Ladies and gentlemen, thank you for standing by. Welcome to the Noble Corporation First Quarter 2008 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operators Instructions]. As a reminder, this conference is being recorded on April 24th, 2008. I would now like to turn the conference over to Mr. Lee Ahlstrom, Vice President of Investor Relations and Planning. Please go ahead, sir.

Thank you, Janus and good afternoon to everyone. I will start by reading our Safe Harbor today and I'd like to remind everyone that any statements we make today about our plans, expectations, estimates, predictions, or similar expressions for the future are forward-looking statements and are subject to risks and uncertainties. Our filings with the US Securities and Exchange Commission, which are posted on our web site, discuss these risks and uncertainties in our business and the industry and the various factors that could keep outcomes of any forward-looking statements from being realized. Our actual results could differ materially from our expectations. We've included detailed balance sheets and income and cash flow statements with our earnings news release. Also when we open up for questions, I am going to ask each of you to stick to one question with one follow-up. I am sure you all understand that we have a large number of folks who would like an opportunity to have a question answered and we want to be fair to everyone. With that, I will turn the call over to David Williams, our Chairman, President and Chief Executive Officer.

Thanks, Lee and good afternoon to everyone and welcome to our first quarter call. We are delighted to be here today to discuss what we think are some great results. First, though, I want to begin by congratulating our employees in the US Gulf division, both offshore and onshore, for their second consecutive win of the MMS' National Safety Award for Excellence. It's a fantastic achievement and we are proud to be on the same team with all those folks. So, thanks to you. As usual, we have got the team assembled here for the call. I am going to make a few opening remarks and Tom Mitchell, our CFO, will discuss the quarterly results and then combine that with some guidance. Then Kurt Hoffman, our VP of Worldwide Marketing, will run through the markets. After that, we will open it up for some questions. In spite of a pretty big beat of $1.43 in earnings over the First Call number of $1.31 and in addition to almost $5 billion of contract backlog potential during the quarter, I think the news has probably created the most interest is the announcement last week of our $0.75 per share special dividend. So I would like to spend a few minutes talking about that. If you followed our story for any period of time, you know that we consistently told the investment community that while we would like to grow the fleet particularly in deepwater, we are going to be disciplined about how we evaluate our investment opportunities. So far, despite having looked at a lot of those opportunities to purchase assets, we just haven't found anything that's very exciting for us. We are going to keep looking. But in the meantime, we have also made it clear that we don't intend to…

Good afternoon, everyone. Last evening, Noble released record financial results for the first quarter. This is our fifth consecutive quarter of record earnings. Net income was $384 million, or $1.43 per diluted share on revenues of $861 million. Contract Drilling revenues during the quarter were up $37 million or about 5% to $798 million. Six of our rigs moved to higher day rates that generated almost $30 million in additional revenues. Utilization quarter-on-quarter was also up slightly, and unpaid repair days were down. Total revenue for the quarter included approximately $31 million of contributions from our Labor Contract Drilling Services segment. As some of you may recall, we had expected to close the sale of our North Sea platform labor business to Seawell in the first quarter. But we were unable to do so until shortly after the quarter closed. Revenues of about $50 million related to this business were booked in the first quarter. This contributed less than a penny a share to our earnings. We expect to book a gain of somewhere around $25 million to $30 million on the sale of these assets in the second quarter. Now, as I move on to talk about costs, I'm also going to work our guidance into my comments. Contact drilling expenses are probably the big story during the quarter. Sequentially, costs of $236 million were actually down about $8 million from the $244 million that we had last quarter. However, fourth quarter '07 costs included $10 million related to the insurance deductible for the fire aboard the Eason. If we adjust that out, then first quarter '08 costs rose just under 1% in total. On a per-day basis, costs during the quarter were about $48,400. If you compare those to 4Q '07 costs of $47.8 million and that $47.8…

