Ladies and gentleman thank you for standing by and welcometo the Noble Corporation third quarter earnings conference call. During thepresentation all participants will be in the listen only mode. Afterwards wewill commence a question and answer session. At that time if you have aquestion please press the 1-4 on your tone phone. If at any time during theconference you need to reach an operator please press star 0. As a reminder this conference is beingrecorded Thursday October 18, 2007.I would now like to turn the conference over to Mr. Lee Ahlstrom, VicePresident of Investor Relations and Planning. Please go ahead sir.

Thank you, Frank, for giving the introduction. And before Iturn the call over to Bill Sears I’d like to go ahead and welcome you all tothe call today and read the disclosure statement. I’ll remind everyone anystatements about our plans, expectations, estimates, predictions or similarexpressions of future our forward looking statements are subject to risks anduncertainties. Our filings with the U.S. Securities and Exchange Commissionwhich are posted on our website discuss the risks and uncertainties in ourbusiness and industry and the various factors that could keep outcomes of anyforward looking statements from being realized. Our actual results could differmaterially from our expectations. We’ve included detailed balance sheet andincome and cash flow statements with our earnings release. Also, because we’reon a international line when we get to the Q&A period we may experience aslight delay between speakers as we stop and pause to make sure an idea isfully completed. With that I’ll now turn the call over to Bill Sears ourinterim Chairman, President and Chief Executive Officer.

Thank you Lee. Welcome everyone to Noble’s third quarterearnings call. We’re taking this call from Amsterdamwhere we gathered more than 200 of our senior personnel for a worldwidemid-managers meeting. You would be impressed with these mid-managers. They aresolid, experienced, and a huge asset for Noble. We have a good report for youtoday. Joining me on the call are Tom Mitchell, our Chief Financial Officer whowill talk about the quarterly results; Lee Ahlstrom our Vice President ofInvestor Relations and Planning will review guidance for the fourth quarter;and David Williams our Chief Operating Officer, will address marketing andoperations. Julie Robertson, our Executive Vice President is also here with us. You do not know me so I’ll say a few words on my background.I’m a civil engineer from the University of Kentucky and started my workcareer with Exxon at their Baton Rouge Refinery. After a turn in the air force I went intoExxon Upstream Business for some twenty years, and then with VP for fourteenmore. I was Director of Worldwide Operations at VP in Londonwhen I retired. I joined Noble’s board in 1998. I am an interim leader here atNoble and we have all agreed that we’re not going to mark time while I’m here. Noble has great employees and we’re focused on our corebusiness of providing services to our customers better than all our competitorsdo. Although we have reported some slippage in our rig construction program, weexpect to get this job done with good results. And Noble has a history incontinuing strategy of augmenting growth by acquiring and building rigs. Whereit has made sense we’ve bought companies; where it has made sense we’ve boughtassets. We’ve also upgraded rigs and built new ones. Our current new-build program will add onalmost $2 a share in 2010. Also we intend continued pursuing of strategy ofbeing…

Thank you Bill and good afternoon everybody. Last evening wereported quarterly earnings of $1.18 per diluted share on net income of $318million. Earnings were up $0.10 per share or 9% over last quarter driven byrigs rolling to higher day rates. This more than offsets the increase in unpaidshipyard and staff pay which increased to 308 days from 121 in the second quarter. As plannedthe third quarter was our heaviest shipyard period for 2007 with about 40% ofour shipyard dates falling within this quarter. Unplanned downtime was 1.8 %which meets our expectations for the summer months and weather disruptions havebeen minimal. Contract drawing costs continue to be well in hand as yourecall we have previously got it to a 15% increase in per day out-costs for theyear versus our per day costs at the end of 2006, and we’re on track to deliveragainst that. For the first nine months of the year these costs were up 10.8%.On an absolute basis costs, were up 15 million but 11 million of this increasewas driven by a fruitful quarter of costs from the Noble / and the delivery ofthe Noble Roger Lewis in September. The bulk of the remaining costs wereprimarily attributable to the annual fleet flyover costs for our operatingpersonnel which was effective July 1st, and various revenue costs such asagency fees which increased as rigs in various international markets rolled ahigher day rate. A final positive note on costs, costs escalation orrecoveries during the quarter totaled $5.1 million. In the engineeringconsulting and other line item, we incurred an additional 6 million related tothe planned sale of the low cost rotary steerable system assets. On our last call we told you we believe wemight see additional charges of $0.5 million during the third quarter; howeveras we continue to move toward final negotiation on…

