you guys? I know you are talking about 2012. Is that one of the areas?

Joe, I think, Argentina always offers us some more potential upside. As you know, we're active in Argentina today, and I think anytime you have the potential for large numbers of rigs in an unconventional play, a shale play, then I think you have to consider H&P as being one of the players that would go in. I think there's other challenges. Argentina, that we've had, and I think a lot of contractors have had in terms of the workforce and the labor unions and those challenges that we see in our operations. We would be helpful that we could get those situations resolved, if that could happen, that would be a lot more encouraging for us. I think just as far as the technical side and the type of rig that's required, no doubt, we've got the right rig; we've got the right infrastructure. I think it's just working on those things that tend to be bothersome that causes you not to hit your numbers, not to be able to make your margins that you expect.

Got you. Okay. I'll turn it over. Thanks, guys.

Thank you. Our next question comes from Victor Marchon with RBC Capital Markets. Please go ahead.

Thank you. Good morning, everyone. First question, just on the international side, the margin expectation for the second fiscal quarter, I'm sorry I missed that. Can you guys just repeat that?

Yes. We are expecting in the second quarter revenue days to decrease by about 25% sequentially and average rig margin per day, including the early termination revenues, decrease by 35% to 40% in the second quarter.

Okay. And then looking at, if you could comment at all and looking past that quarter, or this quarter that we're in, how does the margin progression look past that to the extent of getting back to you guys to where you guys had been in that low double-digit range before you started to see the impact of the early terminations and moving the rigs out of Mexico? Is there a progression or a trend line you can give to us?

Well, with the six rigs moving out of Mexico, and in addition to that, we have the two rigs in Ecuador, again, we think those rigs will go back to work and should impact positively the third quarter. We're not really certain where those rigs, as far as activity in the second quarter. But if you just look at the total number of rigs we have internationally compared to what we have had, it's obviously going to be fewer. So that's why we're saying really I think if you just consider 2011 in general, 2012 seems to have a brighter outlook. It's just we think it's going to continue to be soft for the reasons we've just mentioned through the rest of 2011.

And just switching gears to the US on the pricing side, you had mentioned that the spot market or spot pricing was 23,500 in December quarter. What is the expectation for the March quarter on the spot market?

Well Victor, that's hard to nail it exactly. We have rigs, the 50 rigs that are going to roll off of term most likely, I would think that 75% of those at least would roll into the spot. Some of those rigs are going to have the potential to price. Some of those are going to price below the average. Some are going to price above the average. Again, I think in general, we are thinking and we said in general $400 to $500 a day for the quarter. I think the spot market pricing will be slightly more than that, and I think the term market, term pricing would be slightly less than that.

And would that go, because I know you guys had mentioned on the last call when you're looking at fiscal year 2011 at that point, the re-pricings on the terms would be potentially a slight benefit with some below and some above. I guess that, as you just mentioned, that would still hold in looking out for the full fiscal year?

That's the way we're looking at it right now, yes.

Great. Thank you guys and great quarter.

Thank you. Our next question comes from Dave Wilson with Howard Weil. Please go ahead.

Good morning, gentlemen. Just real quickly, and I know you touched on it a little bit here, but regarding international, has the timing or desire to grow there been delayed since we're seeing such a good terms here in the US and utilization? As far as allocating capital here domestically and internationally, how are you guys thinking about that right now?

Dave, I don't think it's a reflection of our outlook or view. Really it's more of a demand pull type situation. We see momentum building and opportunities that like we said earlier, are going to show up more visibly in 2012. So, our approach is, we are interested in growing that footprint. We would anticipate the demand to be there, but it's not so much that type of trade-off. And let me just add, both in terms of capacity and then balance sheet, we're not capital constrained. And so, yes, it's not a reflection of us saying let's stay closer to home.

Okay. Now, as far as some of these in Eastern Europe, is there any significant modifications you'd like to be making to any of the FlexRigs to work over there?

Dave, I think we're still analyzing that. We've had some folks on the ground over there and looking at that. I don't think that they're going to be substantial in nature, but I think there will be some modifications that will be needed. I'm not exactly certain to what extent at this stage. I think most of that's going to have to do with transportation, size of loads and those types of things. So again, I think we can work within those constraints.