Thank you, Tom. I'd like to spend a few minutes discussing some of our marketing efforts during the first quarter. The most exciting achievement was the addition of almost $5 billion of revenue backlog potential added to contract commitments on our deepwater fleet. These opportunities have helped increase our total contract backlog potential to over $11 billion in total and extends our revenue stream into 2016. It's unprecedented for Noble and something we're very proud of. Let me just review some of the details. In Brazil, we received commitments on each of the five water… deepwater rigs currently operating in that market which have added about $4 billion in revenue backlog potential. The Noble Paul Wolff, a 9,200-foot water depth dynamically positioned semi-submersible, secured a five-year commitment with a priced option to extend to six years. Including the sixth year, the backlog potential for this rig alone, including the full bonus, is over $1 billion. The commitments on our three drillships in Brazil are six years each at strong rates will support our planned upgrades for these vessels. Each upgrade is expected to cost around $175 million and require about 150 days in the shipyard. In recognition of the value these upgrades will add, our customer, Petrobras, has agreed to pay us $90,000 per day for up to 150 days in the yard on each drillship project. Finally, the Noble Therald Martin, a 4,000-foot moored semi-submersible, secured a five-year commitment with potential backlog greater than $540 million. In the US Gulf of Mexico, the Noble Jim Thompson, a fourth-generation 6,000-foot moored EVA semi-submersible, secured a commitment from Shell for two years at $505,000 per day adding nearly $370 million in backlog. And finally, the Noble Homer Ferrington, our 6,000-foot moored semi-submersible in West Africa, secured a commitment for three years…

Thanks, Kurt. Before we open it up for questions, let me touch on a few more items, the first is our safety performance. Even though our recordable rate through the first quarter was the best it's been in any first quarter since at least 2000, I want our employees to understand that our safety performance is still not where it needs to be. We’ve got to be constantly improving in an environment where continuous operations are becoming more and more challenging. I know our colleagues offshore are up to it, and I want them to understand that they have full support of everyone in the corporate office. We want to make sure that Noble stays as being the best contractor in the industry in terms of safety. Next, I want to touch on our new build projects. We continue to be on track to deliver our next jackup, the Noble Hans Deul from the Dalian yard. In August, we will load it a board of heavy lift ship and transport it to the North Sea where it will begin its two-year contract with Shell following final commissioning and customer acceptance. Later in the year, we'll deliver the 10,000-foot dynamically positioned semi-submersible Noble Dave Beard, also from Dalian. That rig will move to Brazil and begin a five-year contract with Petrobras in the first quarter of 2009. Our rigs for the 2009 delivery, the final jackup from Dalian and our two 12,000-foot dynamically positioned semi-submersibles from Jerome [ph] also continue to be on track. Finally, let me just mention turnover. We've had a strong first quarter in an ever more competitive environment. Fleetwide turnover was 2% in the first quarter which annualized were below our 2007 number. Among the top 430 senior operating personnel offshore, it was below 1%, so we are doing quite well in retaining our skilled and valuable workforce. Despite the great number this quarter, we are not going to rest on our laurels. Cost control, retention and safety will continue to be our focus areas, the jackup market is not going to be without challenges, but the team at Noble is ready to handle whatever comes our way and take advantage of any opportunities that present themselves. And with that, we'll open it up for questions. Question and Answer

Thank you, sir. [Operator Instructions]. You first question comes from the line of Collin Gerry with Raymond James.

Hi, good morning guys or I guess good afternoon. I had a --.

Hi, Collin.

I had a question on the special dividend policy, won't get into too much of the details. You kind of outlined your guidance and you’re limited talking about that but you all certainly have a lot of foreign kind of operating subsidiaries and so forth. And what are the tax implications for the special dividend and do you see that being a constraint if we… going forward either on a quarterly or annual basis repatriating some of the taxes?

We certainly... this is Tom. We certainly have a complex tax structure but in this regard, it is an advantage for us. Because of our inverted status, we are able to bring the cash back unlike some of the people that are US owned with the US tax relationships. There could be some leakage related to it but there is nothing material. So we believe we will have access to all the cash that's generated.

Without any detrimental tax rate implications or anything like that on your basic operations?

There is some leakage but it's not going to be enough to where you are going to notice it.

Okay, okay. And then you mentioned not being too much opposed to maybe drawing down a little bit on the revolver as it related to uses of cash, could you remind us what your revolver size is and maybe how comfortable you are drawing down debt against it?

Well, the revolver is $600 million and we would be comfortable drawing down. I think David emphasized that we are not really going to get too far ahead of cash but just from a timing standpoint and to smooth it out, we will use the revolver to draw down.