Thank you. I know that some of you were hoping perhaps forsome guidance for next year but right now we’re right in the middle our budgetcycle and it would be premature for us to discuss our numbers now before everythingis scrubbed by the team and approved by the board so we’ll stick to talkingabout the fourth quarter. We are still on track on for contract drawingservices cost that hold the line on a 15% increase per week operating day basisversus year end 2006 and the division managers and rig personnel are doing anoutstanding job there. Our major cost drivers this year have been labor andmaintenance and operating types of costs, replacement parts and equipment andsimilar types of items. And at this point we really don’t see any relief inthose areas for next year. Now as youhave noted, SG&A has increased during the quarter and is likely to increaseagain in the fourth quarter. Costs of the independent investigation are difficult topredict. On our last call we thought they would run about $6 million total overthe third and fourth quarters, but it ran over $5 million in the third quarteralone and they could run as high as $6 to $8 million in the fourth quarter. Ouroutlook for G&A is somewhere between $80 and $85 million for the year. In terms of DD&A, on the last call we guided you tosomewhere between $300 million and $315 million for the full year. We nowbelieve that number is going to be lower, somewhere between $290 million to$300 million, mainly driven by the timing of our capital spending. Next year,we expect DD&A to continue to trend upward with deliveries under the newbuild capital program. In terms of capital for this year, we are on track to finishthe year somewhere around $1.3 billion. Finally, on a net basis, we are notcarrying any costs in the fourth quarter on the engineering consulting andother line. We continue to hold an outlook of 19.5% for the tax rate for thequarter. With that, that concludes the guidance and I’ll turn the callover to David for some operational and marketing highlights.

Hello, everybody. I’d like to begin today by addressing someof the concerns that we’ve heard from investors over the meetings we’ve hadover the last month or so. By far the most often asked question goes to thestrength of the international jack-up market. We know the fleet status reportwe issued at the end of August caused some investors to react negatively towhat they perceived as cracks in market, but let me assure you we continue tosee incremental demands in most markets and that along with our strong backloggives us a lot of comfort in this part of our business. Let’s talk about specifically the two rigs that caused someconcern. Regarding the Noble Jordan, we announced the contract for a minimum offour months and a $160,000 a day. There are two things that are important onthe contract. Firstly the rig will not be engaged in normal drillingactivity. Its primary role will be working as a combination and doing lightworkover operations. So as a result, our operating costs will be a little lowerand our margin should be protected. Secondly, we took this job as a strategicmaneuver to position the rig for another potential opportunity we had and thatopportunity has some critical timing. Investors need to understand that there’sactually a strategy in how we position and price our rigs. It feels likeeveryone’s out trying to make the First Call on the top of the market, but onedeal doesn’t make a market. So we’re still pretty happy with that opportunity. On the Noble Roy Butler Nigeria we announced that Chevron elected to exercisean early termination right and released the rig. As we said previously, theirdecision had nothing to do with Noble. Chevron has been very happy with theoperational and safe performance of the rig. It’s been reported in the press that Chevron was having somepayment…

Thank you, David. Operator, I think we are ready to takequestions.

Our first question comes from Ian Macpherson - Simmons &Co. Ian Macpherson -Simmons & Co: Good afternoon. David, I just wanted to follow up with youroutlook on the jack-up market for Mexiconext year. I wonder if you were seeingany signals that Pemex might be interested in capitalizing on the currentweakness on the USside of the market to try to set some pricing ahead of time now, or if youthink that the Mexicomarket should be fairly well insulated from the pricing that is in the Gulf of Mexico currently?

Well Pemex has been trying to figure out how to capitalizeon the US Gulf weakness for some time. What I think they’re coming to realizenow is that Mexicois an international market, and they haven’t been very successful. Our lastrenewals there were much more reflective of international business than the Gulf of Mexico business. We don’t see any real effort from Pemex right now to doanything else before the end of the year. It is really too early for us tocomment about what they might do next year. But we don’t see that they aretrying to work to market because of the Gulf of Mexicosituation. Ian Macpherson -Simmons & Co: I wanted to ask about the contract status for the Noble JimDay. It’s been six or seven months since the LOI was announced. I just wonder where you are with Marathonand if they have moved closer to signing the contract and what yourexpectations are for extending that to a four-year contract term?

That contract is already executed for its two-year primaryterm. Marathon has conversion rights to turn that into a four-year contract, and thatconversion right comes up about mid-year next year. The contract is alreadyexecuted, and given Marathon’s position lately we feelpretty good about it. I mean they stillhave that right and they have not executed it yet.

Our next question comes from the line of David Smith - JPMorgan.

I was wondering if you have an estimate of the number ofjack-ups under construction that would be suitable for North Seawork?