Okay, great. That's it for me. Thank you.

(Operator Instructions). Our next question comes from John Daniel with Simmons & Company. Please go ahead. John Daniel - Simmons & Company: Good morning, guys. Hans, you mentioned that you're building a fleet two to three rigs per month I mean, you get done by the summer. Should we assume that the rate of construction though continues for all of calendar 2011, perhaps to be ready for international demand next year?

Well, it will be, again, demand pull for us and we will want to see the contractual opportunities. So, we won't just build in, in terms of anticipation or trying to kind of load the queue. But you are right, today, in January, we're at three rigs per month. We will sustain that through the summertime, and then we will have better demand visibility and go from there. John Daniel - Simmons & Company: Okay. Alternatively, should we perhaps see you guys become less assertive with future price increases and focus more on market share gains given the competitive advantage on the new builds?

Well that's a loaded question. Yes, I think that we're used to being the pricing leader and we also have been fortunate to continue to build market share. As you know, we have, over the last three or four years, doubled our market share and we still see it as running room to go. But I'm probably not going to give out anymore of the secret sauce on how we will play between those two dynamics. John Daniel - Simmons & Company: Alright, fair enough. Last one for me, just as you look at markets like say Poland or Romania, do you sense that the customers over there value the efficiency concept? Are they like some other international customers who are more do you solely focused on lowest possible dayrate? Have they made that transition yet?

Yes, that's a good question. Clearly international in general is more price point sensitive, and I think it will take some time to win over converts. But at the same time, they're very keen on understanding and being able to exploit that opportunity, and they are spending a lot of money today in these JV arrangements to have a front seat to all of this. And so, everything we're hearing, we would anticipate that they're going to want to hit the ground with the best drilling solution, and that's what kind of makes us upbeat about it. John Daniel - Simmons & Company: Okay. So, would you ever consider sending one rig over sort of call it like crack, to get them addicted to it at a low rate, build from there?

I think we probably, let us play with that concept, but no, I think that, the truth is, we've built an awareness and a brand recognition, and the majors that we have as part of our customer roster right now really don't need the convincing. And I think you've heard me say, that's probably our first leg in, is with that type of relationship where we have a good, on-the-ground working relationship and they have performance expectations of us and we will hit the ground there. And we've seen this in other international markets. Then, that becomes a beacon or an attraction to other folks, and NOCs and additional customers, so it will probably be done that way. John Daniel - Simmons & Company: Okay. Fair enough. Good quarter, guys.

(Operator Instructions). Our next question comes from Thomas Curran with Wells Fargo. Please go ahead.

Good morning, guys. I'll just echo my peers and congratulate you on an outstanding quarter. I'm curious. So, you haven't hesitated to nearly pull out of Mexico entirely. We've heard some starkly conflicting news flow about what exactly Pemex seems to be gearing up to do in 2011, and there's both bullish and bearish outlooks out there. Should the bullish one begin to materialize, would you be willing to move back in? And if so, how would you most likely go about it in terms of where would you deploy the rigs from?

Well, we hear some of the same conflicting reports that you do. I think where you may see the first wave of improvement will be offshore, and then it really requires better clarity and visibility on what the plans might be onshore. You are aware, as many are, that there are real security concerns there and that will factor in. But longer-term, Mexico is attractive market for us, and we would like to participate. So, it's hard for us to see that happening certainly in '011, and it wouldn't be at the top of our list even as we round the corner into '012.

Okay. Would you be willing to maintain or even expand the footprint you have in Argentina from this point forward? Is the unconventional opportunity there seemingly attractive enough that you would be willing to pursue it despite the frustrations associated with the union labor costs? Or might we see you also look to reduce your presence in Argentina?

Well, longer term, it's a little bit like Mexico and some other countries there; they have long-term potential that we would like to participate in, and so then it is a matter of seeing what line of sight you have now and some of the complexities, and you've mentioned the union issues and others, and just trying to make progress and resolve those. We like Argentina as a longer-term market, but we will go slow for the next couple quarters and just see how that develops. But I'm an optimist, and I think longer term, it's going to be a good place to be.