Right. I guess that's what... yes, okay to make up between quarterly changes. Okay. Following up, the second question I had was, as it relates to planned downtime, I think you made a mention that you might have a little bit of loss utilization as it relates to maybe West Africa and maybe even Mexico, on the unplanned side but I seem to recall last quarter, we kind of had flat utilization guidance for '08. Is that still the same from a shipyard perspective and any thoughts on '09 as we look utilization in the outer year?

You know, Collin, this is Lee. We update our planned shipyard downtime as well as our in-plant downtime in the fleet status reports that we publish about every 45 days or so.

Right.

So I don't think we materially changed the amount of planned shipyard time that we had on our last report. At this point, don't see any changes, we'll probably put out another one here around the beginning of May. I don't have any guidance for you on '09 yet but if I were telling you on how to model, I would say, look at '07, look at '08 on the planned data, the planned days were about the same in '07 as they were in '08, once you exclude kind of the stack time on one of our submersibles. So for modeling purposes, '09 looking a bit like '08 is probably reasonable.

Right, okay. So no big projects on the horizon that maybe we need to be aware of in '09?

If we have them we will put them on the fleet status.

Right.

Yeah, nothing that’s not already out there. I mean the contracts occurred despite [ph] Brazil all contained some time in 2009 and 2010, specifically. But nothing that... there's nothing that's not out there.

All right. That's it from me. I'll turn it over, thanks a lot.

Thank you.

Your next question comes from the line of Ian Macpherson with Simmons & Company. Ian Macpherson - Simmons & Company International: Hi, good afternoon.

Good afternoon. Ian Macpherson - Simmons & Company International: And congratulations on the quarter.

Thank you. Ian Macpherson - Simmons & Company International: Petrobras is not finished with their deepwater rigs permit and there should be more interest for new builds out there and I have read… I don't know if you would agree with this. I have read that they are really looking to induce more capacity as opposed to signing out more existing rigs. Do you think that they would be unlikely to extend the Dave Beard in the near term or is there a possibility that we might see an extension on that rig before even begin this contract?

Well, I think the reason we’re looking to add capacity is I think they have already extended about everything that they could extend with the terms of the people that will talk to them. There is nothing that tells us that Dave Beard doesn't have a long-term future in Brazil. It wasn't part of the package because these negotiations, Kurt and his team with [inaudible], our Division Manager in Brazil, actually commenced this conversation we’ve got almost a year ago. So Dave Beard was pretty far out on the horizon at that point in time. So the dialogue has really been around the existing rigs. But there is no indication from us that they don't intend to take the Dave Beard and wear it out right there. I mean they have been pretty aggressive on their announcements and the excitement that’s been generated there with Tupi and Jupiter and others is significant. So there is no... we don't have any reason to think that we won't wear the rig out right there. Ian Macpherson - Simmons & Company International: But they would be interested in tendering for the... or would you be interested in marketing the Boudreaux for there or does the rig need to be dynamically positioned?

Historically, Petrobras, in particular, has liked to use dynamically positioned rigs because there is so much architecture on the sea floor. But, in places where there is a lot of exploration opportunity, more rigs work just fine and there is nothing that would keep the Boudreaux out of there. Ian Macpherson - Simmons & Company International: Okay. Just one more quick follow-up if you don't mind and I am trying to sort of distill what’s happening with the international jackup markets because they seem to be, I don't know, decoupling is the word, but there seem to be more and more day rate disparities between different types of rigs in different regions. How would you categorize what you... the choppiness that you're seeing in Mexico relative to where you see the leading-edge trends going in West Africa? I mean do you think that the relatively strong rates that you're still getting in West Africa on the leading edge might have some pressure later on in the year? Is some of the choppiness in Mexico and the Gulf of Mexico spreads?