I don’t have the number on top of my head. The bulk of therigs that are under construction are intended primarily for deepwateroperations not in the North Sea. There are some of thoserigs that are under construction specifically in the North Sea, but I’m going to say it is probably 15% of thetotal number, I don’t have the number on top of my head, but I think that’spretty close.

I was just thinking about the jack-ups under construction?

That’s what I am referring to. Most of the jack-ups that areunder construction are not intended specifically for harsh environmentoperations. They are trying to get as much leg out as the can and thoseenvironments, they are really not being heated up or quartered up for North Sea operations.

You realize that two of our jack-ups that are going to North Sea are going there under firm contracts already.

Just looking at M&A and growth opportunities, how do youthink about the level of construction risk ultimately that you will becomfortable with?

We have seven rigs under construction. I think we are prettyhappy with that. We have delivered two, we delivered the [inaudible] drill andit came out smoking the drill its firstwell under budget. We delivered the Roger Lewis now; it will start it tocontract pretty soon. We have five remaining to do, and I think we are prettycomfortable with that in terms of construction risk.

Absolutely, you guys have been doing a great job. I justthink in terms of looking at the M&Aopportunities and maybe other projects that are underway when looking at growthopportunities there?

I think that depends on how much comfort we can give if youtalked about the M&A activity as it relates to acquiring a rig underconstruction I think the level of structure of risk will depend on thestructure of the contract under which and how much comfort we can get that thedelivery price was firm. Or, if we had to assume that risk how we can get thatto be predictable. So it varies from project to project based on how muchcomfort we can get. Some we could get very comfortable with because weunderstand how the delivery contracts are structured. Some are widely variabledepending on what their construction plan is. So that’s very project-specific.

Our next question comes from the line of Pierre Conner -Capital One.

A question on the submersibles, I realize it is a smallpiece of business and you just told us you considered it cold stacking, again,the earnings impact is small. My question relates to the thought process. Youwere getting pretty good cash margin on that rig. Was it your perspective ofthe outlook, was it people availability? Just a little bit more on the decisionto cold stack that one and what does that say about putting more in the market?

Well, we’ve got three of those rigs and that sector of themarket particularly hurricane season when all of the active rigs in the Gulf of Mexico, jack-ups and submersibles, are de-rigged, they have apretty narrow band of operation. The customers that operate those rigs are,since Katrina and Rita, very risk adverse. So we have not cold stacked one ofunits yet, we have discussed it because it’s only favorable for us, we actuallyjust landed a job or just about to land a job on one of those rigs at a cashmargin we’re pretty happy with. We’ll have to see how the next few weeks develop. There maybe some opportunities for these rigs but if it becomes apparent that we aregoing to be beating the bottom of the market with some of these other numerousjack-ups that are out, I think it’s going to be our best interest and best forshareholders to cold-stack them. We have the rigs that are down we have down land, we’ve gotplenty of use for the people. We don’t have a people issue but with theshipyard products we have and the other opportunities in the fleet, we haveplenty of use to the people. So we don’t have a people problem either too manyor too few right now. So it’s a math problem; if they become a cash drain, weare not going to do it and we don’t want to wait too long because we wouldrather make the decision early.

The other one relates to jack-up markets and specificallythe Roger Lewis. Relative to the rate that it’s going to work, do you see thatis where the market is now, was that contacted a month ago and the market haschanged since then, that is the point you made not setting a new leading edge.But where is the current leading edge relative to that contract, I guess?

Well, that deal was done long, long ago. That rate in no wayreflects the current market or frankly any other rig in our fleet that jacks upand down. We think that that rate wouldbe for renewal right now, would be well above that and I would argue, I hopeShell is on the call, I think they might have a per diem.

But to that and again I was just trying to get a window ofwhat you think that current market rate is?

We haven’t started a discussion with Shell. I certainly think that we are looking atrenewals in the North Sea right now for our other rigsnorth of 200. Roger Lewis is classed to be able to work in that market. So Iwould certainly think that would be a certainly a better range for that assetin the market today.

Your next question comes from Mike Drickamer - Morgan Keegan.

Bill, I don’t know if anyone else caught this, I may be moresensitive to this than anyone else, but given this past weekend’s football gameI found it awfully ironic, you started at University of Kentucky and your first job wasin Baton Rouge?

That’s the truth and I became a pretty good Tiger fan whileI lived there. But I celebrated after the Kentuckywin.

I don’t want to hear that. Tom, I’m not sure how much you canhelp me with this. But you guys posted good results in the quarter, what I’mtrying to figure out how to get better at modeling it next year. One of thethings I think I may have been off in was in the performance bonuses. Can youtell me what the impact on the quarter was from the performance bonuses?