Okay. And last one for me on the US side, currently, about 60 of the 360 rigs working in the Permian are drilling horizontally. What is your best read on just how large the horizontal market within the Permian could become?

Tom, this is John. I think not only the Permian, I think all of the basins, the bottom line is the customer can exploit, get better recovery drilling horizontally in an unconventional as well as a conventional reservoir. So, I think that trend is going to continue, and it's hard to say at what pace and at what rate and how quickly is it half of the market? How quickly does it continue to gain a percentage? But, I think it's clear that that's where customers are going. The costs associated with drilling horizontally now, being able to get the cycle times down, in some cases, we are drilling wells horizontally as fast as we were drilling them vertically with a lot less reservoir exposure. And so, if a customer looks at that, they're going to continue the trend of going more horizontal. And I think the Permian is going to be no different than the other basins. I guess the question is, is really on the unconventional versus the conventional reservoirs and I think overtime, that will happen. I think that speaks to our market share gain as we talked about on the call, is that that's what we have seen. We have more than doubled our size there. We continue to gain market share. We continue to have interest, and we have some new customers that we had not worked for before, and that's encouraging as well.

That all makes sense. Thanks for the color, guys. I'll turn it back.

Thank you. Our next question comes from Waqar Syed with Macquarie Capital. Please go ahead.

Good morning and, again, great quarter. Congratulations. I have a couple of questions first on international, especially European market. Do you know if anyone has capability to manufacture FlexRig-type rigs locally in Europe? Any of your European competitors, do they have that capability?

DEUTAG, of course, is a long-term player there. I don't know what their current appetite is for new builds. So, that's the first one that comes to mind, Waqar.

But, Waqar, I think too, when you say FlexRig-type capability, I think when you think about DEUTAG and I think other European manufacturers, I think they tend to build much larger rigs, not fast moving rigs. I can't really speak to the AC side of the design, but I don't see those guys exploiting other markets around the world with a FlexRig type of rig. And, I can't really think of anyone. I can't think of anybody, from our perspective, there's nobody in the world that builds a rig like a FlexRig. Now there's people that build AC-Drive rigs, but I don't see that it has, that their rigs have the same value proposition that we have been able to display. Obviously, we haven't talked about it today. We have talked about in the past, but we have an engineering effort that no other contractor can match. We have a manufacturing effort that no other contractor can match. And so again, I think that makes a huge difference. I really can't think of any other manufacturer in the world that has built as many AC-Drive rigs, and they haven't built FlexRigs, over the last five years.

Sure. Now, the Asian Europeans had a very robust drilling, they had a number of drilling companies that are working all over the Middle East. But they had really low end mechanical that really low-end rigs. Are you aware if they've made any advancements in improving the quality of the fleet that they could be competitive in these unconventional plays in Eastern Europe?

I'm not aware of it. I think maybe another anecdotal example would be we have a lot of the IOCs that we provide a large portion, if not all of their unconventional work here in the US They're coming to H&P and they're talking to H&P about rigs in the future. I'm sure they're talking to other folks as well. I think what they end up doing is utilizing the local contractor content in order to delineate wells and understand how they're going to do it. But from a production standpoint, when you get to the gas manufacturing effort, they're going to use an H&P. They're going to use FlexRigs.

Sure. Also, now you've had these FlexRigs working in the US for like five years or so, some of the equipment on the rigs probably from the early generation rigs needs to be maybe upgraded or replaced or just normal wear and tear kind of maintenance. What are the challenges that you're facing? And has the cost of M&S per rig, changing at all? It used to be the rule of thumb was something around $800 to $1,000 a day in kind of maintenance costs for kind of a normal rig. Is that number changing, dropping down or going up for you guys? And then, I guess, we can think about the rest of the industry as well.