Well, I think the choppiness in Mexico is a little bit self-inflected in Mexico. There's been a lot of excitement around that market, a lot of discussion but it all came to a halt with what Kurt talked about, the [inaudible] incident and there's been very little data poured out of there since then. I mean, you've got to keep in mind, PEMEX has worked very hard to tie that market to the US Gulf of Mexico with kind of mixed success last year. We didn't see a lot of competition on the bids that we had and we were really able to push the rates and the margins on the rigs that we renewed in '07 well above where we saw rigs of similar classes on the margin in other markets. And I think what you see now, what Kurt described as our bid activity, we looked at what we are getting for the light rigs in other markets and we looked at what we are getting in Mexico, what latest renewals were, I think a 250-foot rig full crude and it went for in the mid-120s. Ours are not fully crude, so you back that cost out of it and you give it kind of a single-digit, a below double-digit reduction just because we thought there is going to be more competition in the land where we are. So PEMEX is a little bit different. So... but I still think that market... the future of that market is going to be in jackups. And so even though we don't hear anything, we are optimistic they are going to see more work there. Ian Macpherson - Simmons & Company International: Okay. Well, thanks for that and I'll hand it over. Thanks.

Sure, thank you.

Thanks, Ian.

Your next question comes from the line of Arun Jayaram with Credit Suisse.

Good afternoon, guys.

Good afternoon.

Hi, Arun.

Kurt, I want to elaborate on what you're seeing a little bit in West Africa. I know just looking at the outstanding tenders, there is a tremendous amount of tender activity for jackups, including Exxon, I know is looking for some incremental rigs. I was a little surprised that you think you will see some… the potential for some utilization gaps, could you elaborate a little bit there?

We... Arun, we are currently in two-tender processes right now in West Africa with our existing rigs and that's with what you said, Exxon and also with Chevron and we believe that the Exxon tender at least was introduced to us also adds two incremental jackups to the regions. So we're pleased about that. But there is all kinds of talk not only in West Africa too but… or not just Nigeria but on the West African coast, there are a lot of opportunities that are being discussed both for the jackup market and deepwater market. But what we're seeing is that between NNPC, NAPMs and the operators, the programs are there, they are just slow to develop due to the approval process that's required within the Nigerian government. But it's a politic... geological region, it always has been. We've seen it dip like this before, never with plus $100 barrel oil. So we are confident the opportunities are going to come about and as we said in prepared statements, we do have a lot of discussions ongoing with our jackups that are there.

Okay. My follow-up is you mentioned an opportunity at $170,000 on one of your rigs in West Africa, was that a commitment or is that more an LOI or a contract, you didn't mention the operator?

We're not allowed to mention the operator right now, Arun. But it is a commitment. We've got just to finalize a few details to actually execute the contract and we think that will be done in very near term.

Okay. Thanks a lot, Kurt.

Thank you.

Your next question comes from the line of Dan Pickering with Tudor, Pickering, Holt. Dan Pickering - Tudor Pickering & Co.: Good afternoon. David, could you talk a little bit, you mentioned the three rigs that have availability before 2010. You've clearly in the last six months signed up a lot of term at good rates. Are you going to be looking to keep these three available rigs relatively short term or does the customer really kind of dictate that issue?

Well, some of both. I mean, we're not specifically trying to keep them short term. I mean there are options available on a couple of the rigs. But we are in conversations about the future of these rigs, in some cases with the current operators; in some cases, with other operators about these rigs now. So we are not sitting back kind of admiring the marketplace on what we have done and thinking you’re going to keep this short so we can slam somebody. We're looking towards the future. We certainly think we have an opportunity. All of these three rigs that Kurt talked about, the NTVL in North Sea and the Boudreaux and Romano, all have capability, they’re all… if there is options, they are all in priced. So we are looking for the right job on the right day for the right rigs. So we will entertain short term or long term and we will price accordingly. Dan Pickering - Tudor Pickering & Co.: Okay.

And we have got... Dan, we've got… we’ve done a lot. I mean we have booked a lot of capacity. So we are not jumping up and down in a hurry to get these out the door. We think that there is a huge benefit that accrues to us and to our shareholders by having these rigs available and they are. So we intend to take advantage of that. Dan Pickering - Tudor Pickering & Co.: Okay. And then as we look at the new build environment, just can you, David, give us your view on Noble and how or if you intend to continue any sort of new construction projects and if you did, how would you approach that marketplace speculated with the contract, etcetera?