I don’t have that in front of me Mike. We can get that backto you. We are separated from our team unfortunately so our number generatingcapacity is not with us right now. I don’t have that level of detail right now.

Mike, give Brook a call later, she is back in the officewith the accounting team. She can get some details for you on that.

Going forward, the rule of thumb I have used is that I giveyou guys credit for about half the performance bonus for each of the rigs. Isthat a good rule of thumb or do you think I should be higher or lower withthat?

That’s hard to predict, it is a bonus for a reason andPetrobras is a very tough customer. So I mean sometimes we do great, andsometimes we don’t. I think that is something that you need to take a shot at.Some of the rigs are earning their bonus a high percentage of the time, some ofthem very rarely do, but our bonus performances moderates from time to time.

Your next question comes from Geoff Kieburtz - Citi. Geoff Kieburtz – Citi: Tom, just to clarify, were any of the non-recurring chargesin the operating expense line?

No they wouldn’t have been. They would have been in G&Aand in engineering, consulting and other.

For David, you mentioned on the Lloyd Butler, the backgroundon that rig. Can you give us some idea of what you think the market rate is forthat rig now; I mean a range that doesn’t limit your flexibility?

I can tell you the rig was at 130. Our most recent renewalsfor that class of rig have been well north of 150, 155 up to as high as 170. SoI think somewhere in that range is reasonable.

You mentioned the bidding by Aramco and it seemed somespeculation in the industry press that Aramco might be shopping the market,just to make sure that they were still paying the right rate. Is there any wayyou have of discriminating between genuine incremental requirements versus acustomer just trying to check the market?

Well we don’t read a lot of the same stuff that you guysread, what we talk about is we try to report what we hear from our customers.The information that we get and that we report comes straight from the SaudiAramco. We have to take them at their word. They are out for tender right nowand we have to believe and our expectation is they are going to going to havethe rigs.

You believe they are incremental demand?

We believe they are. They actually showed up at our officeand asked us if we will participate in their tender processes. So we have tobelieve that they’re serious about it. They came to visit us, they called usout, wanted to know what our position in the Middle Eastwas, why we were not more active with them, and so we decided to go ahead andpursue that opportunity with them. Yes, we believe they’re incremental.

Bill, I don’t know if you can answer this question, but fromour perspective what would you advise us in terms of expectation of timing andbeing able to identify and land a permanent replacement in the CEO position?

Well, you know I’m not in total control of that, but justtalking about how these searches go with the company that’s helping us, theyput out a range to me of three to six months, and I’m a retired person, so I’mlooking for it to be on the short side.

Your next question comes from Alan Laws - Merrill Lynch.

The first one is really a follow-up question to thecontracting environment in Mexico.We see a recent picture from one of your competitors that moved to an indexprovision after a year. You have four weeks rolling in ’08; what are yourthoughts around this kind of contract agreement?

Well, we saw some of those last year. We declined to offerthem. We’re aware that one of the strategies PEMEX is trying to utilize. We havenot historically bid those, and it’s too early for us to speculate on what theopportunities might be and when they come up. We’ll have to see what PEMEXdoes. We have not historically bid on those kind of projects in Mexico.

If you have these rigs that roll off and they come withthese type of things, are you prepared to pull the rigs out of the market? Isthat fair?

We will have to review that and see what the opportunitiesare at that time. I can’t speculate.PEMEX came out with some of those index rates before we renewed our last rigs,and we don’t have those terms in our contract. So when they came out with someof those index rates mid-year last year we declined to bid. Some people did,some people didn’t. But when they didn’t get the rigs they wanted, we weren’tforced to take those terms. So, they’ve used them from time to time, and they have usedthem from time to time. So I can’t speculate on what we might do next year.Obviously our preference is not to accept those rates.

Can you speak to your reluctance to take down those rateswith a firm one year and a second year follow-on with variable? Are youconcerned at all with the overall market? What’s the reason why you don’t wantto participate in those?

Well, because we bid a firm term contract. We want to knowthat it’s firm for the term. If the rate floats, you can’t predict the cashflow and we might have other opportunities in other markets that we have morepredictable cash flow. So it’s all about, when we examine the opportunities,whether they’re short term or long term, we can price anything if we know whatit is. The issue there is that you can’t really predict exactly what it is ifit’s got a formula tied to it. I’m not going to tell you we won’t. I’m going to say weprefer not to, and in the past we’ve been able to get around that and be ableto bid our rigs on firmly priced firm term contracts that we are verycomfortable with. That is our preference.