Well, Waqar, I've been with H&P for 24 years and I think in 1990, we might have had $800 a day M&S. So, I think to answer your question, if you look at, we've had Flex3s working since 2002, and no doubt, M&S is higher today on a Flex3 than it was then, but we've had oilfield inflation, obviously, overtime. But if you look at the Flex3 M&S overtime, it's been within a band. Obviously, when you have a large number of rigs stacked like the industry had in 2009, and then you reactivate those rigs coming out of stack, you're going to have some startup expenses. I think that's what we saw over the last three quarters or so. Again, I think we're going to be back in, in kind of this normal range if you will. As far as just long-term costs, that's part of the organizational support. That's part of what H&P I think does a very good job of, is that we have the critical spares, we have the critical overhaul processes, we have the maintenance systems in order to maintain these rigs the way they need to be.

So, let me ask a different way, that organizational change, at what point in the cycle once you introduce these new rigs, does it become the most important factor in continuing to run these rigs at very high efficiency? And I just want to think about some of the other companies that have introduced more recently the new FlexRigs and may not have the organizational support such evolved. At what point do they start to feel the pain?

Well, Waqar, you've followed us a long-time, and we have felt that field execution, that organizational support that you're talking about. And you've seen that. We're in our third generation of that effort. No one has put that type of commitment and resource into doing that. And so, I think you are onto something that's very germane and that is, as people, now, you said other people are doing FlexRigs, but as they do their version of an AC rig, and look, customers have seen those now on the ground for a couple of three years, and we are still leading with new orders and customer commitments. So, I think exactly what you are saying comes to bear, and the effort and resources that we have around supporting our AC-Drive rigs, the ability for us to reduce downtime, to support the equipment in the field, to bring the average well in a field closer and closer to the best well in a field is a march and a drive that represents a lot of effort, and it becomes much more the harder thing to duplicate or to match us with, not just putting out your version of an AC-Drive rig.

Sure.

I think the other advantage, Waqar, is keep in mind that our fleet is standardized. Since 2002, the Flex3s and the Flex4s have very standardized components, and that helps, whereas the competitor, they have AC-Drive rigs plus they have, in most cases, a very large conventional fleet that they have to keep up with and maintaining and that's a different business altogether.

Sure. Great. Thank you very much.

Your next question comes from Thad Vayda with Stifel Nicolaus. Please go ahead.

Good morning, everyone. Just had a couple of quick ones, please, and I apologize if you covered this earlier and I just didn't hear it. Of the eight new build rigs, how many operators comprise those orders? And are there any new ones in the mix? And also, if you could share perhaps where these are going to be deployed or you believe they're going to be deployed?

Thad, in general, what we've said on, relative to the 31, we've talked a large percentage of those are going to the Eagle Ford. A large percentage are going to the Cana Woodford. We also have rigs going to the Bakken, the Permian, the Marcellus, the Haynesville, are kind of the primary areas. But by far, the Eagle Ford and the Cana Woodford are the areas that have the largest percentage. As far as customers, I think it was three or four customers that made up the eight rigs.

Okay. Anybody new or are they all folks that have ordered from you in the past?

I believe these are all longtime customers.

Great. And bookkeeping, can you tell me how many, in the US, how many rigs are currently still stacked and are any of those non-marketed rigs?

As far as the industry or H&P?

No, no, no, I'm sorry. Just in your fleet.

The rigs that we have that are stacked are conventional, our conventional fleet. And there's 36 total. I think that's right, yes. And those rigs, I wouldn't say that they're not marketed because those rigs recently worked and probably most of those rigs were stacked in the '08, '09 timeframe and so obviously those rigs are capable of going to work. But the pricing that the market has out there today is not at a place where we think it makes sense to put those rigs back to work.

Great. That's it for me. Thank you very much, gentlemen.

And operator, perhaps we have time for one more question, please.

Okay. Our next question will come from Mike Breard with Hodges Capital. Please go ahead.

Thank you. Congratulations on a great quarter. Could you give us just an update on your directional drilling program?

Mike, I think since our last call, we feel like we've still made some progress there. I think there will be, in our filing, an additional payment that was long anticipated contractually because it represents a progress milestone. We haven't really had that much change in terms of what we reported last time. But we continue to think through what type of model we bring that to market with, and I think we're making some progress there. So, there's really not a lot new to report.

Okay. Thanks very much.

Alright. Well, thank you very much for joining us today, and have a good day. Thank you, operator.

This does conclude today's teleconference. You may now disconnect your lines and have a wonderful day.