Well, that's one thing that hasn't changed. If we go into the yard to build it from the KLF [ph], it's going to be backed up by a contract. I just don't see where we are going to do that. That's just not something that we are going to drive off into that ditch and just go start building the rigs just for the sake of burning cash. So if we do it and frankly we're actually and have been engaged in some conversations about some new build opportunities, it will be backed up by a contractor… or a contract with an operator we are satisfied with. To take that a step further, I think unless it was a specialized application, you would not see us build jackups. I think if we are going to build some, it would be a floater. I think you build floaters and buy jackups in this environment. So that's really kind of what we'd be looking at. Dan Pickering - Tudor Pickering & Co.: That's helpful. Thank you.

Thank you.

Your next question comes from the line of Robin Shoemaker with Bear Stearns.

Thanks. I just wanted to ask on the indexation of the PEMEX rigs that you agreed to. Was that a PEMEX proposal or was this something that you proposed?

Robin, this is Kurt. It was a PEMEX requirement.

It was a requirement. Okay.

Right, within their contract.

So you described a little bit how it works. It's not just an index to the Gulf of Mexico rates but if we were to calculate the day rate on that index today, would it be above or below these first six months fixed rates that you quoted?

If you calculate it today on the index, we would be below… we'd be below what the index rates today.

The first six months rate would be below where the index is today?

That's correct, Robin.

Okay. So is --.

It’s a pretty convoluted… it’s a pretty convoluted index.

Yes, understood because it's not just US Gulf of Mexico type. Did you believe that in these... in this last tender that you were possibly competing against jackups that would be coming not from US Gulf of Mexico but from other international markets, potentially and bid against you?

We did, we looked at... we look at… we looked at potential jackups rigs that could come from any region that can meet the specification that was available within the window delivery that PEMEX required. And that’s no different than how we look at any tender opportunity.

Okay. Okay, that's all I have. Thank you.

Thank you.

Thanks, Robin.

Your next question comes from the line of Rob MacKenzie with FBR Capital Markets. Robert MacKenzie - Friedman, Billings, Ramsey & Co.: Good evening guys.

Good afternoon, Rob. Robert MacKenzie - Friedman, Billings, Ramsey & Co.: Wanted to hit on another part of the jackup market that I guess you guys don't currently operate in any meaningful way in the Far East region depending on how you define it. Is there any interest in moving some rigs there perhaps maybe from West Africa or from elsewhere because it seems like near term, there is actually some interesting demand levels there now?

We have looked at it from time to time, it’s certainly a market that holds lot of interest for us, it's a vast expanse and I agree, there is a lot of opportunity there. So absolutely, given the right opportunities, we would be glad to move them over there. We don't want to just... with our utilization now, we got about 84% of our base booked for the year. It’s… you don't just jack them down and move them over there for the sake of the moving them. So given the right opportunity, sure we will go chase a job over there. But it's... we're not actually really afraid of where we are either. So that's a wonderful thing about the market we're in. There are a lot of opportunities in basically all active regions around the world and on any given day, you can evaluate more than one possibility for any rig and fleet. So it's… sure we will look at it. Robert MacKenzie - Friedman, Billings, Ramsey & Co.: Okay. Great. And a follow-up on that, the North Sea market right now seems like the rates we are seeing come out of there, say, continues to remain tight. Do you expect it to continue to remain tight as some of the new builds get delivered? And secondarily to that, what is your aggregate view of demand for the next nine months to 12 months? Do you think there is enough demand out there to put all the new builds to work or do you think there is a shortage or a surplus of rigs?