This last question is a little more tougher question, but itlooks like a pretty solid market for the jack-ups as it stands now with somecapacity coming in kind of a larger way next year. You were bullish in your commentsthere during your prepared statement on the jack-up markets and I just wonderif you could comment on why you think the market hasn’t topped, if the leadingedge rates have plateaued and the contract term duration essential evaporates? Whatwould you characterize as a topping process?

I think what we’ve describe is we have seen the leading edgerates, the growth of those rates slow down, and we haven’t seen the leadingedge rates move up is what we’ve seen. But at the same time, we’ve still got alot of repricing opportunities in our fleet; rigs that are working under oldcontracts that we’ll get a chance to reprice at current levels. We’re still very comfortable with the pricing levels thatwe’re seeing for our rigs on roll rates coming up when rigs come off contract.So we’re not seeing the rate of growth; we have seen some things flatten out,but we’re still seeing good terms and good rates. So we’re very satisfied withwhere we are right now.

So it’s a lagged process then; as the leading edge tops,there’s still lots of opportunity here to benefit at the top of the market?

Look, when you’re rolling as an industry, the whole fleet isrolling over to 30 days, the market moves very quick. You can count on one hand-- on just a couple fingers -- the number of jack-ups we have got availablebetween now and next year, or between mid next year. The rate of growth isgoing to slow down when the number of bids and the number of new contracts slowdown. So the market just doesn’t move as fast.

Alan, if you look at last year versus this year on contractand international jack-ups signed year to date, the average term last year wasabout 450 days. The average term on rigs signed this year is about 500 days. Sothis idea that there’s no term out there just isn’t supported by the data.

I see. When all the backlog for all the jack-ups, includingyours out there, which has been shrinking for the last six months comes off andwe have another 25 or so rigs coming to the market, the thoughts are that thisis holding up and that this is not a situation where the rates roll? Is thatfair?

Well, I mean, I think what you need to look at is as the rigscome into the markets and the opportunities are there, we’re seeing incrementaldemand still in markets. We’re still seeing more demand than the market cansupply. For our fleet, what we see is most of our rigs are alreadybooked. I think we’ve already got 75% of our jack-ups booked through 2008. So ,we are not looking for jobs next week, we’re bidding rigs that start in mid tolate 2008 and 2009. The jack-up market has never seen that kind of backlog andstrength. We’re still seeing incremental demand and we are still seeingopportunities. That tells us there’s still more demand than there is supply.

Lee, so the numbers that you’re using there, the rigs thathave rolled onto new contracts and contracts that have rolled on happen to beextended, so these are contracts that were signed before and they’re justrolling on? Is that fair? Lee Ahlstrom: I think that is probably fair Alan. This is data that we’vepulled our rigs down, and basically looked at contracts.

It started in the first-half. Lee Ahlstrom: Year to date in ‘06 versus what we’re seeing year to date in‘07. Average day rate is actually about flat in ‘07 and I think number ofcontracts being signed is down a bit, but I think that goes right back to whatDavid was saying. Everybody’s fleet is pretty much booked up. So the fact thatthere aren’t a bunch of new contracts being signed is really just tied to thefact that everybody’s booked.

Your next question comes from Robert McKenzie - FBR. Robert McKenzie - FBR: Good afternoon, guys. My first question is kind of aderivative of David’s earlier question surrounding potential M&A activity.Phrasing a different way, if there were to be M&A activity apart from theproject risk, how many rigs would you guys still be able or comfortable with staffing up, given the knownprojects that are out there?

I think given our fleet capability, I think that we havetalked about our ability, the breadth of the which we’ve got and the number ofpeople we’re working on our fleet. I think we have said previously and stillcontinue to believe, given the fact we’ve got very little turnover, we couldprobably manage five or more jack-ups and maybe three or so semi submersibles, orshifts. So we wouldn’t want to have to staff three shifts too deep, but I think that given a project andorganization where we would bring them in over time, given our ability to growhands and the fact that we’re already in the process of growing hands for theother rigs, I think we would be very comfortable at that level. Robert McKenzie - FBR: My next question, ODS a couple of days ago was reportingthat [inaudible] have signed a six-monthcontract, but there is no rate in there. Would you be able to share that ratewith us?

I think we talked about where we’re headed. I think what Isaid is north of 200 for one of the rigs in the North Sea,and I think that would be a good guess.

Your next question comes from Angie Sedita - LehmanBrothers.

David, have you started discussions in the Middle East on the three jack-ups you have rolling over, early March?

We have opportunities hanging right now, Angie, for justabout everything that’s coming up before mid-year next year. So we are engagedin either conversations or bidding exercises for everything. We don’t haveanything that we’re ready to report and we don’t have anything locked in yet,but we have opportunities, and I think that’s the best way to put it. We stillhave targets for all of those.

Is your expectation that they would stay with the currentcustomer and the current region or not necessarily?

Well, it varies from rig to rig. Angie, we haveopportunities for some of the rigs outside of the region, and I don’t want toget too specific, but with our breath of jack-up fleet we might be bidding onerig in there, an at the same time bidding another rig out of the area becausewe are trying to reassess certain assets that have might opportunities withcertain customers. So we’ve got opportunities for the rigs both in the area andoutside the area. I think I talked about incremental demand in the UAE and someSaudi Aramco services, certainly some of these rigs have been bid to SaudiAramco and in at least a couple cases we’ve got some opportunities outside ofthat area. So I just can’t get too specific yet.

Fair enough. Then also coming up in March of ‘08, have youseen some interest there? Are you assuming it will stay in the Gulf of Mexico or are you bidding it into other regions potentially ona longer-term contract?

Well, the answer to that question is, yes. We have opportunities,we have dialogue going on for both short-term and long-term work in the U.S.Gulf, and we have the rig bid outside the U.S. Gulf on a couple of programsthat we think provide good term and good rate visibility. So that rig rollsearly, and it’s 4,000-foot capability so it has got some appeal. So we’ve got anumber of opportunities for it.

Expectation one way or the other whether it will stay hereor go abroad, or evenly split at this point?

Up until about two days ago I would have said our odds arebetter outside the Gulf of Mexico. We’ve got an operatorwho we’ve had dialogue with on and off for a good while. It’s kind of come backinto the mix a little more aggressively. It is just going to depend on whojumps up and commits first and where the best opportunity is. We wouldcertainly prefer to have a term commitment for that rig at a real rate, so we’ve got good opportunities for the rig atdifferent places. It will just be interesting to see how this thing developsbecause we’ve got some opportunities.

Finally just a follow up on the PEMEX question. We saw oneof your competitors, Insco, bid a pretty decent spec rig there at a lower ratethan what you have some of your rigs at currently in the region, and certainlyanother customer also had some renewals that came down lower. I would assumethere is going to be some pressure?

Angie, that’s why I like Noble, because there were peoplebidding lower than we did before we did our last bids; we had peopleunderbidding us and we were still able go to 150 for 250-foot rig. I mean, Ican’t tell you why Insco bid a 350 foot rig on a 300 foot requirement, I don’t know why they did that. Butthat’s what they did. I mean, our 300-footers are all priced right at 171. Theycame in I think on their bid in the low to mid 160’s or so plus or minus. Sothey’re not far off of our number, but it’s a higher spec rig than what wewould have bid on that job. Our marketing guys have done a very good job, and our guysin Mexico havedone a very good job of right-sizing our rigs and right-timing our availabilityto be able to put the rates in. We had people undercutting our rates and wewere still able to deliver the numbers.

When would you expect to begin conversations with PEMEXregarding the rollovers? Is it early 2008 or even late this year?

My expectation would be early 2008. I’m sure our guys in Mexico are already having someconversations about future plans, but I think it is too early for Mexico reallyat this point to be able to predict exactly when they will be ready to go totender. Mexicohas a very transparent process, and they’ll do it on their own time, but whenthey’re ready the bids will flow out, but in their budget cycle I think it’s alittle too early right now. I’m sure there’s dialogue going on, but it’s notvery specific yet. I think it’s too early to predict when and what kind ofterm. It is clear that PEMEX is going to have issues and can’tdrill and continue to have those issues. So I think the expectation is thatthey’re going to need every rig they’ve got now and hopefully more.

The timing on the budget issues out of PEMEX that seems tobe more applying to incremental rigs rolling into the region versus rigs thatare already there rolling over?

I don’t think PEMEX ever goes out for bid for anything thatthey don’t have funding approved for. So I can’t speak in great detail to Pemex’sbudget process, but I have to assume they’re in the middle of the same exercisethat we’re in. So my guess is this is early for them to start predictingexactly what their needs will be for ’08 yet.

Your next question comes from Jeff Spitale – Natixis Bleichroeder. Jeff Spitale – Natixis Bleichroeder : First, Asia Pacific is not an area that you haveparticipated in thus far but could you assess, I guess the opportunity a littlefurther down the line there with respect to incremental jack-up demand and whatsort of opportunities that could present for you?