Well, I'll take the North Sea first. The North Sea is kind of a closed market. The rig, it's hard to retrofit the regulatory kit and the safety and environmental stuff that goes on a rig to work in the North Sea. So it's kind of a closed market, most of the rigs if they are not built that way, it's expensive to go back and retrofit, so it's kind of a closed market. Most of the new build rigs that are being constructed are not specifically built for that market. So we don't expect a lot of incremental capacity to come into that market and that's really what's held that market up the way it has. I mean, the marketing guys have done a great job of keeping that thing floating our last renewal at 208 and I think before that, we did a 205 and we had 198. So I mean that market is holding together great and we really expect it will. On the broader market, yes, I mean we talk about the choppiness in West Africa and that really is... we got an operator who wants one of the rigs. But his G date is not keeping up with the availability days. So he keeps so, I want the rig but I need to push it back, I need to push it back. And it's not impacting the rate discussions at all, it's just… they just can’t get going fast enough and then you’ve got this thing in Nigeria where everything has kind of slowed down just by the geopolitical stuff that's going on because it's Nigeria. But again, it's not really hurting the rate. So it's kind of a weird dynamic. There is a lot demand in a lot of different places and I don't see any yet that tells us that our stories really needs to change. We still see that there is a lot of incremental demand out there and the problem is not going to be, can we swallow these rigs, it’s can we swallow them on the same day that they are all available at the same time. So, yes, I mean, I think there is enough demand. Is there going to be some upbeat down ways in the utilization as rigs come into the market, there might be. But I don't think you are talking about rates just falling in the ditch. I think you are talking about periodic times of a few more rigs than you would like to see in the marketplace until they get snapped up. $116 oil just solves a lot of problems and the question is, can the operators keep the prospects ahead of the fleet? And I think they will get there, but it's a bunch of rigs coming in. Robert MacKenzie - Friedman, Billings, Ramsey & Co.: Okay. Thanks. Those were my two.

Sure.

Thanks, Rob.

Your next question comes from the line of Roger Read with Natixis Bleichroeder.

Yes, Natixis Bleichroeder but I sympathize.

What's up, Roger?

Questions for you, one kind of following up on Rob's call... questions there, North Sea, there is a number of rigs scheduled to enter that market in the back half of the year, does it look like those for the most part have slots to go into or are we going to see a little more rig-on-rig competition in a market that really hasn't had any influx of new capacity over the last couple of years?

The rigs, unless some don’t though, most of the rigs that are going in there had jobs. And so they have rigs that have been contracted in previous. So our expectation is that they’re coming into fill, programs have been developed for those rigs and I think the market has probably already adjusted for that. There is actually a couple of rigs that have been slated to leave that market also. So on balance, it looks like it’s going to maintain the balance that it’s got right now for the foreseeable future the way we look at it and based on what our customers are telling us.

Yes, that's going to be my next question. It kind of looks like you don't have much capacity available until the early part of '09, mostly in the North Sea, just bidding is already occurring for that?

Bidding in discussions, yeah.

Okay. And then, my only other question, along the lines of the special dividend, we have seen some acquisitions done that involved returning a certain amount of capital to shareholders. Have you considered, especially with the large contracts in Brazil, the long-term nature of those, anything more aggressive in terms of return to cash to shareholders?

Well, yes, we considered it but we still don't like it. I think, once we load the balance sheet with a bunch of debt to do a recap, then that basically says, we’re out of the acquisition business and I don't think we are ready to say that yet. I mean one of the things that we like is, we've got enough cash to be able to manage the dividend if we choose to continue it but we have also still got a first team balance sheet if there is a good target out there, we got the dry powder. So Noble has been... has grown from a Mid-Continent land drilling company with a few offshore rigs to quite an international force with 62 rigs around the world and we are not done yet. So we are going to save the balance sheet for something strategic.

Okay. Thank you.

You bet.

Your next question comes from the line of Kurt Hallead with RBC Capital Markets.

Hey, good afternoon.

Hi, Kurt.

Yeah, I wanted to circle back on the ability that you guys have demonstrated to control costs. Everywhere we turn, there is a significant discussion about pressures on labor and labor costs related to retention and related to trying to keep some of your employees from bolting to some of these startups and really had steel cost still on the rise, how are you guys doing it, what's the secret formula here?

Well, we could tell you it’s doing [ph] out to kill you. I think in terms of labor, our turnover, we've got a lot of brand loyalty with the workforce and we don't abuse it and likewise we get that… that loyalty stays in place. And so our turnover in the fleet is not a problem as long as we respect the fact that there are other alternatives and we appreciate the need of the workforce. I mean if a plane crashes in Sugar Land, we all die, nothing is going to happen to Noble Corp., it'll keep running just fine because the real work is all done in the field and we… as managers, we respect that and we take care of those people.

I know you will be sad though, Kurt.