We’re not averse to that area. Our rigs are all tied up.We’ve actually bid some jobs in Southeast Asia and Australia,both actually for jack-ups and floaters, but it’s a function of proximity andother opportunities that we have in other parts of the world. We will give great strategic weight to a real opportunity,but right now we’ve got good opportunities where we are. So we’re certainly notcutting our rates trying to put a rig in Southeast Asiaright now. There are opportunities. It is the one region of the world where wedon’t have a big presence. But every time you look at a jack-up job, or any jobfor that matter, you weigh the value of that to you and your shareholdersagainst other opportunities you might have; and to date, our best opportunitieshave been where our current rigs are sitting or other places, so we haven’tpursued those as vigorously as some others have. Jeff Spitale – Natixis Bleichroeder : Then for Petrobras, you mentioned potential incrementaldemand for a jack-up unit. Are they giving you any indications of interestpotentially down the line in terms of de-bar units?

Oh, yes. I mean, we’ve had had multiple conversations with Petrobras about our existingrigs and incremental rigs. They’ve been out expressing interest for somedeepwater bore rigs, very recently within the last 60 days, and there is talkof another expression of interest coming out. So Petrobras, it appears, has avery strong continuing demand. They certainly have indicated very stronginterest in keeping all the five rigs that we had had active down there, andthen some. So yes, we’ve seen a lot of interest from Petrobras about theincremental opportunities.

Your next question comes from William Sanchez - Howard Weil.

Tom, you commented on the share repurchase program. I wasunclear, however, if that suspension has in fact been lifted at this point and areyou back in the market currently buying back shares?

Well it is an opportunistic program, so I’ll lead in withthat. We would come in and I said we are buyers at this point. We have notinitiated any transactions yet, and our lawyers are looking at it right now,and we’re optimistic that we will be able to begin again.

So you haven’t gotten, I guess, formal clearance yet tobegin repurchasing shares if you so choose to do so?

No, and I would like to go ahead and come out with our 10-Q,because it gives us an opportunity to add some more robust disclosure aroundthe issue. You can imagine there are a lot of people working on it, and itgives everybody a chance to think about it and work through what we do and donot disclose.

David, for you. You commented on the Roy Butler. I wascurious on the Lloyd Noble, which is also with Chevron in Nigeria.My understanding is that rig also has an early termination provision. Given acontract to July of next year, can you talk a little bit about your thoughts onthat rig? Am I correct in the assumption that it does have an earlytermination? What do you expect Chevron to do with that rig?

You are correct on the assumption. Those are old legacycontracts that kind of keep getting extended. Those rights are embedded. Wehave no indication from Chevron that they don’t want to keep the rig in thefuture at this point in time. I would say quite the contrary to that, the indications theyhave given us have been that they do have a continuing program for the rig. SoI mean we don’t have a reason to believe that there is gong to be any issuewith the renewal of the Butler. Wehaven’t commenced a conversation in earnest, but we don’t have anything yet totell us there’s not an ongoing program for the rig with Chevron.

Our next question comes from the line of Judson Bailey -Jefferies.

David, one more question on international jack-up market. Welook at demand, as you noted, there seems to be incremental requirements in afew different regions like the Middle East, West Africa, et cetera. But we look our in India and Southeast Asia, there are a couple ofinstances where contractors have agreed to a little bit lower rates and thereis one jack-up actually idle and potentially another one going idle. I’d be curious to get your thoughts on how we reconcilethose two things and how you see things playing out as far as maybe the ratestructure? Will that come into play in other parts of the world?

I think there have been a number of issues in play in India,one being there have been some indigenous contractors building rigs and I thinkthey don’t have a frame of reference for the experience level where they arecomfortable bidding those rigs around the world in other markets. It is kind oflike Brazilian contractors work for Petrobras. I think they feel like they aremore comfortable working there and to the extent they have opportunities, theyhave priced to get that work. I think on the other opportunities where non-indigenouscontractors have been asked to match some of those bids, I think they look atthe opportunities for those rigs and you bid those rigs there on a term job ora multi-year job and the rig is getting a very low rate by comparison to otherrigs in the markets; it has probably been in India for a long time, some ofthose rigs have been in India for a while. To take them and kit them up for otherinternational markets and to move them out of that area and take down time tomove them and do all of that, it just doesn’t make a lot of sense. You say I will take 147 a day, I think was what the rig went for, or 145, orwhatever the rate was. Or, I have to spend some capital and then I have to moveit and I have to deal with that. I think that is a choice that contractor made based on theeconomics they had in front of them, andthe bottom line is it is just better to take that job then it is to go fightanother day in other market. Contractors, we have all got strategies and we have all gotdifferent circumstances. What one contractor does on one job does notnecessarily mean the sky is falling. You get a rig stuck in a market likethat,, that may be the opportunity you are faced with, you take it. I don’t think that means that the world is falling apart. Wethink India andwe see good incremental opportunities in India;we are certainly watching that market closely. We bid in and out of that marketsometimes, we frankly were face with a similar question on one of our bids notlong ago and we elected not to match the rate. We thought we had better opportunities someplace else, and I think weproved that to ourselves. It just depends on the circumstances you have at thetime. I don’t think it changes the market dynamic. I have been inthis business so long, I look at that and think it’s comical we are talkingabout jack-ups at $150,000 a day. That’s a big rate for a 30-year-old jack-up.

Understood. If I could follow up on India.You mentioned some of the indigenous contractors. With several more popping uphere, is it going to make it more difficult in your mind for some of the U.S.companies to expand into that market or are we look at a situation where someof those companies are just going to continue to undercut so they can get workfor their rigs and stay close to home?

Well, it depends on how much demand they have. We certainlysaw there are indigenous Mexican contractors, and we’ve dealt with those guysfor 15 years. We saw an indigenous, a good Mexican contractor have a new buildrig, and when we started our renewal process about a year ago, they went wellbelow us on renewal for 350-foot rig, and they got the first job. We figuredthey might do that. But when we did our renewals, we got all of ours done thatwe wanted to at rates that we’re very proud of. So it’s another dynamic in themarket. It depends on how much demand is there. I would expect that there areindigenous Indian contractors. Of course, I can’t speak for them. They’re verysmart people. They’re very capable, they can do whatever they are comfortabledoing. But I would expect that they’ll be more like the Mexican contractors andthe Brazilian contractors and they’ll want to work close to home. That’s justanother dynamic in the market. I don’tthink if there’s the kind of demand that we expect out of India that it’s goingto be just a huge damper on those opportunities. There’s only so many of themout there. Once they go to work, all bets are off.

Your next question comes from Phil Dodge - The StanfordGroup.

I wonder if you could go through your new builds in anycases where there have been significant delays from the original timetable?

We can. I think wedisclosed in the last fleet status report what our current situation is, andour situation today has not changed for those disclosures. We delivered theRoger Lewis and it was about five or six weeks late. The next rig in the queueis the Hans [Dual] and we reported a five-month delay on it. The rig behindthat is the Dave Beard and we reportedfour months on that. The Scott Marks, it is very early in that process yet butjust seeing what we’re facing on the other rigs we gave guidance of athree-month delay on that rig. Then the two rigs in Singapore,the Noble Danny Atkins, we gave advice of a one-month delay. Again, it’s veryearly. We got all the equipment and in Singapore,one month, they’ve got not a bad shot of making that up and we have given thatguidance. On the Jim Day we think we’re still in good shape. So those are thedelays that we disclosed previously, and that’s still where we are today.

Our final question comes from the line of Benjamin Bell -Bernstein. Benjamin Bell –Bernstein: You didn’t mention in your comments about Indiaand the Asian market, the shelf explorer, which I believed someone previouslyasked about. If you had any thoughts on why the transaction had that hotstacked in the market in that area?

I don’t have any comment on it. I don’t know what Transoceanis doing with that rig, if it’s hot stacked I don’t know whether it is betweenjobs or they have some work they need to do to it, I really can’t comment. Idon’t know. Let me say, one rig hot stacked in the market doesn’t scareme. When you work jack-ups, it’s not unusual to have critical timing betweenone operation and the other. You may be waiting on a heavy lift shift, you mayhave shipyard work. There is a litany of issues that could impact that. So onerig being hot stacked is not worrisome to me.

Just lastly on Shell, they have announced the recent JV tobuild their own rig. Does this now mean that rig rates are at a level where themajors are saying they’ll build their own rigs, rather than come to you guysfor new rigs?

Every time this market moves into a cycle where we are nowthe majors start talking about building rigs, Petrobras has talked about it; BPin its past has owned their own rigs, most of the majors at one time or anotherhave either owned rigs or been in partnership with rigs. I think there are somepeople at Conoco that would certainly talk about their last experience owningdrill ships. So I don’t see where a major operator’s hurdle rate or costof capital is any better than ours; and they’ve got to generate the same kindof return for their shareholders that we’re looking for, for ours. So I don’tknow what goes into their thinking. Their partnership may have issues, there isa whole lot of reasons why. I don’t see where they really derive the benefitsof doing that, but I don’t think you’re going to see wholesale rig constructionopportunities with major operators.

Frank, that is going to conclude the number of questionsthat we take today. Ladies and gentlemen, thanks for joining us on our call andspending the last hour with us. We hope that we were able to answer all thequestions that you had. We remind everybody that a replay of the call will beavailable beginning today at 5 pmCentral time at numbers that you can reference there in the press release. Withthat, we look forward to continuing to see you on the road at conferences andvisiting with you at our next call. Thanks very much.