In terms of other things, we're just trying to manage it tight every day. It's... we felt like things would run, steel price is running up the way they had, it's going to be a shock to all others, but in terms of our new build programs, we’re actually ahead of that. Other than just steel... drill pipe and things like that, things we normally buy, the run-up in steel prices is not going to hurt us as much as others because we are... our seven-rig new build program is already mature enough and far enough out in front of us, that shouldn't really come back and bite us. So it's… we had a great quarter, we thought we might have a little more pressure, we actually went back into the numbers and worked it hard and will continue to work it hard and it's just something we do everyday. It’s… our HR folks have done a great job with the workforce, our operations guys work in that. It's the safety effort I think gives us a lot more brand loyalty with our workforce and so it's something that runs all the away from the fleet up and from the top down. So it's just something we live and breathe everyday. It’s… it’s the best I can describe it.

And the follow-up I had was, you referenced the build versus buy decision and looking at jackups in the deepwater fleet and on the jackup market, currently there has been certain price points that recently I believe something north of $220 million, I believe per asset and kind of doing a rewind here, that same asset probably could have been picked up three years ago at $150 million, a couple of years ago maybe $175 million, whatever the case and the price points kept walking up and nobody in the industry in general here in the US was comfortable at $150 million or fairly probably less countable at $220 million but at some point, does the... does the bar get completely reset and the industry just says, look, that's what the value is and I mean they are in the game or I’m not, so where do we stand on that?

Well, I think you're exactly right. A few years ago, the new construction cost was $150 million or something like that and probably new construction of [inaudible] up right now on a jackup before the run up of steel prices was somewhere around $200 million or so I would guess for a reasonably delivered rig. Our expectation is that the asking price of those assets is going have to trade back down closer to what you suggested that the value of those things might have been in years past. We certainly looked at the $228 million rigs and we run it very hard, so they don’t say how we felt about them. I'm not... I think there will be some opportunities out there. It's a little slower coming, most of these… almost all of these new build speculative folks have taken some money off the table in Oslo and their net market has a way of valuing those assets just like any other market does and I think there is probably some take-over premium built into that. But the closer they get actually having to deliver the software that goes with the hardware of actually happened to be a drilling contractor, I think that hopefully there will be some... a little rational… a little more rational view of the market and we will see some of that bid ask close a little bit.

Okay. Great. I appreciate it. Thanks.

Thank you.

Your next question comes from the line of David Smith with JPMorgan.

David, are you there?

Dave is not home.

You are on mute?

Mr. Smith, please, your line is open. David is not responding at this time.

Okay. Let's move on.

Your next question comes from the line of Geoff Kieburtz with Citi.

Can you hear me?

Yes. We find you great.

Thank you for joining us.

There's a couple of jackup questions. Earlier today, Ensco was --.

I'm sorry, you are breaking up, Geoff.

Okay. Can you hear me now?

Yes, we got you.

Clearly have a communication problem. A jackup question. Earlier today, Ensco was talking about some… their estimate of day rate changes in a Southeast Asian market where they seem to think that the rate to come down about 15% in the last six months. Are you seeing that in any of your active markets?

Well, as we… we’re not in Southeast Asia which you know. So I can't really comment on that. The only real re-pricing position that we’ve had of note is Mexico and in that regard, yes, we've seen our prices come down from what they were. But --.

I guess what I was trying to get at while you may not have had an actual fixture, I’m presuming that you're keeping track of what the sort of market environment would be if you were to have a fixture and that was kind of --.

Certainly, we are, yes. We are actively monitoring the changes in the market. But as you know, in the Middle East, our rates have held up very well; in West Africa, as we talked about, our rates have held up very well and we think the fixtures of our peers held up. The one part that has probably not held up as well is the 150-foot class rigs, which we were able to really stick the market about a year-and-a-half ago. We've put those… the Don Walker and the Dick Favor, both added around $160,000 to $165,000 a day and those were right-sized rigs with the right availability on the right day with the right guy. And I think that those rates were probably not reflective even of the market then. And so I think those will probably re-price at a level below that level but probably close to what the market should have been, but we were just able to kind of right size the market at that time. I think some of that also was inherent in Mexico when we did that last year when we were getting $171,000 a day for 300-footers in Mexico last year, when that's about the same rate that rigs… for the same class rig in other markets with full crew. So we were on the margin doing much better in Mexico and I think that's traded back down just because of the notion that there was going to be a lot more competition there, but so far in our major markets in North Sea, West Africa and the Middle East, other than the 150 footers and we've only talked about Mexico, the rates have seemed to hold up pretty well.

Okay. In Mexico, there was some speculation, PEMEX was going to at least explore if not require a buyout option in the new tenders. Was there any discussion of that or is there anything in the new contracts that looks like a buyout option?

Not in these tenders, no, I mean that's something they have talked about from time to time, but the tenders are all fairly specific and no, there is no purchase options and no rights that they have for equity in these rigs in the future.

Okay. And in terms of OpEx in this modified bareboat charter, how should we think about the operating expenses on those rigs relative to, say, Gulf of Mexico?

We typically have talked about those being kind of in the mid-20s in terms of OpEx, Geoff.

Okay. All right. And that's not changed?

No. There's no real change there.

And last question.

Geoff, you're violating the rules here.

I'm sorry. Can I put it out there?

All right.

All right.

There has been a lot of publicity about the dialogue between SeaDrill and Pride recently, any impact on your thinking in terms of what's going on strategically in this industry?

No, it’s certainly interesting press. But no, I mean, that doesn't impact us... how we view the market, no. I mean, we think consolidation is a good thing. What's going on now in the press is kind of fun to watch but no, it doesn’t change the way we view it.

Okay. Thank you.

Sure.

Janus, we are going to take two more and then we're going to call it an afternoon.

Okay. Sir, your next question comes from the line of Michael Drickamer with Morgan Keegan.

Mike?

Sir, your line is open. Mr. Drickamer, your line is open.

All right.

We'll take the next question. Your next question comes from the line of Jud Bailey with Jefferies & Company. Judson Bailey - Jefferies & Company: Good morning. Can you hear me?

Yes.

Very fine. Judson Bailey - Jefferies & Company: Okay. If I could just do a quick follow-up on one of the earlier jackup questions. David, could you give us maybe a little more color on the Middle East? You mentioned the cloud that's going to be out there being marketed with the second half of the year. From your comments, should we expect maybe a similar day rate when it’s contracted with the back half of the year or do we look for a little bit of a discount?

We have multiple opportunities for that rig. So I wouldn't look for a big discount. I mean there is actually some scenarios where you might see the rate grow a little bit but I certainly think that an extension or, I shouldn't say an extension, but a re-pricing on that rig will certainly be in the range of where it is, plus or minus. Kurt, do you have anything to add to that?

I agree. I agree the opportunities we're looking at right now would support what Dave is saying. Judson Bailey - Jefferies & Company: Okay. And a follow-up, if I may, would be, one thing we've noticed in some of these markets are some of these jackups that are a little over spec and you can't quite tell by looking at [inaudible] but they are lower quality in nature, are getting a bit of a discount. Do you have any rigs in the Middle East that would fall into that category? Outside, looking at, obviously the Leg Length, is there any one of your rigs that re-price maybe next year that you think maybe wouldn't be as competitive in the current market environment?

I don't think that's a fair question. No, I mean, our rigs in the Middle East were able to complete just fine. We don't have any issues, I mean, the Dabby II [ph] is… will be legged up to more than it is. But right now it is legged up for operations in about 116 feet of water and taken a three-year job with that one in the 90s is, I think appropriate for that rig. And if that's what you were referring to, that’s certainly an example, we've got one other 150 footer over there. But on the margin, I think our rigs are in good shape and can compete just fine with most of what’s over there. They are not brand-new but there is… they are in good shape. They’ve been well maintained, updated well. They’ve got proper quarters capability and good kit. So we don't have any… we don't have any spec issues that we are afraid of. Judson Bailey - Jefferies & Company: Okay. That's all I've got. Thank you.

And that’s all the time we have for today and Mr. Ahlstrom, I'll turn it back over to you for any closing remarks.

Thank you very much, Janus. Thank you all for joining us and for playing along with our strict two question rule. Appreciate that to everybody. Just want to make sure one thing on the guidance was clear, as we went through on DD&A, we said we would probably come in at the high end of the range that we gave in the first quarter… or the fourth quarter call which was $325 million to $335 million, just so we are clear on that. Again thank you very much for joining us today and we look forward to talking to you either on the road or at the next call.

Thank you.

Thank you.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.